Profiles of Embezzlers

The following is an excerpt from the upcoming second edition of David Harris’ book Dental Embezzlement; the Art of Theft and the Science of Control


The Narcissistic Sociopath

Like every private investigator, I consider myself an armchair psychologist. From my observation, many Greedy thieves display sociopathic characteristics, and also markers of a narcissist. Psychological literature recognizes this combination as a narcissistic sociopath. The accepted traits of an antisocial personality disorder (sociopathy) include:

  1. Superficial charm and intelligence.
  2. Unreliability.
  3. Untruthfulness.
  4. Lack of remorse.
  5. Inadequately motivated antisocial behavior.
  6. Delusions of invincibility.
  7. Failure to learn by experience.
  8. Failure to follow any life plan.

Some behavioral characteristics of narcissism are:

  1. Self-importance. Think they should be your “partner.”
  2. Focus on appearance.
  3. Exaggerate achievements and abilities.
  4. Believe they are of special or high status.
  5. Think they can only be understood by similar people.
  6. Need for admiration.
  7. Sense of entitlement and expects favorable treatment.
  8. Lacks empathy.
  9. Envious of others or thinks others envy them.

Clearly, there will be some embezzlers who do not fit any profile that we could develop. Still, many of the embezzlers whom I have encountered, particularly the “serial embezzlers” who have stolen from more than a single practice, fit the narcissistic sociopath category fairly closely.

The Hero, Control Freak and Sugar Momma

Some common profiles that embezzlers fit are what we describe as the Hero, the Control Freak, and the Sugar Momma.

The Hero looks for a practice that is really struggling. This practice is the disorganized office that has a large number of unpaid insurance claims and receivables that are out of control. The Hero claims that they have cleaned up bigger messes before and that they love a challenge. They know too well that you will be feeling so relieved at having found the perfect person to take on the herculean task of getting your office back on track that the last thing that will dawn on you is to call that last office that the Hero supposedly whipped into shape to obtain a job reference. While sometimes the Hero can achieve some short-term success with these problems, they have considerably oversold their experience and abilities, and their true focus is cleaning you out, not up.

I’m sure that you can conjure up a mental picture of the Control Freak. He or she is the person of whom the other staff are terrified. He or she holds guards their duties jealously and reacts aggressively to what they perceive as an encroachment. This territoriality will often extend to their workspace and “their” computer, and someone else who sits at their desk or touches their computer will likely receive a dose of this person’s wrath. The control freak may combine their tyranny over staff with subservience to you (which one of my team labels the “teacher’s pet”).

At the opposite end of the behavioral spectrum is the Sugar Momma (who, of course, can be of either gender). The Sugar Momma is the person who bestows largesse on other team members. Sometimes it is baking cookies and bringing them into the office; at other times, it is tampering with the pay of one or more employees to pay them for hours beyond what they actually worked or giving them a pay raise that wasn’t approved by you.
Why do they do this? You may have heard the saying that “you don’t look a gift horse in the bicuspids.” I’m not suggesting that Sugar Momma’s chosen ones are complicit in his or her illicit activities. However, if these staff members have a concern about what Sugar Momma is doing, they are far more likely to go to him or her than to you with that concern.


Do you have questions about embezzlement in your practice? Please give us a call at 888-398-2327

Prosperident Webinar Series August 19, 2020 – Picking Up the Pieces; What to Do when the Unthinkable Happens

See Prosperident’s Amber Weber, David Harris and Wendy Askins discuss the important steps, and some of the “minefields” when embezzlement is suspected or confirmed in your practice.

If you want to check out other webinars that we have done, they are all available here – https://www.prosperident.com/prosperident-webinar-series/. Or if you prefer to receive content in podcast format, Prosperident’s The Dental Practice Owner’s Podcast is now available on Spotify, TuneIn and iHeart Radio. You can subscribe using one of the buttons below.

Protect Yourself As an Associate

While most of this website is oriented towards owners of dental practices, we would be remiss if we didn’t address the topic of associate dentists.

Associates can become embezzlement victims in several ways.  First, they can end up being underpaid relative to what they are entitled.  As much as we would prefer to believe that this doesn’t happen, sometimes this is the result of an avaricious practice owner fiddling with the books to the financial detriment of the associate. 

