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