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 Embezzlement: Dentist Survey Video

Dental practice embezzlement dentist survey videoDental practice embezzlement can be a major dental management issue.

In a survey from The Wealthy Dentist, 52% of dentists who responded reported having been embezzled, while 48% say they have not been a victim of fraud.

“It happens to 95% of dental offices,” said an orthodontist. “The other 5% are ignorant, or have a spouse working the front desk.”

Jim Du Molin and Julie Frey discuss the problem of dental practice embezzlement:

“I was embezzled to the tune of over $1,000,000!” said a periodontist.

“You need to have several checks and balances to help prevent embezzlement, plus do random audits to let staff know you keep on top of checking records and books,” advised a pediatric dentist.

Has your dental office ever been embezzled? Any further thoughts on dental practice embezzlement and fraud?

Dental Practice Embezzlement Nets Office Manager 190k

Dental Practice Embezzlement Nets Office Manager 190kThis week, The Times-Picayune reported that a Covington, Louisiana, dental practice manager, Kelly Muller, was charged with embezzling almost $190,000 over a three-year period from the dental office she managed.

Muller allegedly added unauthorized money to her paycheck as well as made credit card purchases using the dentist office’s money.

Embezzlement is known to occur more often when just one employee has control over writing checks, balancing back statements, administering payroll, and making deposits.

The U.S. Chamber of Commerce estimates that employee fraud costs American businesses over $50 billion annually. It is estimated that 1 in every 6 employees is dishonest.

The MDDS states that the most common method of embezzlement in a dental practice is 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, 59% of the dentists surveyed said they had discovered evidence of embezzlement. With such a high degree of fraud, how does a dental practice 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.

Could your dental practice survive a $190,000 embezzlement?

What safety nets do you have in place to prevent embezzlement from happening at your dental practice?

To read more about the Louisiana dental embezzlement case see: Covington Woman Accused of Stealing $190K From Dentist’s Office.

Dental Practice Management: Dentist Embezzlement Survey

Dental Practice Management: Dentist Embezzlement SurveyA recent survey from The Wealthy Dentist reveals that 52% of dental practices who responded have been been embezzled, while 48% have not been a victim of fraud.

The reason why dental practices are at high risk is because the dentist is the central figure generating the revenue stream that moves the practice forward.

Many dentists do not have the time, the interest, or the resources to establish effective internal control systems and monitor them on a regular basis.

As a pediatric dentist expressed, “You need to have several checks and balances to help prevent embezzlement, plus do random audits to let staff know you keep on top of checking records and books.”

Of the dentists who responded, 90% of urban dentists answered yes to being embezzled, with only 43% of suburban dentists and 40% of rural dentists stating they had been embezzled.

Here’s what dentists has to say about dental practice embezzlement:

“Always double-check. Remember what Harry Truman said, ‘The buck stops here’ Do not create or allow situations to occur that would allow some one to embezzle you.” (General dentist)

Do not blindly trust even your most loyal employee! Run an audit trail every week!(Alabama dentist)

“Much easier with computer dental management software. Hard to do with a pegboard system of old. Balancing day-sheets by using old defunct accounts, etc. makes it easier to hide in a variety of ways. Small offices with key employees tied up with no cross-trained duties, one person business offices.” (General dentist)

“We need to be more educated on how they manage to do this.” (California dentist)

“Many dentists make so much money when some of our staff are not well-paid, so it is not a surprise.” (California dentist)

“You can only make it more difficult, you can’t prevent it entirely.” (Florida dentist)It happens to 95% of dental offices. The other 5% are ignorant, or have a spouse working the front desk.” (Colorado orthodontist)

It’s the person w all the passwords and been with you the longest. They know your moves and you trust them. Don’t have that person have access to your check book. Have your CPA’s bookkeeper do you checkbook reconciliation and run periodic reports for account receivable and check against bank deposits. Watch your cash.” (Michigan dentist)

“Don’t trust anyone except your wife, especially your most trusted, long-term employee. Monitor, audit, but never trust!” (General dentist)

“Thank God for computer systems that can now track corrections made!” (Texas dentist)

“I make all the deposits and look at the daily reports. You have to be hands-on to some degree otherwise you leave the door wide open for theft.” (California dentist)

Over 1,000,000 dollars!” (Texas periodontist)

Each year Marquet International, an independent investigative, litigation support and security consulting firm studies major embezzlement cases in the United States and issues a report on their findings.

