What Squirrels And Embezzlers Have In Common

David Harris
I was discussing embezzlement with my friend Rick Willeford a few months ago.  Rick is a CPA and engineer who founded DentaMetrix, a company that helps dentists and consultants make sense of their data.
Rick was analogizing embezzlement to, believe it or not, bird feeders. He told me that he was having trouble keeping squirrels away from his feeder.
When he tried to buy squirrel-proof bird feeders, Rick was told that they don’t exist. Rick asked the hardware store clerk why.
“How much time per day do you spend thinking about the problem you are having with squirrels eating your bird seed?” the clerk asked Rick. Rick acknowledged that it was less than 10 minutes. Next came the wisdom.  “Let’s consider this from the squirrel’s perspective,”the clerk said. “He want nothing more than to steal your birdseed. In fact, he thinks of nothing but that birdseed all day. Of course he is going to beat you!”
Watch what happens in this video:
Many dentists assume that their considerable intellectual prowess and lengthy education should give them an advantage over embezzlers. And yet we see less gifted thieves successfully embezzle for years, so the bird feeder parable is accurate. Thanks for the perspective, Rick!

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

Ten Great Embezzlement Monitoring Ideas

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By David Harris MBA, CPA, CMA, CFE, CFF

CEO, Prosperident

If you read our articles or receive our monthly newsletter, you probably are familiar with our telling people that “prevention” of embezzlement is impossible, but detection of embezzlement is fairly easy, if you go about it the right way.  Here are ten steps that take very little time but can make your practice much safer from embezzlement:

 

Daily:

1. Print reports yourself — this prevents the possibility of a staff member using “selective reporting” in the information that they give you.

2. Review and initial day sheets. Retain for three years or more. You may need these some day if embezzlement is suspected.

Monthly:

3. Review entry log (alarm system).  Staff members coming to the office at unusual times is often a symptom of embezzlement.  Taking five minutes to review this information from your alarm company is one of the best time investments you can make in detecting embezzlement.

4. Review AR listing and compare with previous month.  Make sure that balances are “aging” properly in the reports, and ensure that suitable collection action is being taken on older accounts.

5. Review the Modified transactions report (the name varies with the type of practice management software you are using).  This is a much smaller report than the “audit log” (which can run to thousands of pages per month) and is often a place where certain types of embezzlement transactions can be seen.

6.Have bank and credit card statements sent to your house instead of your office.  This prevents employee tampering.

7. Use Prosperident’s Monthly Monitoring Spreadsheet (ask for it at requests@dentalembezzlement.com) to reconcile daily reporting with monthly reporting and deposits.

As needed:

8.Embezzlement Risk Assessment Questionnaire (available at www.prosperident.com/store)

9. Mandatory vacations and cross-training for all staff.  And don’t let them take a vacation one day at a time — everyone from your office should be gone for at least two consecutive weeks per year, and this needs to be done when the office is open.  The idea is to force another staff member to do the work that would normally be done by the person on vacation.  This will not happen if vacation is taken a day or two at a time.

10. Skepticism when hiring (Prosperident’s Hall of Shame is a great resource).  Did you know that 65 million Americans (i.e., one in four adults) have criminal records?  And that published studies suggest that at least 60% of resumes have at least some level of false or misleading information.  Often dentists “hire in a hurry” and end up skipping a proper background check on an applicant.  From basic items like checking photo id for job applicants to having short-list applicants take a drug test, dentists are very reluctant to apply proper screening before hiring.

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



Former MA Office Cleaners Accused Of Stealing Cash, Drugs From Dentist

dentalmugs1.jpg dentalmugs2.jpg PITTSFIELD — A city couple are accused of breaking into a Merrill Road dental office and stealing cash and drugs. Shawn Chapin, 37, was a former employee of a company responsible for the cleaning of the office and knew the code for a lockbox containing the building key, according to a report authored by Pittsfield Police Patrol Officer Brandon M. Gallagher. Witnesses who were parked outside of the Aspen Dental building on the night of April 1 saw two people, later identified through a photo lineup as Chapin and Kara M. Wilson, 32, open the door with a key and enter. Through the glass windows, witnesses were able to see the pair walk through the building and open drawers before exiting and driving off. The witnesses, both employees of Aspen Dental, waited about 10 minutes then entered the building themselves to find drawers and lockers open, money missing from the cash drawer and the drug cabinet unlocked before contacting police. The witnesses also provided police with the license plate number of the vehicle in which the pair left. That plate number came back as registered to Wilson. In addition to $74 in cash, the pair allegedly stole midazolam and ketamine — both anesthetics — and dexamethasone, a type of steroid medication, police said. A police interview with the owner of the cleaning company said Chapin used to clean the office for about six months, but was no longer working for the company.
The owner told the police Chapin was only one of two people who knew the code for the lockbox containing the building key, but there was no reason for him to enter the building.
Police requested warrants for the pair and placed both under arrest Monday evening. The pleaded not guilty in Central Berkshire District Court on Tuesday to three counts of larceny of a drug and one count each of nighttime felony breaking and entering and larceny from a building.
Judge William Rota released them on personal recognizance and ordered them to return to court May 17 for pretrial hearings.

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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

 

 

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.

The Myth Of Fraud Prevention

lock_w_pennies

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 personally make bank deposits. 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