At other times, it happens because of mistakes being made at the front desk.  For example, if treatment is coded to the wrong provider, this may end up lowering the associate’s pay.  Particularly when a dental office first adds a new associate, a kind of thinking is required from front desk staff that may not have been there before.  In a solo practice where hygienists are salaried, it makes no financial difference whether a recall exam is coded to the dentist or the hygienist.  For this reason, it is understandable that many small offices aren’t used to being careful about certain details.  However, when an associate comes on board, the need for more careful recordkeeping suddenly arises, and sometimes front desk team members and even practice owners fail to realize this.

There is also the possibility that embezzlement is happening at a practice and that one or more associate dentists join with the practice owner in becoming victims.

And finally, buying all or part of a practice where a staff member is stealing can provide a buyer with a difficult and unforeseen introduction to practice ownership, when you suddenly realize that you need to pay for, and invest time in, cleaning up a mess left by your predecessor.

Information that should be provided to an associate

  1.  On making an agreement to become an associate, ensure that the agreement provides for sufficient access to practice information to ensure that your compensation is being properly determined.  Information sharing is always a touchy subject for a practice owner, who can understandably be expected to give you information that may have commercial value if you establish your own practice nearby or take an associate position with a competitor.  However, you need to be firm in insisting that you need sufficient access to the practice management software to confirm that your compensation is being determined properly.

Normally, the compensation formula for an associate is based on one of two measurements; production or collections

If your pay is calculated on production, you require day-end reports from the practice management software that show both your gross production and any adjustments. 

If your pay is calculated based on collections, you need this production report plus the collections report showing who paid and how much.  You also need a monthly receivables listing that shows all amounts owing for work performed by you.  This report should be “aged” – in other words it should show how old the amounts owing are, as well as the report showing open insurance claims for your work.  Your agreement should also provide you with access to the “ledger” for each patient for which you have a balance.  The ledger is a summary of individual transactions on a patient’s account.

We stress that your right to access this information should be enshrined in your associate agreement. If that isn’t done, you will be in a difficult position later if you think that you are being undercompensated, because you will not have access to the information to determine if this is true.

2. Review the production, adjustments and collections, if paid on collections, daily.  Look at the receivables monthly, and compare to the receivables listing you received the previous month.  Some questions to ask yourself when reviewing this information:

In all situations:

  • Did all patients seen today show up on the production report? 
  • Were the procedures performed today accurately recorded in the production report?
  • Do you understand and agree with all adjustments against production given to the patients you saw today?

If paid based on collections:

  • Did the front desk collect co-pays in accordance with office policy from patients who were in today?
  • What efforts are being taken to collect on balances for your work that is overdue?  Are there any patients you should call yourself?  Should any patients be sent to a collection agency?  If you think collection efforts on your patients are inadequate, you may wish to have a talk with the practice owner.
  • If insurance claims have been rejected, have they been resubmitted with whatever extra information is needed?
  • Are patients with significant balances being reappointed with you?  If yes, why?
  • Do balances age properly?  In other words, if an amount was 30 days past due a month ago, and it hasn’t been paid, it should now show up in the 60 days past due column.
  • Is the change in receivables for your work reflected in your pay?  If receivables decreased by $15,000 this month, I should receive ($15,000 plus collections for this month’s work) x payment percentage.
  • Are payments from patients on whom multiple providers worked being applied to the correct provider?  A symptom that this is not being done is when patients have “double balances”.  This means that a patient has a debit (i.e., positive) balance with one provider, and a credit (negative) balance with another provider.

When buying a practice

Many new practice owners have had an unfortunate awakening when they realize that the practice that they just purchased has an embezzlement issue.  A second shock ensues when the new practice owner realizes that the people he or she thought were protecting him or her from this eventuality actually have no responsibility, and the new owner is left to their own devices to deal with the mess.

Obviously, a dangerous scenario for buying a practice with active embezzlement is when the buyer is unfamiliar with the practice, but it also happens when the new owner has been with the practice for some time as an associate.  In many cases, when embezzlement comes to light after a purchase, we expect that the former owner was totally unaware that stealing was happening.  Unfortunately, there are also situations where the former owner knew or suspected that embezzlement was taking place but didn’t share that knowledge because he or she wanted the sale to you to go through and thought that you might have been scared away if he or she told you what they knew or suspected.

The other scenario that afflicts buyers is that inaccurate information is provided about the purchase – revenue, number of active patients, number of new patients per month, etc.  Sometimes this is accidental, and at other times it is a deliberate action of the selling dentist looking to extract every possible dollar from the sale.  Sadly, in a typical year we look at dozens of situations where the buyer of a practice retains us to work with their attorneys to determine if the seller has overstated attributes of the practice.

