$500,000 credit card fraud fueled by information theft by dental office employee

NEW YORK (CNNMoney) — Grisha Stpanov opened a credit card, charged up $20,000, but never paid it back.

That’s because Stpanov doesn’t exist.

Stpanov, or at least his credit profile, was the creation of Arman and Wachagan Hovhannisyan, two brothers from California who were accused of scamming 21 banks and the three major credit reporting bureaus by inventing hundreds — possibly thousands — of fake identities, and charging $500,000 on fraudulent credit cards.

While it may sound like the plot of a Hollywood heist movie, anyone who understands how credit works can easily game the system.

Even after the worst financial crisis since the Great Depression, banks are still doling out credit cards to any borrowers who look good on paper — even when that’s the only place they exist.

And the Hovhannisyan brothers are proof positive that most banks are still very susceptible to fraud.

How they did it

It all started when the Hovhannisyan brothers joined forces with a man named Jamal Hyde, who worked in a dentist’s office extending loans to patients and then reporting payments to Experian, one of the three major credit bureaus.

According to the government complaint filed in California federal court, which summarized the investigation, the brothers, along with Hyde, made up hundreds of fake social security numbers to establish false identities. The men then began reporting loan information and on-time payments for fictitious dental services to Experian.

Once the fake credit profiles had high credit scores, the men opened credit cards and took out loans, fooling issuers like Bank of America, Capital One , Wells Fargo , US Bank , Chase  and Discover. In all, the government estimated that the men duped at least 21 financial institutions.

At first, they paid off the balances on time to improve the fake scores. Eventually, they ended up with hundreds of cards with a combined $500,000 credit limit, which they used to pay their own bills and purchase two luxury automobiles, federal documents show.

The Hovhannisyans were eventually caught by the FBI. After pleading guilty to lesser charges, they were both sentenced to more than 20 months in prison for bank fraud and must each pay restitution of $486,143. They entered prison in March.

Hyde is scheduled to appear at his sentencing in May.

How they got caught

About a year into the scheme, Experian flagged the fake accounts, saying the loan amounts seemed unusually high for dental services and that the geographic distribution of the patients was also unusual.

A spokesman for Experian said the company did carefully vet the dental practice involved in the case, and worked with law enforcement as soon as Experian became aware of the scam.

“In [this case], the dentist’s office involved was a legitimate business, which hired a rogue employee who reported the account data in question,” he said.

The three men likely picked the social security numbers at random and simply made up names, addresses and dates of birth, according to the case documents.

(Even if a social security number is already in use, if the name and other information doesn’t correspond when a credit bureau receives it, a new profile can be created.)

When government agents received a search warrant to check the homes of the three men, they found hundreds of documents with account numbers, drivers licenses, social security numbers and other personal information relating to the many identities they created.

The fact that the scheme went on for a year means that it probably could have continued a lot longer if the men had been a little more careful, said John Ulzheimer, personal finance expert at SmartCredit.com.

“They got greedy,” he said. “They were smart, but not smart enough — if they used modest credit lines and were more geographically sensitive, they could have kept it going.”

Why it could happen again

While this is considered a “victimless crime” since most of the “individuals” defrauded didn’t exist, (though the government believes several of the identities did belong to real people), the banks ultimately recoup fraud losses from their customers, said Ulzheimer.

“The takeaway from this case is that the system isn’t fool proof,” said Ulzheimer. “It can be manipulated. So it’s crucial that the credit bureaus do a good job making sure that folks who have credit profiles and access to reporting information are legitimate.”

But the job of the credit bureaus is to report the information given, not necessarily to take additional measures to determine its accuracy, said Jay Foley, founder of the Identity Theft Resource Center.

“The credit reporting agency may or may not realize there’s fraud, but they usually won’t do anything about it. Why would they? That’s not their job,” said Foley.

The banks disagree.

“Banks rely on the credit reporting, so they need to count on it being reliable,” said John Hall, spokesman for the American Bankers Association. “The weakest link in this case seems to be the credit reporting folks, because the product we get from them is only as good as it is accurate.”

While Experian said it typically alerts lenders to potential fraud, a spokeswoman from Wells Fargo said the bank doesn’t receive proactive alerts from credit bureaus. Instead, fraud risks are flagged through internal tools, network providers like Visa and MasterCard, merchants and customers.

