Phil Cole 0:06
Hi, everyone, and welcome to class solutions dental education Podcast, the podcast series where we share knowledge and experience providing value to you and your dental practice. I'm your host, Phil Cole, and I'm with my co host, Chris Webb. And in today's episode, we're going to be talking about embezzlement in the dental industry, and how prevalent it is in that dental community. So we're joined today by David Harris, CEO of prosperity and embezzlement experts who will be sharing his thoughts and his knowledge on this topic. So hello, and welcome, David, tell us a little bit about yourself and a little bit about I see that you know, you became an investigator and stuff, give us a little history for yourself.
David Harris 0:50
You've as I like to say, Philip that I got into this business because I had some big business plan. And I saw an opportunity to work with dentists. The truth is a little bit far from that. I I was, shall we say, not a high achiever, academically, you know, my high school and I parted company in not a good way, ended up joining the army because it sounded better than jail, which was kind of my alternative at the time. And anyway, I got there and kind of flourished in a way that maybe nobody foresaw. The Army ended up sending me to college. So I have a master's degree, but no high school diploma, which probably not a lot of people can say. When I finished my army time, I went to work for a bank, I lasted a few years, I got very frustrated, I was a fraud investigator there, and it just wasn't, the bank just insisted on making the same mistakes over and over. So and just to give you the chronology, 1989 I quit my job there. I was sitting at home doing absolutely nothing and bored. And the phone rang and it was the guy who had been in high school with in my quick visit, there was now a dentist. And he said to me, I think my front desk person is stealing. I have no one else to call. His timing was perfect. I mean, I was I was so eager for any diversion from thinking about my future. And I, I said to him, perfect. I'll meet you tonight at your practice after work, and we'll get to the bottom. So I went over to his practice. Now this is 1989 BC before computers. So he was he was using that old metal pegboard system that was kind of the antecedent of practice management software. Oh, yeah. So I got there. And he shoved a bunch of Ledger's and stuff happening. And I said, now we're gonna go at this a little bit differently, show me where she works. And he showed me her workspace. And I started going through her drawers. And what I found taped to the bottom of one of them was what we call him the trade or cheat book. A lot of us have to write down what they do so they can keep track of what's real, and what's not real in the accounts. So I found the cheat book. And from there, it all kind of unraveled pretty quickly. You know, it's kind of like one of those blankets, made a wall where you, you know, you pull the thread in the corner, and now you have a ball of yarn sitting in front of you on the floor. That's, that's kind of what this looked like. So there was there was about 30 or 35,000 sheets stolen, which was big, big numbers in those days. And so my friend was not happy that she had stolen but happy that I found it. He said to me, can you come back tomorrow morning, please, to help me fire her because I don't want to face that one alone. And I I had no reason to believe I would be any less bored the next day than I was that day. So I said, sure. I'll come back. So we got into fire. My friend promised to buy me dinner that I'll mention I'm still waiting for. And I walked away from this whole experience thinking well, that was interesting, but I didn't really see a job for myself. Until two weeks later, what happened two weeks later was I had an appointment at my own dentist's office. And I was standing outside the front door and I was about to go into effect. I had my hand on the door handle. And I looked through the glass in his door. And sitting at his front desk was the same woman I hoped fired the other office two weeks earlier. So I said something I won't repeat. And I ran to a payphone because in 1989 you know cell phones were like the size of a briefcase used to carry one around with you. When I call the practice and I told my dentist about the time bomb that was taken away at his front desk and he asked me in this panic voice What the hell do I do now? And about two sentences later, he hired me and that was my first time. Wow. So that's how I got started. Now a lot has changed in the last 34 years. You know, technology has revolutionized how dental practices function and also how we investigate. You know, one of the big innovations was the ability to move have data around over the internet which enabled us to do investigations remotely. I mean, you know, when, when, way back when when you did an investigation, you'd meet the doctor at six o'clock at night, they'd hand you the keys to the practice and say, okay, just make sure you're out by 6am. And you'd work all night. You know, that was that was the way he did investigations. Whereas now, you know, our, our team and they're about 20 people and you know, they all work from home, they, you know, they can work kind of daytime hours and do it all across the Internet and my my chief technology officers in the in the office next door, and he's the he's the one who handles that monumental task of getting data so that we can, we can work with it.
Phil Cole 5:47
So I guess my question would be if that just burns off right away is was it easier to embezzle back in pegboard days? Or is it easier now? Because technology you can get away with hiding so much?
