Hidden in Plain Sight - How a Dental Office Manager Embezzled $370k

[0:00] You are listening to the Dental Practice Owner's Podcast brought to you by Prosperident. From our unique perspective as dentistry's embezzlement experts, Prosperident's team can bring you the information that is important to practice owners. The Dental Practice Owner's Podcast brings you strategies, tools and tips that you can use and dentistry's thought leaders as guests. So sit back, relax and listen to Prosperident's Amber Weber, Wendy Askins and David Harris

[0:31] talk about the issues that matter to you. Hi everybody. So we'd love to share our stories to our dental community and tonight we're sharing an amazing story hidden in plain sight so you know this is the case that my dear friend and colleague completed and I can't wait to hear the entire story. Most of our webinars last about one and a half, an hour and a quarter, 1.25 hours and

[0:57] we will have a Q&A session at the end and then we also have a chat box. So we hope that you can stay for the entire webinar but if you can, we do record these and you'll be able to look at this around Tuesday. As always our great friends with Altera periodontis allow us to provide a continuing education for those of you who attend. So I'm super excited to hear this great story and thank you everybody for being part of our

[1:22] audience. Alright, well I get the honor of introducing a couple of special people and I'm going to start with our outside guest for tonight who's Dr. David Hughes. David is an orthodontist in Virginia. I can say having gotten to know him that he is a truly wonderful guy. We met when he phoned me and he said I think I might have a problem, there he is, I think

[1:55] I might have a problem with my office manager and he told me a little bit of the story and after he did I agreed with him that there was likely a problem and then we started investigating and you're going to hear the results of that today. David has become a real evangelist I think would be a good word for protecting your practice and not going through what he went through which was extraordinarily difficult and of course we really appreciate him sharing his story with you tonight.

[2:32] Our second special guest is somebody you probably already know and she's one of our on-camera people but she's here in a little different capacity tonight and this is Wendy Askins. Again, you know her as our very urbane well-spoken host on camera but here are some other things about Wendy. First of all she's what's called a supervising examiner here and we have three levels of examiner supervising examiner is the very top so that means that Wendy handles some of

[3:06] our most difficult challenging cases and has done so for a long time. She's been with us I think Wendy next month is 11 years if I count that correctly and she has a couple of distinctions here at Prosperity and she has found more embezzled dollars than any other investigator here and that's saying something because we've got some some big cases from time to time. The second thing is Wendy has more letters of commendation from clients than any other

[3:39] investigator so she's she's really a legitimate top gun. She's also an MBA and has earned the certified fraud examiner designation. Before Wendy came to us she I said 10 plus years here Wendy but I think it may have been a little more than that I just didn't want to really telegraph your age but before she came to us she ran a multi-practice multi-doctor orthodontic business and so she's got a very deep orthodontic pedigree so that's the stuff you might not know about Wendy but

[4:18] now what what we're going to do is we're going to turn turn the podium over to David and Wendy and the way we do this and those of you who have been with us in in previous kind of case presentations like this know this we we have some recorded video but we also have both both Wendy and David here with us live so we'll play the recordings and then they'll they'll likely chat about them a little bit and and just to emphasize what Amber said we've got both chat and Q&A open so if you have a question for the panel

[4:50] use the Q&A if you want everybody to see use the chat so the first question that was asked was well what caused suspicion here in the first place? It frankly was not on my radar in my practice for the first several years I was very busy focusing on the patients and trying to establish myself in the dental community I had this very high level of trust in my financial systems in the office and because I bought a practice just a year or a half after residency I really had not learned how to run a practice from the financial aspect

[5:33] started working with an orthodontic consultant who was kind of a game changer in helping me establish less of a mom and pop business and more of a professional level practice I gave this very high level of trust to this office administrator and I I frankly turn my attention away from the business in terms of what was happening with the financial resources of the business as they flowed through the practice my office manager just started behaving differently and I'm not coming to work every day and acting depressed and anxious and staying after

[6:24] work a lot and being sick a lot and not I felt like there was something going on with her so changing behavior was a big thing yes I mean obviously we uncovered some very easily identified problems some transactions that were not authorized that's what triggered the investigation but she was president at a consulting event or I should say a meeting and the consultant that I work with an orthodontic consultant that I work with read her behavior also and said that she's overcompensating she's she's trying to telegraph extreme loyalty and there's no reason

[7:13] to do that there's something wrong she's trying to cover something up you need to go home and look at your accounts table your so while I was focused on production and collections and everything that we as business owners were worried about the business staying afloat or being profitable so we look at the incoming funds and we don't look at how it gets diverted potentially so that opened a floodgate of discovery and it was beyond upsetting and just as way of introduction I don't love talking about this but I love helping other people avoid it if I can because it's truly

