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

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

Protect Your Dental Practice by Bonding Your Employees

Editorial
by Bryan Truitt and Jim Du Molin

Even if you have an internal controls system that makes embezzlement difficult, the danger of collusion still exists. (I’ve already told you that embezzlement is common, it can be detected, and it can be prevented.) One of the ways in which some dental practices protect themselves from employee dishonesty is by bonding their employees.

Bonding is the process by which an employer can be indemnified for the loss of money or other property sustained through dishonest acts of a “bonded” employee. Bonding can cover many types of acts including larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, willful misapplication, or other fraudulent or dishonest acts committed by an employee, alone or in collusion with others.

There are several types of fidelity bonds. Discuss each with your agent to determine whether damages from negligence are covered. Basically, your practice has several options at its disposal:

  • Individual: covers one employee. Usually purchased by small practices or family-operated businesses with only one employee.
  • Name schedule or position schedule: covers either the employees or positions specified.
  • Blanket fidelity: covers all employees.
  • Commercial, blanket, and blanket position: provides multiple protection (comprehensive dishonesty, disappearance and destruction coverage, or a blanket crime policy).

There is wide choice in features and coverage as well as cost differences in bonding coverage. It difficult to understand why only two practices in ten have this economical insurance.

Next week, we’ll talk about what to do when you have discovered a problem.

Dentist Accused of “Biggest Ever” NHS Dental Fraud

Dental fraud by NHS dentistA dentist in the UK has been charged with one of the largest NHS dental frauds ever committed. The dentist, now suspended, is accused of stealing £1million from the National Health Service.

The dentist submitted as many as 5,000 false invoices between 2006 and 2009.

The Birmingham cosmetic dentist also operated a medical spa and advertised her services for dental Botox and dental makeover options such as braces and veneers.

Read more: Woman dentist charged with stealing £1m in ‘biggest ever’ NHS fake invoice fraud

Warning: Dentists Get Scammed for $50 Million

Dentists Get Scammed for $50 Million
Who can you trust?

Dentists and physicians are legendary for losing money to scam artists. But who would have thought two dentist would take their peers to the cleaners for $50 million.

What school did these guys go to?

Two Canadian dentists are being investigated by the Ontario Securities Commission (OSC) for an alleged $50 million Ponzi scheme.

According to the Star, in 2006 Peter Sbaraglia, DDS and his wife, Mandy Sbaraglia, DDS joined forces with Robert Mander, the mastermind of a Ponzi scheme that snatched the $50 million from naive investors.

The OSC’s Statement of Allegations states, “Sbaraglia, acting on behalf of CO Capital Growth, used investors’ funds to repay other investors and to pay for his and his family’s personal expenses and not for the benefit of CO investors. In addition, Sbaraglia and his spouse received over $2 million as purported profits earned by them in the Ponzi scheme.”

Fifty investors, many of who were dentists familiar with the Sbaraglias, may have lost up to $50 million in the scheme. Regulators calculate the amount as closer to $40 million.

The OSC claims that as much as $7 million of investors’ money remained in the Sbaraglias’ personal accounts and was never properly invested. Approximately $2 million was considered profits by the Sbaraglias and used for personal expenses. Another $2.4 million was lost in poor trades, and $585,000 was used to buy open venture securities. Much of the remainder of the money was used for business expenses, according to the OSC.

Rick McIntosh, Mandy Sbaraglia’s brother and former head of the Toronto Police Association, also lost money investing with CO Capital Growth. McIntosh and his wife invested about $1 million with the Sbaraglias.

Both Peter and Mandy Sbaraglia claim they are innocent victims and blame Robert Mander for the financial collapse of CO Capital Growth. Still, in December, a judge put all the Sparaglias’ assets into receivership, which included their $2.9 million home.

It’s never a good idea to invest money with family or friends, but if you do invest, you should be aware of the possibility of losing your money.

Have you ever been approached to invest in something offering a crazy rate of return on your investment? Do you think you could be duped into investing in a Ponzi scheme?

For a full report on the Sbaraglias’ story, visit the Star.

Dental Practice Fraud Causes 200k Embezzlement Warning

dental embezzlementThe 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

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