David Harris 6:02
It is way easier now? And that's a great question. You know, in pegboard, even the least business savvy dentist could have a decent picture of what was going on, you know, and you had little clues like you could see, you know, whose handwriting made an entry. And of course, embezzlement happened in the pegboard days, but it was it was relatively small scale. The time when the dollars really started climbing was when practices computerized and now what doctors are looking at instead of transactions, which was kind of what you saw on pegboard, they're looking at reports. And just by their very nature, a report is an abstraction. It's, you know, it's an aggregation of transactions. And of course, somebody who produces that report can can have a lot of shaping about what the report says, you know, they can they can set different parameters for generating the report. So investment is much easier and the dollars are much, much better.
Phil Cole 6:55
What would you say is the what would you say is the average dollar amount.
David Harris 6:59
The last time we looked the average amount that a thief stole to the point where they get caught from our files was about $109,000.
Chris Webb 7:07
When I, I was looking and I was looking on your website and doing some research, and one of the things I noticed with that was that the average timespan of them embezzelment goes on is two years undetected? Yes. So that that is shocking to me. So if you could just kind of go through like, why should all doctors be concerned and pay attention? Or what things should they be aware of when it comes to embezzlement in their office?
David Harris 7:39
Yeah, that's a that's a question that has kind of a multi phase answer, Chris, but I'll I'll try and address some of them. You're absolutely right embezzlement goes on, typically undetected for about two years. Why? Because this is like playing poker with somebody, and your cards are face up and their cards are hidden. In other words, if if I'm gonna, if I'm your office manager, I know the control systems. In fact, I am a lot of the control systems. And I know what you look at as a doctor, and more importantly, what you don't. And embezzlement is really a crime of navigating around your screen. So let's let's start at the beginning, you know, every software produces a day end report. And it says here were our fees today, here are collections here are adjustments. Well, one of the basic rules in in any business is that the amount collected should be the same as the amount deposited in the bank. And there are two kinds of dentists there are those who will sit there at the end of the day and go to their online banking and see if the amounts matched up. And then there's the other 85%. If you're in that 85%, and I am your office manager stealing is incredibly easy. I don't have to do anything exotic in your software. To conceal what I did, all I need to do is divert some of your deposit. So your practice collects $37,200 today. And if I can get away with either depositing if I'm doing it or handing the money over to you, if you're making the deposit of let's say $800 less than that, and you don't notice that discrepancy. That's what I'm going to do. So, unfortunately, there's a huge majority of dentists who are in that category. Why? Because that concept of verifying the day end elections against the deposit, which used to be a really simple task has gotten to be a much more complicated one. What complicates is is timing differences. So when I when I started in this game in 1989, most doctors didn't take credit cards. And there was no such thing as as an electronic funds transfer. So the way money came into the practice was either cash your checks and the doctor who typically made the deposits in those days or maybe the doctor spouse knew instantly at the end of the day, whether today balance in other words, I've got you know, I've got excellent collections and it's all sitting here in my hands waiting to go to the bank. problem now is that when, for example, somebody pays by credit card. First of all, there's a time offset. In other words, if, if I, if I pay a, if I pay a payment by credit card today, the practice management software records that as a payment today, but we're, we're having this conversation on a Friday, that money might not get deposited until next Tuesday. Yeah. So, you know, the doctor today has no way of really knowing reliably whether that that credit card payment showed up at the bank or not. You also have electronic funds transfers, and they're the sequences reversed, they hit the bank first. And then afterward, the doctors staff recognize and post them so that it's a lot more complicated problem than it was in 1989. And the easiest thing for a lot of doctors to do is just check out of this game and say, You know what, I am going to trust my office manager, and hopefully the past. You know,
Phil Cole 10:56
I had an office manager once that took over somebody that was embezzled. And so she brought up this theory of hers, i don't i It sounds like a good idea. But what she said is, when she does those days sheets, she wanted to make sure that that doctor trusted her and did not think anything that she was doing anything illegal. So she went around with the day sheets and full day sheets from any of the providers and have them sign off on every single thing and verify that that work was done that this was posted properly, blah, blah, then went into the doctor with the day sheet said, here's everything totals up, you have to sign off on it. Because her big thing was is if if there's ever somebody that does embezzle in this practice, I've got initials for everything that I did, at least to make sure that it's not coming back on me. I I thought it was a good idea. Is that? Is that is that? True?
