I’ve Heard That If I Suspect Embezzlement, Stealth Is Important. Why?

When an embezzler thinks that he or she is about to be discovered (and possibly go to jail, have their friends read about them in the newspaper, have their spouse find out about their illegal activities etc.), their thoughts turn to self-preservation.  This is a very powerful emotion, and anyone who has ever taken lifeguarding training is well aware of the danger of getting too close to someone who believes that they are in danger.
We have seen many instances of destroyed hard drives, missing backup media and in a couple of extreme cases, arson and murder committed by dental office embezzlers attempting to cover their tracks.  (read about here — https://www.prosperident.com/2016/07/05/assistants-life-…tal-baltimoresun/ )
Although such efforts normally end badly for the embezzler, the dangers they pose for dentists are considerable.   When we say that embezzlement investigation is a job for professionals, this is one of the reasons why.  Prosperident has expended considerable effort perfecting the ability to conduct stealthy investigations to protect you from these issues.
If you want to discuss your situation in confidence, we are happy to speak with you.  You can call us at 888-398-2327 , send email to our embezzlement hotline which is checked daily by our on-duty investigator at emergency@dentalembezzlement.com, or chat with us using the “chat” button that should be visible in the lower right corner of your screen.   We will get back to you as quickly as we can, normally within 24 hours.

The Mind of the Embezzler

I’ve often said that our embezzlers fall neatly into two categories, which I labeled the “Needy” and the “Greedy”.  The Needy are exactly what you expect; some life event has made their finances unworkable, and they are stealing to preserve the basics of life.  Some of the events that might prompt this include an addiction, a spouse losing his or her job, or a divorce.  Stealing is done because the thief feels that they have exhausted their other options.
The Greedy are a bit different (and fascinating — I keep threatening to write a book about them — perhaps this column is the start :-).  These people steal to scratch an emotional itch, not a financial one.  We are completing an investigation now where the thief won a seven-figure lottery prize, and after winning the money– get this — kept stealing.  These thieves get some kind of “endorphin rush” when they steal and it becomes addictive.
The Greedy thieves I have met are smart people and in many cases are close to being the intellectual peers of the dentists they work for.  I think that at some level they resentfully compare your wealth and status to their own, and decide to address the inequity that they perceive.
In contrast to the Needy, Greedy thieves tend to flaunt their “winnings”.  We have seen everything from top-end BMWs to boats to membership in the “Shoe of the Month Club” bought with YOUR money.
The good news is that our extremely popular Embezzlement Risk Assessment Questionnaire is excellent at ferretting out these thieves.  The Questionnaire provides a systematic way of capturing and evaluating the behaviors that are characteristic of embezzlement.

When Dentists Behave Badly

Do Dentists Embezzle?
By David Harris
I think everyone reading this newsletter is aware of the shockingly high probability of a dentist being embezzled in his or her career.  Published statistics put that probability at three in five dentists, but because some embezzlement goes unreported and some is never detected, the true probability is likely about 80%.
It is tempting to attribute this pandemic to the necessity to have employees, with those employees being generally less educated and having a less developed sense of ethics than the dentist.  By this logic, while it is quite possible to be victimized by staff, it is unimaginable that another member of the dental fraternity would steal.
This reasoning is doubly flawed.  First, the overwhelming majority of dental team members share the altruism and integrity that most dentists bring to their profession, and the embezzlement statistics are a result of the actions of a very small proportion of dental staff.  And second, one dentist stealing from another in a group practice context is something that we encounter with some regularity.  We usually have four or five active investigations of this type in progress.  While this is a small proportion of our total investigations, we need to bear in mind that the number of multi-dentist practices where this “fratricide” can happen is relatively small also.
What I want to establish is that the causes of embezzlement are not as simple as modest economic circumstances and underdeveloped ethics.  Most of our dentist-embezzlers are already reasonably well off, and it is clear to me that they understand the ethical transgressions they are making.
So why do they do it?
Sometimes the embezzlers feel that the dentist they are victimizing has somehow wronged them in the past, and they are (using a very twisted concept of fairness) attempting to right this historical wrong.  In other situations, I believe they get some kind of biochemical thrill from successfully stealing (analogous, I guess, to the celebrity shoplifters we sometimes read about in the news who steal a $10 item from a store while earning millions of dollars).  And the dental education and licensing process is probably far better at weeding out the undexterous and unintelligent than the sociopaths.
If you are not in a group practice, at this point you are probably questioning the relevance of this discussion to you.  It’s actually pretty direct.  Embezzlers who happen to be dentists are bestowed a huge advantage by their victims.  Because their actions are “inconceivable” (and I’m now quoting many of the victims), the perpetrator receives far less skepticism from the victim than he or she should.
Regardless of your practice situation, an easy way to make yourself vulnerable is to decide that it is inconceivable that a certain person will steal from you.  We have unfortunately seen far too many of these “inconceivables”.  In addition to the classic cases of the trusted long-term employee we have also seen embezzlement committed by siblings of the dentist, children, and even spouses.
I’m not suggesting an ongoing hunt for embezzlers the way Sen. McCarthy once hunted for communists; simply that deciding that anyone is “above suspicion” is exactly the enabler that they need, if they are so inclined.  We just can’t completely rule out the possibility of someone being a thief.  Whether you practice solo or in a group, some amount of skepticism is a healthy thing.

