Kelly Paxton has built a career out of following the money—and she knows exactly where to look.
A Certified Fraud Examiner, former US Customs Special Agent, and author of Embezzlement: How to Prevent, Detect, and Investigate Pink-Collar Crime, Paxton has spent decades investigating the kind of fraud that rarely makes headlines but costs businesses millions: the trusted employee who slowly, quietly, steals.
Through her work in government, law enforcement, and the private sector—and now as a professional speaker and podcast host—Paxton has become the leading voice on pink-collar crime.
In this interview, Paxton shares hard-won insight from her years in the field, including:
- What "pink-collar crime" is, and why it's so often missed
- The human pressures and rationalizations that drive otherwise trustworthy employees to steal
- How technology and AI are changing both fraud investigation and fraud itself
- Practical steps organizations can take to protect themselves
Read the interview or watch the video below for an eye-opening look at the fraud hiding in plain sight—and the empathy it takes to uncover it.
Editor's Note: This interview has been edited for length and clarity.
Kyla Sims: So I did my own OSINT investigation.
Kelly Paxton: Oh God. Okay.
Kyla Sims: I found out that you’re a fraud investigator. You’re a Certified Fraud Examiner, a former private investigator, and a prolific podcast host with two podcasts—or, okay, is it two different podcasts, or did one podcast turn into another podcast? I couldn’t quite discern that.
Kelly Paxton: Great Women in Fraud turned into Fraudish.
Kyla Sims: You’re also the author of Embezzlement: How to Prevent, Detect, and Investigate Pink-Collar Crime, and a professional speaker with decades of investigative experience across government and the private sector. Now you’re educating leaders on how internal fraud happens, why it’s often missed, and what organizations can do to prevent it.
How did I do?
Kelly Paxton: Perfect. You did great.
Kyla Sims: Thank you so much. And thank you so much for joining me today.
Let’s get this out of the way at the very beginning. What is “pink-collar crime”? Because immediately I was thinking about the Pink Panther doing a priceless jewelry heist. So can you explain to me what pink-collar crime is?
Kelly Paxton: Yeah, sure. So you have white-collar crime, which is the big umbrella: Ponzi schemes, financial statement fraud, bribery, the big cases. Then you have pink-collar crime.
The term white-collar crime didn’t come into being until 1939. Before that, people thought of criminals as icky people. And now it’s like, rich people can be criminals. Shocker. So that was in 1939.
Then, 50 years later, Dr. Kathleen Daly popularized the term pink-collar crime. The definition is low- to medium-level employees, primarily women, who steal from the workplace. It is garden-variety embezzlement. That’s what it is.
Kyla Sims: That’s interesting.
Kelly Paxton: It’s all about position, not gender.
But in the United States, over 90% of bookkeepers are female, and women are really good at it. People underestimate them. There was a TV show on CBS with Marcia Clark, of O.J. Simpson fame, and she described Pink Collar Crime as women committing any type of crime.
That is absolutely not true. It is garden-variety embezzlement. I get pushback sometimes. People are like, “Well, I’m not going to hire you because half the audience is women.” I’m like, it’s about position, not gender. Women are really good at it. So that’s what it is.
Kyla Sims: I had never heard about it until I started looking into your work, and that makes a lot of sense. It’s also something I never hear people talking about, either, in terms of embezzlement.
Kelly Paxton: It’s my mission to make it well known, because it is a thing.
Kyla Sims: I have a lot of questions about that, so let’s get into it a little bit. First, let’s rewind and do a little background. What drew you to this profession?
Kelly Paxton: Oh my God, very long story.
I’ll make it as short as possible. I was a stockbroker and a bond trader. When I was a stockbroker, I was an assistant to a senior broker, and we worked in a very small firm. It was kind of a boutique agency.
One day I got a phone call from a Customs special agent and she said, “Do you know Alan Taylor?”
I was like 28, and I giggled. I said, “Oh, is that what we’re calling him today?”
And she said, “What do you mean?”
I said, “Oh, sometimes he’s Winston…”
And she said, “I’m going to send a subpoena down.”
Well, this was back before you had to know where your customer’s money came from. So I told the broker, and the guy immediately came in and got his money. Well, it turns out he had committed white-collar crime. He had committed wire fraud.
But I knew he was dirty.
It was back in the early ’90s, and we just figured, it’s Oregon, he probably sold some pot. And again, back then, you did not have to know where your client’s money came from. He was a great customer for the broker because he turned and burned, which means he traded a lot. And I say he traded a lot because he didn’t earn the money—he stole it.
If someone works really hard to save up money, they’re generally conservative. He wasn’t. He’d take people out for drinks. Nothing made sense.
My dad said I’ve always been snoopy. I prefer to call it curious.
So my boyfriend at the time, who became my husband, said, “Call that woman up. I’m going to go study at the University of Washington. Maybe you could get a job.” And I called her up and said, “Hey, I want to do what you do.” And I knew Alan was dirty. So I got hired with US Customs.
And it’s kind of shocking, because she called the boutique firm locally [during her investigation]. She should have never done that. She should have called the headquarters, because the headquarters would have frozen his account instantly. So she learned a lesson, and she still hired me.
The reason why you would never go to the local branch is because maybe the teller is friends with the perpetrator. You’ve got to go to the headquarters, because they’re the ones with the compliance and the attorneys and everything, and they will freeze things instantly. So she learned a lesson: don’t ever go to the local office. You’ve got to go to the headquarters. But I still got hired.
Then I was a special agent for US Customs for five and a half years. My husband finished his PhD. He got a job in the middle of the country. I was pregnant with our second kid, and I stopped.
Then we eventually moved back to Oregon.
