dental practice embezzlement

Dental Office Embezzlement of $100,000 in Dental Insurance Payments

December 27, 2011 By Catherine Hughes 2 Comments

Dental office embezzlement is still alive and well in California.

Deborah Lynn Kessler, 45, pleaded guilty to four counts of grand theft over charges that she embezzled more than $100,000 in dental insurance payments at the dental practice where where was manager.

The Orange County Register reports that Kessler signed dental insurance payments over to her personal bank accounts over the course of about three years. Investigators initially said she may have used the money to pay for an RV, boats and trips, and to cover her personal bills.

She was sentenced to two years in jail, plus an additional two more years of community supervision.

According to a 2010 Association of Certified Fraud Examiners report almost one-fourth of all embezzlement cases report losses of at least $1 million with smaller businesses being the most susceptible to fraud.

The average embezzlement scheme lasts for 18 months before detection.

The U.S Chamber of Commerce estimates that employee embezzlement costs American companies $20 billion to $40 billion a year. A long-term employee is 15 times more likely than a stranger to steal from a company.

Some of the best ways to prevent dental office embezzlement is by implementing a segregation of duties, keeping petty cash to a minimum and requiring dual signatures on checks.

Has your dental practice ever been the victim of employee embezzlement? What happened, and how did you handle it?

For more on the Orange County Register story see: Dental worker guilty of stealing more than $100,000

Dental Practice Fraud Causes 200k Embezzlement Warning

May 10, 2011 By Jim Du Molin 6 Comments

dental embezzlement The Colorado Dental Association recently sent an email alert to member dentists regarding a $200,000+ embezzlement that occurred in a dental practice related to the processing of credit cards.

According to the Metropolitan Denver Dental Society, experts estimate that more than 50% of dentists are embezzled with an average loss of $50,000.

But, because embezzlers often steal relatively small amounts over a long period of time, the misappropriation of funds goes unnoticed.

The U.S. Chamber of Commerce estimates that 75 percent of all employees steal at least once, and that half of these steal repeatedly. The Denver District Attorney’s Office website warns, “embezzlement is at epidemic proportions accounting for 20 percent of all cases filed by the Denver District Attorney’s Economic Crime Unit.” In 1970, one in 200 employees was dishonest; it is estimated that today, one in six employees is dishonest.

The MDDS states that the most common method of embezzlement in a dental practice occurs through theft of cash, checks or supplies.

Here are a few embezzlement scenarios that occur in dental practices -

Cash is pocketed from patients.
Petty cash is stolen.
Cash or checks are removed from the daily deposits and replaced with subsequent receipts.
Insurance fraud.
Endorsements are forged.
Writing duplicate accounts payable checks or writing checks to phony vendors.
Stealing supplies and re-selling or returning to vendors for refunds that are pocketed by employees.

In a survey The Wealthy Dentist performed in 2010, 59% of the dentists surveyed said they had discovered evidence of embezzlement. With such a high degree of fraud, how does a dentist diminish the risk of embezzlement?

The American Bar Association offers the following checklist on how to prevent fraud and embezzlement -

Adopt an effective, documented system of internal controls to protect against acts of dishonest staff.
Bank and credit card statements can be delivered to the business owner’s home or separate address for personal review.
Checks and debit transactions should be reviewed with the statements.
Checks should require two signatures, or be reviewed by the owner.
A copy of the bank reconciliation should be attached to each monthly bank statement and reviewed by two parties.
Finance or accounting personnel should not be signers on all bank accounts.
Checks received in the mail should be immediately endorsed by a two-person team who opens and processes the mail.
After checks are properly endorsed and verified, the bookkeeper should take charge of the checks for deposit.

Have you recently experienced embezzlement in your dental practice?

For more on employee embezzlement and how to prevent it see – The Metropolitan Denver Dental Society Watchdog

Filed Under: The Wealthy Dentist Tagged With: dental embezzlement, Dental News, dental practice embezzlement, dental practice management, embezzlement

Dentists Often Embezzled – Thieves Rarely Prosecuted

January 19, 2010 By Jim Du Molin 9 Comments

Dentist office embezzlement is a major issue at dental practices, but most dentists don't even realize how widespread the problem of dental embezzlement is.

I'm a total cynic when it comes to dentists being embezzled. I've spent over 20 years uncovering over 100 thefts. I'm fully convinced that it happens all the time. (In fact, one of my surveys found that most dentists report being embezzled.)

The vast majority of embezzlement cases never go to trial. (And we're not even talking about all the theft that is never even uncovered in the first place!) Usually, the offender is fired, and that's it. If charges are filed, 9 out 10 times there will be a plea bargain which results in probation for a first-time offender.

Only on rare occasions do you see the dental embezzler fully prosecuted and taken through the court system. This only happens if the case has has been fully investigated, all the details uncovered, and everything tied up with a big bow by the doctor (and the the doctor’s attorney and private investigator) and handed to the district attorney for prosecution.

Recently, one such case resulted in a five-year prison sentence for the miscreant. The 25-year-old woman, a Texas dentist's financial clerk, pleaded guilty. Here's the news report:

U.S. District Judge Hilda Tagle… sentenced [defendant Claire Batsell] to 69 months in federal prison on a count of fraudulent use of dental patient identification information and a count of aggravated identity theft.

The U.S. Attorney’s Office said Batsell used patient information to open and bill credit card accounts for services. In addition, she pocketed cash payments made by the patients…

Dentist DavidPedley was unaware of Batsell’s scheme and said her actions almost destroyed his practice and damaged his reputation…

In a statement before Tagle, Pedley said the thefts affected the credit of some of his patients and "imposed a huge financial burden on him and his family to pay back the credit card company for the fraudulent charges made by Batsell."

- Laura B. Martinez, The Brownsville Herald

While it's morally satisfying to see someone held accountable for their wrongdoing, I have to say: if it was just the doctor losing money, this case probably wouldn't have been prosecuted. Identity theft is a hot consumer issue right now… while employees stealing from their dentist employer is somehow stale and commonplace.

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