Our most popular article ever — What I Learned About Embezzlement by Playing Chess With My Son

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(Originally appeared in Dental Products Report)
While this isn’t the way that most articles about dental office embezzlement start, playing chess with my son taught me something important about embezzlement.
For his age, he is a decent player. He has a well-developed sense of strategy, which allows him to routinely defeat his peers. However, he has never beaten me (although I confess that he came close once last summer). My perfect record isn’t because I am smarter than he is (objectively, the reverse is probably true) or because his strategies are deficient. I attribute my success to having the perspective and wisdom of an adult, which allows me to study his moves and discern (and counter) his  strategy.
Before we get mired in the philosophical debate about whether we should occasionally allow our children to win, let’s apply this same logic to embezzlement in dental offices.
A couple of basics first – published statistics suggest that 60% of dentists will eventually be victims, and that the average amount stolen exceeds $100,000. Some dentists experiencing these losses have been forced to postpone retirements, others have marriages ruined, and the aftereffects of embezzlement have made practicing less enjoyable for many dentists.
Furthermore, while active embezzlement is occurring, practices tend to underachieve in ways that extend beyond the amount being stolen. Thieves tend to sabotage efforts made by owners to improve their practices, such as engaging consultants, implementing changes, and hiring new high achieving
staff. The true cost of embezzlement can extend well beyond what is stolen.
The transference from my family’s chess games is this – the embezzler has ample time to study the “moves” (by which I mean the control system) of the practice owner and to plan an embezzlement that will defeat the structure. The embezzler is also likely to bring far more knowledge and worldliness to the problem than the dentist can, and to adapt quickly and successfully to any changes implemented by the dentist (much like the way that the process of monitoring one’s chess opponent, and reacting to any apparent changes in tactics, is an ongoing one).
This adaptation is helped because, much like the large number of moves possible on a chess board, there are many possible embezzlement pathways in most dental practices.
So are dentists consigned to perpetually lose in this battle of wits? I don’t think so. In the same way that my son is developing as a chess player (I mentioned that he almost beat
me a few months back), you too can improve your skills. He is becoming more competitive not by improving his basic strategies (which are already pretty good) but instead by becoming more observant of my moves and better able to discern the strategy that underlies them.
You can also benefit from becoming more observant of your opponent. In its 2012 Report to the Nations, the Association of Certified Fraud Examiners reported that more than 80% of
embezzlers displayed some type of behavior indicative of embezzlement.
I’ll mention that this is a different approach than the anti-embezzlement measures that are most frequently advocated for dentists like separation of duties and increased self-audit (which I would really equate to trying to improve basic strategy). To be clear, I am not suggesting that these
suggestions are bad ideas; rather that, in the unequal battle between embezzler and victim, they are simply unlikely to be successful.
I’ll also recommend an excellent tool to improve observation of your opponent. Our popular Embezzlement Risk Assessment Questionnaire takes about 10 minutes to complete, and helps
you identify employee behavior that indicates risk of embezzlement. Your score gives you an indication of your vulnerability. You can access the questionnaire here.
I soon will rejoice in the imminent victory of my underdog son, and I will also celebrate your coming of age and winning your embezzlement battle.

Embezzlement, Baby Boomers and The Culture of Entitlement

 
I recently attended a presentation about the different ways that Baby Boomers, Gen Xs and Gen Ys make buying decisions. One of the points made by the speaker is that we are currently raising a generation of kids who never get to “lose” (when we now give medals to kids for participating instead of winning) and who, even as they enter adulthood, still have their parents fighting their battles for them (for an interesting read on this, check out this Huffington Post article).
One generational change that the presenter discussed was that now most parents repeatedly tell their children that they are “special” (whereas when I was growing up in the 1960’s, parents used the word “special” in an almost derogatory way — as in “What do you think you are, special or something?”).
Part of my interest in these changes relates to my role as parent of a 12-year-old son (who is frequently told that he is special), but I am also interested in anything that explains any part of the explosion in dental office embezzlement we have seen over the past two decades.
There has clearly been a seismic shift in the environment in which we raise our kids.  Since it is we adults who create the framework in which our offspring develop, I have to conclude that changed parenting mirrors a change in our values and is not an adaptation to newborns behaving differently from birth.
I am certainly not advocating a return to the “Mad Men” 1960’s when kids sat on smoking parents’ laps in the front seat of cars and bullying was almost encouraged; I’m simply considering changes in societal values and their potential effect on embezzlement.
I’ve said before that our embezzlers fall into two categories, “Needy” and “Greedy”, with Needy thieves pushed by financial need and the Greedy stealing for emotional reasons.  One observation I have often made about Greedy thieves is that they feel that they have underachieved in life and that they “deserve” certain things that their incomes don’t permit.  I am sure that I am not the only one who sees the parallel between the concept that “everyone should be considered a winner, regardless of effort and ability” and “life hasn’t rewarded me the way that it should, and therefore I am justified in correcting this societal oversight by stealing”.
So what I realized from the lecture I attended is that probably Baby Boomers and Gen Xs worldview makes some of them feel more “entitled” to embezzle than perhaps their parents felt.  This entitlement would certainly explain some part of why embezzlement in dentistry has been such a growth industry.