[7:54] horrible to deal with the aftermath the key is prevention absolutely and one thing I'll say about the consultant community is that we get first of all a lot of referrals or questions from consultants and and also every consultant has a story about you know I was working in this practice and there was somebody there who really didn't want me there and you know we called prosperity and we dug a little bit deeper into it and you know there was something behind it I mean just before we went live tonight Amber and I were talking about one of her cases and

[8:29] it's a similar kind of story you know there was a consultant who since the things weren't right and got us involved and you know it's it's it's all kind of unfolding from there I guess David we should let the audience meet your your adversary in this right so this is my former office manager who I originally met as a mother of two patients you know you could say she's a it's hard to see anything different about her she doesn't read as someone who's up to no good military spouse college educated very

[9:14] high functioning in the administrative areas can really take care of the back office in a way that freed me up to see patients so she worked for me for 11 years and I would say for the first I want to say five years she was really key to to being part of a growth spurt in during which time we renovated and expanded the office and really took what was originally a smaller practice that I bought into something of a different size and scope so I was very happy with the relationship because of that history but then it was that that second half of her tenure

[10:00] there with everything just was falling apart and I I would work with her and talk to her about what was going on and she passed it off as being health problems and I don't know anyway it's um the key to this slide is just that you can't see or even detect the motivations of people sometimes and it's better just to have safeguards and assume that the unpredictability of human behavior has to be built into your system and you can always you can say that your checks and balances are dictated by your

[10:39] insurance or the accountants require that I do this or I have to look at this because if I don't I'll get in trouble with the accountant you can make it doesn't have to there's no reason why you have to hesitate to look carefully at primary documents and everything that's going on she um she was good at creating a layer of detachment between me and the in the data to kind of create a a report system was a secondary kind of doctored set of numbers so I felt like I was looking at the information but she had manipulated those figures wow

[11:18] and then of course the obvious question is why why she did it let's let's hear what David said earlier and as the investigation continued I was I was floored absolutely floored by the extent of the embezzlement and the the breadth of complexity of the multiple strategies being used in payroll and the company credit cards and the cash payments that were being diverted and the the mirroring of things that we like vendors and suppliers that we used there were parallel accounts set up so that the credit card statement would have recognizable vendors but

[12:06] those purchases were actually going toward personal purchases and amazon there was an amazon account that was opened for the office but it wasn't actually the office account it was under the control of the office benefit it's every conceivable way of stealing funds from the office and also there was there was a line of credit and another loan multiple loans were opened under the auspices of this renovation but the the line of credit like the money was being stolen there's basically a credit as being mugged

[12:54] when do you are on the front lines of this I was going to ask if I could speak to the magnitude that David Hughes is is uh talking about you know generally when we do an embezzlement case we'll find one main area of finances that the thief will focus on be it revenue or be it expenses um with this particular individual she targeted revenue expenses and payroll all three of them now although there were three categories of finances there were different strategies within each category which is where the complexity that

[13:41] David Hughes is is talking about comes from so for example um on the revenue side there was one main methodology that she used on the expense side there were four maybe more um and then on the payroll side there was also four it and I I so wish that we could go into the depth of how this particular theft was committed um because one thing I think it's very important for people to know is that Dr. David Hughes is a brilliant businessman and people who go through embezzlement sometimes are placed in a separate category of you know you're you're not paying attention to your

[14:39] business or well you don't really know your numbers that's absolutely not true with Dr. Hughes absolutely he's a very good businessman and yet the things that she did were so crafty and so complicated you would have to be a fraud examiner to be able to figure it out well thank thank goodness you're uh you're you're one of the most skilled I've ever met um a couple of takeaways here that that I get from this first of all we most embezzlers who we see use three methods and I think Wendy just said that she saw nine um which is oh yeah

[15:21] and don't don't forget Dr. Hughes just discovered one this another one this week I mean it's still going on yeah okay so so we're up to a nice even 10 um in the second thing that comes across is that like most thieves it seems like the thief in this case knew the pattern of her doctor really well and designed her theft patterns carefully to uh kind of evade his his reasonable scrutiny in other words I think the message for the audience is that you know David is not somebody who we would categorize as being asleep at the switch and

[15:58] you know this all happened because he ignored his finances the opposite we would consider him to be a very uh adept operator of a practice and even then it happened sorry David we're talking about you like your slab of cow there but um you know anything you want to disagree with well I will assure you that I've spent many hours usually in the middle of the night beating myself up about how this happened and um I I checked a lot of things by asking her to run through we have like these little meetings where I would have her run through everything and show me charts and

