What FTX and Theranos Teach Us About Fraud in the Age of Tech Bros and Hype

By Todd Wentz, CEO, Wentz IT Consulting

Fraud doesn’t always come wrapped in spreadsheets—it often shows up in slick pitch decks, tech conferences, and billion-dollar valuations.

FTX and Theranos were two of the most high-profile fraud cases in recent memory. Both were led by charismatic founders who sold a vision that outpaced reality. Both relied on secrecy, blind trust, and the assumption that the “smartest guy in the room” didn’t need oversight.

Small businesses don’t operate in Silicon Valley—but they fall for the same traps: trusting without verifying, letting one person run the show, and skipping the basics because everything looks like it’s working… until it’s not.

The Hype Machine Hides the Red Flags

Elizabeth Holmes convinced investors, boards, and even doctors to believe in blood testing that never worked. Sam Bankman-Fried built an entire crypto empire with virtually no recordkeeping, no board governance, and zero accountability.

In both cases, the fraud was possible because:

• There was no independent verification of results
• Founders had too much control
• Governance was a formality—not a function
• The people who knew better stayed quiet (or didn’t have access)

Sound familiar? It should. These patterns show up in small businesses and nonprofits every day—just at a smaller scale.

Why This Matters to You

• One person who “knows all the systems”
• A lack of backups, logs, or access control
• Financial records only one person can interpret
• “It’s working fine, we don’t need to change it” mentality

Fraud happens in the gaps—the places where no one is looking and everyone assumes someone else is in control.

Digital Controls Are Just as Important as Financial Ones

You need audit logs. You need alerts. You need multi-factor authentication. And you need someone—internal or external—checking that those controls are working.

In both FTX and Theranos, the lack of technical oversight enabled bad actors to hide the truth. The lesson? Tech is not immune to fraud. In fact, it can be the perfect place to hide it.

Final Thoughts

Don’t wait until someone walks off with your business—or your client list, or your donor records. Use the tech you already have to make fraud harder.

Start today by enabling audit logs and activity alerts. We’ve created a free guide to help you do it with tools like Microsoft 365 and Unifi.