The Blind Spot That Killed WorldCom (And Could Kill Your Business Too)

By Todd Wentz, CEO, Wentz IT Consulting

Back in the early 2000s, I worked at WorldCom. I saw firsthand how a lack of oversight, over-reliance on key individuals, and broken internal processes led to one of the biggest fraud cases in corporate history—over $11 billion in false accounting entries.

You might think your family business is too small to worry about that kind of fraud. But the truth is, the same weaknesses that killed WorldCom exist in small organizations every day. They just don’t make the headlines.

What Went Wrong at WorldCom

WorldCom’s CFO, Scott Sullivan, used accounting tricks to hide costs and inflate profits. The fraud was enabled by:

• A lack of segregation of duties
• No meaningful audit trail
• An internal culture of silence
• Over-reliance on a few trusted individuals

The fraud went unnoticed for years because the internal controls were either absent or ignored. And the people who could’ve spoken up felt powerless.

Small Businesses Make the Same Mistakes—Every Day

Most small businesses run on trust. That’s not a bad thing—until it becomes a blind spot. In many companies I work with today, the same person:

• Approves purchases
• Processes payments
• Reconciles the bank account

If that person ever decides to exploit the system—or makes a critical mistake—no one will catch it.

What You Can Do Right Now

• Separate duties: No one should control a financial process end-to-end.
• Implement basic IT access controls: Use MFA, role-based access, and unique logins.
• Require a second set of eyes on critical transactions.
• Make logs and approvals traceable—digitally or on paper.
• Have someone outside your daily operations (like your MSP) perform regular reviews.

Final Thoughts

WorldCom didn’t collapse because of hackers or a technical failure—it collapsed because too few people held too much power without oversight. It happens in family businesses more often than you think.

Want to know how your business stacks up? Start by reviewing your internal roles and responsibilities.

Download our free checklist to begin tightening your fraud defenses today.