Another embezzler joins the exclusive “Half Million Dollar Club”
The man, I’ll refer to him as Dr. Smith, was sitting in a leather chair in his attractive reception area. He was a well-dressed, distinguished-looking man who appeared every bit like the highly respected dental specialist he is. He is in the prime of his career and obviously accustomed to being the master of his domain.
This day, however, it was evident that things were not well in Dr. Smith’s kingdom. He was agitated and obviously resentful of the intrusion I was making into his life. “You’ve made a mistake,” he told me. “This can’t be right.”
There was no mistake; the news I had just given him was accurate. His trusted office manager of nearly 20 years had been stealing from his partners and him. On receiving this information, Dr. Smith leaned forward, placed his head in his hands, and fell silent.
Allow me to introduce myself. My name is David Harris. I am a licensed private investigator and the CEO of Prosperident, the world’s largest dental embezzlement investigation firm. Prosperident is consulted on hundreds of dental embezzlement matters annually, and frequently has the pleasure of hearing cell doors shut on thieves.
Embezzlement: It can happen in your practice!
I love my job. Sure, sometimes I come face to face with some pretty distraught people, but investigating is like trying to complete a big jigsaw puzzle while someone keeps hiding pieces from you. The feeling you get when you outwit them is like the one you get when you sink a forty-foot putt.
Although we didn’t know it yet, Bill Hiltz (he’s now Prosperident’s chief operating officer, but at the time was a lowly embezzlement investigator) and I were just beginning to investigate what would earn a thief her place on our “Wall of Shame.”
The chain of events that brought us to Dr. Smith’s office began a month earlier, when Dr. Smith and his colleagues hired a practice management consultant. Smith and his colleagues hired the consultant, whom Bill Hiltz and I had known for many years, regardless of intense objections from the office manager, who I will call Mary.
In fact, Mary threatened to quit if the consultant was brought in. The consultant found this unusual and called Bill to discuss her concerns.
Lessons I learned as a partner in a dental practice
Bill reminds me of a bloodhound – he has a “nose” for embezzlement, and it was twitching like the gearshift of an old Ford when the consultant described aspects of Mary’s behavior. Bill arranged to visit the office after hours (when he was unlikely to encounter Mary) to do a “preliminary investigation.” He also brought along his good luck charm, yours truly.
It took us under an hour to find fraudulent activity validating Bill’s suspicion, although at that time we were unaware we were seeing the tip of the iceberg.
We then provided initial findings to Dr. Smith, the managing partner of the office, which prompted the scene of disbelief that I described earlier.
I’m a pretty persuasive guy, especially when I know my poker hand has four aces, and it still took considerable effort to convince Dr. Smith that Mary was stealing. Dr. Smith’s disbelief was not surprising when you consider that Mary had years to shape Smith’s perceptions of office finances. For example, I showed Dr. Smith that bank deposits over the last year included virtually no cash, sometimes with weeks between cash deposits. Dr. Smith’s reply was that “most of our patients don’t pay with cash anymore – they use a debit or credit card.” This was exactly what Mary wanted him to believe.
100 tips from 100 practice management experts in 100 words or less
In fact, some patients still preferred to pay in cash – to the tune of about $6,000 per month. The problem was that Mary recorded less than $1,000 a month and pocketed the rest.
I should tell you a bit about Mary. She worked in the practice for 20 years, the last half as office manager. She certainly didn’t have an extravagant lifestyle – she drove an old car and from appearances bought her clothing at Wal-Mart. In the eyes of Dr. Smith, she was incredibly efficient, loyal as a puppy dog, and had an enviable work ethic – she routinely stayed late and often came in on Saturdays to “stay on top of things.” She rarely took vacation and hadn’t taken a sick day in anyone’s memory.
She enjoyed the complete trust of Dr. Smith and his partners, and worked to create an environment where the dentists could focus on clinical responsibilities, confident that the administration of the practice was in capable hands.
Mary’s husband had died about five years earlier. She has an adult son who lived with her, had an addiction and was, as they say, “known to police.”
When we find the smoking gun that conclusively establishes embezzlement, we initiate a locking down procedure. This involves changing passwords and locks, taking steps to preserve evidence, and of course buying the “perp” a bus ticket to Unemploymentville. Dr. Smith was visibly torn between the convincing evidence we gave him and his loyalty to a respected, long-term employee. He reluctantly agreed to let us lock down the practice.
Once the thief is gone and evidence is protected, we move from “preliminary” to “comprehensive” investigation. This is where we look into each corner of the practice’s operations for fraudulent activity. With Mary out of the way, we began looking at the computer, banking and accounting records of the practice. And we found a lot.
At this point I should tell you about the two types of thieves in dental offices. We categorize thieves as being driven by “need” or “greed.” Needy thieves can be in truly desperate financial positions and steal to preserve the essentials of life. Desperation could happen for many reasons – their spouse could lose his or her job, they might have some type of addiction, they could be experiencing matrimonial problems, etc. Once the needy have exhausted their other financial options, they realize that stealing from their employer would be pretty easy. And so it starts.