Do thieves steal more in a recession or when the economy is booming?

Something I often get asked is whether more embezzlement takes place when the economy is in trouble.  The answer isn’t a totally simple one, but it does show something interesting about embezzlers, so it is one that I am always happy to address.

An economic downturn puts some people in a financial bind; spouse may lose their jobs, investments devalue and falling housing prices cause homes to be “underwater” or can even make it difficult to obtain mortgage financing.  All of these things exert sufficient financial pressure to cause a small minority of the population to steal.
We refer to this group as “Needy” thieves, and economic conditions certainly increase their numbers.  However, we shouldn’t forget that there is another cohort, which we label as “Greedy”. Unlike the Needy, these people aren’t stealing to survive — they are stealing to purchase luxury items that they feel that they “deserve” but can’t afford on what you pay them.  We’ve watched these people purchase everything from $150,000 automobiles to boats to lavishing expensive gifts on their friends.
Members of this group believe that society (and in particular their employer) underappreciate their talents and value.  Stealing is their way of addressing this perceived inequity and tacitly demonstrating how smart they are.
I’ll mention two things about this group — they seem to be much larger than the Needy — approximately 80% of the embezzlement we find involves Greedy thieves.  Second, the “lifestyle gap” that they perceive widens in a booming economy — they see others “getting ahead” faster than they are, and this motivates them to embezzle.
So, contrary to what you may have thought, we see more embezzlement in a recovering economy than one in downturn, but it involves a different group of embezzlers.

Embezzlement is a Selfish Crime…

I was speaking somewhere a couple of months ago, and this phrase popped into my mind. I jotted it down and resolved to discuss it in a future newsletter column.
Embezzlers fall into two categories; there are those who steal from necessity, and others who steal, not because they need to, but because they want to.  I recognize that there is some inherent subjectivity between these two, but for most embezzlers the delineation is pretty clear.  We did an examination a few years back where someone was embezzling, and then they won several million dollars in the State Lottery.  What did they do next?  They continued embezzling!  Clearly this was being done to address an emotional (as opposed to a financial) need.
When I speak with dentists about embezzlement, many of them have the feeling that certain attributes of them or their practices make them more or less “prone” to embezzlement.  For example, many doctors believe that there is some correlation between how well team members are paid and their propensity to embezzle.  Our research doesn’t support this, and in fact points to a slight negative correlation; in other words, better-paid employees are slightly more likely to embezzle. (We have debated the explanations internally; personally I think that doctors with well-paid employees tend to believe that they have bought immunity against embezzlement and are therefore less vigilant).
However, what I’ll tell you about embezzlers is that, regardless of whether they are stealing out of need or greed, they are very consumed by their own problems.  They spend a lot of time thinking about how to steal (and how to cover it up), and their own needs.  They spend almost no time thinking about you, their victim, and the swath of financial and emotional destruction that their actions create.
We are dealing with employees who are powerfully motivated to steal and would do so in whatever situation the found themselves.  For this reason, I don’t accept the widely-held belief that some doctors or practices are “embezzlement magnets”, and I view victims as essentially selected at random.
Does this mean that you are powerless against embezzlement?  Absolutely not.  there are a few things you can do:
1.  Hire carefully.  Most dentists despise the hiring process — understandable, but it shouldn’t push you into taking short cuts.  Once fired at one office, embezzlers are remarkably successful at getting hired at another office.  Last month’s newsletter had an article on avoiding hiring mistakes.  If you missed this article, you can check it out here.
2.  Systematically watch employee behavior.  The one constant of embezzling employees is that they act in a predictable way.  Thieves don’t want to take vacation, resist your hiring of consultants, guard their duties and work space carefully, conspicuously point to their own honesty, and so on. Our Embezzlement Risk Assessment Questionnaire (which is on sale this month in our online store) provides a systematic way to assess and classify employee behavior.  I’d recommend a look — that questionnaire has helped many practice owners realize that they had an embezzlement issue.