David Harris 11:57
Not not foolproof, but a good idea. And to be clear, one of one of my team said something once that really has stuck with me almost forever. She said transparency is the first casualty of embezzlement. In other words, if I'm stealing from you, my my incentive is to be less transparent, as opposed to more so, you know, I might not want that kind of system. Alternatively, though, Philip, if, and, you know, let's assume that a practice is effectively or that the practice owner is effectively supervising the collections versus deposits? And, you know, there are there are different ways to do that. But let's, let's assume that the office manager is being supervised in that area. I'm the office manager and I still want to steal. The next thing my thought process goes to is, how can I make the practice management software lie about how much money coming? In other words, if my doctors checking a report against the deposit, how can I make the report wrong? And to be clear, I am not going to get into details here. Yeah, because my my mortal terror is teaching some thief somewhere to be a better thief. And I'm not going to use use your, your, your show here as a vehicle for that. Yeah. But what I will say is, you know, it's tempting to think that practice management software, which is generally made by pretty big companies, you know, is sophisticated and should be hard to fool. It really isn't. If somebody understands how the software works, they, they almost inevitably can find out how to make it understand collections.
Phil Cole 13:36
I know that in the time that I've been in, you know, coming up on 25 years of being in dental and calling on as many offices I did. It's one of those things where I truly the amount of doctors that I had that were embezzled from it, I truly believe that, you know, there's always someone out there smarter, you know what, you're just when you think that you figured it out. And that's why I always tell Dennis, when you think you figured it out, there's someone that's become smarter, that's figured out the systems, like you said, some other system, and I kind of feel like it would be something that is you know, for you guys is gotta be just always changing. And always kind of like cybersecurity type almost like that. You're it's there's always somebody out there trying to find a new way to hack the system.
David Harris 14:27
No question about it. Well said. And beyond that technology is definitely the embezzlers right. And let me give you a small example. You know, about seven or eight years ago, there was this new device that came out called a square. And the readers who for the audience who don't know what a square is, it's a little two inch by two inch wide plastic gizmo that plugs into the bottom of a smartphone and turns that smartphone into a credit card terminal. So if I'm a thief, you know, I have two problems. I need to get your money in my hands. That's problem number one and then problem number two As I need to hide when I've done so steel on conceal, I feel like the square makes stealing a credit card payment much easier than it used to be, you still have to conceal it in software, I mean, you have to do something to hide what you did. But, you know, your your starting position is that the patient's payment is in your bank account. So the doctors so yes, our world changes. Technology changes what we do. And of course, it also changes now, how thieves steal. And you know, the dollars are getting bigger, as I said that first development of application, I think it was like $35,000, which was was big in those days. I mean, we I won't say routinely, but we frequently see a theft of over a million dollars. In fact, on our website, we have we have part of it, it sounds like Chris, you may have had a visit there, called the Hall of shame. And part of the Hall of Fame is the million dollar club. So these are staff who stole more than a million dollars from their practice. Now, you know, sometimes that happens in a group practice, but I can think of three or four instances anyway, where it happened to the solo doctor.
Phil Cole 16:10
It's just it just it's mind boggling to think that you could but I like you said, once you get going and you find and you got a system moving, I am sure that. And the problem I would save a lot of times too is I think Dennis fall into the trap of just, if everything's going smooth, the trust factor level is just so much higher. And then probably most businesses and it's that family atmosphere, which with a lot of those offices. So it just becomes so easy. Because I know the ones that embezzled from when I when I was in the supply business, every one of them sit there and said I had no idea. She was like, you know, she was like a sister to me, or she was like a family member to me. And I trusted her so much. And it was always that I trusted her so much so I can see it.
David Harris 17:01
Yeah, it's a self fulfilling prophecy. I mean, if you didn't trust people, in the first instance, you probably wouldn't hire them. And if you did choose to hire them, you would probably watch them more carefully. I mean, it's that it's that person. You know, as soon as, as soon as the doctor says I would be, you know, in such trouble if she ever quit. It's, you know, when when somebody makes that statement about one of their employees. That's green light to steel. And a lot of times to the embezzler will kind of work their way into the doctor's family. A comment I get a lot is something along the lines of You know, I can't believe it's her. I mean, I was at her daughter's wedding three months ago. And it's it's just starting to occur to the doctor, how much of that wedding she actually paid for?
Chris Webb 17:48
Oh, it's the mass is the mass manipulation. You know, like, what what you guys said said was one of the things that stuck out to me was, yeah, it almost always it was That's my most trusted person. She was my most trusted, you know, person in the office. And it's is that mass manipulation, where they have to gain your trust to gain access, like you said, it's that green light, you gain that trust, and then at that point, it's game on. It is.
