Great story about how an optometrist prosecuted an embezzling employee

How I prosecuted an embezzling employee

My life was turned upside down by the theft and the fallout

During the summer of 2013, I was starting to hit my stride as a relatively new practice owner. I had taken the helm of my practice in 2011. Cash flow had started to stabilize, and I was starting to plan the next round of investments to improve the practice. My team consisted of three full-time employees, two of whom had been working for the previous owner since 2001. These two long-term employees had a long history with the office and our patients, and they were integral to a smooth transition after I bought the practice. My team was performing well, and we were relatively drama-free.

Or so I thought.

I discovered that an employee had been dispensing glasses to her family without collecting payment for the materials. After studying the relevant charts, I was certain that the activity was deliberately hidden from me. The employee was terminated the following day, but at the time, she insisted that the missing payments were errors rather than evidence of theft.

From three employees to one

A few hours after the termination, my best employee resigned. She was close friends with the one who had been terminated, and although I do not believe she was involved in the theft, I presume that she thought I was incorrect in my accusation. She told me that she no longer needed to work because her husband’s income was sufficient to support them. I may never know her true reasons for quitting, but I was stunned.

My team of three had been reduced to one employee in a matter of a few hours. The person remaining was pregnant with plans to be a stay-at-home mom, so I would be losing her in a matter of months. I would have to rebuild the entire team from scratch. I returned home that evening with a feeling of deep despair, unsure how I would maintain day-to-day operations while also searching for and training new employees.

The scramble to hire temporary and full-time employees began immediately, and I was incredibly fortunate to find wonderful people within a very short time. However, the training process would be long and arduous because I chose to hire for talent rather than eyecare experience. I was fortunate to have friends and colleagues offer to help in many ways to help me through those first few weeks, but nonetheless, the emotional distress was tremendous.

A few weeks after the initial discovery, I learned that the terminated employee had also repeatedly stolen money from the cash drawer in small amounts over a period of two years. My husband and I spent six weeks sifting through charts and making copies of relevant documents to prepare for an insurance claim. There were more than 70 instances of theft, and the amount was far past the threshold to qualify for a felony charge if we chose to pursue legal action.

Taking legal action

Ultimately, we decided to turn the information over to the local police department and press charges for three reasons. First, the amount of theft was significant, and I felt the former employee should be punished. Second, I was certain that the accusations were correct because our research had been very thorough. Finally, while talking with local colleagues about the events in my office, I learned that they all had fired someone for theft, but none had pursued criminal charges. Most told the person to return the stolen money or goods in exchange for a promise that the police would not be notified. In other words, the thieves were allowed to move along and prey upon their next employers.

In October 2013, I submitted a four-inch binder of evidence to the local police department. The case was assigned to a detective, but he was unable to start working on it until the following May due to a homicide investigation that was in process. In a way, the delay worked in my favor because it allowed me to focus on training my new team during that period.

The detective and I met in early May 2014, and by the end of that month, his investigation was complete. My former employee confessed to the theft in a recorded phone conversation with the detective, and because she was cooperative, he allowed her to turn herself in the following day. She was arrested and posted bail on the same day. The charges filed against her were felony grand theft and embezzlement.

I was surprised by my reaction to the news that she had been arrested. I expected to feel good and victorious at this milestone, but instead, I just felt sad and unsettled. It was difficult to concentrate on work for the remainder of that day.

The subsequent court process lasted about 10 months. There were several types of hearings, and they were scheduled and rescheduled multiple times along the way. Given our line of work, it was difficult and stressful to remain flexible with the schedule changes. The deputy district attorney assigned to my case was negotiating with the defense attorney. We agreed to drop the charges to a misdemeanor in exchange for a “no contest” plea and a partial upfront restitution payment. I was relieved to avoid the stress of a jury trial.

The sentencing hearing occurred last September, and I read a victim impact statement at the hearing. The judge mentioned that it’s often hard to understand the downstream effects when theft occurs, and he thanked me for articulating them so well. He thanked me three times for being there, which seemed odd to me at the time, but I learned later that victims rarely appear at these hearings.

After sentencing was complete, the next step was restitution. Although I had filed a claim with my business owner’s liability policy for the amount of the theft in 2013, that claim did not include reimbursement for the time that my husband and I spent to conduct the investigation and participate in the court proceedings. In addition, the carrier for my business owner’s liability policy dropped me as a client due to “loss history” after the claim had been paid. Ultimately, the new policy’s premium was significantly higher than the previous policy’s premium.

The restitution process was intended to collect against these additional damages as well as the $1,000 deductible. I used fixed-cost overhead to “charge” for the days that I had to clear my schedule for court hearings—because the hearings had been rescheduled so many times, the total restitution claim was approximately three times the amount of the original theft.

