A Different Kind of Embezzlement — DSO Executive Accused of Stealing Trade Secrets

Nathan Cox

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Earlier this month, a Nashville, Tennessee company filed a federal lawsuit against its former employee alleging trade secrets misappropriation under the Defend Trade Secrets Act, among other claims.  The plaintiff, Marquee Dental Partners, LLC, operates dental offices in Tennessee, Alabama, and Kentucky.  Marquee purchases existing dental practices and provides administrative services to those practices allowing the doctors and support staff to focus on clinic services and patient care.  In a particularly strongly-worded introductory sentence, the complaint reads: “This case shows what it means to be a faithless corporate executive.” 

According to Marquee, that corporate executive, defendant Nathan Cox, was hired in early January 2016 as the Vice President of Business Development.  Mr. Cox was tasked with helping Marquee grow its network.  Specifically, Mr. Cox’s duties included developing contacts with practices that met certain financial, geographic, and practice-type criteria, cultivating relationships with potential future network members, and gauging their interest in joining Marquee’s network.  Instead of fulfilling his duties, Marquee alleges that Mr. Cox “concealed the confidential and proprietary information Marquee paid him to collect, develop, and maintain for its exclusive use; provided information instead to multiple Marquee competitors—while still employed by Marquee—in an effort to land a higher paying job; and deleted nearly all of his [8,200 emails] on his way out the door.”  Marquee claims Mr. Cox abruptly left the country shortly thereafter.

Marquee recovered Mr. Cox’s deleted emails and allegedly found that, despite his obligations, he withheld acquisition pipeline information from Marquee.  For example, Marquee alleges that one list of potential leads that Mr. Cox sent Marquee included twelve fewer leads than he alluded to in emails to Marquee’s competitors.

Marquee brought its claims under the DTSA which was signed into law effective May 11, 2016.  In order to prevail in their DTSA claim, Marquee will first need to establish that the information Mr. Cox collected were Marquee’s trade secrets.  Then, Marquee will need to establish that Mr. Cox’s activities amounted to the unauthorized disclosure of Marquee’s trade secrets.  Though these elements are familiar under state laws, with less than two years on the books, how the DTSA will be used by Plaintiffs and applied by courts is still to be determined.  If you’re a regular reader, you know we have been keeping our eye out for developments with respect to the DTSA and will continue to do so.

In the meantime, a key lesson can already be gleaned from this case: Trade secret owners must be vigilant.  Even trusted executives can misappropriate.

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Content retrieved from https://blogs.orrick.com/trade-secrets-watch/2017/12/29/worse-than-a-toothache-dental-executive-alleged-to-have-misappropriated-proprietary-business-leads/

Tennessee bookkeeper accused of embezzling $250k from dental practice

blank The Tennessee Bureau of Investigation said authorities arrested a Tennessee woman in Colorado for stealing from a dental practice. According to the TBI, 43-year-old Aleea Nash was arrested Monday in Colorado. Agents said she is accused of stealing more than $250,000 while working as a receptionist and bookkeeper for a Lewisburg dental practice. The TBI said she took the money from Feb. 2014-Jan. 2017.
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Content retrieved from http://fox17.com/news/local/lewisburg-bookkeeper-accused-of-stealing-250k-from-dental-practice

Tennessee man moves from managing wife’s dental practice to major investment scam


Two Tennessee men with criminal records and an associate in Florida have been charged with fraudulently raising $15 million by misrepresenting to investors that their funds would be used for oil drilling.

The U.S. Securities and Exchange Commission on Friday said David R. Greenlee and David A. Stewart, both of Gallatin, Tenn., ran the scheme from January 2013 to February 2016, telling investors they would use enhanced oil recovery techniques such as fracking to exploit existing wells in Kansas, Oklahoma and Texas and promising profits of 15% to 55% for decades.

In reality, the SEC said, they diverted nearly two-thirds of the funds raised from at least 150 investors for their own benefit, to pay salesmen or to advertise for new investors.