David Harris 18:21
And let's face it, I know very few dentists who chose that profession, because they had this unquenchable desire to be a business owner. You know, the vast majority of people in dentists are healers and clinicians. And running the business is kind of the unwanted stepchild of the marriage. And when they encounter a take charge office manager who says Doctor, you go in that operatory and you do high end dental work, and you just leave running the business to me, and I mean, every dentist who hears who, who hears that from their office manager thinks that their prayers have just been answered. And sometimes it's true, sometimes it's not.
Phil Cole 19:00
So, when, when we're doing transitions and stuff, you know, we throw out the stat that it was done by the ADA and other ones. And if you look at just in people in general, one out of every two dentists will have to retire early or quit dentistry because of disability. Okay, or or death. But then embezzlement is the same thing. When you look at the ADEA. I looked at some, you know, ADEA says two thirds of dentists are embezzled from dental dentistry IQ put it at a little, little over 50% There's others that say 50% I know I think you have a stat couple stats on your on your website, but they're all in that 50 You know, 40 to 50 percentile and stuff. I mean, it's obviously I mean, I know yours on your website, go back to 2019 and you're going to And you're showing the growth actually, what, why, what do we do? How do we, as a dental community, start to get the dentist to understand how prevalent is because it's the same thing for us when it comes to doctors, you know, not getting their practice valuated when they're at, you know, when they're through their cruise or throughout their career, because it's inevitable. I mean, this year alone, to the end of the year of last year, and this year, I would say 50% of our transitions were doctors that had to leave early because of illness or disability. So once again, when we talk to them, they always say, Oh, that's not going to happen to me. You know, but how do you get the stats out? How do we make this so that people start to recognize that listen, I mean, if it's not you, then go talk to your buddy when you have lunch with them, because one of you two are getting embezzled from
David Harris 21:01
Yeah, one of you are getting are going to get embezzled? Not necessarily right now, as to how you get the message out, I wish I had a better answer. You know, things like what we're doing here today are a good start. You know, I speak probably in a typical year 40 to 50 times. And, you know, I mentioned before we went live, I'll be I'll be at the Michigan Dental Association this year, and I'm speaking in the annual meeting in Grand Rapids, and I'll be speaking about embezzlement in the morning. And then I have a slightly different topic in this app in the afternoon, but I I'd welcome your dentist audience to, to come visit and you know, we'll, we'll open their eyes, or we'll continue that, that process from where we started today. You asked about numbers, and they're a little elusive. But let me give you the best numbers I have. What is pretty much a consensus is that embezzlement will hit the majority of dentists at some point in their careers. The ADA did a study that probably the most broadly based study that's been done was done by the ADA in 2019. And they asked about 17,000 dentists have you been stolen from? And the good news first 53% said as far as I know, I haven't been because you know, it's a little hard to give absolute answers here. So of course, the other 47% said, Yes. And then the ADA asked him another question. And this is where it gets kind of interesting. How many times and 26% of respondents in other words, about half those who said yes, and once as far as I know, you had 11%, who had been hit twice. 2%, three times. And the one that really floors me is that 8% of respondents had been stolen from at least four times.
Chris Webb 22:41
Yeah, yeah, I saw that. That blew me away.
David Harris 22:44
It blew me away. I mean, they you know, I expected most of the other numbers, Chris, but that was the one that really surprised me. So first thing you can do is just a little frequency exercise where you take 26% times one and 11% times two and 2% times three and 8% times let's assume just for and what you end up with is 86 embezzlements per 100 dentists. So that's what's already happened. Now, there's probably some under reporting. In other words, there's likely some embezzlement that happened and the doctor didn't realize that there's probably also some embezzlement that happened and the doctor realized that and for whatever reason they didn't tell the ADA about. So there's some underreporting, we can't quantify that. The other thing we can't quantify is how many of the 53% who said no? Or for that matter? How many of the 47% who said yes, will be embezzled, either for the first time or again in the rest of their careers? Right? Yeah. Pretty safe bet that it's going to touch 70 to 75% of the dental population. Now, one more thing I want to throw out just before I leave the discussion of frequency, the ADA asked the same question that Dennis in 2007, so 12 years earlier, and in 2007 35% of dentists had been stolen. So look what happened over a 12 year period, the prevalence of embezzlement went up by about a third. And of course, these are all pre COVID numbers, where we're certainly noticing an increase post COVID. But it just is it hasn't really been fully studied yet. But just unscientifically, we're seeing more data is getting embezzled now than we did five or eight years ago.