I started doing background investigations for the US government, like Homeland Security and the Office of Personnel Management. When we moved back to Oregon, I went to work for a sheriff’s office, and I became the analyst for their fraud team because I got my Certified Fraud Examiner designation.
So I put together packets on people who were stealing from Main Street, as I call it—dentists, schools, water districts. I would put all the spreadsheets together, and one day I thought, “God, all my suspects, with the exception of one, are women.” So I typed in “women embezzlers,” and Dr. Kathleen Daly popped up.
Even though it is primarily women, we did have one guy who I said “stole like a woman”. And that’s kind of what started me on pink-collar crime. I thought, I’m going to do that. Because I was only part-time, and I thought, I’m going to go out on my own.
And I did defense work, so I worked with some defense attorneys, and I actually loved the defense work because you get to look at everything.
So I did that for about five years. Then I went to Nike. I got recruited to go to Nike, kind of for open-source intelligence.
Then I went out on my own and became a professional speaker. Now I teach and train. I had my PI license until about a year and a half ago. I don’t like attorneys—sorry, attorneys—but you have to work underneath an attorney. I’m at the point in my career where I can pick and choose, and I choose not to be in a toxic environment.
So now I teach and train, and I do my podcast, and I write, and I do research. I consider it the best work I’ve ever done.
Kyla Sims: This is amazing. What a journey.
Kelly Paxton: I got to interview a retired FBI agent today who also has a podcast. It’s a true crime podcast, and it turns out we knew certain people together. It’s a small world, but it’s so much fun to do. I’ll get an email or a message: “I found your podcast. It’s so good.”
And people are like, it’s just Kelly talking to people. They can be perpetrators, they can be victims, they can be investigative professionals. It’s just a conversation about fraud.
Kyla Sims: Wow. It’s so interesting. I haven’t had the chance to dive in, but I’m not a true-crime girly in the sense that I’m not into the murder podcasts. I can’t do it. Life is scary enough. I don’t need to listen to people talk about murders. But I love fraud. I love a con. I love that kind of stuff.
Kelly Paxton: Yeah. I don’t like blood.
Money tells a story. I could get someone’s bank account and tell you everything about them. Everything—their values, etc., because it’s what people spend money on.
And unfortunately, people think money solves problems, and it does initially. But at the end of the day, if you only make $50,000 and you’re spending $100,000 a year, you need to learn to live on 50 or you’re going to have to steal, in theory.
Kyla Sims: In theory.
Kelly Paxton: Yeah. And women are in the workplace, and they can steal now. It didn’t used to be that women were in the workplace. I have the most amazing book here called One Thousand and One Embezzlers: A Study of Defalcations. I literally didn’t know what defalcations were. I had to Google it. This was by an insurance company in 1937, and they looked at 1,001 cases where they had to pay because someone in a business stole.
So I’m going to quiz you. Out of 1,001 people in 1937, how many were women?
Kyla Sims: 1937. Okay, this is pre-war, so there aren’t as many women in the workforce, maybe.
Kelly Paxton: This is good thinking.
Kyla Sims: Out of how many? A thousand and one?
Kelly Paxton: 1,001.
Kyla Sims: Let’s say—I’m going to be generous and say 50%.
Kelly Paxton: Oh dear. Thirty-seven only. Not 37%—only 37 women.
Kyla Sims: Wow.
Kelly Paxton: Now it would be more than half.
I have a book, called Sisters in Crime by Dr. Freda Adler. She wrote it in 1975.
And I actually talked to her. I picked up the phone.
So I’m going to tell your audience: if you ever want to do something new or different, just pick up the phone, send a LinkedIn message like you did, send an email. People are kind and generous.
So I sent her a message, and she said, “Call me.” And this was in 2014. I had a 45-minute conversation with the woman who basically started the conversation about gender in white-collar-type cases. And she said, “First, women are humans. Second, they are women. Third, if given the opportunity, they may steal.”
And there’s the fraud triangle, which is opportunity, pressure, and rationalization. You can control for opportunity by—people are like, “Well, I’ll have two signatures on a check.” And I’m like, well, if you can forge one, you can forge two. So that doesn’t stop it.
But there are other things you cannot control for, like rationalization. You just can’t. You can have a “master-of-the-universe” boss who doesn’t treat you well, and you’re going to rationalize stealing. You’re never getting paid overtime. They make you come in on the weekend. They write their family vacations off as business trips. My kid can’t even afford to join the soccer team. I’m going to take 200 bucks. And all of a sudden, 200 bucks becomes half a million dollars over time.
Kyla Sims: Wow, that’s so interesting. I want to talk more about that.
But before we get into the nitty-gritty of embezzlement and how these things work and why they happen, you’ve been in the industry long enough to see some pretty big technological shifts, and even just changes in the kinds of information that are available out there, the kinds of systems that people use. Even bookkeeping is probably so different. What was it like when you first started, and how did that change over time?
Kelly Paxton: So, it used to be that I would have notebooks of people’s bank accounts, and I would have to put them manually into Excel.
Kyla Sims: That’s a lot.
Kelly Paxton: It was. It took a long time. Now there are page scanners, and you can do it that way. Granted, sometimes it’s a little messy and you have to clean it up a little bit, but technology has really changed things.
I worked with an accountant who was very technologically forward, and he was like, “We can scan this.” And I said, “You know what? When I do it manually, I get patterns. My brain sees patterns.”
I asked one detective who arrested a young woman, “Ask her what her favorite number is.”
He said, “What are you talking about? What woo-woo stuff is this?”
I said, “Her favorite number is four.”
He said, “How do you know?”
I said, “Because every time she steals, there’s the number four in it.”
And there’s this thing called Benford’s law, where numbers in invoices and things like that have a natural pattern. But I could see it just after putting in check after check after check after check.
