What NOT to do if You Suspect Embezzlement

We have invested enormous time and resources obtaining our education, building our clinical skills and providing exceptional patient care. Additionally, we invest heavily in training and developing our dental teams to assist us in achieving our professional and financial goals. Sadly, over the course of our careers, there is almost a 50 percent chance that one of your trusted team members will embezzle.

Embezzlement is a violation of our trust and can be emotionally and financially devastating. Some of you have experienced this in the past and know all too well the consequences that result from this crime. It also impacts the rest of your team, and they often are afraid you will no longer trust them, which can have a significant impact on team morale. Additionally, you will need to hire, train, and build trust with a new team member.

Therefore, it is imperative to recognize the early warning signs in order to minimize impact. It is also paramount to respond correctly if you suspect someone on your team. If you suspect that embezzlement is occurring, your natural instinct will be to start collecting information and asking questions. Unfortunately, this is often the wrong response.

I have seen computers stolen, hard drives removed, backups destroyed, mysterious computer crashes, and the removal of charts and other patient records from the office.

Stealth is essential, and nothing should be done to alert the suspect that you have concerns. I admit it’s easy for me to say since I no longer perform clinical dentistry, and I’m sure I would have had the same challenges when I practiced. However, if your suspicion turns out to be unfounded, it will be far better if your team remains unaware of your earlier suspicion.

Mistakenly accusing a team member of impropriety could lead to a wrongful termination lawsuit or other legal issues. At best, the bond of trust you had with the employee will likely be forever broken. Also, terminating employment based on a suspicion may lead to some type of severance obligation. Delaying termination until sufficient evidence is gathered allows a “for cause” discharge and is far less likely to lead to severance related liabilities.

Additionally, alerting the suspect prematurely will give him/her time to hide or destroy evidence. I have seen computers stolen, hard drives removed, backups destroyed, mysterious computer crashes, and the removal of charts and other patient records from the office.

Embezzlers typically face some type of financial pressure and have rationalized that the best solution is to steal from you. As the embezzlement ensues, the pressure and stress steadily increase. Should the embezzler suspect you have discovered suspicious activity, the natural reaction will be to remove the evidence. Once evidence is lost, an ensuing investigation can be more difficult and could prevent an effective prosecution or civil recovery. With this is mind, please consider the following advice:

Refrain from asking questions and requesting reports that would be considered unusual.

Should you suspect someone in your office is committing embezzlement, the natural tendency will be to start a self-directed investigation which could include asking questions or requesting reports you haven’t requested before. Additional information requests or changes in procedure will likely raise suspicion.

Don’t ask a team member to contact outside agencies such as the dental board or insurance companies.

While contacting these entities may be a necessary part of an investigation, these inquiries should be made privately. Any requested documents should be sent to a private location. For example, if you suspect that fraudulent insurance claims may be involved, you could be held vicariously liable for your employee’s actions. Contacting an insurance company prematurely could result in an audit.

Don’t bring in outside advisors during normal office hours and don’t have these advisors call the office.

While it is common to have your accountant visit during tax season, it could be unusual to have him/her show up unexpectedly. Compound this with visits or telephone calls from attorneys and management consultants, and you could have the makings of a disaster.

Don’t make bank, vendor or advisor changes.

Any sudden changes of this nature could be a tip-off that something isn’t right. Gather the evidence first, terminate the employee if appropriate, and comfort the rest of your team before proceeding with major changes in operations. Remember, your remaining team members are going to be feeling shock, hurt and outrage as well. Throwing too many changes into the mix will add to the stress. Obviously, if one of these parties either participated in or was negligent in their duties, a change must be made. But again, the change should occur after the employee is terminated and you and your team have had time to digest what has occurred.

Don’t suddenly upgrade software, increase the number of technical support calls, or change your backup procedures.

Should you suspect embezzlement is occurring, make multiple backups of your practice management software, financial software, and any other systems that might be affected. However, these activities should be performed privately. While software should be kept updated, it is important not to update during the investigation. We have had clients who became concerned that embezzlement was occurring and called technical support for advice. That advice often included immediately upgrading the software. However, the upgrade process could delete or overwrite data thus destroying evidence. Also, if an employee notices that software has been upgraded, they may become suspicious. Once the investigation is complete, a review and update of your business processes is important.

Don’t contact law enforcement—yet.

If you really want to cause the suspect to panic, get the police involved early in the process. This will also alarm your other team members and likely alert your patients that something isn’t right. The criminal justice process can be protracted, and many detectives and prosecutors don’t understand dental terminology or the software used in a dental office. It is important to supply law enforcement with a full report detailing exactly how the crime occurred. By having the evidence clearly documented, the investigating officer will be able to conduct a more thorough and expeditious investigation.

As hard as it may be, the key is to stay as calm as possible while evidence is being gathered. Force yourself to smile and say good morning just like you always have. Yes, you may lose some additional money to embezzlement while the investigation is ongoing, but that is far better than botching an investigation, having evidence destroyed (which could result in vandalism and theft), and possibly being the recipient of a wrongful termination lawsuit.

It is prudent to retain a professional familiar with dental embezzlement to conduct a thorough investigation in stealth. If wrongdoing is discovered, the suspect will have no time to react and can be removed from the office so that the remainder of the investigation can be completed and handed over to the proper authorities. Being a victim of embezzlement is a tough and emotional experience. Having the embezzler get away with the crime adds insult to injury, so stay the course and remain calm.