Phil Cole 24:26
Well, that was one of the questions I was gonna ask you too, because that is, I mean, a lot has changed from that COVID and many different directions. So that that's interesting that so it's you don't have hard numbers, but you can see that it looks like it's trending even worse.
David Harris 24:46
I'll give you our hard number which you know, let's let's agree as on a small sample size. One thing we have tracked for a long time is called the strike rate. And what the strike rate measures Phillip is the percent of time that we investigate when we actually find investment. And for a very long time that strike rates have been very steady at around 70%. Since the start of 2001, is 78%. Now, there that's, there could be a lot of factors in that. And I, you know, I'm a little hesitant to read too much into it. But what it does tell us is that we're finding more embezzlement now than we ever do.
Chris Webb 25:26
So I've got that, it makes me it makes me think of like, sorry, I get so excited after reading everything and listening to you not excited in like, Oh, this is great, but it's, it blows my mind. And, and I love what we do in in coaching and consulting and working with with these dentists. And so I'm passionate to find out information, how can I protect them? Right? So what are the two questions I have is like one question or like a request, and then like a follow up with it. So one, would you be willing to take just a couple minutes and share like a story about a doctor that you worked with? Kind of how they figured out what was going on? And then how you guys came in and helped. And then with that is, what should a doctor or a consultant or a coach do when they have suspicions that are raised? How do they get you introduced? And how do you go in and help? What does that process look like?
David Harris 26:23
Great questions. Let's start with a story. And I'm going to tell one that was was the subject of a webinar that we did, because we do we do our own webinars about every quarter. We did one in January of 2023. And we featured a an orthodontist from Virginia named Dr. David Hughes. And David's a great guy, very articulate man, obviously a very smart guy. And he got taken for $370,000 by his longtime office manager. And he was courageous enough to to tell the story publicly, we we did the investigation actually, and relatively recent news last week, his embezzler got convicted. Her sentence seems a little light to me, but you can be the judge. She got sentenced to one year in prison and was ordered to repay Dr. Us $200,000. Yikes. And, to his credit, David has made it part of his mission to help educate the rest of the dental profession about the perils. And the thing that strikes me about about David Hughes and Chris, you and I talked about this before we went live. You hear him speak and you think to yourself, you know, this is not a willfully blind business owner who you know, has has no involvement whatsoever in the business of his practice. You know, this was a guy who watched stuff who did all the right things and still got stolen property. So you know, that's, that's how it can happen. It's a fascinating story. If, if you're in the audience, and you want to find out more, you can just go to our website, which is triple W dot prosperity and.com. Our webinars are there. And you can you can watch the the hour and a bit with with David who's telling his story with some of our team. And you know, we also had a fairly big live audience. I mean, there were about 100 people watching remember, they were asking some good questions as well. So it's a it's a it's a fascinating watch, if you haven't seen it. And he will give a lot more information when time permits here. You asked Chris how he detected it. He was very typical, the way that most people realize they're being stolen from is what I'm broadly gonna call dumb as luck. In other words, there's some chance occurrence that results in, in, in the thief getting outed. And the control systems that doctors put in place and think are protecting them against embezzlement in most cases aren't. For example, a lot of a lot of doctors are very surprised when they realize and David Houston is one of these people and he said that, that you know what? The chance that my accountant will spot. Embezzlement in my practice is microscopic. In other words, they think that, you know, their accountant isn't their first line of defense. And that's not the case. And you guys know this because of what you do. But it probably hasn't occurred to a lot of the audience. Most embezzlement is concealed inside practice management software. Most accountants don't even need to touch practice management software to do their work. So offense, effectively, it puts them right on the sideline instead of in the game. And, you know, dentists think, well, this person knows a lot more about money than I do, and surely if embezzlement was happening, they would, they would spot it and that's not how it works. And as I say, David kind of found that out the hard way. I Think back to a big embezzlement I investigated early in my career, I was about $600,000 stolen. And the way it all came to light was the office manager who had never missed a day of work in anybody's life, broke her leg skiing. And Monday morning, for the first time in any anybody's memory, Judy, that was her name, Judy wasn't in the practice. And at about 11am, one of the receptionist came in and interrupted the senior doctor in the practice, which was a big no no in their culture, and took him out of the operatory and said, Doctor, I've gotten three very strange phone calls this morning. And they're all patients complaining about the same element of their bill. And that's when the receptionist decided she needed to go talk to the doctor. You know, had Judy been there that day, none of that would have happened, because we would Judy would have gotten those calls it would have would have steered them away. So that's the way embezzlement is discovered.
