The American Dental Association Featured an Article written by Dr. Lewis in their December 2011 issue- Trust But Verify — Protecting Your Practice From Embezzlement.    Click on the Image Below to read the scanned Article!

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Dr. Lewis writes for the great team at Pennwell Publishing and DentristryIQ .  Check out our quick story on their site outlining a concise list of 4 tips in plain english, to protect you from embezzlement.

Read the Story at Dentistry IQ.

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Cosmetic Surgery Times stepped in to interview Dr. Donald P. Lewis, DDS, CFE.  Below is a small excerpt from the article by Bill Gillette linked below in PDF format.

Cleveland – “So what do I do if I think it’s my sister?”  The question was asked by a doctor attending a recent seminar on medical office embezzlement given by Donald P. Lewis, Jr., D.D.S., a Cleveland-based oral and maxillofaciall surgeon. Dr. Lewis has made a second career of conducting lectures and writing about a topic that serves as the title of his first book…

CLOSE YOUR EYES AND TAKE YOUR CHANCES!

BY: Donald P. Lewis Jr, DDS, CFE

Introduction: Have you ever thought that you might be working each and every day with a white-collar criminal? Embezzlement in the health-care profession is growing each year. More and more practices are realizing that they have fallen victim to this crime. Each day, practitioners see more patients, generate more fees, but in some cases, lose their profits.

Embezzlers are criminals that we may be working with each and every day. Recent statistics gathered by some of the nations security organizations reveal some startling facts, including:
The average United States Company loses about:

• 6% of it’s gross revenue to fraud and abuse
• Losses exceed about $400 billion per year
• Losses average $9.00/day/employee

Identifying the white-collar criminal is difficult. Everyone has reasons to behave and act as they do. Employees are hired with developed behavior patterns and these employees do not change these patterns without a significant reason. The principle of cause and effect applies to the relationship between a change in a person’s behavior and the change in the person’s life. But what about embezzler?

Any variety of circumstances can enter into a person’s life and impact in a serious enough manner where the person’s long-standing attitudes and values may change. Some of these motivational factors can include excessive gambling, non-sharable financial debts, financial losses, living beyond one’s means, extramarital involvement with related blackmail, excessive use of alcohol, controlled substances, employer resentment, job frustration, down sizing or threat of job loss, greed and peer pressure.

Opportunity can also be a part of the change in the employer’s behavior and thoughts in regards to crime. Opportunity is simply the measure on the part of a person of the ease and certainty with which a crime can be committed. With the proper motivation present, in combination with the perceived or actual weaknesses of the practices operations, the probability of success is determined. It is important to note that the potential thief will ask himself or herself this question prior to the act. Unless discovery and punishment are certain, some employees may take the chance. Another variable in this evaluation process is the diminishing role of law enforcement in the criminal investigation of office white-collar crime. These agencies find their resources seriously limited and will only respond to financial loss incident of a significant nature.

Employees will also define what is right and what is wrong in regards to their behavior. They will go as far as to rationalize stealing from the practice by viewing themselves as average employees in a dishonest world where everyone is trying to get ahead. However, their stealing from your practice is no accident. Rather, it occurs only following a careful evaluation process on the part of the employee. The key to this is prevention. As this process takes place prior to the actual theft, what you do or don’t do, will effect the employee, their attitude toward the possibility of stealing from the practice, and in fact, whether or not they choose to commit the act. Your management skills in your practice will set the tone and draw the line. Integrity starts at the top. If the employee perceives that you don’t care about the financial portion of your practice, there will be more rationalization for theft to occur.

Embezzlers are usually predictable. Their crimes of embezzlement are rhythmic, cyclical and predicable. These employees usually will suffer from low self-esteem and the crime, or at least the attempt to commit the crime, somehow help alleviate this lack of esteem. It may be from the fact that they have new found money, or the material things that this money provides, is all it take to feed this lack of self-esteem. Guilt and anxiety will also cause a marked change in both the embezzler’s behavior and appearance.

For the crime of embezzlement to begin, the embezzler usually needs a motive. There are three primary motives seen in these individuals. One is the basic need for money. The second is revenge and the third is the excitement of the crime. All three of these motives may be intertwined or may be individually the cause for the perpetrator.

