Kevin: Today, we have a special guest. It’s an area that we all hesitate as health care professionals to talk about, but it’s an important area and perhaps in our business careers and in our personal careers, this is one that I suggest our listeners pay very close attention to. Mr. Dave Harris is founder of Prosperident, the world’s largest dental embezzlement investigation firm. Since 1989, it has been leading the dentistry war against embezzlement. Under David’s leadership, Prosperident has expanded over the past 25 years to become a team of more than a dozen specialized investigators consulting on hundreds of embezzlement matters annually.
David’s vast investigative experience coupled with his own misadventures is a tremendous asset to the dental profession and can help us avoid this serious and complicated issue. He’s passionate about sharing the ever growth and wealth of knowledge with dentists and dental specialists. David believes that the best educational experience are enhanced by humor and his entertaining and insightful presentation style has made him a favorite presenter at regional, national and international dental conferences.
David is a licensed private investigator with a graduate degree in applied mathematics and a CPA designation. He is dual certified in fraud investigation, possessing both the certified fraud examiner designation from the Association of Certified Fraud Examiners and he holds the certification in financial forensics designation from the American Institute of CPAs. He can also be found at email@example.com.
David, thanks so much from your busy schedule to our busy schedule to take today’s podcast. As far as our listener is concerned, there’s almost no one probably that hasn’t been affected by embezzlement and those who don’t think they have been are probably going through it and are just not knowledgeable enough. Would you agree with that statement?
David: Almost. Statistically from what we know, there’s about a two-thirds chance that a dentist will be embezzled at some point in their career. Unfortunately, those numbers are probably understated a little bit simply because as I think you’re suggesting, some embezzlement goes on and is never detected and other embezzlement happens and nobody reports it. So my own number, which is of course unprovable, is that there’s probably an 80 percent chance that you’ll get hit at some point in your career.
Kevin: In your firm, in your background, when you talk about embezzlement, are there different types of embezzlement or does it always involve money?
David: By embezzlement we are talking about typically staff stealing from their doctors. It could be money, and in most cases that’s the form that we see, it could also be something, Kevin, like you have somebody in your office who’s ordering hand pieces and they order an extra one and sells on eBay.
Kevin: So there’s more than just the straightforward stealing from Dr. Smith or Dr. Jones, is that correct?
David: Absolutely. When I talk with dentists about embezzlement, what’s in their mind typically is the theft of cash, $20 bills. Let’s not misunderstand, that happens and it happens a lot, but it’s not that hard for a thief to steal checks payable to you or even to hijack a credit card payment or an automatic funds deposit. Any form of wealth transfer to you can be stolen. And then we have thieves who, as I suggested a minute ago, have for whatever reason decided to move beyond that and into stealing things like hand pieces.
Kevin: For our listeners, most of them know — that have been following the podcast that I do weekly — that I have over 150 employees. I’ve been self-employed for 35 years. I speak as an expert in the business of dentistry and healthcare. I believe I’m knowledgeable. I have the Master’s in Business Administration, and I can share with the audients today that I know that it’s happened to me in my 35-year career three different times. Each time was not only emotionally disturbing, but it rattled my confidence. Here I am out there speaking as “an expert” knowledgeable in business and believe I have the safeguards in place, but on three occasions over my 35-year career it’s happened to me. I’m embarrassed to say it, but in full disclosure, a firm like you could have perhaps had me avoid that if I had the proper protections and safeguards in place.
Can you just explain to the listeners today, if you had to narrow down to five to ten particular items to protect your practice, what would you say those would be in an order from most important to least important?
David: The most important advice I can offer your listeners is not to underestimate the embezzler or to assume that your superior education will give you some kind of upper hand in this battle. The second thing I will say is that there is absolutely nothing and I mean nothing that will prevent embezzlement. If I worked for you and I get the idea that I am somehow more entitled to the money that your practice makes than you are, I’m going to get away with it at least for a while.
We hear about a lot of things. If you look at the things that people write about embezzlement when you go to www.drbicuspid.com or any of the online stuff and you Google embezzlement, you’ll find a lot of advice. You’ll find a lot of articles that say do these five things to “prevent” embezzlement in your practice. Kevin, as soon as I see that word “prevent” I realize that whoever is writing this doesn’t really get it.
Kevin: You’re sort of making me cringe right now that you can put up all the safeguards you want, but in the end if somebody wants to steal from you bad enough, where there’s a will, there’s a way.
David: Where there’s a will, there’s a way. What’s controllable, however, is how long they get away with it and how much money they get. If somebody steals from you once and gets caught, I view that as a success not a failure. Somebody who gets away with it for three years and gets $275,000, that’s a failure.
But let’s talk about these “controls” that people suggest you will prevent embezzlement. For example, I was looking at one today and this person said, “The office needs to have a stamp so that when a check comes in on the back of it it’s stamped for deposit only to Citi Bank account number 123456. This person is saying that’s a way to prevent embezzlement. I was speaking somewhere about five years ago and one of the doctors in the audience kind of put that one forward. He said, “I have this stamp that locks up my checks so nobody else can cash them.” The question that I asked him was, “Do you stamp the checks yourself?” And he got kind of this huffy look on his face like, “No, I’m a restorer of smiles, stamping checks is somebody else’s problem.”