Now you can throw everything into a database, and it will pull out all the things that are outliers—like a business paying one vendor on day five of the bill when every other vendor gets paid on day 29. It’ll kick that out instantly, and I don’t have to see a pattern, because tools like Excel and Tableau and all those things can kick it out instantly.
I do feel like—and this is me being old school—you lose a little bit, because I would get to know these people.
There’s a woman who stole in the Midwest, and she said the way she kept track of it was that the last four digits of every check she forged were an important number, like the last four digits of her kid’s Social Security number or her anniversary date.
So when they confronted her, she could go through and checkmark every check she knew was illegitimate because the last four digits were always something that clicked in her head. And I think I would see that.
But granted, you could throw it into Gemini or something like that, and it would probably say, “There are patterns here. Maybe you should…” So technology does make it really amazing what you can do with it.
But it used to be that I’d be sitting on the floor just going through bank records.
When I’d get someone’s bank account, it was like Christmas. Now it’s like, feed it into a machine, it kicks it out. It’s just not as touchy-feely.
Kyla Sims: That’s so fair. So has that changed how you approach the work?
Because it sounds like it used to be quite manual. You were going over everything; it was all kind of existing in your head.
Now you have these tools you can kind of outsource that thinking or pattern recognition to. What does that mean for the rest of your work?
Kelly Paxton: I think it gives you more time to do other stuff. I don’t know if it’s like this in Canada, but attorneys charge in the United States by six-minute increments. Technology has made investigations, in theory, a lot more efficient.
So I remember going in—this was a divorce case—and it was a nightmare case. I’m going in, and some attorney is on the floor with all these notebooks, and he’s like, “I can’t find a check for like $65.”
I plugged it into my computer and got it like that.
He’s like, “I’ve been sitting on the floor for hours.” And I’m like, oh God, the client had to pay for him sitting on the floor for hours, when I could pull it up instantly.
It gives you time to do other things, like prepare for interviews. And that’s where open-source intelligence really comes in. You need to be prepared for the interview.
I had a case where I told the attorney I couldn't testify, because if the prosecution asked me one question, it was over for his client.
And he's like, "What?"
And I said, "If he asked me one question, I can tell you by looking at her Facebook page, she's at the casino every weekend." And I said, "And if the attorney knows that, I can't not answer it."
He's like, "I thought you were an expert."
And I'm like, "I am an expert. The issue is if the attorney has done any open- source intelligence and knows that she's been spending the money at a casino, I can't sit there and pretend I don't know. I'm under oath."
And so I was like, "You might as well get a really good plea deal because she's gambled it all away." And he was very annoyed, and said, “Well, you don't know they'll ask you that.”
I'm like, well…
Kyla Sims: If they're worth their salt, they probably should!
Kelly Paxton: Yeah, definitely.
So I have a colleague who does interview training, and he’s ex-FBI and all sorts of other three-letter agencies. It is so important, and words matter so much. I wouldn’t sit across the table from you and say, “Tell me how much you stole.” There are words you don’t use.
You do this background investigation in advance. You see that their spouse has left, they have a sick kid, they go to the casino, and you build from that.
And it’s not fake. It’s empathy. You’re sitting across from someone—generally speaking—on one of the worst days of their lives. They know the gig is up, and they’re probably going to go to prison. So you’re not going to pound on the table.
I was telling you before, I was talking to a retired FBI agent who did bank fraud, and she was talking about it, and everything was pink-collar flags, or pink flags as I call them. The woman never took vacation. One woman had a gambling habit.
I said, “Did they confess to you?”
And she said, “Yep.”
And I said, “Because you’re kind.”
She said, “Yeah.”
So you go in there, and you can have these amazing pivot tables and all the numbers, but you also have to be kind. Like, I see that your husband left you or your kid is sick, and I can understand why you may have had to borrow money.
They always think they’re borrowing it, and the gamblers think that they’re going to hit it big. And I’m like, “So just say you won a million dollars. Are you going to put a journal entry back in? Don’t you think your boss is going to notice that you put a million dollars back in that you stole?”
I’ve seen some people put a teeny bit of money back in. But it’s pretty darn rare, and it’s nothing compared to the amount they stole.
Kyla Sims: That’s so interesting. When I think about embezzlement, or any crime, it’s sometimes hard to think of “criminals” as entire people with entire lives who have all of these emotional, rational needs that they need to get met, and they go about different ways of getting those needs met, or trying to.
It’s interesting to think about coming at them like, “You stole. Naughty, naughty,” is not actually helpful at all.
Appealing to that humanity, and the context in which the crime has been committed, is very important to unearthing how this happened.
Kelly Paxton: Yeah. My saying is, good people make bad decisions; bad people make good decisions.
And you know what? I put into one AI tool “the oldest embezzler.”
Now, I don’t know if this is true, but it said 91 years old. She was a very long-term city mayor, and I think she stole a couple hundred thousand.
But then I had this other woman whose name was Maxine. She stole $27,000 because her husband got cancer, and she said she needed to feed her family.
I’m not going to sit across the table without thinking, “There but for the grace of God go I.”
My husband had cancer. We had health insurance. We had—you know—I didn’t have to do that. But would I say I would never do it? No. No one can say they could never do it.
The FBI agent I was talking to today said everyone has a price. Sometimes it’s not an actual dollar amount, but it might be something else.
Kyla Sims: In Canada, we have universal healthcare, so we don’t have the same worries around that. But whenever I hear stories like that, I’m like, how not? You’ve got to do something, right?
It’s so human, and it makes perfect sense. It’s tragic, but you can’t say that you would never do that if you were in the same situation.
Kelly Paxton: So, can I move to Canada?
