NY Dental CFO Sentenced for Embezzling $432k From Practice — has Previous Conviction for Embezzlement

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PLATTSBURGH — Kevin J. Conroy is serving jail time for the theft of more than $400,000 from High Peaks Dental and High Peaks Realty. The prosecution argued a far more severe penalty — 2 1/2 to seven years in state prison. In October, the Beekmantown man pleaded guilty to two counts of second-degree grand larceny, one county of third-degree larceny and three counts of second-degree forgery, all felonies; and two counts of falsifying business records, a misdemeanor. His plea was made with the agreement that his sentence would be no more than the time in state prison sought by Clinton County Chief Assistant District Attorney Timothy Blatchley in court this week, with the condition that sentencing would be at the sole discretion of the court, a release from the DA’s Office said. Wednesday, Conroy was sentenced by Clinton County Court Judge Kevin K. Ryan to four months in jail and five years of probation, along with paying the fee for a DNA sample. TRAVEL, VEHICLES Conroy, then 32, was charged May 23 after a three-month investigation by State Police. At the time of his crimes, he was CFO of High Peaks Dental Professional Partnership and High Peaks Realty, where, the probe indicated, he embezzled more than $300,000 between March 2012 and December 2015, police said at the time of his arrest. Conroy was fired that December, High Peaks Dental Office Manager Nikki Burdo told the Press-Republican in May, saying “some inconsistencies” caused the firm to look into his actions. The money, according to the DA’s Office, was used for unauthorized purchases for renovations at Conroy’s home, along with travel, exercise equipment, computer equipment and sport utility vehicles. “As the office manager for both entities, the defendant was able to make then hide these fraudulent transactions.” REPAID MONEY After Conroy pleaded guilty to the charges, the DA’s Office said, he paid back $423,819.82 to victims Dr. Michael O’Connor and Dr. William Caldon, based on a civil settlement agreement reached with their attorneys. “The court made its decision not to send the defendant to prison based upon the fact that the victims … were not requesting incarceration and had been paid full restitution …,” the release said. CRIMINAL HISTORY Blatchley, who prosecuted the case, requested the prison term based on “the seriousness of the crime” and Conroy’s history of committing similar crimes. In December 2011, Conroy pleaded guilty to petit larceny and second-degree offering a false instrument for filing, both misdemeanors, for forging billing orders and return paperwork at Curtis Lumber, where he was employed at the time. Those charges had been reduced from third-degree grand larceny, a felony; first-degree falsifying business records, a felony; and third-degree criminal possession of a forged instrument, a misdemeanor. Plattsburgh-based State Police said at the time that Conroy had been conducting the scheme for several months, crediting the funds to his personal account. Plattsburgh Town Justice Christina Bezrutczyk sentenced him to 90 days in jail, a $100 fine on each charge and 30 hours of community service, with a one-year conditional discharge. ‘PROBATION COULD HELP’ Ryan, the DA’s Office said, “agreed with the prosecution that these were serious offenses but was moved by the victims’ request (for no prison time), the fact that restitution had been made in full and that probation could help the defendant.” In court this week, Conroy apologized, the release said. He is now incarcerated at Clinton County Jail.

LAWSUIT

In 2018, Mr. Conroy commenced a lawsuit in Federal Court against his former employers, alleging contraventions of the Employment Retirement Income Security Act of 1974 (ERISA) as well as unjust enrichment, conversion, misappropriation of his likeness, fraud, and fraudulent inducement.  The amount claimed was $400,000, which coincidentally approximates the amount he repaid relative to the embezzlement.  This lawsuit was dismissed in 2019, with the Court determining that the ERISA claim had no basis and that the other issues were purely a matter of State jurisdiction.

The Myth of Fraud Prevention

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Published statistics suggest that three in five North American dentists will be victims of employee-perpetrated fraud at some point in their careers.

As a private investigator specializing in investigation of embezzlement against dentists, understandably I have spent considerable time examining dentistry’s apparent failure to control this epidemic. My view is that the approach that has been taken is misguided.

Much has been written on this topic (including by some “stars” of dental consulting) and yet I think that these well-intentioned authors have unfortunately learned the wrong lessons from the embezzlement that they have seen. After that bold statement, I owe you some explanation. The articles I refer to have enticing titles like “How to Prevent Fraud in Your Dental Office,” and they outline some internal control measures that supposedly result in fraud prevention.

I have been investigating dental office embezzlement for over two decades, and I will confess that for the first 15 years of my career I also believed that embezzlement could be prevented if an office would just implement enough controls. My company, Prosperident, even considered offering some kind of “controls remediation” service.

My epiphany happened while discussing an interesting embezzlement with one of my senior investigators. We were investigating an office where the dentist, not realizing at the time that embezzlement was happening, had changed some office procedures. By happenstance, one of these changes (requiring the dentist to approve all write-offs of patient balances) directly thwarted the thief’s primary methodology.

What do you think happened next? Did the embezzler stop stealing? Of course not! Our enterprising swindler quickly varied her methodology to steal in ways not involving write-offs. Looking at this ex-post, the timeline was quite evident – the original embezzlement pattern followed by changes implemented by the dentist and responsive adaptation by the thief. When I saw this, I realized the futility of most of the controls advocated by these articles.

Thieves steal because they are driven by powerful forces (we characterize their motivation as “need or greed”). To a thief, control systems are merely speed bumps on the “embezzlement highway” – challenges to overcome to put YOUR money in THEIR pocket. While I have seen dumb thieves and crude embezzlements, most dental embezzling is sophisticated and the thieves can readily adapt when necessary. Since there are many ways to steal from you, they have many possibilities. So how should you stop them? Another of my bold statements – quit wasting resources on control measures that provide no collateral benefit.

I’ll illustrate with two examples. I fully support reviewing your day-end sheet. Since it’s easy to construct a fraud that bypasses this daysheet, this review won’t stop embezzlement, but it does catch sufficient ACCIDENTAL errors to justify the effort.

In contrast, one recommendation of many of these articles is to make bank deposits personally. I consider this a colossal waste of time – the same control happens by checking one line on your monthly bank statement against the daysheet, and most theft takes the money off the books before the daysheet is compiled, so this comparison is unlikely to reveal embezzlement.

Rather than implementing additional controls (at a cost of either money or your time) there is a simple and effective solution for detecting embezzlement. Our investigative work has shown that, notwithstanding the many possibilities for stealing from a dentist, the behavior of thieves is remarkably consistent, and that behavioral analysis is the quickest and most effective way of detecting embezzlement early. We have used a behavioral assessment internally for years and have recently developed a version for dentists and their advisors.

– See more at: http://www.offthecusp.com/myth-fraud-prevention/#sthash.zOHZ1rVn.dpuf


Do you have questions about embezzlement?  Give Prosperident a call at 888-398-2327 or send an email to requests@dentalembezzlement.com

Content retrieved from The Myth of Fraud Prevention

Dental Hacks Podcast — How to Think Like a Criminal with David Harris (DHP95)

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How big of a risk is embezzlement in dentistry? In a word…HUGE! David Harris of Prosperident helps you understand why it pays to think like a criminal instead of a dentist!

Content retrieved from How to Think Like a Criminal with David Harris (DHP95)

 


Do you have questions about embezzlement?  Give Prosperident a call at 888-398-2327 or send an email to requests@dentalembezzlement.com