And I said to him, “Okay, let’s see if I understand this. Let’s assume that you have an embezzler and by very definition, this means this is somebody who does not feel a huge compulsion to follow society’s rules, what would ever lead you to believe that they’re ever going to follow yours?” In other words, if we are a little bit introspective about these “controls” they’re basically rules.
Kevin: So bad people don’t always necessarily follow the correct rules, is that a fair assumption?
David: I think you can count on them ignoring those rules when they cost those people money.
Kevin: If you were to look at your vast years of knowledge and experience, is the advent of computerization in the dental office a plus or a minus in your experience?
David: From who’s perspective, the embezzler or the victim? From the embezzler’s perspective, it’s a huge plus. If you go back to the days pre-computerization, and this is when I got my start in this world back in the days of Pegboard, the least sophisticated dentist in business terms could typically look at Pegboard and have a reasonable idea of what was happening. As soon as computerization came in, what all you guys did, Kevin, was take about three steps back from the information. In a computerized practice, what people depend on is not seeing raw transactions but what I think of as reports, which are aggregations of transactions. There is an obstruction there and that obstruction creates a lot of opportunity for an embezzler.
One of the pieces of advice that I give doctors and a great idea for your listeners is the reports they look at at the end of each day and at the end of each month should be ones that they printed themselves.
Kevin: I could tell you in my own experience, for our listener’s advice, I could tell you that in most cases, the dentists that I know do not print the reports themselves. They have someone else print those reports.
David: Most dentists I know, honestly, wish that they would wake up tomorrow morning and that Practice Management software had vanished from the planet without them ever having to invest enough time and mental energy to learn how to do the most basic functions in that software. That’s not going to happen. Software will be there tomorrow and it will be there next year and the alternative, which is Pegboard, is far worse. You obviously have a sizeable practice, just imagine trying to operate that without software. It’s necessary and it’s important and it lets officers do things that they could not dream of doing any other time.
As a practice owner, as a doctor, you have to embrace that and say okay, that’s the reality, now what do I do with it? As soon as you allow somebody else to print the report that you rely on to see if somebody is stealing from you, you create the possibility for selective reporting. That what you are seeing that you believe is the whole practice, in fact, is not and that’s dangerous.
Kevin: If you were to guide our listeners through your “typical client” if I wanted to hire Prosperident and I said whether I suspect it or I don’t would hurt me personally is a phrase that I’ve coined or I heard from somewhere about BLT, Believe, Like and Trust, and I felt if you believed, liked and trusted your employees or your team members that chances of embezzlement were worse. In my particular case, all three of these incidences I believed, liked and trusted the individual and I was amazed at the coldness and the callousness of the acts.
Without getting on that situation, we hire a company, your company comes out, what actually would our listeners do? How do you work it? Do we sign a long-term contract? Do you come in and do your own audit? How do you actually bring out listeners to your business and educate them about what your company can do?
David: We do, in really broad terms, a couple of things. One is that we do investigations. This is when people contact us and they’ve got some level of concern. The level of concern may be a function of an employee who they think is misbehaving a little bit, or it could be simply that they see the statistics and they hear somebody like you saying it’s devastating emotionally when somebody does this and they say, “I have no reason to believe anybody is stealing from me now, but at the same time I don’t want to be willfully blind to this problem.” We get people who contact us with various levels of concern and when they do, we investigate. Investigation is done in a way that’s stealthy so your employees have absolutely no idea that you are experiencing a little crisis of confidence in one of them and you’ve hired somebody to look at them. That stealth is really important.
We also get people who come to us and say, “I have no particular concerns now, but I want to set up my systems in a way that is going to minimize my risk from embezzlement.” You’ll notice that consistent with our discussion a few minutes ago I didn’t say prevent embezzlement, I said lessen the risk. That means doing things that if embezzlement is happening to you, it will be revealed more quickly and with fewer dollars taken from you. We have a program for solo practices and we have another program for larger group practices where we will review systems and identify the embezzlement hotspots that exist and help the practice owner address them. Those are the two different things that we do.
Kevin: Is that on a monthly fee basis, is it a yearly contract, is it you pay as you go? Can you give the listeners sort of a broad representation of what it would cost a solo practice or a group practice to reach out and get your expertise from Prosperident?
David: Certainly. Our investigations are in some cases able to be priced on a fixed price. If you and I can agree on the scope in terms of what time period we’re going to look at and what things we’re going to look at within that time period, we can fix a price. The price for investigation in the simplest of cases can be about $6,000. In a five office practice with 12 doctors, obviously, it’s going to cost more. Investigations are always done looking backwards. In other words, we look at some time period which often is a year and we look back through that year and see if anything was going on. We’re not fans of the sort of monthly contract or the long term contract with us. Typically people want to hire us to answer a question, we will answer it and move on, unless they want to come back later and ask us the same question again or maybe a different question.