Kyla Sims: Sure. Yeah, come on. We’ll take you all.
Kelly Paxton: I’d like to move to Canada.
Kyla Sims: Wouldn’t that be nice? It’s funny—we always have this joke in Canada that you could never write Breaking Bad about somebody in Canada, because the whole premise is immediately moot. It just doesn’t make sense. And yeah, desperate people, man.
Kelly Paxton: Well, yeah. And the thing is, people don’t like to talk about money. People talk about sex before they’ll talk about money.
Kyla Sims: That’s so true.
Kelly Paxton: Really, they do. And there’s a lot of shame about money—not having enough. It’s just one of those things. And again, people think money is going to solve the problem.
So say your kid gets picked up and thrown in jail, and you have to bail them out, and it’s $5,000, and you don’t have $5,000.
It’s like, okay, I didn’t think this would ever happen to me, but it’s happened to me. What am I going to do?
We don’t sit there and say, “I’m going to save $5,000 for the eventuality that my kid’s going to get thrown in jail.”
Money makes the world go round, but it can also lead to some very dark places.
Kyla Sims: Yeah, for sure. What misconceptions do people have about embezzlement and fraud that annoy you?
Kelly Paxton: That it’s never going to happen to them.
So, I have a friend who is now divorced, but at the time I was at their multimillion-dollar beach house, and her husband—ex-husband now—was a “master of the universe”.
He asked me what I do, and he very cockily said, “I’ll never have to hire you.” The attitude was basically, “Look at this. I’m really smart. I pay my people well. Why would anyone steal from me?”
Fast forward nine months—guess who got ripped off? No one thinks embezzlement is going to happen to them because they’re really smart.
They pay their people well, and again, they’re really smart.
And they don’t think Gladys—and I call her Gladys—is that smart. And it’s like, just because you’re up here on the org chart does not mean that Gladys down here is dumb or not as smart as you.
Maybe Gladys is there because she likes to pick her kids up from school, and she’s never really wanted to be a “master of the universe”.
So I do my Catch Me If You Can: Today’s Pink-Collar Criminal training, but the problem is, no one thinks it’s going to happen to them. So they’re like, “Do you have any other trainings?”
And I have a new one that is actually called Nobody’s Fool. It’s based on this book, Why We Get Taken In and What We Can Do About It. I’ve had these guys on my podcast.
So basically, everyone knows someone they think can get ripped off. But not them. It’s all about how people think about a con artist. They’ve got rizz, you know? They’re confident. They seem competent. They’re not the person in the corner reading a book. They’re calm people, and they use behavioral science. They use Dale Carnegie—How to Win Friends and Influence People—to get people to invest with them, or whatever it is.
So I’m pushing that presentation more. I just did it in the Midwest, and I said, “Who here knows someone they’re concerned about getting ripped off?” And this guy raises his hand really quick.
And I said, “Who is it?”
And he’s like, “My father-in-law.” He’s a recent widower.
So I have a different book, Anatomy of a Con Artist, by Jonathan Walton. And I gave this book to him because I was like, “You need to read this and then give it to your father-in-law, because it lays out how people can get ripped off.”
And again, you work for a successful business, and you’re like, “We have internal controls. No one’s going to steal from us, and we’ll turn them in to the cops.” But everyone knows someone who they think might get ripped off.
And so that’s why that presentation is more popular sometimes—because people are like, “Yeah, I’m not going to get ripped off.” It’s misguided.
I have a felon friend, who stole money. She’s a D1 athlete. She grew up in a very religious family. She ends up stealing money. I could plant her in any audience I have, and no one would be able to say, “That’s the criminal.” She looks like us. They don’t look like bad guys. They look like us.
We don’t hire people that look like “criminals”. We hire people that look like us. And because they look like us, we think they’re like us, and that they wouldn’t steal.
But life happens. Like Maxine Brinks, who stole $27,000—she was almost a 50-year employee.
Also, do you think she woke up at age five and said, “You know what? In my 80s, I’m going to steal”? No. Life happens.
Kyla Sims: How has working in embezzlement and fraud changed how you see the world?
Loaded question.
Kelly Paxton: You know what? Actually, I am a lot more empathetic than I used to be, because life happens. I never thought my husband would get cancer. He did.
Life happens, and most people—with the exception of serial grifters, con artists, and narcissists—don’t say at age five, “I’m going to rip people off.” I don’t even think Bernie Madoff, at age five, said, “I’m going to run the world’s largest Ponzi scheme.” I really don’t.
I was in the trading industry. He made some bad decisions, and it was good money after bad. It didn’t even snowball. It avalanched. I don’t think he had that intention at the beginning, but it turned him into a different person. Do I think at age five he said he was going to rip everyone off? No. I don’t. But he did rip a lot of people off.
“In the United States, three out of five dentists get embezzled."
Kyla Sims: I know you said you’re not active in investigations now, but when you were starting a new case, what did the first phase of your investigation look like?
How do you start investigating embezzlement, or how does it even come up?
If people think they’re immune, how does it even come up?
Kelly Paxton: There are pink flags. One pink flag—and interestingly, the FBI agent I spoke with today said the same thing—is when someone never takes vacations.
In one case, this woman never took vacations, and then one day she didn’t come into work. That’s when they found out things weren’t right.
I had a dentist case. It’s probably different in Canada, but in the United States, three out of five dentists get embezzled.
There’s a lot of cash flowing through a dental office. Dentists don’t always realize how much money is running through their practice.
Well, this woman, Betty, stole from Dr. E. It took her 10 years to steal a million dollars.
The only way Dr. E found out was that his wife was home one day—his wife also helped at the practice—and she got a call from the bank. The bank said, “Is there any reason why Betty would put an insurance check in her account?”