How to protect yourself when buying

Here are some considerations and steps to take when buying:

  1.  The people who assist you should have specialized dental expertise.  Most of us have friends who are lawyers and accountants, and it is often tempting to use them to represent you in a purchase.  No matter how well intended these people are, and how reasonable their fees may be, there is no substitute for dental-specific expertise when protecting you.  A purchase agreement specifically designed for dental transactions will give you better protection than a generic agreement also used to sell car dealerships.  While most embezzlement could not be spotted by a CPA doing a pre-purchase financial review, a dental CPA certainly has a better chance to see that something is amiss than a non-dental one.
  2. The broker doesn’t work for you.  Normally a broker is hired by and compensated by the seller.  The broker normally takes information provided by the seller and makes use of it to determine a price and provide you with an information package.  Brokers normally stamp a big disclaimer across all of their information indicating that they have not verified or audited it in any way.  So, if the broker is fed incorrect information by the seller, either deliberately or inadvertently, the broker will quickly point to this disclaimer when challenged.
  3. Do a chart audit.  It amazes me how often this step is not done.  As well as helping you plan what you are going to do with the resource you just purchased, chart audits can help you spot where information you have been provided does not make sense, such as when the practice where 4,000 active patients are claimed but there is only a single hygienist.
  4. Review information in the practice management software.  You may want to enlist the help of a consultant or software trainer for this. 
  5. Interview the staff.  This is often a somewhat sensitive area, because the selling dentist may not want it publicly known that he or she is selling, and certainly does not want to get their staff stirred up if a purchase falls through.  The way to make this palatable to a seller is to make it a “condition precedent”.  This means that buyer and seller have agreed that interviews will take place, but it only happens after there is a signed agreement in place.  We can’t promise you that this process will allow you to spot an embezzler, but it may help you spot future problem employees.
  6. Be alert for “non-replicable” revenue.  Sometimes this comes from a special skill that the selling dentist possesses (such as treating temporomandibular disorders or sleep apnea) that you will not be able to replicate, it may be from his or her ability to charge above-market fees for certain procedures, and at other times it may even be from some non-clinical business activity carried on by the dentist, such as speaking fees he or she earns, or even revenue from some kind of multi-level marketing.  If the broker has failed to segregate this revenue, you may end up paying for revenue you can’t possibly have.  A comparison between revenue according to practice management software and revenue from accountant-prepared financial statements may give some indication of this, as will looking at revenue by procedure code from the practice management software.
  7. Have a holdback for part of the purchase price.  Deferring the payment of some portion of the purchase price provides some incentive for the seller to behave properly.  Often the final accounting for a purchase cannot be concluded in real time and needs some time to be finalized.  Also, negative information sometimes emerges after the purchase is concluded, and if the seller has already received the full purchase price, the buyer’s position is much weaker than if part of the purchase price can be “frozen” until the dispute is resolved.  This is particularly important when the seller has agreed not to compete within a certain radius.  As long as escrow funds are still being held, the seller is unlikely to break this restrictive covenant.  When funds are held back for the purpose of ensuring seller integrity, the money should be funded and placed in escrow at closing, with a specific escrow agreement dealing with it.  This is not the same as the seller agreeing to “hold paper” to provide part of the financing for a purchase, which has a different timeline and terms.
  8. Have a proper, dental-specific, agreement.  This goes back to using an attorney who specializes in dental transactions.  The agreement should do a few important things:
    • Provide “representations” of any key financial metrics that you are relying on.  For example, if you have been told that there are 4,000 active patients and if this is important to you, this number should be stated in the agreement.  Don’t assume that because this information is on a broker’s “cut sheet” that you have any ability to hold the seller to it.  As mentioned, if information provided by the broker is inaccurate, the seller will blame the broker, and the broker will blame the seller.
    • Define key terms.  Metrics such as “active patient” need to be defined.  If it is not, you will never be successful in getting a partial refund for a deficiency.  To correctly determine the number of active patients, you first need a clear and operable definition.  The legal system relies heavily on precise wording to express the intent of parties to an agreement, and you should never be the farm on the concept that everyone can agree on whether a specific patient is active or not.
    • Deal specifically with copayments.  Many buyers have had bought practices without realizing that the seller was habitually not collecting copayments.  This puts the buyer in the terrible position of either having to continue the seller’s unethical behavior or the seller or to deal with a revolt from patients who are suddenly asked to pay for a portion of their dentistry.  The seller’s handling of copayments should be made clear in the agreement so that you do not get this kind of surprise.
    • The seller should specifically state that he or she is not aware of embezzlement in the practice and either has not consulted any professional with respect to embezzlement in the practice in the past two years, or if a professional has been consulted, outline who and when.  If it is clear that the seller has had embezzlement concerns, this might be a time to insist on the seller having a proper investigation done, which should be at her or his expense, and before the sale closes.