A spokeswoman for Discover said the company advises merchants to use security processes to prevent fraud.

Capital One and US Bank could not be reached for comment, and the other major banks named in the complaint declined to comment.

“Our country still has no method of defining exactly who the customer is, how honorable the business reporting information is, or how accurate the information on the report is,” Foley said.

Creating better fraud prevention systems would be expensive, and consumers would likely end up paying, he added.

Experian said cases like this are rare. But if a more secure system isn’t developed, similar schemes could easily happen, Ulzheimer warned.

“These guys are almost trailblazers, they’ve proven the concept works, so now it’s just a matter of someone coming along and creating 25 more human beings and improving the process,” he said. To top of page

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: http://money.cnn.com/2011/05/03/pf/credit_card_fraud_identity_theft/

_____________________

Jamal Hyde release conditions:

UNITED STATES OF AMERICA
v.
JAMAL HYDE
JAMAL CLIFFORD HYDE; JAY HYDE; JAMAL DANIELS; JC

Social Security No. 2 6 0 0 (Last 4 digits)

JUDGMENT AND PROBATION/COMMITMENT ORDER MONTH DAY YEAR

In the presence of the attorney for the government, the defendant appeared in person on this date. May 25 2011

Nina Marino (Name of Counsel)

X GUILTY, and the court being satisfied that there is a factual basis for the plea.

NOLO CONTENDERE NOT GUILTY

There being a finding/verdict of GUILTY, defendant has been convicted as charged of the offense(s) of:

Possession of at least 15 Counterfeit and Unauthorized Access Devices in violation of 18 U.S.C. §1029(a)(3) as charged in Count Seven of the Eight-Count First Superseding Indictment.

The Court asked whether there was any reason why judgment should not be pronounced. Because no sufficient cause to the contrary was shown, or appeared to the Court, the Court adjudged the defendant guilty as charged and convicted and ordered that: Pursuant to the Sentencing Reform Act of 1984, it is the judgment of the Court that the defendant is hereby committed to the custody of the Bureau of Prisons to be imprisoned for a term of:

Five (5) years on Probation under the following terms and conditions:

The first twelve (12) months of probation shall be spent in a Residential Re-entry Center;

The defendant shall comply with the rules and regulations of the U. S. Probation Office and General Order 05-02;

The defendant shall refrain from any unlawful use of a controlled substance;

During the period of probation, the defendant shall pay the special assessment and restitution in accordance with this judgment’s orders pertaining to such payment;

The defendant shall apply all monies received from income tax refunds, lottery winnings, inheritance, judgments and any anticipated or unexpected financial gains to the outstanding court-ordered financial obligation;

The defendant shall not obtain or possess any driver’s license, Social Security number, birth certificate, passport or any other form of identification in any name, other than the defendant’s true legal name; nor shall the defendant use, for any purpose or in any manner, any name other than his true legal name or names without the prior written approval of the Probation Officer; and

The defendant shall cooperate in the collection of a DNA sample from the defendant.

It is ordered that the defendant shall pay to the United States a special assessment of $100, which is due immediately.

It is ordered that the defendant shall pay restitution in the total amount of $120,000 pursuant to 18 U.S.C. §3663A to victims as set forth in a separate victim list prepared by the probation office which this Court adopts and which reflects the Court’s determination of the amount of restitution due to each victim. The victim list, which shall be forwarded to the fiscal section of the clerk’s office by the probation officer, shall remain confidential to protect the privacy interests of the victims.

Restitution shall be due during the period of probation, at the rate of $100 per month or 10% of defendants’s gross monthly income, whichever is greater, and shall begin within 30 days from the pronouncement of judgment.

If the defendant makes a partial payment, each payee shall receive approximately The defendant shall be held jointly and severally liable with co-defendants Wachagan Hovhannisyan and Arman Hovhannisyan for the amount of restitution ordered in this judgment. The victims’ recovery is limited to the amount of their loss and the defendant’s liability for restitution ceases if and when the victims receive full restitution.

Pursuant to 18 U.S.C. § 3612(f)(3)(A), interest on the restitution ordered is waived because the defendant does not have the ability to pay interest. Payments may be subject to nd delinquency pursuant to 18 U.S.C. § 3612(g).