[16:36] numbers like I said earlier um the key is just to as I said earlier just prevent there's no remedy for this after it happens you you won't get restitution in most cases um David Harris will tell you that his clients rarely see the money that was it's disappeared um you won't get your piece of mind back very soon and it's just a it's a seemingly endless disruption so yes the the vaccination is much better than the cure here for sure yes um what I say about about restitution is that every dentist gets something back uh and relatively few get it all

[17:24] back um and I and I think in this case uh David did receive some money from from the thief uh it wasn't a lot and I I assume you also got some some modest amount of insurance recovery as well um that's another curiosity is that oh okay insurance insurance doesn't cover this very well um so anyway that insurance was not a a factor for me okay so um but the the key is that the bezlers spend a lot of careful time with what they're doing it's a drip drip every day and it's hidden and concealed in the same careful methodical

[18:10] everyday kind of way so it's it's very difficult to unravel it later and figure it out unless you have unless you have Wendy unless you have Wendy um well we're we're both glad that that that we get to share her um the the other thing too that I say a lot and it it really applies I think squarely in this case is that embezzlement's a very unequal battle in other words the thief has a lot of advantages over the doctor and that's that's one thing that we saw in this case so let's ask the obvious question uh why did Lisa do this?

[18:51] So yeah here's do as I've learned is that they they convince the doctor that they're irreplaceable and that's a that's an absolute red flag for people that know better and are alert to this and believe me I beat myself up about all of these these different weaknesses that I had and were obvious to her but she saw that I was watching certain things and not other things and honestly the embezzlement went on for about five years it just things were not adding up to me but she would always say oh it's it's understandable or you know the costs have gone up and you haven't

[19:29] associated and we're just the overhead is different and I said well where's the pie chart show me the overhead and she was very evasive about that because a lot of the numbers that we were turning into the um the consultant and the numbers that she was showing me were all either about the income of the practice which I believe was correct but the expenses and all these other things were actually fabricated I was being shown secondary documentation this was reports fabricated reports and the primary documents of the bank bank statements credit card statements

[20:11] payroll details those were dismissed as oh you don't want to get in the weeds with that I'll just show you the numbers these are the numbers we're doing great let's just keep working and you see the patients I'll work with with everything else and

[20:30] yeah again yeah can I go on on David's story um one thing I love about working at prosperity and is that we get to see some very private insights to our clients because they're in a very vulnerable place when they're working with us and also they basically splay open their financials to us which is a very sensitive topic for everyone one thing that I remember that hurt me so deeply is that there were some communications that had gone back and forth between David Hughes and Lisa Enzel and I saw even the manipulation in those responses

[21:29] that she was giving him so for example she first when when the subject was first broached with her there was this defensiveness and then she immediately started blaming him you know saying I even wrote down the phrases phrases like you weren't there everything I did for you after everything I did for you I'm not sure where you would be if it weren't for me um and to to David's credit he was so kind and so well tempered during his responses to her

[22:14] it it actually amazed me of course at that time we didn't know the extent of what the fact would be but he knew it was happening but he was still very measured and very kind to her and to me it says a lot about him and his character to be that measured um another thing that I noticed through reading is that when the tactics of manipulation weren't working on him anymore then she changed and she became outright nasty I mean just just said just some very mean things um that she had said and again David was very measured

[23:03] and one thing that I was hoping that maybe you could address David Harris is that upon confrontation in the beginning she offered him I think $160,000 from her retirement plan immediately immediately and Dr. Hughes kept saying you know I need to do some more research on this before before we make any type of agreement I need to speak with legal counsel I need to speak with other professionals before I agree to accept this so I'm not agreeing to accept it right now David Harris can you tell our audience why that is so important

[23:50] absolutely um and great question why I need most most these uh under report you know if they're confessing they under confess to what they're stealing and those of you who were with us a couple of months ago when we presented a case that that Amber Weber Gonzalez had done saw that graphically because the thief confessed on video to stealing $25,000 and the real number amber if memory serves me was about $175,000 and and if he was always under confess or under report I think sometimes it's because they've lost track and of course also because

[24:29] they're trying to minimize punishment and one of the best ways to minimize punishment is to to to lay out not what you did but what you think somebody else would believe so if you're in the position that David Hughes was in and you're offered a settlement if you accept it without knowing the real numbers I mean you're just you're you're just like like a sightless person in in a dark room you have no idea whether the amount you're being offered correlates or or doesn't to what was stolen from you and uh from from our experience

[25:05] in this case and and also with amber's case and others uh we know that that what's being put in front of you probably is not what you lost right um but yeah kind of classic manipulations and I'll tell the audience too one of the most manipulative questions that that a thief can ask you is don't you trust me doctor you know that's that's passive aggressive manipulation at its finest