Phil Cole 30:56
That that Judy sounds very familiar, because I got two dentists that I know that I work with, personally. And that's exactly how they got caught. They both went and went on a vacation. And I think one of them was actually thought that she had the systems locked down so well, that she could finally go on vacation, because that's what everybody was surprised like this, you know, Judy, for a better name is going on vacation, what's going on with her, she hasn't gone on vacation in 25 years. And that's what actually happened in that in that week span. All of a sudden, all hell broke loose. And that's how she got caught as well. So
David Harris 31:41
and to Chris's question about warning signs. Exactly. You know, there are two kinds of warning signs into two different activities that should happen in a practice. The first thing that we talked about a few minutes ago, was that oversight over the office manager, the reconciliation between what's collected and what's deposited. And my suggestion to doctors is, don't try to do that at the end of each day, because the timing differences involve making daunting. Do that on a monthly basis, which means that most of those timing issues will self resolve. The second thing is you don't have to do that yourself. I mean, there's a dental bookkeeper or somebody who for not a lot of money will do that activity for it. But if you're not lining up collections with deposits, you open the door to the dumbest, laziest thief on the planet. So don't be that guy or that girl. That's, that's the first thing again, you can still steal in that environment. But now you have to manipulate practice management software. And that's, that takes a lot more skill and has a lot more risk.
Phil Cole 32:45
So what with embezzlement being so, so prevalent? Do you I mean, do you ever talk to these software companies, practice management software companies? I mean, I never hear any software companies talking about how they're trying to put in checks and balances into their software systems or anything like that, is that just, it's not worth it not possible to do too much of a task and too much money for them to do it or what?
David Harris 33:15
No, we're actually in fairly regular conversations. In fact, I had a I had an in depth chat with a practice management software company yesterday where we were talking about this exact thing. So we share our knowledge with them, you know, sometimes they're a pretty big ship and turning the ship takes some effort. But frankly, thought the problem isn't the software, you know, the problem isn't the tool, or it's the carpenter in most cases. And if you are not doing that square up between what is collected and what's the positive, it doesn't matter what software you use, it doesn't matter what safeguards are in it. You know, that's, that's stealing around the software as opposed to through it. The problem with safeguards in software is there's an inherent trade off. And the trade off is between efficiency and safety. So let's talk about something that most doctors are well aware of adjustments. And, you know, conceptually, every adjustment reflects money out of a doctor's pocket, whether that's money to a thief or money to an insurance company, or or whatever, it's you know, it's money leaving their bucket. Now, in any software, if you want to, you can set up your software so that the doctor is the only person in the practice who can make adjustments. Unquestionably, that's the safest is also an incredible nuisance because you have stat running to the doctor maybe 30 times a day, needing an adjustment authorized. Now I'm sure you can say to the staff, okay, there's no such thing as an emergency adjustment. You know, let's, let's batch them all up, and I'll do them at five o'clock. But now you're forcing a doctor who wants to get out of there. go home to their family to stay there for an extra 15 minutes, you know, look at these adjustments, make sure you're happy with them all and then authorize them. So the safety factors are there in most software. And in a lot of cases, they're degraded by the practice in the name of operational efficiency. Okay. So no, I don't you know, I don't think software is to blame for most embezzlement, I think I think they do what they can, but then you have practices that sometimes knowingly and sometimes unwittingly, undercut that stuff that the practice management software company put their frame.
Phil Cole 35:39
So then let me ask you this, one of the things that we coach is not having an office manager, because a lot of times that person for other reasons in the in the team atmosphere and stuff, why we why we propose that there's maybe a team leader, but not necessarily the quote unquote, office manager that's in control of all these certain things that everybody's kind of cross trained. Would you say, just because of what the reasons we do, I just think to myself, is that something then because people would be more cross trained, that you would think that that's something that possibly can eliminate that fraud, because more people are handling all the same systems, or it wouldn't make a difference?