In contrast, the greedy have the feeling that life hasn’t fully recognized or rewarded their talents, and they justify stealing as a way of rectifying this apparent inequity. They spend stolen money on luxury items. We have seen everything from $150,000 automobiles to yachts to chartering a plane to take their friends to The Big Apple on a luxury shopping trip.
While either group can be dangerous, needy thieves often remain undetected for longer, while the greedy draw attention by displaying sociopathic “conspicuous consumption” patterns.
One thing that surprises many dentists is that the vast majority of dental embezzlers have no prior history of dishonesty. “Serial embezzlers” definitely exist (and constitute a good reason to perform thorough background checks on prospective hires), but repeat offenders constitute a small minority of embezzlers. The other thing that surprises dentists in my presentations is the typical length of time for which a thief works for a dentist before stealing; we normally see five or more years of employment before stealing begins.
Some time ago (about five years earlier, as best we can figure) Mary became one of those needy people. This was about the time her husband died, and we speculate that the loss of his income and eventual pension might have been a factor. Also, Mary’s son probably needed money to cope with his considerable legal issues (and to fund his drug habit).
What we do know is that when Mary began stealing, she did it cleverly. Her methodologies varied over time, but in most months she managed to slide about 9,000 unauthorized (and tax-free) dollars into her pocket.
So how did she do it? By most accounts this was a well-run office. Despite giving Mary probably more authority than she should have had, the office had the usual checks and balances, including having the office’s accounting firm visit monthly to do bookkeeping.
I had the job of giving these dentists the bad news. Even a thief of average ability can successfully steal from most offices. A good thief, as Mary certainly was, can steal for years undetected. Mary employed seven different embezzlement methodologies in her quest to separate her doctors from their money.
As our investigation continued, and these details unfolded, it began to sink in with Dr. Smith and his colleagues that Mary had been coldly, systematically plundering their wallets. Mary used the trust that they given her, and her knowledge of the items to which the dentists were inattentive, to steal large amounts of money and avoid detection for an extended period. When Dr. Smith realized this, the initial disbelief that he had felt when we first broke the news to him turned to disgust and anger.
At this point, Dr. Smith had only one question. “How much money?” he asked in a voice barely above a whisper. We told Dr. Smith that we had identified $609,000 in theft, and that there was probably more, but that it would serve absolutely no purpose to expend the efforts needed to find the remainder.
Mary did receive a two-year prison sentence for her transgressions, but very little of the stolen money was ever recovered.
I should tell you one other thing about Mary – after she “left” Dr. Smith’s office, she flogged her seemingly attractive resume all over Dr. Smith’s city. I still have a copy of it in my office – I particularly like the part where she refers to her honesty, integrity and familiarity with computers. She did actually manage to get hired at one dental office, but we made the local dental association aware of her past and that seemed to shut down her efforts to secure another “high-paying” dental position. One thing that this confirmed for me, however, is that dentists could be better at doing background checking and verifying resumes.
So what can we learn from this episode? I can think of several things:
- Watch for patterns of behavior consistent with embezzlement. Although there are hundreds of different ways to embezzle from a dentist, the way that embezzlers behave is remarkably predictable. We have developed an Embezzlement Risk Assessment Questionnaire, which is an excellent way for a dentist to assess whether an employee is stealing. We’re happy to offer this to any dentist who emails us at [email protected].
- Scrutinize resumes forensically:
- Check references, but don’t use the phone numbers helpfully provided – look them up yourself to know that you are really talking with the reference, and not some disposable cell phone.
- Look for inconsistencies. Ask previous employers where the applicant worked before working for that employer and compare the answers with the resume.
- Ask former employers to confirm exact dates of employment. Applicants sometimes try to cover a checkered past by “stretching” the dates of favorable employment experiences.
- Investigate your suspicions. That “spidey sense” that tingles about embezzlement is right more often than not. The number of times we get a phone call from a worried dentist where that suspicion subsequently turns out to be unsubstantiated is less than 20%.
- Investigation is definitely a job for professionals. Unfortunately, we have seen the positions of many dentists worsened when they tried to investigate by themselves or made use of what I would term a well-intentioned dabbler.
Well, the phone’s ringing, so I better go grab it. Until next time.
David Harris is the CEO of Prosperident, the world’s largest dental embezzlement investigation firm. Bill Hiltz is Prosperident’s chief operating officer. David, Bill, and their team of experienced investigators have spoken at national, international and regional conferences on embezzlement. David and Bill can be reached at 888-398-2327. If you have embezzlement concerns, you can send an email to Prosperident’s priority embezzlement email, [email protected], which ischecked daily (including weekends and holidays) by Prosperident’s on-duty embezzlement investigator.