[25:42] and um as I said that earlier the the the real impetus to get this investigated came from a consultant uh I do see somebody from that consulting firm is uh is is in the audience Karen Moed welcome great to have you with us uh so let's let uh let David tell a little bit of the story of the involvement of the of the consultants here my consultant was with me and my office manager at a meeting and my office my my consultant said there's something very wrong here this your office manager is acting strange and she's she seems to be trying to cover

[26:23] her tracks in some way and deflect attention away from something I need you to go back and look at your accounts payable and you did David and what did you find

[26:38] well I found some problems right away well actually to be honest um um I started the investigation with your team David and it was in the first um fact finding inquiry to my accountant my accountant called me within 24 hours and asked me if there was any explanation for this one large check that had been written recently it was a forged check and then that snowballed into many other problems but it was the the initial investigation and

[27:18] as many of you might know prosperity has the capability of creating a a clone of the office server and going through it in great detail without having to disrupt office operations or or reveal what they're doing to someone who still might be on payroll but I I found out on a Tuesday evening what was going on and or Monday night maybe and let my office manager know that she wasn't to come to work for the rest of the week until I figured some things out and that's when she was sending all

[27:57] those very strange messages she was panicking I suppose but then I had to use a I didn't fire her in the normal way I had to use legal counsel to terminate her create a a do not trespass order it was it was quite a whirlwind week but there was really only the beginning and it's still going on that was four years ago and the case isn't even finished in the criminal system because of COVID yeah I think if if I remember she has pled guilty and is now awaiting sentencing is that for you are roughly that is true yes

[28:37] but again let's give a shout out to the consulting community in general and and hummingbird associates specifically and hummingbird if you're not familiar with the name is an orthodontic practice consulting company that's been around for a very long time and and has a great reputation in the in the community yes thank you Karen if you're there thank you Karen yeah definitely okay so you know consultants are in in more than a few cases kind of if I can use another bird analogy that the canaries in the coal mine who will who will sense the danger and and let the

[29:13] doctor know and that was certainly the case here my concern and then of course we get to the subject of trust and something that we hear a lot as as the investigators is that you know the person stealing was the most trusted person in the office and my answer to that is you know it's kind of the self-fulfilling prophecy I mean if you're not able to gain that amount of trust from the doctor you typically don't get the access to steal but David had some some very interesting comments about the whole the whole question of trust and and Lisa the thief and let's hear what he said

[29:54] I kind of because by then things were busy I I just kind of cut and paste that level of trust to the new person making additional assumptions of integrity based on the fact that she was one of the moms in the practice she was from a military family her husband was working in the Pentagon I just I had other military spouses as staff members and they in my experience they they have a very high level of integrity and a sense of duty and resiliency with having to move so many times they're just I think special people and I

[30:34] I ascribe that to this employee of mine in retrospect very mistakenly

[30:47] I'll make the opening comment here you know life is a lot easier when you can convince yourself that you should trust the people around you and a lot of times people will revert to some kind of rule to convince themselves that that people around them should be trusted and David mentioned the military spouse one and there are others when the previous case that we did with with amber and dr mark solid and mark knew the the thief in that case from church and mark is a fairly religious guy I think and he just assumed that anybody who you know went

[31:26] to his church and at least overtly shared those values with him should be trustworthy and the reality I think David is something different yeah and I think another thought I had earlier today in anticipation of this meeting tonight is that some people in in positions of responsibility and busy businesses even though dental offices can be relatively small businesses there can be a lot of cash flow through the business with a lot of income but also a lot of expenses and I think that if someone isn't

[32:11] used to that level of responsibility they they misinterpret or they twist the responsibility into something closer to like a power it's like it's not that they have responsibility they have power and power does strange things to people so seeing and like shepherding money through the practice if you feel responsible then it goes well but if you feel powerful then you're like well I'm part of this and I deserve to be in on it I don't know it's I'm I try to be a mature psychologist and it's it's just guessing I don't know but no no I like I think you're on to

[33:00] something and and I think a lot of thieves David construct a partnership you know they they view themselves as your partner and that they're integral to your success and then the next thing they decide is that and he's not really rewarding me properly for that right and you know they but they they construct this this otherwise unrecognized partnership in their head and then they they take what they think you should be paying them right and even when when we tabulated the losses Wendy even

[33:40] changed the like the pay on the payroll side we even changed the salary that she thinks she should have been getting and then still came up with the losses above that so I'm not sure where I'm going with that it's just that she thought perhaps that she was owed more but she went way overboard because of the whatever feeling she had about getting away with it it just opened floodgates and it accelerated there's actually it was not a geometric curve of broad it was like accelerating over time it was worse every year during the years that she was

[34:20] doing it yeah I noticed that in some of my cases and even the one we talked about on our last webinar he started to see a climb right it's like each month a little bit more and not as fearful that something was going to happen yeah that's a good part of it Amber and the other part is too that people's lifestyles tend to climb to reach their incomes so you know if the point of stealing is you're trying to get a little bit ahead of what you're spending and if you consistently steal a thousand dollars a