The defendant shall comply with General Order No. 01-05.

All fines are waived as it is found that the defendant does not have the ability to pay a fine in addition to restitution.

It is recommended that the Bureau of Prisons conduct a mental health evaluation and provide all necessary treatment.

On Government’s motion, all remaining counts are ORDERED dismissed as to this To the extent defendant retained any rights to appeal, defendant is advised to file a notice of appeal within fourteen days.

Bond exonerated upon checking into the Residential Re-entry Center.

In addition to the special conditions of supervision imposed above, it is hereby ordered that the Standard Conditions of Probation and Supervised Release within this judgment be imposed. The Court may change the conditions of supervision, reduce or extend the period of supervision, and at any time during the supervision period or within the maximum period permitted by law, may issue a warrant and revoke supervision for a violation occurring during the supervision period.

U. S. District Judge

It is ordered that the Clerk deliver a copy of this Judgment and Probation/Commitment Order to the U.S. Marshal or other qualified

Clerk, U.S. District Court May 25, 2011 By Kendra Bradshaw Filed Date Deputy Clerk

The defendant shall comply with the standard conditions that have been adopted by this court (set forth below).

STANDARD CONDITIONS OF PROBATION AND SUPERVISED RELEASE

While the defendant is on probation or supervised release pursuant to this judgment:

The defendant shall not commit another Federal, state or

10. the defendant shall not associate with any persons engaged in criminal activity, and shall not associate with any person convicted of a felony unless granted permission to do so by the probation officer;

the defendant shall not leave the judicial district without the written permission of the court or probation officer; the defendant shall report to the probation officer as directed by the court or probation officer and shall submit a truthful and complete written report within the first five days of each month; the defendant shall answer truthfully all inquiries by the probation officer and follow the instructions of the probation officer; the defendant shall support his or her dependents and meet other family responsibilities; the defendant shall work regularly at a lawful occupation unless excused by the probation officer for schooling, training, or other acceptable reasons; the defendant shall notify the probation officer at least 10 days prior to any change in residence or employment; the defendant shall refrain from excessive use of alcohol and shall not purchase, possess, use, distribute, or administer any narcotic or other controlled substance, or any paraphernalia related to such substances, except as prescribed by a physician; the defendant shall not frequent places where controlled are illegally sold, used, distributed or

11. the defendant shall permit a probation officer to visit him or her at any time at home or elsewhere and shall permit confiscation of any contraband observed in plain view by the probation officer;

12. the defendant shall notify the probation officer within 72 hours of being arrested or questioned by a law enforcement officer;

13. the defendant shall not enter into any agreement to act as an informer or a special agent of a law enforcement agency without the permission of the court;

14. as directed by the probation officer, the defendant shall notify third parties of risks that may be occasioned by the defendant’s criminal record or personal history or characteristics, and shall permit the probation officer to make such notifications and to conform the defendant’s compliance with such notification requirement;

15. the defendant shall, upon release from any period of custody, report to the probation officer within 72 hours;

16. and, for felony cases only: not possess a firearm, destructive device, or any other dangerous weapon.

The defendant will also comply with the following special conditions pursuant to General Order 01-05 (set forth below).

STATUTORY PROVISIONS PERTAINING TO PAYMENT AND COLLECTION OF FINANCIAL SANCTIONS

The defendant shall pay interest on a fine or restitution of more than $2,500, unless the court waives interest or unless the fine or restitution is paid in full before the fifteenth (15th) day after the date of the judgment pursuant to 18 U.S.C. §3612(f)(1). Payments may be subject to penalties for default and delinquency pursuant to 18 U.S.C. §3612(g). Interest and penalties pertaining to restitution , however, are not applicable for offenses completed prior to April 24, 1996.

If all or any portion of a fine or restitution ordered remains unpaid after the termination of supervision, the defendant shall pay the balance as directed by the United States Attorney’s Office. 18 U.S.C. §3613.

The defendant shall notify the United States Attorney within thirty (30) days of any change in the defendant’s mailing address or residence until all fines, restitution, costs, and special assessments are paid in full. 18 U.S.C. §3612(b)(1)(F).

