I’m being embezzled? It can’t be her, she’s my best dental practice employee!

I’ve lost track of how many dental practice embezzlements I’ve investigated over the last 25 years. My company, Prosperident, investigates hundreds each year.

First, let’s quantify the problem. Published statistics suggest that dentists have a 60% probability of being victimized at some point during their career. Average amounts stolen exceed $100,000, and remediation costs add to the total loss.

Contrary to conventional wisdom, most embezzlersare not “serial embezzlers” who are successfully hired after stealing from others. Rather, over 85% of the embezzlement we investigate is committed by long-term employees with no criminal record or adverse work history. So while it’s important to background check potential hires, it’s far from the perfect antidote for embezzlementsince the greater danger lies with existing employees with no prior problems.

Regardless of the embezzlement methodologies used, invariably there are outward behavioral manifestations that give it away. That’s not just my experience, but it also agrees with the Association of Certified Fraud Examiners, which in its 2012 Report to the Nations found that over 80% of embezzlers displayed behavioral indications of embezzlement.

Here are some “embezzlement-like” behaviors that doctors should look for:

• The employee’s situation suggests financial pressure. They have an addiction or gambling problem, their spouse has lost his or her job, or they are getting divorced. Visible symptoms may include creditors calling the office, a wage garnishment, or frequent requests for pay advances or loans.
• The employee works many extra hours. Thieves want “alone” time in the office to steal. Paradoxically, this makes them look like super-dedicated employees.
• The employee is reluctant to take vacation. A thief needs to be able to mollify patients who identify inconsistencies in their accounts, and being away creates the possibility that these discrepancies will come to your attention. Again, many dentists misinterpret this as dedication.
• The employee is reluctant to cross-train or delegate duties. Embezzlers love to have exclusive control over one or more facets of the practice’s operation, and training another team member undermines this. This reluctance is often cloaked as perfectionism, a characteristic that many dentists value.
• The employee is protective of their computer and workspace.
• The employee resists outside advisors. To a thief, a knowledgeable outsider, such as a consultant or CPA, constitutes a serious threat to their illicit activity, so they work hard to keep these people away from the practice.
• The employee is reluctant to upgrade the practice management software. Thieves are often reluctant to install upgrades out of concern that their embezzlement methodology will be disturbed by the upgrade.
• The employee is evasive about discussing financial matters with you.
• The employee has “conspicuous displays of honesty.” This is in order to make a point of telling or showing you his or her integrity. Honest people really don’t need to tell you about their honesty.
• The employee is consistently tardy when providing reports. Thieves often deliver reports late as a means of avoiding or reducing the scrutiny applied.

While these factors are not an absolute indicator of embezzlement, multiple factors should give the doctor concern. To assist dentists in the evaluation of behavioral manifestations of embezzlement, Prosperident offers a free Embezzlement Risk Assessment Questionnaire that can be requested by sending an email to [email protected]. Completion takes 15 minutes or less, and your score provides a great barometer of the risk to your practice.

The MOST important thing I have learned is this – don’t ignore the symptoms. Unfortunately we encounter regretful dentists every day who have allowed their embezzlement problem to grow very large because they ignored the symptoms. If you see indicia of embezzlement, get knowledgeable assistance, and get that assistance quickly.

David Harris is the world’s foremost expert on dental practice embezzlement. He is a licensed private investigator and Certified Fraud Examiner, and is the Chief Executive Officer of Prosperident, the world’s largest dental embezzlement investigation firm. Contact him via his website at dentalembezzlement.com, or call 888-398-2327.

The above article was reprinted with permission from The McGill Advisory, a monthly newsletter with online resources devoted to tax, financial planning, investments, and practice management matters exclusively for the dental profession, published by John K. McGill & Company, Inc. Visit www.mcgillhillgroup.com, or call the newsletter department at 888-249-7537 for more information.