The practice had had some real financial challenges, but Betty always had an answer, like, “Well, we had to pay off the lease on the X-ray machine,” or “You went on that trip to learn how to do molars better,” or something like that. She always had an excuse.
Most dentists don’t say, “I’m going to become a dentist because I want to make a million dollars a year.” They do it because they want to help people.
Generally—and this is anecdotal—they’re not always the best businesspeople. My dentist knows I’m crazy, or whackadoodle, and I’ve brought him my book and another book about dental embezzlement.
But I’m not going to ask him, “Are you profitable this year?” I just want a dentist who does good dental work.
But if you get a dentist, a doctor, or some other professional who’s been ripped off, I will tell you: they are distracted.
Their world has come crashing down, because Betty was in the office. She went to the dentist’s kids’ confirmations, their high school graduations, their weddings. She was part of the family. It’s so devastating.
Money is replaceable, but trust isn’t.
"Money is replaceable, but trust isn’t."
You talk to someone who has been ripped off, and you can see their demeanor change. They second-guess everything. Then when they go to replace Betty, they’re like, “Oh my God, am I going to pick someone who’s going to rip me off too?” And the next thing you know, they’re drilling the wrong tooth because they’re thinking about how Betty ruined their life.
A dentist can do more molars or more cavities to make the money back, but you can’t earn trust back like that. Money is replaceable. It’s tangible. Trust is not.
So when someone has been ripped off, they’re devastated. They’re gutted. They’re angry. Like the “master-of-the-universe” guy who told me, “I’m never going to hire you”—when he got ripped off, he was very upset because it was his trusted lieutenant.
He wanted immediately for the guy to go to law enforcement. But they say only 15% of all embezzlement cases get turned over to law enforcement. The number one reason is shame.
"But they say only 15% of all embezzlement cases get turned over to law enforcement. The number one reason is shame."
Kyla Sims: I mean, it makes sense, but I never would have guessed.
Kelly Paxton: Yeah. I’m the fraud hashtag queen and the one I’ve really pushed the last couple of years is #NoVictimShaming.
Here’s a story — first, if you embezzle, get off Facebook, because I will track you down and it won’t be pretty — but I put in this woman’s name into Facebook.
She stole $1.7 million from a construction company. So I put her name into Facebook—this is open-source intelligence. The local news story pops up, and then the comments start: “Oh, isn’t that nice that they bill so much that they can miss $1.7 million and not even care?”
The victim shaming is awful. And that’s why nonprofits don’t turn in embezzlers, because they think, “If we tell people that Betty stole, we’re not going to get donations.”
So it’s a real problem.
I always wanted my victims to go to law enforcement, but I completely understood when they didn’t. The other thing—and it may be different in Canada—is that the process takes forever.
Forever.
And they’re like, “When is it ever going to end?”
Meanwhile, a lot of times the business owner has to hire an attorney, and that’s not cheap. And they’re already missing money.
I’ve had people literally say, “I can’t afford to hire you, because if you’re going to tell me I also need an attorney, I can barely afford to hire you.” I was always cheaper than the attorneys, but still—they’re just thinking, “How am I supposed to do this?”
And it takes years. I see cases that go on for five years, and I feel terrible for them. They call, and I joke that they cry on my shoulder because my shoulder was cheaper than the attorney’s shoulder.
I always wanted my victims to go to law enforcement, but I completely understood when they didn’t.
Kyla Sims: And I imagine in a lot of cases too, say you have Gladys stealing money to pay for her husband’s cancer treatment or whatever—it’s not like she has that money to pay you back. It’s not like you’re going to get the money back.
Kelly Paxton: Oh no.
Kyla Sims: So I can see why people would be conflicted about it and think, “It’s not even worth chasing.” Dang, that’s awful. That’s terrible.
On that note, how do you balance empathy and objectivity when you’re investigating someone—or when you did investigate folks—who may have been trusted in the organization for years and years?
Kelly Paxton: As a Certified Fraud Examiner, we do not declare guilt or innocence. That is in our code of ethics.
Not every person believes in that, but for CFEs, that is our code.
So you can say the money was here in the business, it went to Gladys, and then from Gladys it went to pay a Visa bill.
Someone else could say, “Gladys stole money from the business and paid her Visa bill.” I can’t do that. That is declaring guilt.
The other interesting thing—and people are going to go, “Well, isn’t that nice?”—is that I never had to testify, because Gladys always confessed and would plead out.
I had an attorney on one case. I worked on that case for like three years, and we were getting down to it. He said, “We’re going to trial."
And I said, “No, we’re not.”
He said, “We are going to trial.”
Then he asked, “You’ve testified, haven’t you?”
And I said, “Only in a grand jury.”
He looked at me and said, “What? I was told you were an expert.”
And I said, “We’re not going to trial.”
He said, “You don’t know that.”
And I said, “Yes, I do.”
There was all this back and forth. Guess what? Did I have to testify? Nope. Because she pleaded out. They came to an agreement.
It’s expensive to do these kinds of cases.
And when I see a case that is going to trial, sometimes there may be issues with it.
I have seen bad police work. In the case where the attorney kept telling me we were going to trial, the woman had an outdoor school for kids, and there were all these Costco purchases. They tried to charge her with stealing all this stuff from Costco—like 50 pounds of hot dogs.
She said, “How did I eat 50 pounds of hot dogs?”
Then she pulled out a brochure for the outdoor school, and it had the menu for the week. There were five days of hot dogs. That was bad police work. I’m going to say it was greedy police work. They just threw the book at her.
You have to look at everything. Once in a while, did she actually buy a carton of cigarettes? Maybe. But you can’t say she stole $700 from you at Costco when $692 of it was for the camp or the nonprofit.
