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Why does embezzlement strike three in five dentists feb 2013
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Why does embezzlement strike three in five dentists feb 2013

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  • DavidNo safe harbor – “involved” dentists are embezzlement victims as “uninvolved” ones
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  • DavidConspicuousdisplay of honesty.
  • Embezzlement happens because people are driven by powerful factors that are out of control
  • DavidWorking on a embezzlement now where staff member insisted that no payments be processed while she was away.
  • DavidFrequent discounts to patients neatly masks embezzlement – can’t tell if discount was really given to patient or just pocketed by staff. Do not allow wireless network in office5. We have signature stamp guidelines – will make available on-line.
  • David3. This is NOT a do-it-yourself project.
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  • 1. Why Will Three in Five Dentists Be Embezzlement Victims? David Harris Prosperident CEO
  • 2. Three in Five!• American Dental Association (2004) – 52% lifetime probability• Dumoulin and Associates (2007) – 59%• Health care fraud is third most common fraud, behind charities and government (Association of Certified Fraud Examiners).
  • 3. Conventional Hypothesis• “Blame the Dentist” – Insufficient business education – Clinical responsibilities cause inattention to the running of offices – Therefore, embezzlement caused by incompetence and inattention• However, we see lots of embezzlement happen in offices with business-savvy dentists who are quite involved in their practices• Equally, there are many inattentive, clinically- focused dentists who don’t become victims.
  • 4. What Causes Embezzlement?• It’s simple –need or greed• Employee decides stealing from you is best solution.
  • 5. Biggest Embezzlement Myths• My practice is immune because …• Biggest danger to my practice is the “serial embezzler”• Making it harder to steal will discourage thieves from trying• Honest people (e.g. CPAs) can effectively catch thieves• If it’s happening, my CPA will spot it in the course of his / her work• Financial inconsistencies are what give the embezzler away• Embezzlers steal cash• Somewhere there is a magic key to preventing embezzlement, and would David Harris please stop wasting my time and tell me what it is!
  • 6. It’s Not About You!• Many dentists believe that certain types of practice are more embezzlement prone than others (urban / rural, general / specialist etc.) Our files don’t support this• Embezzlement happens for one simple reason – someone in your office decides that they have higher right to your money than you do• Your practice’s situation doesn’t factor into the thief’s process at all• Once decision is made to steal, they WILL succeed.
  • 7. Experience Helps!• Thieves know you and your habits, including what you scrutinize and what you don’t• They carefully plan their embezzlement to lie outside your view• Good thieves can adapt easily to your changing your pattern• Computerization makes many dentists dependent on their staff for practice information• Typical thief has five or more years of seniority when they start their new “career”.
  • 8. Effect of Seniority of the Perpetrator Source: ACFE 2008 Report to the Nation
  • 9. The Hard Target Fallacy• A misanalogy that has become accepted as “fact”• Assumes that thieves have some alternative course of action-- they don’t. Steal elsewhere
  • 10. Embezzlement vs. ControlsEmbezzlement wins every time• Controls in use are well-known to thief• Thieves are adaptive to new or changed controls• There might be 1,000 ways to steal from a dentist – what does blocking 50 of them really accomplish?
  • 11. An Unworkable Approach!The frequently-advocated concept ofcontrolling the embezzlement epidemicfacing dentistry by encouraging dentists tobecome untrained, poorly-equipped, unpaidauditors is – Unproven, unfounded, and unlikely to be implemented by dentists David Harris, 2012 interview with DentistryIQ.com
  • 12. Honesty Test?• What do you think of the idea of periodically putting an extra $20 in with the cash to test the honesty of staff?• Several embezzlement “experts” have recommended this. What’s wrong with their logic?• This advice suffers from an inability to think like a criminal -- If I were a thief, I would invest my own money in this “project”!
  • 13. OK, So How Do I Prevent Embezzlement?• Contrary to what many articles say, you can’t• However, early detection is surprisingly easy if you approach it properly• In the final part of the presentation, I’ll give you some solid ideas for combating embezzlement.
  • 14. Embezzlers Look Like Ideal Employees!• Higher intelligence than is necessary for job• Ideal employee – hard working, never sick,• Multitasker• Always prepared to assume extra responsibility --“I’ll take care of that”• “Self-imposed authority”• Trusted by dentist.
  • 15. The Good News!
  • 16. Predisposition to Fraud• Embezzlers have personality traits and personality disorders that make them vulnerable to temptation• They may be passive-aggressive, have anti-social tendencies, and may have a “corrosion of their moral constraints”• Societys rules and mores dont mean much to them. “They know damn well that people are being hurt”• Anti-social people usually show a pattern of lying and cheating in school by age 15, and of taking other peoples property• Embezzlers commonly have “an element of selfishness or narcissism, where they see their own needs as more important than their employer’s needs”.John Podboy, Forensic Psychologist
  • 17. Ten Warning Signs Not To IgnoreLife factors:1. Staff members in financial difficulty2. Addictions or other compulsive behaviorsBehaviors:3. Staff who are “super-dedicated” especially working unusual hours or who never take vacation / sick days4. Unusually territorial about work or workspace5. Control freaks / cocooning -- want to control communication between patients and practice6. Conspicuous displays of honesty7. Resist practice management software upgrades8. Resist increased involvement of consultants /accountants9. Attempt to exert control over choice of practice advisors10. Receptionist’s BMW is newer (and bigger) than yours.A scored Embezzlement Risk Assessment Questionnaire is available atfraudnews@prosperident.com
  • 18. Don’t Make Things Worse!Protect yourself:• Behave ethically• Do not allow staff to have remote access to network• Regular backups of data, with media kept off site by dentistAllow detection:• Force staff to take vacations and to cross-train• Be attentive to patients questioning / disputing invoices or statementsMake investigator’s job easier:• Use computer system properly (individual passwords, security features enabled)• Have alarm system for office and monitor access.
  • 19. Dos and Don’ts If You Suspect1. DO maintain stealth and 1. DON’T contact police – yet act normally 2. DON’T contact affected2. DO make a complete insurance companies backup of dental 3. DON’T ask unusual questions software data and take or ask for extra reports off site. Do not involve 4. DON’T confront staff staff in this activity member or terminate, even3. DO use advisors with if you are “pretty sure” experience with this 5. DON’T make any changes to type of embezzlement banking arrangements or4. DO ensure dental software communication with 6. DON’T make the circle wider investigator is secure than it needs to be.
  • 20. Your Action Plan• Watch employee behavior, sensitive to indicia of embezzlement• Request “Embezzlement Risk Assessment Questionnaire” and use regularly (6 month intervals recommended)• Don’t ignore warning signs. Get expert help if indicated. Embezzlement investigation is not a do-it-yourself project!
  • 21. Prosperident Is The World’s Largest Dental Embezzlement Investigation Firm
  • 22. Thanks for joining us How to contact• Questions? Prosperident: Phone – 888-398-2327 Priority email (monitored 365 by on-duty investigator)– fraud@prosperident.com David Harris’s personal email – david@prosperident.com To request an Embezzlement Risk Assessment Questionnaire / join our mailing list fraudnews@prosperident.com Twitter, Facebook, LinkedIn – “Prosperident”