When we help somebody set up their systems properly, in our minds, that should be permanent and we should be able to do it once and you’ll never need us again. In real life, people change systems that you put in place and atrophy and it’s not uncommon for us to set up systems only to have somebody come back three or four years later and say, “Can you please just confirm that we haven’t drifted from what you helped us set up before?” And we’re happy to do that. But our intention is not to have an ongoing role in your life.
Kevin: David, as far as the dental profession is concerned, how does it rate amongst other professions and other businesses? Are we more apt to be embezzled or are we less apt? Can you share with our listeners some statics? You mentioned that maybe between 66 and 80 percent chance that you will be embezzled from. How does that compare with other industries and other businesses?
David: I’ll preface my remarks by saying I only work in dentistry so I have no firsthand exposure to any other business. The statistics I see from my kind of colleagues in the medical world, which is really the closest one that we have to draw from, have very similar numbers. I was looking at some stuff the other day that suggested that a medical doctor would have about a 75 percent chance of being embezzled in his or her career, which would put them very close to us.
The difference between medicine and dentistry as I see it is that most physicians practice in very large practices. A lot of dentists still practice in a one or two person operation. The larger operations tend to have a higher probability of being stolen from, but the theft related to the revenue of that organization is probably a lower percentage overall. In other words, $100,000 theft from a solo dentist, which by the way is the average, is a pretty big deal in terms of the financial impact that has on them. $100,000 embezzlement from a big hospital is the same number of dollars, but the impact it has on the people who work there or own it is probably much smaller.
Kevin: Can you share with the listeners in the scope of your experience and Prosperident’s experience, how many actually go to court? Is there statistics involving the dental community? Is it something where we found the problem, we’ve tried to implement strategies to reduce the chances of these problems reoccurring, but do these responsible parties, do they end up in court or does experience indicate that you just sort of move on, brush it under the couch and just say it was a bad experience, or does legal action normally take place for the perpetrator?
David: It doesn’t take place as often as I would like it to and there are probably a couple of reasons for that. The first is that I view the vast majority of your peers as being fundamentally altruistic. Most of them didn’t get into dentistry because they wanted to get obscenely wealthy or they had some perception that that’s what would happen from a career in dentistry. They get into dentistry to help people. They’re healers, first and foremost. That makes them trust people, it makes them hurt when people don’t repay that trust properly, and it also makes them a little reluctant to take somebody and push them through the legal system.
Beyond that, there’s another problem and that problem is that the legal system has finite resources. Wherever your listeners live, there’s probably violent crime and the justice system, the police, the district attorneys, have to allocate their resources between dealing with different types of crimes. On the one hand you’ve got potentially robberies and murders and things like that happening, and on the other hand you have white collar crime where no blood is spilled and where the victim is honestly somebody who most members of society probably think is a little overpaid to begin with. That’s the context into which an embezzler is inserted and a lot of our victims are, I will say, underwhelmed by the response of the justice system towards the fact that they’re victims. Things move slowly and a lot of the perpetrators get treated, in my mind, more lightly than they should.
An interesting place for your listeners to go is on our website, and you gave the address earlier, www.dentalembezzlement.com. On our website there’s a thing called The Hall of Shame and we profile about 500 embezzlers there. You can see for the most part what they did and what happened to them. We will only report on things that are already in the public domain so in addition to those 500 odd, there are many, many more who are in our files that we can’t talk about. But if somebody wants to read a little bit about how embezzlement happens and what happens to embezzlers, there’s a pretty good cross-section there.
Kevin: David, our time is almost about up. I cannot tell our listeners how pleased I am for you and your company to take the time to join me on this podcast. We’ve been listening to Ascent-Dental-Solutions. My name is Dr. Kevin Coughlin and with the help and expertise of Mr. Doug Foresta, we’ve put on over 80 of these podcasts to help the dental profession. In this particular case, although there was a huge business slang, you cannot be enormously successful clinically if you don’t have financial success. With the statistics that you shared with us of between 66 and two thirds and potentially 80 percent of all dentists being embezzled from, your firm and your expertise is genuinely appreciated.
Could you just leave us with the best way to reach out and contact you for your expertise and help?
David: I’d like to thank very much Dr. Coughlin and Mr. Foresta for hosting me today. And as a thank you to Ascent Dental and the listeners, I’d like to make a special offer. One of the best indicators of the fact that a doctor is being embezzled is the way that the thief is acting. There are a lot of ways to steal from you, but the way that somebody acts when they’re stealing is predictable and consistent and measurable. So my company developed this assessment called The Embezzlement Risk Assessment Questionnaire which is an online questionnaire of about 40 questions, it will take 15 minutes or less to complete. It’s something we normally charge $79 for on our website, but as a thank you to Dr. Coughlin, what I’d like to do is to make that available at no charge to his listeners until August 31st. There’s a long link to access the questionnaire, but I will send that link to Dr. Coughlin and Mr. Foresta and they will include it on the page that has this podcast.
Kevin: That’s a wonderful thing to do and I’m sure our listeners will greatly appreciate it. Mr. Harris, thank you so much and thank you so much to your company for your expertise and help to our profession.
David: Thank you very much for having me on today.
Kevin: You’re welcome.