The defendant shall notify the Court through the Probation Office, and notify the United States Attorney of any material change in the defendant’s economic circumstances that might affect the defendant’s ability to pay a fine or restitution, as required by 18 U.S.C. §3664(k). The Court may also accept such notification from the government or the victim, and may, on its own motion or that of a party or the victim, adjust the manner of payment of a fine or restitution-pursuant to 18 U.S.C. §3664(k). See also 18 U.S.C. §3572(d)(3) and for probation 18 U.S.C. §3563(a)(7).

Payments shall be applied in the following order:

1. Special assessments pursuant to 18 U.S.C. §3013;

2. Restitution, in this sequence: Private victims (individual and corporate), Providers of compensation to private victims, The United States as victim;

3. Fine;

4. Community restitution, pursuant to 18 U.S.C. §3663(c); and

5. Other penalties and costs.

Wife embezzles from husband; employee dishonesty insurance will not cover because she wasn’t an employee

The insured in Chancey v. Cincinnati Insurance Co. was a dentist who had “married the wrong woman.”

Dr. Chancey’s wife managed his dental office, but in the course of running that office, she ran up over $300,000 of credit-card debt and stole over $25,000 from his dental practice. The two divorced, and Dr. Chancey later sought coverage for his wife’s misdeeds under a bond that covered loss resulting from employee dishonesty.

The insurer denied coverage because his wife was not an “employee.” A federal district court in Alabama agreed with the insurer. The bond defined employee as a “natural person [w]hom you compensate directly by salary, sages or commissions,” but the record was clear that the wife had never received a salary, wages, or commissions for her work at the dental practice. The court entered summary judgment in favor of the insurer.

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

A veterinary example — PA office manager accused of embezzling $355k from animal hospital

Trisha Lynn McLaughlin
Trisha Lynn McLaughlin

NEWTOWN TOWNSHIP – A Warminster woman is under arrest, charged with embezzling more than $355,790 from the Newtown Veterinary Hospital.

Trisha Lynn McLaughlin, 36, of East Street Road in Warminster, turned herself into police on Thursday after Detective Charles Palko Jr. filed charges that she misappropriated funds from her employer.

McLaughlin is facing first degree felony charges for dealing in proceeds of unlawful activities, second degree felony forgery for unauthorized act in writing and third degree felonies of theft by unlawful taking or disposition and receiving stolen property.

McLaughlin was processed at Northampton Township Police headquarters and was arraigned via video by Judge Donald Nasshorn. She was released ROR on $250,000 bail.

Detective Palko began his investigation in Feb. 2012 when the owner of the Newtown Veterinary Hospital (N.V.H.) came to police headquarters to report that McLaughlin, in her capacity as the practice manager at N.V.H., had embezzled funds in the range of $80,000.

McLaughlin was hired in March 2001 as a senior veterinary technician and in March 2006 became the practice manager at N.V.H.

In her capacity as practice manager, McLaughlin was responsible for meeting financial objectives and for accounts payable, payroll and budget. Her position provided access, use and control of N.V.H. accounts, including bank and credit card accounts and control of N.V.H. accounting ledger and/or software. She was fired in Dec. 2011 because misappropriation of funds was discovered that started at $3,000, but quickly grew, police said.

In his initial report to law enforcement authorities, police said the owner/victim told police that checks would be written out to McLaughlin from the business and she would cash them. She also would over pay herself in the pay-roll, police said.

The company charge card also was used to make personal purchases such as fuel oil for her home, police said. In addition, police said McLaughlin purchased gift certificates that were to be used as gifts for other employees but failed to give them to the appropriate employees.

In Dec. 2011 the owner of N.V.H was notified by his bank of a discrepancy involving McLaughlin personally withdrawing $4,700 from his Money Market account without his authorization.

While conducting a year-long investigation, Detective Palko discovered that many of the financial records had been destroyed by McLaughlin before her employment was terminated.

Police said the owner of N.V.H. advised Det. Palko that he had received numerous correspondences from McLaughlin, via e-mail, regarding her termination. Specifically, McLaughlin denied stealing from N.V.H., but considered herself as borrowing money with intention to pay it back and pleaded with the owner not to go to the authorities or deny her unemployment benefits.