I was sworn-in to testify at the restitution hearing in February 2015. The defense attorney attempted to discredit me, but I stood firm and calmly explained the rationale behind each item on the restitution claim. The judge issued his ruling six weeks later, and I was granted nearly all of the restitution that I had requested. He omitted a few small items that were categorized as incidental costs of turnover rather than as a direct result of the theft. Overall, I was pleased that the court had validated my restitution claim.

Was it worth it?

Looking back, I would definitely choose to pursue legal action if I had to face that decision again. It was time consuming and stressful, but I achieved closure through the process, and it is satisfying to know that my former employee was held responsible for her actions. I learned a lot of valuable lessons along the way, and an article in Optometry Times’ sister publication Medical Economics became a good resource for me as a navigated through the process: MedicalEconomics.com/preventingembezzlement.

I had previously heard that employee theft was a common occurrence in medical practices, but until it happened to me, I had no idea how pervasive the problem had actually become. The realization that a trusted employee had stolen from my practice had far-reaching implications, and the full impact went much deeper than the initial financial damage. I had never before experienced a violation of trust of this magnitude.

The betrayal was personal because I trusted the employee and cared about her during the few years that we worked together. Our backgrounds share quite a few similarities, so I identified with her and wanted to see her succeed. At the same time, she knew that as a new and struggling business owner, I was making significant personal sacrifices to transform the practice. The practice provided her with a job with steady daytime hours, paid vacation time, and fully paid medical, dental, and vision benefits. Yet she felt it was appropriate to also help herself to materials and cash from my office on a regular basis for more than two years. In light of her knowledge of my situation and the generosity extended to her, that was despicable to me.

My life was literally turned upside down by the theft and the subsequent fallout, and it took a solid six months to restabilize my business. The good news is that my practice is stronger now than it was before the theft was discovered. I have a stellar team in place and we have a bright future, so thankfully, I have been able to return to focusing on my original goal of providing excellent eye care for the community.

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://optometrytimes.modernmedicine.com/optometrytimes/news/how-i-prosecuted-embezzling-employee?page=0,0

 

Think you know what goes on at your front desk?

Do you really know what happens at your front desk?

Here is a conversation we captured between an embezzler and a patient.  Needless to say, what she is telling the patient isn’t true.

front-desk

 

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

 

Let’s Talk About “Trust”

By David Harris

CEO, Prosperident

I had an interesting discussion the other day with a learned (and outspoken) friend. The topic was the possibility of a spouse embezzling from a dentist. My friend lives in the “real world” and acknowledged the possibility, but also found the topic uncomfortable and probably self-fulfilling (in other words, not trusting your spouse may make embezzlement, and its usual companion divorce, more likely).

While I can’t fault my friend’s logic, I can recall a number of situations where spouses committed embezzlement. Typically, these do not become public (because they are resolved as part of the divorce process) but an example is here.

The way that humans address trust is interesting. To us, trust is binary — someone is either “trustworthy” or they are not. Also, we have a positive bias in that we want to trust people. And we also want to get the trust question out of the way early in our relationship with a person.

So we assume that certain people are “above suspicion”. I can always surprise an audience of dentists when I show them examples of:

  • Dentists stealing from each other in group practices — see examples here and here
  • Spouses embezzling from dentists
  • Children who work in a parent’s office embezzling (see an example here)

Similarly, strong religious beliefs don’t mean someone won’t embezzle. An example of a pillar of the 7th Day Adventist community going to prison for embezzlement can be found here.

Are the majority of people dishonest? Of course not. But we need to fight our very human desire to consider people trustworthy because of some personal characteristic they have, or a judgement that we made early in the relationship.

Ultimately, almost anyone can find themselves in a situation where they view stealing your money as the solutions to their problems, and we need to be mindful that trust is a concept that needs to be re-evaluated over time.


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

Someone who works at a dental office actually asked this (stupid) question online. Would she have any hesitation about embezzling?


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

Will I get caught if I charged a stolen credit card?

My co worker and I were parking at Walmart when we see a cart with a purse. It was both of our ideas to get the purse and search it but I’m the one who got off and got it. She kept the cell phone for herself and I took a credit card. I charged the credit card to a nail salon as $400 gift card. I know have the gift card from the salon of $400 my coworker got rid of the purse. The downfall is that I called the nail salon and she mentioned that I was calling from a dental place (my work) I told her that that wasn’t really where I worked that I worked down the street at another place but that we’ve been getting many calls about problems with our phone lines. I told her my sister was gonna got pick up the gift cards but i went instead and she had no idea I was the girl on the phone. What can happen? Can I get caught?
____________
And here is the winning answer:

Here’s the really cool part of this whole deal: when you ARE caught, you get to go to jail, where the other girls will beat you up and steal all of your belongings.