Cops don’t become cops to play with spreadsheets, as I say.
Say a business gets ripped off, and let’s say the business owner—I call this a get-out-of-jail-free card—has been a little loose with expenses. He pays his kid’s car payment, or she pays the electric bill at home out of the business account. Then she realizes that Gladys has stolen, and she goes to the cops and says, “Gladys has stolen.”
And they say, “Okay, we need all your records.”
And she’s like, “What?”
Now the cop is probably not going to know what a K-1 is, or what depreciation is, but everyone has that moment of, “Oh God, I cheated on my taxes. Now the cops are going to see all my books. They’re going to see that I paid for my kid’s trip to Disneyland, and I’m going to get in trouble.”
And Gladys knows you’ve done that.
So I did have a woman who stole from a medical practice. And when she was confronted by the woman business owner, she said, “Well, I’m going to go to the state revenue agency, and I’m going to go to the IRS, and I’m going to show them that you’re not paying the proper amount of taxes.”
The business owner said, “Fine, do it.” She called her bluff.
But how many business owners would go, “Oh God, you mean I have to give you all my records? I can’t just tell you what I think was stolen?”
No, you can’t.
So yeah, that’s the get-out-of-jail-free card that Gladys often has.
"Cops don’t become cops to play with spreadsheets."
Kyla Sims: Actually, that leads really well into my next question.
Are there any controls or safeguards of note that organizations still resist implementing, even though they would go a long way toward prevention?
It sounds like number one is keep your records and don’t be fudging around with your taxes.
Kelly Paxton: Yeah—don’t live out of the corporate checkbook.
A big one is: make your employees take vacations. And not a day here and a day there.
So many cases get caught when someone is out of the office for, say, a week, because someone has to get into their desk, or someone answers the phone and a customer says, “I just got my statement and my payment isn’t on there.” Then it all unravels.
There was a plastic surgeon in, I want to say, Texas or somewhere like that. She thought her office manager was stealing, but she didn’t have proof, and the office manager was always there. So she couldn’t have forensic accountants come in at night because the office manager would know.
So this plastic surgeon said, “You know what, Gladys? You’ve been working so hard. I’m going to send you on a cruise.”
She sent her on an all-expenses-paid cruise, and while she was on the cruise, the forensic accountants came in. Sure enough, they were able to put the case together.
But who does that? She literally sent her on an all-expenses-paid cruise just so she could have her investigated. I thought that story was crazy, but it’s true.
So yes, your employees need to take vacations.
I also have this thing called surprise and delight that a client gave me. If you only look at checks over, say, five grand, pull one for 500 and say, “I want to see the backup to this.” That’s surprise and delight.
If you have auditors come in only in June, have them come in in October or November instead, and don’t tell anyone they’re coming until they show up. That’s surprise and delight.
It used to be—back in the olden days, which isn’t all that old—that you would get your bank statements in a PO box or have them mailed to your home. Now you can get them online.
Don’t tell Gladys, “Hey, can you print out my bank statement?” Because I can do all sorts of things with Adobe. I can make your $10,000 balance look like $100,000.
You have to be the first person to get to your bank account.
And then I had what I call the fat-finger caper. She was remote, she was an accountant, and the business just started going downhill.
So she starts looking at things and thinking, “Okay, check 102, $5,000. Check 103, $7,500. Yeah, I remember signing those.”
Then she fat-fingers it, hits view image, and check 102 for $5000 wasn’t to Acme—it was to Betty!
It is now her mission to get everyone in her industry either to get copies of the checks—which banks charge you for—or to view all the images. And I call that the fat-finger caper.
She would have never known if she hadn’t done the fat-finger move. So again, yeah, she knew something was wrong, but still—she stumbled into it.
Kyla Sims: Totally by accident.
Kelly Paxton: Yeah. My friends call it Kelly math. Say you’re a business owner. You sell a million widgets a year and, after every expense, you make $10 a widget. In your mind, you’re like, “I’ve got $10 million.”
Trust, but verify.
So many business owners do mental math. It’s like, “I know I have $10 million because I sold a million widgets and I make $10 a widget.”
You’ve got to go in and verify that yes, you actually do have $10 million.
"Trust but verify."
Kyla Sims: Wow. I’m just kind of blown away. It sounds like so much of it is this sense of ego or being untouchable—like, “Well, I’m a smart person. I know how much I have.” But yeah, that trust-but-verify idea—you can trust people, but you still have to double-check. And so many people don’t want to do that.
Kelly Paxton: I don’t like looking at my checkbook. There’s this thing called optimism bias. We don’t think bad things will happen to us. If I asked you what percentage of people get cancer, most people say 10%. It’s over 30%.
We don’t think bad things are going to happen to us. We only think good things are going to happen to us because we’re good people.
Bad things don’t happen to good people. But yeah, bad things do happen to good people. I hate to tell you.
Kyla Sims: Oh, that’s terrible.
Kelly Paxton: I pay my utilities online, like autopay. Not everyone pays their utilities that way. When I was working at the sheriff’s office, we had a water district that got ripped off, and they got ripped off in cash.
And I’m like, who pays their water bill in cash? Well, my brother probably pays his water bill in cash.
We have this sense that everyone does things the same way we do. We pay our bills online or on autopay. There’s a whole population out there that doesn’t do that.
And this is where experience comes in. I could sit down with my brother and say, “Okay, what other sketchy things do you do financially?” We have to understand that not everyone lives just like us.
Kyla Sims: I want to talk a little bit about your podcast. So Great Women in Fraud turned into Fraudish, and it’s quite prolific.
Have there been any conversations on the podcast that have challenged or expanded your thinking?
Kelly Paxton: I had one woman, Cheryl Obermiller. She wrote a book, and she got ripped off. It was a textbook case of getting ripped off. She was doing mental math.