David Harris 36:30
I doubt in most practices, it's going to make a difference. So the end, let's be clear that when there is an office manager and embezzlement happens, probably 90% of that time it is the office manager doing theft. In the other 10% of the time, the office manager is kind of the COVID them with the Docker. But yeah, you know, they tend to be the people who have that, that agglomeration of of control, you know, sufficient privileges to both pull off that theft, and then that concealment that has to happen after but when you take away the office, man, you know, when you take away the title of office manager, and jobs are done by other people, I mean, the same work is being done and the same, the same opportunity, more or less, probably still exists.
Phil Cole 37:15
That's gotta mean that's got to show you how sophisticated it is, though, then that these guys can get how sophisticated they can get that they even though someone else can be tomorrow could be doing the same job, they still are sophisticated enough to hide it or whatever, you know, I know I'm not using probably very good terms. But no, you're doing something that they're tricking the other ones. Still, with not noticing what's happening.
David Harris 37:39
Well, the first possibility and let's throw this on the table is collusive fraud. In other words, you have multiple people involved. And it doesn't matter how you divide up duties, once people get together and decide collectively that they should steal that. You know that that overrides the fact that, you know, I'll be doing this today, and somebody else will be doing it tomorrow. So let's, let's put that on the table. But beyond that, you know, the fact that I don't have this one particular responsibility all the time, just becomes an input into my decision process. And, you know, that might mean that I have to work a little bit harder to find the winning formula, but it's probably there. And, you know, most most embezzlement, when you get right down to it isn't all that sophisticated. It's simply that there's a door left wide open in the practice. And somebody sees that and throws money through it. But what what I will talk about though, in terms of relationship between doctor and staff is a lot of doctors struggle with the difference between delegation and abdication. And delegation is I'm giving you a job to do, you're going to have accountability back to me, and I'm going to enforce that accountability. And advocation is, I don't ever want to hear about this again. And I think a lot of times doctors get into the second place where really the first one is where they should be. And, you know, if that accountability just isn't there, then stuffs gonna happen.
Phil Cole 39:09
That and that was saying that I can just, I think of all the different times that I've come, I hear that the abdication is definitely something that you hear so many times versus you know, the prior because I think a lot of the once again, it goes back to that business concept of dentistry, right? They just they were never taught any business first of all, but I would say when you talk to them, the majority of dentists don't like it anyway. So it's it's kind of funny that they get into a business that they're gonna they know they got to run a business but yet they don't. They don't really like it in the first place. And
David Harris 39:51
and you know, if if that is, if that is you, then the best advice I can give you in that case is Just accept that and go affiliate with the DMO. I mean, fine, you know, or join a large group practice where somebody else is going to run it. If you really hate the business part of dentistry, it's okay to say so. And there are alternative practice situations that suit you know, the people, I feel sorry for the ones who really have no interest whatsoever in the business, but they really want to be a practice owner, and they, you know, they, they're, they're kind of a round peg stuff and themselves in a square hole.
Chris Webb 40:33
What I guess give me in your professional opinion, is it better to contact you? Excuse me when, like when you have a real suspicion? Or is it okay to contact you just to say, You know what, I just want to full proof my office. So every once a while, I'm just going to say, Hey, David, can you just investigate and make sure that no embezzlement is going on in my practice? I mean, Are there advantages to both? Or what would you recommend for that, both are
David Harris 41:05
fine, we actually have two very distinct products that we offer to people. So the first one, which is what we've been largely talking about so far is investigation. And when we do an investigation into practice, I'll mention at the top that it is stealthy. In other words, staff have no inkling whatsoever, that we're taking a look at things. So that won't get into the details. But I just want to tell the audience, you know that you don't have to make a public display that you don't trust your staff. If you hire us, we kind of come and go in the night and nobody knows we were there. So investigations are the first things we do. And we get people, Chris, who come to us in three different places. I mean, some of them have found embezzlement already. And our job is to map it and ensure that somebody gets prosecuted and all those things. Sometimes people perceive that they're at risk, and they want us to confirm it or not. And then we get the people who call us and say, you know, as far as I know, this guy is blue. But I see the statistics, and I don't like them. And I just want to make sure that I'm not kind of blithely being stolen from. The other product we have is our proactive product, which actually has that Word In the Name is called owner proactive strategies. And that's where we work with doctors to put the systems in place that will protect them. And if you really want long term protection, that's how you do it. In other words, almost every embezzlement can be traced back to a system failure. You know, maybe it was a bad hiring decision made on incomplete information. One thing that will probably shock your audience is that 70 million Americans, in other words, one in four adults has a criminal record. And yet, the majority of dental practices don't don't have criminal records check as part of their pre employment screening. And you're, you're playing Russian roulette there, you know, and sooner or later, is it you're going to hit the chamber with a bullet in it? Yeah. So there are there are a lot of things that people can do to protect themselves, you know, from hiring to security settings and practice management software, which Phillip mentioned a minute ago, to, you know, what the doctors oversight processes, which goes back to that stuff I was talking about, about how to how to confirm that the right amount of money went into the account, and that entries in practice management, software, have integrity. Those are all parts of the control system. So we work proactively with with people on those things. And it's just like dentistry. If I go to my dentist and I say I want to spend the least amount of money in my lifetime on my teeth, what should I do, the dentist will probably hand me a toothbrush, and I can't have dental floss, and say, you know, use these every day and see my dentist twice a year, because the money you spend on those things is a whole lot less than they're a whole lot less intrusive and painful than what I'm going to do to you if you if you neglect those things. So prevention is the best approach. And we have a whole proactive services department and its whole mission is to work with doctors on risk reduction. That's great.