For many dentists, moving from being an associate to a practice owner represents an important milestone in their dental career.  We hate to see what should be such a joyous event smirched by the horrible realization that what you acquired was not what you thought you were getting.  Following the steps in this chapter is a great way to minimize this risk and protect yourself.  Feel free to reach out to us if you have any concerns.

Ohio Woman has Embezzlement Convictions

blank
Jenny Draime Adams

This is Jenny Draime Adams, who lives in Brunswick , Ohio, which is a suburb of Cleveland.

Back when she used to live in Florida and went by the name Jenny Lynn Draime, she was convicted in 2006 of First Degree Larceny (which is for stealing more than $100,000) from a Palm Beach area dental practice.

She also has Florida arrests for theft of less than $5,000, motor vehicle theft, and domestic battery.

It appears that Jenny moved to Ohio circa 2008. We are unable to determine whether she has been working in the dental field in Ohio, but we do note a 2018 bankruptcy from which she was recently discharged, so clearly Jenny’s troubles have continued after her move to Ohio.

As always, we recommend a proper background investigation, including a criminal records check, before hiring any staff member.

Have questions or concerns? Call us toll-free at 888-398-2327 or click the button below.

Contact Us

Prosperident Pulse #97 August 2020

Want to receive our newsletter automatically each month?

blank
August 2020
Next Webinar Aug 19!
blank
Prosperident’s next webinar takes place on August 19 at 8:00 pm Eastern / 5:00 pm Pacific. You won’t want to miss this one. The title is Picking Up the Pieces – What to do When the Unthinkable Happens.
David, Wendy, and Amber will talk about what to do (and not to do) when you suspect or find embezzlement in your practice, and what happens after embezzlement is confirmed.
To register, click HERE. If you want to catch up on our previous webinars (we had some great topics like Forensic Hiring and
Steal and Conceal; What Serial Embezzlers Can Teach Us), you can access them at THIS LINK.
PACE CE credit is available.
We look forward to having you back in our audience!
Hear From an Embezzlement Victim
Several of our clients generously agreed to be interviewed about their experience being embezzled. Here is part of Wendy Askins’ interview with Dr. Kirk Specht, where Kirk talks about what made him suspicious.
blank
Did you miss a previous newsletter? We archive them HERE.
Delegation versus Abdication
Delegation is essential to the financial well-being of a practice. The existence of well-trained clinical and administrative staff allows a practice’s doctors to focus on their unique (and high value) competencies.
The concept of clinical delegation is well-understood by dentists and is something that they first encountered in dental school.
However, delegation of the administrative functions in a practice is something that is normally encountered much later when a dentist becomes the owner of a practice, and it happens without the dentist having the benefit of any training.
Something to Talk About…
blank
In our webinars, we talk a lot about doing a better job of screening applicants before hiring.
MANY cases of embezzlement could have been avoided if the practice owner had only taken a bit more time to learn about the applicant. (For a spectacular example, look HERE at an Oregon woman accused of stealing from a dental office while she was awaiting trial for stealing $1 million from a medical office.
Dentistry has allowed itself to fall out of step with how most businesses hire. I hear lots of excuses from dentists about the casualness with which they hire, almost none of which make sense. For example, I often hear that there is a “shortage of good people in my area”. Even if this were true (and after the COVID-caused adjustments happening now I’m not sure it is), it might prompt you to “lower the bar” and hire someone you might not in other circumstances. However, you still need to know to what extent you have compromised your standards.
In my 30+ years of working with dentistry, I’ve had the pleasure of seeing immense growth in dentistry’s ability to deliver clinical care. Unfortunately, the ability to screen out dangerous applicants hasn’t progressed at all.
We are currently working on adding some background checking services to our product offerings and expect to have an announcement soon.
Sincerely,
blank
David Harris
We are Prosperident, Dentistry’s Embezzlement Experts
blank blank blank blank