[34:54] month then at some point your your living expenses have sort of moved up to that thousand dollars and now you need to steal more to to stay in front of it right so it tends to be cumulative the next slide is pretty interesting and something that we say often is that dentists think that their accountants are doing more to combat the problem of a vesselment than they really are and and and David kind of found that out the hard way and he's going to tell us about it I felt vulnerable and I asked my accountants for an audit just to because there was a lot

[35:33] of money flowing in and out of the practice for the purpose of the you know the the debt service on this expansion renovation I just wanted to make sure there were eyes on all of those transactions and it was weird I don't remember their response precisely but they basically declined like that wasn't really their role I guess in their eyes and years later when the embezzlement was discovered I spoke with David Harris at Prospera and he enlightened me to the fact that accountants services are in a tiered system of responsibility

[36:19] accountants are really there to properly handle the numbers that you provide them they're not there to verify your numbers or to babysit your practice because of the quick books that we were sending to them with all of the expenses and the credit card statements and the checks everything I assumed that they were aware or at least watching something and I I just I don't know why I thought I just didn't understand yeah you know what what people sometimes don't grasp about the way that dental practice

[37:01] accounting is kept is that you have two sides you have the revenue side which is patient payments and insurance payments and you have the expense side like payroll and rent and stuff like that and what's different about a dental practice from most other businesses is that those two are attracting different pieces of software so most businesses use a single piece of software something like QuickBooks that looks after both revenue and expenses but that wouldn't work very well in dentistry because you need to bill insurance and use CDT codes and all the

[37:32] kind of specialized parts of the revenue side so you have this bifurcation between two different pieces of software what the accountants look at typically is QuickBooks they spend very little which really means probably no time looking at your practice management software and yet in most theft that's where the bodies are buried yep

[37:56] and Dave I like to tell clients that um there's like a gray area between your practice management software and what your QuickBooks or your accountants sometimes there it can be muddy waters and you really start diving deep it absolutely is and again most accountants in doing their work they don't actually need to look at your practice management software and they really don't have any expertise and in fairness to the accountants there are you know a hundred plus types of practice management software out there and it would be a little bit unrealistic to

[38:28] even if an accountant specialized in dental practices it would be a little bit unrealistic for them to learn all of the practice management software that that that their clients use so to them the practice management software is really a black box and the black box produces a number and that number goes into QuickBooks and the accountants spend very little time again probably really no time looking at where that number comes from or or whether it is in fact accurate and I think David that's that's kind of um you know you realized I think at some point that there

[39:04] was an expectation gap between what you thought the accountants were doing and what they actually were able to do right and when I asked my office manager whether she was reconciling our office management financials with the bank statements and all the that muddy waters I was trying to ask her about that she would assure me that she was checking all that out but she would never you know raise the hood and show me underneath what was happening and and to me the takeaway here is that every employee in a dental practice needs oversight

[39:40] and if somebody functions without oversight which is I think what you just said was was kind of Lisa's condition um that's that's when stuff's going to happen um so Wendy any any thoughts here I was just thinking about um yes what you're saying is true but but I do have to say in this particular case um hummingbird alerted David that there were some behavioral issues and David attested to that he had seen that in the past so they hired prosperity but like David said a little while after that it was his CPA that contacted him and said

[40:27] hey I'm seeing a pretty big check here did you write that did did you authorize that uh David I don't know if you had made Keith aware um of what was going on in the practice or not about your suspicions but I do have to give him props for calling David and saying this doesn't look right um but one of my things I I think that people get most confused about is the reconciliation that we're talking about in that when your CPA produces a P&L for you they're taking strictly the deposits that have gone in the bank well the thing with that is that

[41:09] the deposits disappear before they get into the bank so if you're only looking at B and you're excluding A you have no idea if those are supposed to match or not and or if they do match or not and I'm working on a case right now of a young practitioner who who just brought his first practice and I'll go into all the details although you know I know I'm going to tell you they're fascinating because they are um well this gentleman had to thought you know I'm just going to take a basic Excel spreadsheet and I'm going to in column A

[41:52] put how much my practice management software records that was recorded in that software per each month and then I'm just going to you know look at my bank statement up at the top and I'm going to see how much that is and I'm just going to put them side by side and I'm just going to kind of keep a running tally of them right just off the top of his head doesn't know how to run a practice he just thought well you know this this might be a good thing to do you know he was short a couple of months in a row and then wham over four months it was