While there is no description of the average embezzler, most employees who embezzle consistently will display some regular symptoms or “red flags”. These symptoms may show that the employee is unbalanced mentally, physically, emotionally or financially. These are clues that may become apparent to other employees in your practice. The demonstration of any one of these symptoms does not necessarily mean that an employee is embezzling from your practice, but should serve notice that the potential is there. It simply puts that employee in a risk category and intervention may prevent the future embezzlement. Let’s examine some of the well-known “clues”:

• A significant and unexplained change in an employee’s lifestyle may be a true indicator that illicit funds have been stolen from your practice. A suddenly enriched and extravagant lifestyle, unsupported by normal compensation, is one such indicator. This is an example of what is known as an “ego” crime where the perpetrator feels, for whatever reason, compelled to flaunt the proceeds taken from the commission of their crime. They are in effect calling attention to their behavior.
• The frequent requests of delayed repayment of loans may signal an employee living beyond their means. The cycle of expenses greater than income will eventually be interrupted, or the employee will continue to embezzler greater amounts to cover past debts.
• The employee, who refuses to take time off from work, also raises a red flag. As was mentioned, embezzlement is a “rhythm” crime and this must accommodate routine practice operations. The embezzler must be present in the office to track transactions, and the prepare explanation for suspicious activities that may be discovered during a spot-check or an audit. By taking a vacation the embezzler not only loses money that it costs to take the vacation, but they also lose money that they could have been stealing while they were on vacation.
• Constantly working overtime without a sufficient reason and often without pay should also be examined. Again, the embezzler needs to spend time to track transactions and falsify entries and this may not be possible during the normal office hours. The employers may get the false indication that this employee is indispensable, dedicated and committed to the practice success. All the while the employee enhances their image while committing the crime. This is all part of the image to coverup.
• The erratic or disruptive behavior at the office should also be noted. The other employees may note this, but the perpetrator may be in such a power position as to use this behavior in an intimidating fashion. This behavior can be shown as a preoccupied, withdrawn manner or inappropriate displays of anger and frustration. In any event, they will both be manifested by extreme mood changes and may or may not be coupled with deterioration of physical appearance, or mental and emotional instability. These employees will live an increasingly complex lifestyle to escape the effects of the distress.

As you can see, the profile of the embezzler is one of complexity and significant behavioral problems. Dealing with the investigation and prosecution of these individuals also is complex. To recover lost assets from these employees responsible for the crime, you need to develop a prosecution and recovery strategy.

First of all, the practice must determine the primary goal of the recovery. Criminal action before civil suit is the most powerful avenue to reach the primary goal of recovery. Your strategy needs to be developed with the legal advice of your legal representative along with help and guidance from the local law enforcement agency.

When working with the law enforcement agency, remember, they have other cases to solve besides yours. You can help them by developing documentation of the loss. This includes any information about the profile of the suspected embezzler. Your goal here is to help the law enforcement agency not only serve justice, but to also obtain and return the ill-gotten property to you the rightful owner. This is in the form of restitution.

You should make a specific request for restitution. Learn the types of restitution and accept repayment directly form the employee responsible for the crime. Suspects often attempt to repay lost funds directly, in exchange for an agreement by the practice not to seek criminal or civil prosecution. The form of restitution should be made by and agreed to only after legal representation. Remember, the profile of these criminals is complex and there repayment of funds may be just as complicated. Also remember, they had a reason to steal from you in the first place, and are the funds used for restitution being stolen from their next victim?

Written for Trojan Today, the Newsletter available from Trojan Professional Services. Trojan’s monthly newsletter features articles from top dental industry professionals,offering expertise and providing ideas and essential information in the area of practice management. From the article:

Although most employees are hardworking and trustworthy and loyal, the cost of white-collar crime is staggering. Recent reports show losses to employee theft t0 be greater thatl $5 hillion per year.

Health care practices have been financially ruined due t0 employee theft and embezzlement. The price paid is not only lost jobs but the loss of delivery of important health care.  Criminals need t0 be identified as being the enemy. Not the trusted employee…..