During the course of communication via e-mail, police said the owner inquired about the PayPal account established for N.V.H. for which he did not have the log-in information to access the account. Det. Palko was able to obtain the PayPal records.

A review of the transaction log history by Det. Palko, from Feb. 20, 2008 to Dec. 27, 2011, revealed $16,098.09 in unauthorized transactions. The PayPal transaction log history confirmed that the items were shipped to McLaughlin at her home address in Warminster, police said.

Detective Palko’s review of N.V.H. accounts also revealed discrepancies and misappropriation of funds associated with N.V.H. bank accounts, credit card accounts and payroll. Palko also determined that McLaughlin failed to maintain accurate accounting records, retain past account statements and altered Quick Book entries relating to unauthorized transactions.

Police said unauthorized transactions included the purchase of clothes, shoes, home heating fuel, hair salon and membership fees to the Newtown Athletic Club.

Monthly bank statements, police said, also revealed payments being made for additional accounts with Verizon and PECO, not affiliated with N.V.H., as well as car payments for the vehicle McLaughlin was driving.

McLaughlin also maintained N.V.H. business accounts with BJ’s Wholesale Club, Sam’s Club, and Costco and was the principal purchaser of paper products and cleaning supplies relating to the day-to-day operations of N.V.H.

Det. Palko obtained purchase history reports from the wholesale clubs, itemizing the products purchased by McLaughlin using the wholesale club ID number. The bulk of the items purchased, police said, consisted of household products, perishable groceries, electronics, baby supplies, clothing and gift cards in $100 and $200 amounts.

Based on the itemized purchase history reports, Det. Palko determined that McLaughlin made $50,601.58 in unauthorized purchases from wholesale clubs, for goods and services that did not benefit the Newtown Veterinary Hospital.

Police said additional illegal activities committed by McLaughlin include inflating the pay rates for herself, her husband and other select employees, not withholding payroll deductions for medical and dental benefits for herself and her husband along with numerous other deductions that were not withheld from the paychecks were discovered. A review of accounts also uncovered that McLaughlin’s mismanagement of the business daycare center caused a loss of revenue discrepancies that totaled $85,194.77, police said.

As Detective Palko continued his extensive investigation he exposed numerous other fraudulent financial activities that led back to McLaughlin and the $355,790.00 listed as the total loss suffered by N.V.H.

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: http://www.buckslocalnews.com/articles/2013/03/04/the_advance/news/doc51268ab043665754841471.txt?viewmode=fullstory

Delaware office manager pleads guilty to mail fraud; agrees to $1 million restitution

Editor’s note — as you may know, we normally confine ourselves to investigating dental office embezzlement.  However, we do provide reporting on significant embezzlements in medical offices because the methodologies employed have considerable commonality.


WILMINGTON, Del. (AP) – The former office manager of a medical practice in Dover has pleaded guilty to federal mail fraud charges.

According to a court filing Tuesday, a federal judge in Wilmington scheduled the sentencing of Pamela Poore for March 3.

Poore, who worked at Internal Medicine of Dover, waived indictment last week and pleaded guilty to a single count of mail fraud, which carries a maximum sentence of 20 years in prison.

Authorities say Poore, who was responsible for day-to-day accounting tasks and making cash deposits, misappropriated the medical firm’s funds for her own use by writing unauthorized checks and failing to make cash deposits. As part of the plea agreement, she must pay more than $1 million in restitution.

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: http://www.washingtontimes.com/news/2014/nov/25/del-office-manager-pleads-guilty-to-mail-fraud/

N.J. dental office manager pleads guilty to health care claims fraud

The office manager of an East Brunswick, N.J., dental practice pleaded guilty to cheating insurers out of $45,000 by billing for services never rendered.

Magdy Rafla, 56, made the plea to a charge of second-degree health care claims fraud in a state Superior Court, according to the New Jersey Attorney General’s Office.

Rafla, the billing manager at his wife’s dental practice, admitted that between Feb. 9, 2004, and June 14, 2007, he knowingly falsified the dental records of 66 different patients, adding services never performed. He also admitted to submitting the records to various insurers for payment and reimbursement.

An investigation by the New Jersey Office of the Insurance Fraud Prosecutor found that the dental practice gained $45,000 as a result of Rafla’s fraudulent activity.

