Malinda Downey, a long-time employee of a local dental office, has been arrested in connection with the alleged theft of nearly $300,000 from her employer over at least a four-year period beginning in 2015.
Malinda A. Downey, 47, of Madison, has been charged with one count of theft, a Level 5 felony, but additional charges could be forthcoming as accountants, Indiana State Police and the Jefferson County Prosecutors Office continue investigating the case.
Downey is currently free on a $10,000 cash bond. She appeared in Jefferson Superior Court Friday, for a reading of the charges and a “not guilty” plea was entered with her trial date set for 8:30 a.m. on Thursday, Jan. 16, 2020.
Downey, who was arrested by state police Wednesday, had been employed as an office worker at Pawlak Orthodontics, 160 Demaree Drive, Madison, for 17 years using both Ortho-Trac and QuickBooks programs to track customer payments, services and patient information before depositing receipts in the bank account for the business.
According to a probable cause affidavit, Dr. Elizabeth Pawlak, owner of the practice, had suspected discrepancies in receipts and deposits for some time but on July 11 and July 12 discovered that cash payments from two new patients were not properly documented. Pawlak then conducted a review that confirmed payments recorded in Quickbooks did not match those recorded in Ortho-Trac and an estimated $150,000 could not be accounted for.
At that point, Pawlak asked Indiana State Police to investigate the case and Det. David Makowsky advised Pawlak to seek a complete audit of her books.
The affidavit said Pawlak spoke with Downey about the discrepancies on Aug. 12 with Makowsky present and Malinda Downey indicated that she must have recorded the transaction incorrectly. When confronted with other discrepancies, Downey did not have an explanation for the missing funds.
Eventually, Makowsky asked Downey how much money was missing and she told him she “did not know.” He asked if she had taken any money prior to 2014 and she said she “didn’t think so” and that she “did not remember if she ever put any money back,” the affidavit said.
At that point Downey said she did not want to speak to Makowsky any further. They set up a time to meet the following day but prior to that Malinda Downey notified Makowsky that she did not want to meet with him further.
Autumn Dean, an accountant with Hartman and Williams LLC, completed an audit of the records at Pawlak Orthodontics and, based on a summary between the Ortho-trac and Quickbooks records, $292,251.32 was found missing between 2014 and 2019, the affidavit said.
Dean’s report indicated that a sample comparison of Ortho-Trac entries made under Malinda Downey’s login credentials compared to payments recorded in Quickbooks from 2015 to 2019 showed that payments were recorded in Ortho-Trac but not in Quickbooks and that $74,078.00 was missing in Quickbooks. Additional transactions still are being scrutinized.
The investigation led to Wednesday’s warrant issued for Malinda Downey's arrest on the Level 5 felony charge of theft (over $50,000). She was booked at the Jefferson County Jail and later released on bond.
Pawlak has since issued a statement to reassure patients that the thefts that are charged were from Pawlak and not customers.
“We at Pawlak Orthodontics want to thank our patients for being dedicated to our office. We appreciate the loyalty you have shown us. We have had an unfortunate situation occur. A former employee has been charged with theft of funds from our office. We want to assure everyone that this has not affected any patient’s accounts. These were cash-only payments and only affected the bottom line for Dr. Pawlak.
“We want to assure everyone that we have taken measures to make sure that something like this will not occur again. Again, we sincerely appreciate the support and patience we have received from everyone while we deal with this issue.”