[42:28] a hundred thousand dollars that went missing and that's when he called us and he said something is very wrong here what my practice management software says I recorded in revenue is not being deposited in my bank and I just don't know where it's going um well obviously it it was going somewhere and we figured it out for him um but anyway that that's just to go to the point that a lot of people don't understand that CPAs don't reconcile they think they do but they don't bookkeepers reconcile yeah so true and uh we we have uh in the audience tonight uh a dental

[43:09] bookkeeper named Annette Woods and uh she just put something in the chat where she said a practice should never do its own bookkeeping and she's she's so right um thanks Annette great to have you here so then the question comes up well what's it like to work with prosperity and let's let's hear what David said in recorded comments when whoops sorry and um as part of the technical difficulties tonight I'll mention that I'm not in my office I'm actually in Boston for the Yankee dental conference so we're we're doing this on

[43:43] not our usual gear and that's that's part of the reason we've had a couple of slip-ups let me try that again yeah okay please work when prosperity asked me to provide access to certain things payroll and they actually did a a mirror image of my server eventually and looked at everything in my practice management software and as the investigation continued I was I was floored absolutely floored by the extent of the embezzlement and the the breadth of complexity of the multiple strategies being used in payroll and the company credit cards and the cash payments that were being diverted

[44:36] you know I I have to compliment David Hughes as well because he was very proactive in getting us documents and things that we needed I mean David you remember we were trying to pull down some payroll records and he didn't even have he didn't even have access to his payroll records he had been locked out of it and she deleted everything on her computer in the few minutes that she had on the day that she left yeah but that's that's one of the main keys to a successful examination is if the client will get you the documentation that you need and David was just awesome at that I mean

[45:27] no matter how hard he struggled trying to get new passwords and trying to prove that he was the actual owner of the business even though he didn't have the password um he really struggled with that but he did a good job so my compliments to you David thank you I had two of my staff sideline for four months cataloging all of the data before the report went to the police so it's a lot of work and it's a great distraction as I mentioned to the practice as a whole absolutely and and just a reminder for the audience we're getting close to the end of our

[46:09] kind of prepared part of the presentation and after that we're going to go to questions and answers and and just a reminder to as you think of them put your questions in the q&a um Ambers uh watching them quite closely with with Wendy and they'll uh they'll kind of collate them and we'll use them in a few minutes so we're we're almost there um I guess what we all want to hear from David is what did you learn from this and uh he he made some great remarks in in the recorded video so let's uh let's let's make that play I learned this lesson the hardest

[46:50] way possible and that is that doctors tend to focus on new patient um starts um referrals basically the production end of the practice finances once money comes into the practice and is flowing through the practice with the accounting systems with accounts payable accounts receivable payroll there there are a lot of places where you can spring leaks both through negligence or just not following up with you know insurance delinquencies patient delinquency there are lots of little procedural things that can make a leaky barrel problem which is about competency

[47:37] and and doing things the right way and on time and I I did worry about those things a little bit and I would obviously keep on I put those numbers in from the financial coordinator but I didn't I didn't think of fraud as being one of those things

[47:57] I love that point David because it it seems like every time I go to an orthodontic meeting especially there are tons and tons of speakers on increasing production how to connect with your referring offices increase your referrals increase your production and sometimes I think man we are missing a huge part of it and that's the other side of it that the more you produce the more you collect the more money I have available to steal from so but I have a question for you what are you doing differently now in your practice

[48:42] than you were prior to this event well it's actually fairly simple I'm just watching everything that I should have been watching from the beginning but more specifically prosperity has a like a prepackaged system that you can bring into your practice it's called the practice protection system I think that's called is that the yeah owner owner proactive strategies yeah exactly yes so you don't have to reinvent the wheel and it shows you step by step how to how to create these systems of oversight and it has procedures for each team member

[49:23] and the practice owner to follow up on all the different things that need to happen in the office so I'm reviewing statements and I'm reviewing everything that I need to look at every month and we we run different kinds of reports that I didn't run before and I look at the you know the closing out of the day and everything like that that worse we do we had separation of duties before which gave the appearance of oversight but my office manager had manipulated the social structure of the office and Wendy can talk

[50:01] about that where they can almost change the loyalty structure of the office and start becoming like a a competing like center of authority and so they start calling the shots a little bit and like anyway it's it's complicated but just follow that that system it's it's much easier just to get that on board with the people that have seen everything and have covered all the bases with that system so prosperity that's the main thing to take away from this meeting in my opinion just to get on board with that yeah absolutely and we'll just play his his recorded

[50:43] comments quickly but I think it's pretty similar yeah embezzlement dealing with embezzlement is about prevention I'm part of a an unenviable fraternity in my state with two other orthodontists that have had this happen to them all three of us are speaking to our local societies to try to help others you won't get your money back you won't get your sleep back just prevent this from happening put the safeguards in place put put please work work with prosperity I'm not aware of anyone else that does this and in the way that they do it and helps you