As part of the plea deal, Rafla’s wife, Gina Tanios-Rafla, agreed to a five-year dental license supervision, including 364 days of an active suspension. The remainder will serve as a period of probation. The dentist also signed a separate consent judgment ordering her to pay a $50,000 civil fine.

Rafla is scheduled for sentencing Sept. 13 and through the plea, the state recommended a three-year state prison sentence and a $50,000 civil fine.

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: http://ifawebnews.com/2010/04/09/n-j-dental-office-manager-pleads-guilty-to-health-care-claims-fraud/

Expensive Extraction As Pennsylvania Dentist Office Employee Is Charged With Stealing

levi-weaver

GREEN TREE (KDKA) — Green Tree Police have charged 31-year-old Levi Weaver of Coraopolis with stealing tens of thousands of dollars from The Dentistry office.

The office is located on Fleet Street.

Weaver was arraigned late Friday before District Justice Gary Zyra in Scott Township and jailed on $50,000 bail.

Chief Downey said that Weaver worked on the desk, and was responsible for the day sheets and balances, so he had the perfect opportunity to manipulate the books to cover anything he was taking.

A police criminal complaint stated that in some cases, cash payments were taken from patients, but were never recorded, and no receipts were provided to patients.

In other cases, transactions were deleted from the system.

Dentistry employees became suspicious when patients started complaining and calling the office to say they had paid money on their bills, but the payments were not reflected on their accounts.

Downey told KDKA’s Ralph Iannotti, “Police confirmed that some patients did pay and they identified Weaver as the person who took the cash payments.”

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: http://pittsburgh.cbslocal.com/2013/06/07/expensive-extraction-as-dentist-office-employee-is-charged-with-stealing/

Dentist vs. Dentist — Dr. Nicole LeCann successfully sues partner for misappropriation. Awarded $2.34 million in damages.

N.C. Business Court judge has ruled that a Winston-Salem dentist must pay her former partner $2.34 million in compensatory and punitive damages for transferring money for personal use without permission.

The Nov. 7 ruling by John Jolly Jr., chief special Superior Court judge for complex business cases, concluded a nearly 2½-year-old lawsuit brought by Dr. Nicole LeCann against Dr. Sharon Cobham. The court specializes in complex business cases.

Cobham was accused of making “unjustified expense reimbursements” to herself. The lawsuit said Cobham used the money to pay for personal expenses that include: mortgage payments on a Charlotte condo occupied by her brother; accommodations at the Ritz Carlton in Charlotte; the purchase of Prada shoes at Saks Fifth Avenue; purchases at Belk; and a Match.com account.

Cobham currently operates Forsyth Family Dental Care at 2912 Maplewood Ave., as well as offices in Burlington and Durham. According to her website, she has plans to open a practice in Greensboro office off Wendover Avenue.

LeCann currently operates practices in Apex and Raleigh.

The dentists did not immediately return phone calls seeking comment. David Rooks, Cobham’s attorney, declined Wednesday to comment on the case.

Robert Fields III, LeCann’s attorney, said Wednesday that Cobham did not file a post-trial motion in the 10 days following the ruling. She has 30 days to file an appeal.

“The damages can be paid at any time voluntarily,” Fields said. “There is a legal process through the receiver for collection if necessary.”

According to the judge’s ruling, Cobham began in 2007 “a long series of complicated, wrongful, self-dealing transfers of funds” from their Apex, Burlington, Durham and Raleigh practices to their joint Winston-Salem practice, which eventually went to Cobham’s solely owned Winston-Salem practice.

Cobham was ruled to have committed “constructive fraud” from co-mingling money from the five co-owned dental practices. Jolly awarded $559,888 in compensatory damages and $1.68 million in punitive damages – both listed as personal liabilities.

“The court finds that this amount bears a rational relationship to the sum necessary to punish Cobham for her egregiously wrongful acts, and to deter her and others from committing similar wrongful acts,” Jolly wrote in his ruling.

According to LeCann’s lawsuit, the dentists graduated together from the UNC School of Dentistry in Chapel Hill in 1999 and formed a partnership in 2000 that involved the jointly owned dental practices and three real-estate ventures operated as limited liability companies.

The lawsuit said Cobham served as president of the joint entities, while LeCann served as their administrative manager.