Then, you get to go to court, where you will be convicted of grand theft and credit card fraud. You’ll be sentenced to more jail time, and hopefully, prison time. You’ll also be fined – probably thousands of dollars. Of course, you won’t make your payments to the court for the restitution or the fines, and you’ll go back to court for failure to pay. The judge will sentence you to more time in jail, and you’ll still oew the fines.

Of course, you’ll figure out that you’ll have to keep stealing to make enough money to pay off the court, but you’ll get caught again. As a repeat offender, you’ll go to prison. There, some bull dyke will make you her “wife”, and you’ll have a very special relationship with your new master. And you’ll probably get shanked a few times, cut up with razors and such, so your pretty face will be a mess of scars.

Eventually, they’ll let you out of prison, and you’ll find that you can’t get a job because you’re a convicted felon, and because no one wants you working the “want fries with that” counter because you’d scare their customers off with your scarred up face. You’ll end up turning tricks to make money, and one after another of your customers will beat you up, steal from you, rape you, and break your bones.

You’ll turn to drugs to try and ease the pain, and get into deep debt with your dealer. He will become your pimp, making you go out every night to make enough money to pay him off. You’ll get beat up more often, and life will just suck.

A thief like you is a pathetic excuse for a person.

Can I get a job as a dental assistant with a criminal record?

We recently found some discussion in an online forum about how easy or had it is for one to find work in a dental office if they have a criminal record.  The dialog makes for interesting (and eye opening) reading, and several of the participants mention the laxity with which dentists perform background checking (see our article here https://www.prosperident.com/2016/02/04/how-not-to-hire-the-wrong-people-in-your-practice/ for more discussion.

We’ve highlighted a couple of particularly interesting statements.


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

can i get a job as a dentla assistant with a criminal record

 

Two big embezzlement myths

I know that I have talked about these things before, but  they keep coming up in conversations with doctors, so this month I’ll devote this column to addressing some of the misconceptions about embezzlement that just won’t seem to go away.
Myth # 1 — Cash vs. Checks
Almost every dentist I speak with believes that embezzlement is limited to cash theft, and it hasn’t occurred to them that embezzlers have found ways to steal checks payable to the doctor, credit card payments, and electronic funds transfers.  Because there are almost certainly some nascent embezzlers reading this column, I won’t spell out here how it is done, but this is something that we see on a daily basis.  Practice owners need to know that any form of wealth transfer can be adulterated by an embezzler, and they don’t have to be a Mensa member to do it.  A bit of research and a modicum of creativity will suffice.
Myth # 2 — I Can’t Fire Them Yet
Another misconception is that doctors believe that their recourse against a thieving employee diminishes when that employee is fired or quits.  I frequently encounter dentists who suspect a former employee of embezzlement, but believe that they have no ability to take action because the employee no longer works there, and others who believe that they must keep an otherwise unsatisfactory employee on the payroll until our investigation is complete.
Let me make this very simple.  Stealing is stealing, regardless of whether or not the person who did it is still (or ever was) an employee.  So yes, we can investigate the actions of an employee who is no longer working for you, and no, there is no reason to keep an employee you really don’t want anyway while our investigation take place.
Have embezzlement concerns?  Want to make your practice better protected against embezzlement?  Give Prosperident a call at 888-398-2327 and we will be happy to help.  Or click here.

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We are sorry, but this promotion has ended.  However, the good news is that you can still access our Embezzlement Risk Assessment Questionnaire, for a very modest fee, here — www.dentalembezzlement.com/ERAQ.

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Don’t Underestimate the Embezzler by David Harris, MBA CMA, CFE, and Pat Little, DDS, FAGD CFE – Orthotown

OT_Embezzler_0615.indd

As investigators, one thing we encounter every time we speak to a group of orthodontists is that, in the area of embezzlement, they consistently underestimate the capabilities of their opponents.

The most common question asked of us is, “Will this control/procedure/auditing step work?” followed by some procedural change that the questioner intends to implement. Normally, this change is designed to block a specific embezzlement method.

For example, one question recently asked in a presentation was whether using a “lockbox” system, where all mail gets delivered to a third party (which then opens the mail and inventories the contents), would prevent embezzlement.

This question is an example of denial of opportunity strategies for controlling embezzlement, because its goal is to block a specific embezzlement pathway.