She started this business building parking lots. She had a trusted employee. One day there was a big snowstorm, and the trusted employee couldn’t get into work. So Cheryl goes into work, and the mail comes. There’s a big letter from the IRS stating that Cheryl has not been paying taxes.
She calls the woman, and the woman says, “Oh, it’s a mistake. It’s a mistake.”
During the interview, she pulls out her desk drawer and she says, “Kelly…My checkbook is in the safe. That’s how much I value my checkbook. I keep the checkbook in the safe and the gun in the drawer.”
She literally pulled it out and lifted it up. I was like, “Oh my God.” It was so funny.
We’re friends now, and it was just such a great moment. But again, she was doing mental math. That woman was trusted. She had all these excuses. It was just textbook.
And then I’ve had some felon friends on.
Can I give a shout-out to a book that just came out?
Kyla Sims: Absolutely. It feels like we need a reading list from you after this.
Kelly Paxton: Oh, yeah. So this is Wired on Wall Street. It just came out last week. Look at how many tabs I have in it. I know this guy. He’s one of my felon friends.
Everyone should read this book. He got caught doing trades on inside information, and he became an FBI informant. This book is so good. It is so, so good. I cried during it—literally cried.
He wrecked his family for a while. This is a guy who, when you hear what he did to get into an Ivy League school, and how he worked to get there growing up in Georgia—it’s incredible. His thing is more. He always wanted a little bit more, and he never felt he belonged.
And when you hear that, it’s heartbreaking. Especially with social media, where you see these people with their Louis Vuitton bags and think, “Why can’t I have that? I work just as hard as they do.”
It’s so good because he’s one of the nicest guys I know. And he has worked so hard at his craft of speaking and everything. I think every kid in college should have to read this book and listen to him speak. I get goosebumps even thinking about his talk because it’s that good. It is just the best.
Kyla Sims: Wow. We’ll definitely find a link to the book and make sure people can check it out.
What is the best piece of advice you’ve been given about investigations or investigating?
Kelly Paxton: You know what? It’s all about who you know. I used to tell an attorney I worked with, “I’m really good at numbers and spreadsheets. But if we need a computer forensics person, I’m not going to pretend I can do it. I’m going to find the best computer forensics person.”
Networking is so important. And LinkedIn—I have over 16,000 followers. I get the best resources on LinkedIn.
I get work there. I’m validated on LinkedIn. People see what I post. They see who I’m connected to.
I had a guy who wanted a job where I had worked for a bit. I went and met with him. I spent an hour with him. Then he ghosted me. I’m like, “Dude, I just spent an hour with you. Could you at least say thank you?”
You have to network. You have to have social skills.
There are a lot of people who think, “You know what? I had the highest murder-solving rate. Everyone’s going to want to hire me.” Not if you’re a jerk. Not if you can’t say, “You know what? I’m not good at computers, but I’ll find someone who is.”
So yes, you’ve got to network, and you have to be social. That’s the best thing I could tell people to do.
Kyla Sims: That’s so fair. And I think that’s applicable in any industry. There’s a lot of generational talk out there about how different generations communicate, but yeah—it really needs to be reinforced that it goes a long way to make friends.
Kelly Paxton: Oh, I’ve got two kids in their 20s, I know.
Generational differences also come into play with stealing.
So Maxine, who’s 87, is going to write a check. The kids are going to use Venmo, PayPal. There are differences. My kids are 27 and almost 29. They can deposit checks all day long on their phones. They have never had a checkbook in their life.
My kids aren’t going to steal because I’m the pink-collar-crime lady. But they wouldn’t even know how to write a check.
So if you’re looking at Gen Z or whatever, maybe you don’t look at checks. Maybe you look at Venmo. Maybe you look at PayPal. Maybe you look at Cash App or stuff like that. These are generalizations, but they can help with an investigation.
Kyla Sims: Yeah, that makes perfect sense.
Speaking of technology, I can’t have a conversation about anything these days without talking about AI. I’m curious how you’re seeing it come into play in your world, with embezzlement.
Kelly Paxton: I play with AI. I’m not the greatest AI person, but I put a spreadsheet in recently just to see what it would pull out. It found some things I hadn’t really considered. I asked it, “Name the top three findings you have with all of these columns of stuff,” and I was like, “Oh, okay.” It quickens things.
I mean, literally, there could be a Gladys in a business, and Gladys could go into Claude or ChatGPT and say, “What is the best way to steal?” I have literally done that.
You can ask, “What are the top three ways people embezzle in a business?” and it’ll say things like forging checks and payroll shenanigans.
So when I do my presentation on pink-collar crime, I have a couple of slides that I show or don’t show depending on the audience. Pre-COVID, I did a presentation for fire office administrators—primarily women, perfect pink-collar-crime territory. An amazing number of fire departments get ripped off. It’s shocking.
Kyla Sims: Oh, that’s so sad.
Kelly Paxton: Anywhere there’s money, it can happen. It’s very sad.
So at that presentation, I didn’t show how you can steal.
Whereas if I’m in front of a group of auditors, I’m like, “These are the top 10 ways people steal.”
I’m not going to teach people how to steal. I could teach people how to steal. But now with AI, they could literally put the check register in and say—“How can I hide something?” Or, “Would it be easy to put a vendor in? What should I name my vendor?” It gives you creative options.
“Anywhere there’s money, it can happen.”
Kyla Sims: Oh, wow. I didn’t even think of that. Which I guess is kind of the headline takeaway for 90% of AI stuff: we didn’t think about that.