[51:26] wow wow and even that was that was great let's say one more thing before we go before we move on real quick I'm sorry you know I'm just attached to this case I'm attached to David Hughes um just so everyone can kind of get the magnitude of of this if you haven't already um this case went for grand jury and they did a true bill of 47 felony counts that's amazing it's shocking it's shocking in someone could steal that much it's shocking that Dr. Hughes could have the wherewithal and the strength to withstand it and to go through it and come out on the other side

[52:20] as well um so David your case went before grand jury received a true bill um charges were filed she pled guilty and so I think we covered where where we are now with that um you're still fighting for that although she's she's pled guilty you haven't gotten to sense sentencing yet it's been continued right correct it'll be finishing up at the end of February okay that's what I thought yeah thank goodness and I don't think in in the presentation we actually gave an amount to the audience um and and David I know it's it's it's a little bit of an uncomfortable topic but

[53:02] why don't why don't you give people some idea of what what an enterprising thief can do to a doctor well when you spread it out over the number of years and you look at it in percentage terms she was she was skimming during a period of growth where it was less easy to notice but the the actual dollar amount was quite shocking it's um it was north of three hundred and seventy thousand and money missing but then in in Wendy's report after adding lawyers fees and other costs um I think the final number was four hundred twenty eight

[53:46] thousand and that again has gone up because I've found many other instances since those numbers were compiled up to and including just this week we found another completely novel strategy that she had been using for something different with health health insurance I mean yeah like the employee benefits so it's it's life changing like it actually changes the timeline of like a retirement a little bit I mean it's just not not a fun number to talk about but that it's a high number um one one other thing I'd like yeah this is Q and I it's Q and I'm sorry I keep talking

[54:30] um another thing that I wanted to point out is um a significant amount of this particular theft was committed through payroll fraud remember there were four different methodologies through and it's just absolutely disgusting one of the things we've always talked on our webinars about how difficult it is to prove payroll fraud beyond a reasonable doubt because it's always one person's word against another person's word one thing that David had which was like the foundation of his payroll case is that in his policy manual he had laid out and structured what races were going

[55:24] to be based on and what bonuses were going to be based on and when we when I first talked to David and we started talking about payroll I thought oh no I hope oh this is going to be difficult I hope we have what we need and turn up he said well it's it's right here in my policy manual I'll send it to you and there it was in writing so props to him as well and another example of why employee policy manuals are so so very important right yes Wendy that's something that's very near and dear to my heart as well I my previous payroll case didn't have

[56:03] as good as documentation so it was harder to prove you know how hard they are there you know how hard they are to fight unless you've got proper documentation for them so my friend Laurie wants to wants to know and wants us to speak to the staff manipulation issues that Dr Hughes alluded to I can give my view on that in that exactly like what David said part of their gain is to get your loyalty away from the business owner and to them that way if they happen to see anything if a staff member happens to see something they won't say anything if a staff member

[56:52] happens to see something they'll think of the thief in the best light if you will and number two it's a it's a position of power that that's what I think it is I think it's taking power away from the owner and placing it on yourself and Dr Hughes specific instance she would give generous loans to other staff members without seeking Dr Hughes's consent prior to doing that so that's one way that she gained their loyalty and bypassed him it was like let's not tell Dr Hughes because he might not agree with it but I'm going to go ahead and do it for

[57:41] you anyway so that's Dr Hughes do you have anything to add that's a good example but she also managed to at least make people believe that she had power over their employment at all because she managed she would I don't know you could argue that she was successful in blackballing a couple of employees like she had my ear I guess and she let everyone know that if you like your job you're going to you know just stay in line and I and she did that without my even seeing that side of her because she she never really showed that that personality to me but it came out as

[58:28] you mentioned when she was cornered at the very end she lashed out in a way that I had never seen so another psychology moment absolutely well we we're getting close to time but Amber any questions that we want to to bring forward I do have a question that somebody asked about the payroll did you do payroll in-house or was it outsourced so it's processed through an outside third party a large provider ADP everyone might know them and we would do the time and like the time sheets everything was kind of transferred over from our practice management so

[59:14] there's a lot of it wasn't all that seamless and I would monitor certain parts of the payroll but one thing I do differently now is that I'm the one clicking approve and I'm reviewing it I don't let no one finishes the payroll they just fill in all the blanks then I review it and approve it I just did that an hour ago before this seminar that's a big thing that I do now that before I thought I was too busy to do but I'm not too busy to do that now good for you and then another question for someone who arrived a little late over what

[59:51] period of time how how many years did the embezzlement occur how long did it so the employee worked for me for 11 years and the the embezzlement seems to have taken place only during the last five years and that's based on extrapolating backwards to when it seemed to go down to nothing but I don't actually have bank records from that far back to investigate the very beginnings of it so about half the time so that's another lesson is that someone who is trustworthy perhaps won't necessarily stay that way