While we don’t think that strategies of this type are necessarily bad ideas, we do believe that their effectiveness in controlling embezzlement is overestimated.

Why do people steal?
Let’s start by debunking one of the myths about orthodontic office embezzlement. Many orthodontists believe that embezzlement occurs as a result of mistakes in hiring and/or poor background checking. Serial embezzlers (i.e., those who have stolen from other offices before) definitely exist, but they account for less than 15 percent of our investigations. The vast majority of our perpetrators have no criminal record and no adverse work history. However, some pressure has caused this person to begin stealing.

In some cases, that pressure is from financial desperation. Various factors can make someone’s financial position unworkable. It could be addiction, divorce or a spouse losing a job. These people, who we label the “needy,” steal to preserve the basic needs of their family.

We call the second group the “greedy.” These thieves tend to be bright, and viewed objectively, are somewhat underemployed in your office. It is common for them to consider themselves (sometimes justifiably) as your intellectual equal, and therefore the perceived income discrepancy between the two of you seems unfair. Of course, in this simplistic comparison, they fail to consider the educational differences and/or sacrifices that you made to achieve your position. Their social circle tends to include people who are better off financially. Money that is stolen is often spent on conspicuous displays of affluence.

Whether they are needy or greedy, embezzlers are responding to some powerful pressures. A motivated thief who possesses an intimate knowledge of your procedures and how you think is a truly dangerous opponent, and one who is unlikely to be deterred simply because you have blocked some, but not all, options for stealing.

Embezzlement vs. controls
Let’s revisit the denial of opportunity strategies and see how they might withstand assault from a determined, knowledgeable thief. We should mention that it is our policy not to discuss specific embezzlement methodologies in articles, so as not to provide information that may aid thieves. In order to protect orthodontists, we will confine ourselves to a general discussion of how a thief will overcome controls.

First, any control or procedure that is dependent on implementation by a staff member is doomed. For example, many orthodontists have a policy that incoming checks are to be stamped “for deposit only” in the hope of stopping an embezzler from cashing them.

The flaw in this logic is that we shouldn’t expect an embezzler to stamp the back of any checks that he or she plans to steal. So unless the orthodontist personally stamps every check, this control is useless against embezzlement. And as we have pointed out, stamping the checks personally won’t accomplish anything unless you also personally receive, open and keep complete custody of the mail until the checks are stamped. And even if you do all those things yourself (which might make you wonder why you even have a receptionist at all) this may not fix the problem—we have seen many creative thieves find a way to redirect a portion of the incoming checks to a different address to escape the orthodontist’s control.

We have also been told by some orthodontists that embezzlement isn’t possible in their office because they diligently check their day-end report against the bank deposit. We disagree, as do many embezzlers. We do believe that every practice owner should review the day-end report, because he or

she will sometimes catch honest errors and because it is a good way to monitor practice performance. However, any embezzler who knows that the doctor compares the day-sheet against the deposit will not steal in a way that leaves a visible discrepancy; the thief will instead construct a method of embezzling funds that somehow hides the out-of-balance situation. And while (again) we won’t discuss specifics, a number of possibilities exist for creating a situation where money is stolen but the day-sheet and deposit agree. While we certainly agree that a “deposit shortfall” is indicative of a problem, the reverse isn’t true.

Many orthodontists tend to view their day-end report—especially if they have checked it against their appointment book—as gospel, and they don’t consider that thieves normally control what information gets entered into the practice management software in the first place.

Regrettably, there are hundreds of ways to steal from a practice. For internal controls to be effective there would have to be a control to stop each embezzlement methodology an employee could use. This is impractical from both an economic and procedural perspective. Additionally, most implemented internal controls are already known to the thief and can be discreetly “tested” for effectiveness.

We must also consider that embezzlers are adaptive to any new controls that are implemented. We have had numerous cases where a doctor, suspicious that an employee might be stealing, implemented additional internal controls. Typically, the suspect quickly adapted and began using a different embezzlement modality. This points both to the cleverness of the thieves involved and the strength of their compulsion.

Why ethics and best practices are important
A common thread in many embezzlement lectures and articles is that it is paramount for orthodontists to behave in an ethical manner and institute best-practice procedures. We concur. However, the prevailing thought is that engaging in ethical behavior will instill ethical behavior in staff and therefore discourage embezzlement. This is where we disagree. As already discussed, whether embezzlers are “needy” or “greedy,” they are under intense pressure to commit their crimes. Once they decide to steal, the fact that you are behaving ethically might make them feel guiltier about their crime, but your behavior isn’t strong enough to compete with their need to steal.