The following statistics are highlights based upon The 2011 Marquet Report on Embezzlement. Here’s what they found:

  • Vermont had the highest Embezzlement Propensity Factor followed by Connecticut Pennsylvania, Montana, Virginia, Iowa and Idaho – identifying these states as having the highest risk for loss to embezzlement in 2011;
  • The financial services industry suffered the greatest losses due to major embezzlements;
  • Non-profits and religious organizations combined accounted for about one-sixth of all the major embezzlement incidents in the 2011 study;
  • The average loss for 2011 was about $750,000; the median loss was $340,000;
  • Nearly three-quarters of the incidents (72.3%) were committed by employees who held finance/bookkeeping and accounting positions;
  • The average scheme lasted nearly 5 years;
  • The most common embezzlement scheme involved the issuance of forged or unauthorized company checks;
  • Nearly 22% of the cases in which a motivating factor was known involve perpetrators who reportedly had gambling issues;
  • 5% of the cases involved perpetrators who had a prior criminal history;
  • The average embezzler in this study stole $15,189 per month from their employer;
  • Nearly two-thirds (64%) of the incidents involved female perpetrators;
  • Male perpetrators, on average, embezzled about 25 percent more than females;
  • Nearly 90 percent of the cases involved individual perpetrators;
  • The average adjusted age of perpetrators at the commencement of their embezzlement was just under 43 years;
  • 40 – 49 year-olds caused the greatest overall losses;
  • Most major embezzlers appear to have been motivated by a desire to live a relatively more lavish lifestyle, rather than driven by financial woes; and,
  • The average prison sentence was 4 1/3 years (52 months) for convicted major embezzlers.

For tips from The Wealthy Dentist on preventing embezzlement see Dental Practice Fraud Causes 200k Embezzlement Warning.

What has been your experience dealing with dental practice embezzlement?

Do you have advice for other dentists?

Dentists: Beware of the China Domain Registration Scam

China Domain Registration ScamDomain registration scams continue, both offline and online.

In the online version, a dentist receives an email, wanting to “clear up” ownership for their dental practice domain that someone else is allegedly attempting to register in China.

The emails usually look something like this –

Dear Manager,

(If you are not the person who is in charge of this, please forward this to your CEO,Thanks)

This email is from China domain name registration center, which mainly deal with the domain name registration and dispute internationally in China and Asia.

On September 26th 2011, We received Tianhua Ltd’s application that they are registering the name ” yourdomainname ” as their Internet Keyword and ” yourdomainname .cn “、” yourdomainname.com.cn ” 、” yourdomainname .asia ” domain names etc.., It is China and ASIA domain names. But after auditing we found the brand name been used by your company. As the domain name registrar in China, it is our duty to notice you, so I am sending you this Email to check.

According to the principle in China, your company is the owner of the trademark, In our auditing time we can keep the domain names safe for you firstly, but our audit period is limited, if you object the third party application these domain names and need to protect the brand in china and Asia by yourself, please let the responsible officer contact us as soon as possible. Thank you!

Best Regards,

General Manager
Shanghai Office (Head Office)
3002, Nanhai Building, No. 854 Nandan Road,
Xuhui District, Shanghai 200070, China
Tel: +86 216191 8696
Mobile: +86 136615 29704
Fax: +86 216191 8697

This is an updated email version of an old fax scam –

According to the FTC, consumers – many of them operating small businesses on the ‘Net – have received unsolicited solicitations stating, “URGENT NOTICE OF IDENTICAL DOMAIN NAME APPLICATION BY A THIRD PARTY.” The letterhead identifies the sender as either Electronic Domain Name Monitoring or Corporate Domain Name Monitoring.

The solicitation warns that an application for a domain name almost identical to the recipient’s has been “submitted to the National Domain Name Registry (NDNR) for registration,” by an unidentified third party. For example, the owner of a site “www.sobi-sky.org” was told that an application had been submitted to obtain the domain name “www.sobi-sky.net”

The solicitation says, ” Consequently, it is our opinion that this application may have been submitted in bad faith. . ..” The solicitation lists four reasons someone might want a copy-cat domain name, including “disrupting the business of a competitor,” or intentionally attempting to lure someone else’s customers by creating a confusingly similar Web address.

The fax solicitation offers to block the application by obtaining the copy-cat domain name for the fax recipient for a fee of $70. It warns that, if the consumer fails to act, “NDNR WILL NOT BE LIABLE FOR THE LOSS OF DOMAIN NAME LICENSE, IDENTICAL OR CONFUSINGLY SIMILAR USE OF YOUR COMPANY’S NAME; OR INTERRUPTION OF BUSINESS ACTIVITY OR BUSINESS LOSSES.”

Often online scams come from successful offline scams that just get updated for online use, much like viral email hoaxes do. Remember the old paper chain letters?

Whenever you receive a suspect email, some great sites to check their validity are –

Google can be a great hoax research tool if you search the company name or website address offering to “help” you with your domain name registration.

By searching the website address on Google I see others have posted about this domain registration scam –

Using Google to search for scams

Also, when I attempted to visit www.ygnetworkltd.com I got the following warning about the website –

China Domain Registration Scam website

When in doubt always check with  your domain name registration company.  Never be in a hurry to answer an unsolicited email asking you for money from a company you don’t know.

To read more about this type of domain registration scam see: FTC Halts Domain Name Scam Thousands of Consumers Pay Up To Fend Off Fictional Poachers


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