None of it makes sense in the context of a well-run business with proper executives in place. That’s because these frauds don’t operate like a well-run business.
Usually, the upper management teams are extremely lean. The business is broken up into different silos such that few people can see the big picture. Each is led to believe they are a tiny fraction of the overall revenue, giving them the impression that the bulk of the company’s revenue must come from another department where they have no visibility. As a bonus, this motivates siloed teams to feel like they need to catchup to the rest of the company, when in reality they might be the main driver of it. It helps to have separate offices and a culture of secrecy to prevent people from comparing notes.
The CEO positions himself as a controlling, micromanaging individual at the center of everything. This makes it possible for the CEO to intercept financials and other crucial numbers en route to people who might catch on.
The rest of the management staff might be filled with people too inexperienced to recognize that something is wrong. They might think the CEO is doing them a favor by giving them a golden opportunity to advance their career into an executive position at a rocket ship startup. They don’t know what they’re doing, but they think it’s okay because the CEO has taken them under his wing.
At scale it becomes difficult to do this without at least a few people being complicit, though. A fraudster usually has several close associates who can be trusted to be in on the fraud or at least look the other way for a while.