[1:00:29] so you can't think of people as being static throughout their lives and throughout their time in the practice yeah you what you said David almost verbatim is what I say to people you know we cannot view trust as a static concept that you you address once when you first meet somebody and then you never reopen again I mean people people's position in life change their their view of your practice and what their compensation should be for being involved in a change and unfortunately as as uncomfortable a concept as this is for some people

[1:01:05] trust is something we've got to re-examine yeah exactly right we probably have time for about one more question this is a good one was your legal counsel did you have legal advice David when you decided to terminate her did you confront her what what you had uncovered when you decided to terminate her yeah so I um I did get legal counsel before I even saw her from the time that I

[1:01:39] realized something was wrong or specifically wrong to the time that I met her I'd already been in touch with lawyers and um she she came into work the morning that I confront actually it's funny she um I didn't confront her initially I just she came into work a little bit late as usual for that time that she was with me and she she threw a little tantrum because she said she couldn't get into the payroll system or the bank I had changed all the passwords and she was locked out and she was she was upset she didn't understand what

[1:02:16] she was and um so I confronted her and she I only talked to her for a short time and she had to leave for an appointment or something and I um she never came back to the office I I had lawyers involved with all of the firing process so you have to you have to have help with these things so someone at oh I'm sorry someone asked did did you what was that last question Amber did you immediately did you immediately end access to all software I did I did but I guess she was locked out of everything all the

[1:02:58] main systems but the one thing she did is she deleted all of her work email like a hundred percent of her work email that was one thing that we didn't get but she the other thing that took me a couple weeks to remember is that she had the password to our security cameras so she was at home watching us from home going around the office and that's how I found out that that's how I found out that there was a very incriminating file in one of these drawers because I I went into our office and I opened this particular drawer and I got an immediate text from her saying

[1:03:34] oh I just remembered there's a file there's it's personal it's not for the office I just need you to mail it to me and that's the first file that we I drove it directly to the county the county seat to the police department that was the first evidence that file it was it was full of personal stuff like house renovation level expenses which is what she was doing partly wow anyways so just yeah that's interesting too and I'm glad you brought that point up David because the prosperity has um an employee separation checklist yes yes that's correct um

[1:04:15] because I I love that you're getting giving a firsthand account of things that you just don't think about yeah right especially you know at this particular time period I always say I mean you're heartbroken your mind is blown you're heartbroken you're scared of what's going to happen to your business and your finances and how much is it and how deep does it go and who would think change the password on your security camera right yeah right totally understandable yeah wow we had uh we had some terrific questions from people and I think

[1:04:56] we got to most of them um if you do have questions about your own situation or you want to learn more about the the protection stuff that that David Hughes talked about uh we're happy to talk talk to you after um if you enjoyed tonight especially our our technical hiccup at the front when we had the the repeating loop going around um we would love you forever if you left us a five-star google review and that's where you can do it um just a couple of things in closing first of all I would like to send a huge thank you to our guest Dr David Hughes I mean he came on here tonight

[1:05:30] yeah and and bared his soul uh for the for the benefit of the audience and we are we are just so grateful um and and also uh our our guest slash host Wendy Askins who uh was was there with David through this this whole process uh really great insight from both of you tonight of course uh Amber Weber has been handling the questions as ably as she always does and our off-camera person Sheila O'Driscoll who many of you got got emails from and stuff want to thank all them but but David Hughes we are we are so grateful to have you I will

[1:06:11] mention that we asked David if he had a a specific charity that he supported and he mentioned Operation Smile uh and and we've made a donation on his behalf so David thank you again so much you're welcome thank you David thanks everyone um and finally if you need to if you need to reach us there's how to do it um and I'd like to again thank our our guests our hosts and behind the camera crew and uh also you are our audience for for being there and just amazing participation tonight I couldn't believe how much the the chat was lighting up and

[1:06:50] we also had some great questions uh we do not have a date or a topic for our next one yet uh we'll the the crew will be getting together in the next couple of weeks to decide on that we'll uh we'll get back to you uh we are certainly going to continue more stories like this where we have people who have learned some lessons the hard way come on and tell their stories so we'll look forward to more of this in the future uh everybody enjoy the rest of your evening and uh we'll we'll all be back with you soon good night good night good night bye

[1:07:25] oh hi everybody thanks for listening to the dental practice owners podcast brought to you by prosperity you can contact prosperity through its website www dot prosperity dot com or by calling 888-398-2327 if you have questions about this podcast if you would like to discuss your practice or there is a topic you would like to see in a future podcast we would love to hear from you amber wendy and david will be back soon with another episode