Phil Cole 44:04
Yeah, I mean, I would say that that would probably be the thing that I would suggest the audience more than anything is get involved now, and not wait until afterwards. I got to think that the what is the the collection rate, I guess from an embezzlement because I've always, I've always heard that, you know, collecting it once you find out that you were embezzled, and the chances of getting a conviction are very slim. Is that true? Or is that a myth?
David Harris 44:39
For our cases, it's in our conviction rate is over 95% Which we're quite proud of. And that the problem sometimes people make for themselves is they show up at the police department with a shoebox full report from their software and they say see it's in here. And the police can't solve this crime. It is it is way too technical, and they need somebody like us to do it. On the other hand, when we hand the police our report, which says this person did it, you know, here are here are the examples, here's how much money they they stole a whole lot easier for the police to work with. So that's why our conviction rate is so high because we give rapid for the police. In fact, a lot of times we skip over the place and we go right to the district attorney. I think what was behind your question, though, Phil is do people get financial recovery, and everybody gets something back? First of all, your clients all have some amount of insurance coverage for this, the norm is 25,000. Which is kind of easy money to get back beyond that. It depends on how somebody stole and what the thief's ability to repay us. But a lot of our victims are getting restitution checks. So every month they're getting $682 or something. And you know, if somebody took $100,000, from here, you're getting $680 a month. And so it's a long repayment. Right. But I don't know anybody who gets those checks who just throws them in the fire? No,
Phil Cole 46:07
I mean, yeah, I know, a couple that I've had, that's just the I don't think the money was as important is as they wanted you to see them see the conviction, right, that they actually they want
David Harris 46:16
to get away with action. And and they want to protect the profession. Because, you know, the the other issue here is that, you know, if if you don't hold these people's feet to the fire, then, you know, they get hired down the street and do it again. And again and again. And you know, we've seen when one embezzler who I think was, had actually done, you know, and victimized probably 15 different practices. And you can point to a whole lot of deficient hiring that's going on there.
Chris Webb 46:49
Phil Cole 46:50
That is amazing.
Chris Webb 46:52
So I even think about just those proactive services and the benefit of it. Looking at the story you just mentioned of Dr. David Hughes and the fact that he was embezzled for 370,000. Yes, she got convicted, just as was somewhat served there. But what he's getting in restitution is 200,000. He's out 170,000 Plus.
David Harris 47:13
Yes. So yeah. And his comment was,
Chris Webb 47:17
definitely just be proactive and be ahead of it. Don't Don't try to get it back in the end of the game, because it's going to be too late.
David Harris 47:25
You know, his his comment, he recorded a comment for us and he said, you know, you're not going to get all your money back. You're not going to get your sleep back. Just prevent this. You know, do do what has to be done to protect yourself.
Phil Cole 47:39
Well, David, I want to I want to thank you. I mean, we could go on for for hours I bet witness but we got to put a close to this. So we want to thank you very much. And audience think David Harris for being with us and talking to us about embezzlement. As you can see, it is a humongous important topic and then something that everyone that's listening should be aware of, and should also be looking at, please reach out to David prosperity.com is where you can find them and set up so
David Harris 48:14
prosperident.com What's that? prosperident.com
Phil Cole 48:19
prosperadent.com so, so reach out, have them talk to you and and then find out if hopefully you're not one of those victims. But if you enjoyed our show, please rate review us on Apple Spotify or wherever you get your podcasts. I'm Phil Cole and we want to thank you for listening