Richard P. Underwood, who allegedly supervised one of the boiler room sales teams that solicited and sold the investments, was named as a co-defendant in the SEC’s civil complaint. All three men have also been charged in a parallel criminal case.

“As alleged in our complaint, misleading brochures and radio advertisements lured investors into believing they could strike it rich by investing in these oil drilling opportunities,” Walter Jospin, director of the SEC’s Atlanta Regional Office, said in a news release. “Unbeknownst to the investors, most of their money was being used for other purposes.”

Greenlee and Stewart allegedly used fake names to conceal their criminal records from investors. Greenlee served time during 1999 to 2000 for forgery and burglary, and again in 2004 for vehicular manslaughter, while his partner was convicted of federal tax evasion in 2007.

According to the SEC, the two men initiated the alleged fraud by incorporating a company called Southern Energy Group (SEG) in January 2013 and installing Robert Dorrance, a relative of Greenlee’s wife, as its “figurehead” president.

SEG’s promotional materials described Dorrance as having “years of experience in finance, sales, oil & gas,” when in reality, the SEC said, his “prior work involved selling stereos and helping manage his spouse’s dental practice.”

Of the funds raised from investors, “most was spent at only a few of the wells in order to create an appearance of activity to dupe investors who wanted to see the wells in production,” the SEC alleged.

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Content retrieved from http://ww2.cfo.com/fraud/2017/08/three-accused-15m-oil-investment-scam/

TN Dental office worker turns herself in

The Knoxville News-Sentinel (Knoxville, TN)
June 17, 2005

Byline: Bob Fowler

Jun. 17–OAK RIDGE — The former office manager of a husband-and-wife dental practice in Oak Ridge is accused of embezzling more than $60,000 from the business during a six-year period.

Kimberly J. Reed, indicted by an Anderson County grand jury for theft over $60,000, turned herself in to authorities Thursday morning at the Anderson County Jail.

Reed, 43, of Oak Ridge is free on $10,000 bond and will be arraigned June 24 in Anderson County Criminal Court.

Reed worked at Lee & Barton DDS, the Laboratory Road dental practice of Dr. Bill Lee and Dr. Linda Barton, for 14 years.

The indictment alleges Reed embezzled cash from the business from about July 1998 to about June 2004

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TN employee indicted for embezzlement


April 4, 2017 – A longtime bookkeeper for a Collierville dentist was indicted Tuesday on felony theft charges following an investigation that showed she had systematically stolen tens of thousands of dollars in payments from patients, said Shelby County Dist. Atty. Gen. Amy Weirich.

Tina C. Day, 44, was indicted for theft of property over $60,000 in an alleged scheme between August of 2006 and April of 2010. She is free on $30,000 bond.

An investigation showed that Day, who worked for Dr. Stephen Thompson, would offer 10 percent discounts if patients paid their bills in cash, but that she would then record the payments as credit card transactions.

An audit showed that Day collected more than $77,000 from 93 cash payments during the four-year period, but that there was no record of the money being deposited into the dentist’s business account.

The lengthy investigation involved federal and state agencies.

The case is being handled by Byron Winsett, chief prosecutor of the DA’s Public Corruption & Economic Crime Unit which is responsible for cases involving money laundering, and fraud and theft from governmental agencies, non-profit organizations and businesses.

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Content retrieved from  https://www.scdag.com/news/item/1324-dentist-s-bookkeeper-indicted-in-theft-scheme

Embezzlers Tennessee Target Dental School


On October 12, 2005, a Shelby County grand jury indicted 68 people alleged to be part of an embezzlement scheme which targeted the UT dental college. Agents for the Tennessee Bureau of Investigation found that about $130,000 was embezzled by three former employees of the college via reimbursement checks, which is reserved for patients at the college. The crime occurred between August 15, 2002 and November 3, 2003. Two of the former employees, Connie Ackerson and Alberta Paylor, were arrested.

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Content retrieved from http://www.wikiwand.com/en/University_of_Tennessee_College_of_Dentistry