The lawsuit listed the dentists as “close companions and shared a personal relationship,” a phrase Fields said that the judge chose. Although Fields said he did not know what their relationship was, he said it led LeCann to trust Cobham’s business decisions.

Cobham said in her reply to the lawsuit she considered some of her spending as business expenses, such as buying movie tickets and the Prada shoes, as uniform costs. Cobham also said that she provided more money to the five dental practices than she transferred, but, according to the judge, she provided no such documentation.

Once LeCann became aware of the expenditures, she asked that the money be put back into the practices. LeCann filed her lawsuit after Cobham declined to do so. LeCann’s lawsuit also accused Cobham of acts of intimidation and personal abuse, which Cobham denied.

Fields said Cobham’s expenditures were affecting the practices’ ability to make payroll, including checks bouncing, and to pay vendors. The ruling said the practices incurred a combined $54,388 for more than 200 overdraft charges.

Three months after LeCann’s lawsuit was filed, a judge ordered the dissolution of the LLCs and appointed Dr. Joseph Laton as receiver, who happened to be a dentist.

Fields said Laton was able to keep the individual practices open long enough for LeCann and Cobham to form new LLCs and buy the individual practices they now operate.

A second receiver, Christine Mayhew, was appointed in March 2011. Mayhew is responsible for pursuing Cobham’s financial obligations if she doesn’t make them voluntarily, Fields said.

“It remains to be seen whether the defendant has the money” to pay the damages, Fields said.

Content retrieved from: http://www.journalnow.com/news/local/judge-orders-dentist-to-pay-her-former-partner-million/article_18b17b9e-3986-11e2-8da7-001a4bcf6878.html

See the decision here:

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lecann-vs-cobham

Is your CPA protecting you from embezzlement? Embezzled dentist sues CPA firm, alleging accounting malpractice. Not successful yet.

New York dentist Ronald Ghiz was embezzled by office manager Carolina Vallario to the tune of $400,000.  in 2013, Dr. Ghiz sued his accounting firm, Shreck and Company CPAs, on the basis that they should have detected the embezzlement.

No final decision has been rendered on this case, and it is possible that the parties may have settled out of court.

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

ghiz-vs-shreck

UCLA Dental School employee accused of embezzlement

Tuesday, January 7, 1997

CRIME:

Suspect was employed by School of Dentistry; thought to have stolen some $50,000.

After five years of alleged embezzlement of funds from the UCLA School of Dentistry, a former school official was arrested last month in connection with the loss.

Joseph Castano, the former manager of the UCLA School of Dentistry’s Faculty Group Dental Practice, was arrested Dec. 19 on a warrant issued by the UCLA police department connecting him with embezzled funds totalling $50,600.

Charged with one count of grand theft and a second count of embezzlement, Castano was released on $100,000 bail shortly after the arrest. A preliminary hearing is set for Jan. 18.

The suspect, who was also a part-time law student, was placed on investigatory leave last February after a paper trail allegedly charged his spouse’s dental surgery to the school. Dental school
officials also allege that Castano charged law school textbooks to the school as well. Castano was fired from his position on March 29.

Following the discovery, internal auditors for the school were alerted to the situation and launched an in-depth investigation.

Auditors reported their findings to the police after completing the investigation last August.

According to university police, Castano allegedly submitted refund invoices for people who were never patients of the school or for patients of the school who were not due refunds.

Castano then allegedly filtered those funds out among family and friends, eventually landing them back in his own hands for personal use, police said. UCLA and dentistry school officials will seek reparation of the lost funds.

Officials said that the School of Dentistry takes the management of public funds very seriously and will charge Castano to the fullest extent of the law.

“There is no excuse for betraying the public trust,” said school Dean Rory Hume in a statement on the case. “The School of Dentistry takes very seriously its role to ensure responsible employee behavior,” he added.

Shortly after the allegations, the school implemented several changes in its accounting and management systems. All financial transactions are now electronically monitored and responsibility for cash management, refund approval and accounting are now distinct jobs that will belong to separate individuals.

Dentistry administrators are now in the process of restructuring the school manager’s job description and will hire an accounting manager for the new position.

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: http://dailybruin.com/1997/01/06/student-charged-with-fraud/