When you were talking about asking people whether they know someone they’re afraid will get scammed — I think about generative AI in that sense too, because you can set up bots that just talk to someone. People are having full-on relationships with bots now. So it would be very easy to do a romance scam and take people’s money, or generate images with their name in them, or whatever.
It almost feels like it’s giving people who want to do harm superpowers. The scale of this could become really overwhelming if there aren’t some guardrails put up.
Kelly Paxton: Well, everyone’s always like, “We want to make sure a kid can’t go into AI and ask how to make a bomb.” I’ve never heard anyone say, “We want to make sure AI doesn’t teach someone how to embezzle.”
We think of the worst-case scenarios as, “How do I make a bomb?” or “How do I kill my stepmother?” We don’t think of, “What’s the best way to embezzle?” But I’m sure people are asking it.
Kyla Sims: People are using it for literally everything.
Kelly Paxton: Exactly. Lawyers use it to put fake cases in front of judges, and that doesn’t go well.
Kyla Sims: I’ve seen some pretty wild things, hallucinations. Linking to stuff that’s not real.
So if you’re listening out there and you’re trying to use AI to embezzle, be careful, because it’s going to tell you the wrong thing and then we’re going to catch you.
Kelly Paxton: Yeah. Exactly.
Kyla Sims: Exactly. I just have one more question for you: if you were training a brand-new investigator today, what would you insist they master first?
Kelly Paxton: Oh. I’m going to say interviewing. Words matter. Tone matters.
Never say to someone, “You’re a liar.” But people do.
As a parent, say you catch your kid in a lie. Would you ever say, “You’re a liar”? Some people will, in a moment of anger. But it’s different to say, “Why did you lie to me about being out after curfew?”
Learning how to interview and how to pick words matters.
People have patterns in their language. I joke that I don’t lie—however, I can deflect. If the answer would cause me to lie, I’ll just go, “Squirrel,” and change the subject.
If you see that in an interview—especially in writing—you can start to see those patterns.
The words matter. The tone matters. There’s also the human side.
Do you go into a blue-collar workspace in a three-piece suit? No. You’ve got to dress the part.
I would call them human-centered skills, and they are incredibly important. Because if you can’t talk to someone, relate to them, or have empathy or sympathy for them, you’re getting bupkis, as I call it.
Kyla Sims: I think that’s my big takeaway from our conversation today. Even though it’s all about money, it’s really about how human all of this is—from getting work through networking and who you know, to learning about these pink-collar criminals. Everybody’s got their point, their boiling point, the pressure that’ll make them cross a line.
And with this work, being able to relate to people and treating them like a human being, makes such a big difference. I honestly did not expect that to be the big takeaway from our conversation today.
So thank you for challenging me and bringing that perspective. At the end of the day, we’re all human beings. That gets lost a lot when we talk about crime. These are real people, and they’re making choices for a reason.
Kelly Paxton: Yeah. Besides the narcissists and the psychopaths, yes.
That’s why it was such a big deal in 1939 when Edwin Sutherland came up with white-collar crime. It’s controversial because he says it’s people of high social status.
Before that, we saw criminals as icky people—poor people, people with mental defects.
And I mean, oh my God, look at the world we’re in right now. Rich people…
I have another book. It’s called Dead Money by Jacob Kerr. So good. It’s about Silicon Valley, and there’s a murder, and there’s money, and it’s really, really good.
Kyla Sims: We’re going to have to get your reading list for this. There are so many gems to look through. So many wonderful resources.
Is there anything else you want to share before we go—anything people should know?
Kelly Paxton: My biggest thing, again, is no victim shaming.
This is why people don’t come forward. When someone is ripped off, it’s not only probably one of the worst days of the criminal’s life—it’s many times one of the worst days of the business owner’s life too.
So, #NoVictimShaming.
It isn’t a joke, but it used to be in the ’50s and ’60s that if a woman was the victim of sexual assault, the first thing a defense attorney would say—if she even made it to the stand—was, “What were you wearing?” or “Did you have anything to drink?”
With white-collar crime and pink-collar crime, we cannot victim-shame, because people won’t come forward. They already feel bad enough as it is.
No victim shaming. That’s it.
Kyla Sims: That really comes back to what we were talking about before—the human element. Victims are real human beings, and it can happen to anybody. Like you said, it can happen to anybody.
Kelly Paxton: Oh, and the other thing: have a safe word.
I’m a widow. I have a word for my kids. If they were to get a phone call—and I’m all over the internet, you can get my voice anywhere online—with all the technology out there now, my kids know that if a certain word doesn’t come up in the conversation, it’s not me.
Everyone should have a safe word for their family.
Kyla Sims: That’s great advice. Well, thank you so much, Kelly. I appreciate you so much. Thank you for sharing your wisdom and your time with me. I’m so grateful.
Kelly Paxton
CFE, Author
Host & Founder of Fraudish
Co-Host of OSINT Cocktail
Kelly Paxton has more than 20 years of investigative experience. Kelly is a Certified Fraud Examiner, author, and founder/host of the Fraudish podcast.
Ms. Paxton started her law enforcement career as a Special Agent for the US Customs Office of Investigations in 1993. US Customs recruited Ms. Paxton for her finance expertise. She investigated white-collar fraud, money laundering and narcotics cases. She was also responsible for the district’s undercover operations and the financial reporting of those operations. Kelly worked as a contract investigator, conducting over 1,000 security background investigations for the Office of Personnel Management and the Department of Homeland Security.
Kelly has worked in both the public and private sectors. Most recently she worked as an investigator for Nike. Her investigations include embezzlement, conflict of interest, intellectual property, Open Source Intelligence and fraud. Her book, Embezzlement How to Prevent, Detect and Investigate Pink-Collar Crime, was published in December, 2020.
Check out Kelly's website and reading list here: https://kellypaxton.com/resources
