True dental fraud: The lake house

After reconnecting with a long-lost friend, a series of bizarre events leads a dentist to a chilling discovery. Read the true story in this month's installment of the Fraud Blotter.

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Paul, old man, how long has it been?

Oh my gosh, Bill. It’s been ages!

It's a familiar scenario: Two friends reconnect at a dental convention, share a few stories, and decide to meet again. In just a few months, Bill found himself at Paul’s lake house for a "fishing trip," laughing and telling tall tales with four other guests. Paul’s lake house was unbelievable. It looked like something out of a magazine and was perched on one of the most amazing lake lots Bill had ever seen.

Lake House Hi Res

Spread out on the expansive deck with cocktails in hand, the guys relaxed. Then Bill noticed Paul stand up and greet someone. Paul motioned Bill over for an introduction.

Bill approached the deck railing. He caught a glimpse a couple and shook his head with disbelief. The woman on the neighboring balcony was Frances, Bill’s front desk employee, with her husband, Tyler. He shook his head again and stepped a little closer. He thought Frances saw him when she suddenly turned and disappeared into the house. Tyler excused himself, gesturing that he had a phone call, and followed her into the house. Bizarre, Bill thought to himself.

Paul shrugged, and everyone resumed relaxing. Without saying a word about knowing the couple, Bill asked Paul a few questions about his neighbors. Paul said they had owned their lake house longer than he had owned his. His realtor handled their sale as well. In fact, that was the only reason he knew their names. Otherwise, he knew nothing else about them. They were nice enough neighbors, but didn’t really fit in with the neighborhood, he commented.

Despite all the distractions, Bill couldn’t quit thinking about Frances. Frances had worked for him for years, and Tyler worked at a local auto body shop. Obviously, one of them came from big money somewhere—but where, how? It didn’t make sense. He couldn't wait to talk to Frances about it on Monday.

That night, Bill woke with a start to his cell phone's chainsaw ring. He glanced at his phone: 3:20 a.m. It was his wife. Something was obviously wrong. He answered in a panic. She blubbered, “Your dental office is on fire, Bill.”

Monday at the fire station, Bill gawked across the desk at the investigator with an expression of disbelief. His practice had been intentionally torched. Then the questions began. Where was he? Why was he away? What was he doing there? Eventually, after many tedious questions, the story about seeing Frances came out. The investigator leaned back in his chair and sighed. After that point, a whole new line of questions followed.

"How long has Frances worked for you?"

"Umm, about 14 years."

"How old is Frances?"

"Let me think. Around 50."

"What type of employee is Frances?"

"Ah, the absolute best. She is never sick, never misses work, never even takes vacations. She is always the first to arrive and the last to leave the office. I couldn’t ask for better."

The investigator took a few notes and continued. "Do any of the other employees help out at the front desk?"

"No, not often. Frances is organized and easily distracted, so she asks others not to hover or mess with her stuff. Some of our employees say it is ridiculous, but, hey, I understand."

"Does Frances handle cash?"

"We rarely receive real cash payments in our office. Almost never. She does handle most of the money, runs the credit cards, gets the mail, takes the deposits."

"Have Frances and her husband had any financial problems?"

"Well, back in 2008, he lost his factory job. It took him a few years to land the position at the body shop, but since then all has been stable, as far as I know."

"This lake house she owns, why did it shock you so? "

Bill thought a minute. "It must cost a cool fortune. I know what Frances makes. I have an idea what Tyler makes. How could they afford it? That is what shocked me."

"Have you talked to Frances since you've returned? "

"I can’t get in touch with her. Left messages, but that is all I've been able to do."

"Dr. Dean, judging from your answers, we may have hit upon a motive for your arson: embezzlement. If you want to pursue this lead, an embezzlement expert will need to access to your practice data. Is that a problem?"

Bill immediately dropped his head. He looked up, nodding.

"Well, yes, it is a problem. We’ve not been able to recover my data yet. I thought it was being backed up off-site by our software company, but when I called this morning, they said the service was canceled back in 2009. I am still looking into it . . . "

* * *

It's a terrifying and true story. Contrary to what many people believe, most embezzlement is uncovered in response to behavioral clues similar to the ones listed above and not hardcore evidence. This is because embezzlers constantly create new ways of embezzling: there are hundreds of ways to do it. This makes uncovering how they do it difficult. What is more predictable is the behavior they express in response to the pressures of committing and hiding the crime.

Don’t be an easy victim. Learn the behavioral red flags of fraud and embezzlement so you can catch the crime early. Take the Prosperident Embezzlement Risk Assessment Questionnaire referenced below to become more familiar with what to look for. (Thank you to Prosperident for making the assessment free through February 28, 2018.)

Know how to protect yourself and what to do if you think you are being embezzled. Always remember, it happens to around two out of every three dentists. It can happen to you!

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Resources

1. The Prosperident Embezzlement Risk Assessment Questionnaire is available for free until February 28, 2018. The normal cost is $139. Please email requests@dentalembezzlement.com for your copy.

2. Behavioral red flags. Report to the Nations on Occupational Fraud and Abuse website. http://www.acfe.com/rttn-red-flags.aspx.

3. Fraud and Embezzlement (2005). American Dental Association Division of Legal Affairs, Council on Dental Practice, and the Department of Salable Materials.


Sandy Baird Mba DentistryiqSandy Baird, MBA, is a practice management consultant, coach, and speaker. With 35 years of in-office experience, she offers valuable management services and practical advice. Her passion is to help dental teams conquer challenges, exceed goals, and realize their full potential. Contact Sandy at bairdconcepts.com, or at sbaird@bairdconcepts.com.

Also by Sandy Baird, MBA

A $998 ounce of prevention

How embezzlement hid behind an employee manual


More from the Fraud Blotter

In our monthly Fraud Blotter column, Jean Patterson, Sandy Baird, and Teri Dervenis present real cases of dental fraud.

An interview with a dental practice embezzler

The collateral damage of employee fraud

Behind the Fraud Triangle: Understanding the origins of embezzlement in dental practices


Editor's note: This article first appeared in the Apex360 e-newsletter. Apex360 is a DentistryIQ partner publication for dental practitioners and members of the dental industry. Its goal is to provide timely dental information and present it in meaningful context, empowering those in the dental space to make better business decisions.

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Dental news and press releases may be sent to Apex360 editors at dentalpress@pennwell.com">dentalpress@pennwell.com.


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