Why do we stress that orthodontists should behave ethically? Most important, it is simply the right thing to do. Second, for your staff members who are not embezzling, your ethical behavior will set an example to follow. For the embezzler, however, we consider ethical behavior vital for a simple reason: You don’t want to issue a “Get Out of Jail Free” card.

When embezzlers know their doctor has been engaging in unethical behavior or hasn’t instituted best-practice procedures, they have a powerful weapon at their disposal. One of the most frustrating aspects of our work occurs when we detect embezzlement, but the doctor is in no position to file a criminal or civil complaint because the embezzler has information that can literally make the doctor’s life miserable.

Some examples could include skimming cash that isn’t reported to the IRS, up-coding procedures, filing fraudulent insurance claims, improperly delegating duties to clinical staff, OSHA and HIPAA violations, or having an inappropriate relationship with a staff member.

By avoiding ethical lapses, doctors are better positioned to take action against an embezzler (or any other staff member who commits a crime against the practice). Imagine the consequences of allowing an embezzling staff member to walk freely out of your office—and then go to work for another doctor.

Regrettably, we encounter this more often than we like. So clearly, it is paramount to act ethically and maintain best practices not only because it is the right thing to do, but because doctors need to have all options available if embezzlement is detected in their practices.

The honesty test
Another recommendation we occasionally hear is to go “undercover” and place some extra cash in the cash drawer or other location where a suspect will discover it. The presumption is that if the cash disappears, the employee is dishonest. While we agree that if the cash overage is not reported to you it means that you have an issue, the reverse is probably not true.

We have observed that the typical embezzler steals somewhere between two percent to four percent of collections. So for a thief who is stealing thousands of dollars from you on a monthly basis and finds an errant $50 in the cash drawer, what is the best investment he or she can make with the $50? It’s to hand it back to you, with the predictable result that you will then believe that you have a very honest employee. This gives the employee freedom to continue to embezzle—often with greater magnitude than before the supposed “honesty test” was conducted.

Another tool we sometimes see advocated as a means of preventing embezzlement is to install surveillance cameras. There are two problems with this.

First, cameras are best suited for monitoring events where the time of occurrence can be closely determined. For example, if a computer monitor disappears when the front desk is left unattended for a minute, cameras are valuable, because the video from that time can be examined.

In contrast, embezzlement can happen at any time, and the amount of camera footage that would need to be monitored to discover it would be huge.

Second, since a thief would normally know that cameras are in use, only the dumbest of thieves would commit a visibly dishonest act on camera anyway. While we have heard of the occasional practice embezzler being caught on film, it hasn’t happened in any of our investigations.

What does work?
So if thieves are smart, aware of the control systems in place and motivated, how do you stop them? The answer is far simpler than many orthodontists think. Research by the Association of Certified Fraud Examiners suggests that more than 80 percent of embezzlers act in a manner consistent with stealing.1 This is affirmed by a 2007 study conducted by the American Dental Association that showed more than two-thirds of embezzlement was revealed by behavioral (as opposed to financial) inconsistencies.2

Behavioral signs of embezzlement include things like a reluctance to take a vacation, territoriality about job duties and work space, resisting the involvement of consultants or other advisers, and evasiveness when discussing practice finances.

And the good news? Behavioral monitoring is easier and far less time-consuming than overinvesting time and money in cameras and financial monitoring.

We believe that underestimation of the determination and capabilities of embezzlers is a major contributing factor to high incidents of embezzlement. But orthodontists do not have to accept embezzlement as a cost of doing business. Awareness and using existing tools to motivate employees, monitor behavior and keep an eye open for fraud can help you take the first steps toward preventing—or fixing—the problem.

References

  1. “Report to the Nations on Occupational Fraud and Abuse: 2012 Global Fraud Study”, Association of Certified Fraud Examiners, Austin TX, http://www.acfe.com/rttn-highlights.aspx
  2. Author’s reanalysis of “2007 Survey of Current Issues in Dentistry: Employee Termination and Embezzlement”, American Dental Association, Chicago, IL

__________________________________________________________

David Harris, MBA, CMA, CFE, is the chief executive officer of Prosperident, the world’s largest dental embezzlement investigation firm. Pat Little, DDS, FAGD, CFE, is a senior investigator with Prosperident. The company is consulted on hundreds of embezzlement matters annually. Find out more at www.dentalembezzlement.com, or contact Prosperident at 888-398-2327. Mr. Harris can be reached at david@dentalembezzlement.com and Dr. Little at pat@dentalembezzlement.com.

Content retrieved from: Don’t Underestimate the Embezzler by David Harris, MBA CMA, CFE, and Pat Little, DDS, FAGD CFE – Orthotown

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By Prosperident

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