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08.26.05 Issue #181
Sally's Mailbag

Note from Sally:

The August 4 th and 11 th articles on Embezzlement sparked a lot of interest from our readers. While I received many emails from doctors who had experienced such trauma in their practice, the following I chose to share with our readers. Many thanks to all who were willing to share their stories with me.

Dear Sally,

I have been reading your articles on embezzlement and I thought I would share my experience with you because there are a few critical things that I missed that might have saved me thousands of dollars.

My practice was apparently not producing what it should.  I was chronically short of money.  I was having trouble paying bills.  Lab bills would come in and I'd say that it was going to be fine because Thursday John Smith would come in and leave a check for $1000.00 and I'd pay the bill. Somehow when it came time to pay the bill the money wasn't there. I'd check John Smith's account and find that he had paid his bill and assume I'd spent the money on other bills.  I blamed busyness, high supply bills and adjustments for insurance.  I never thought that my front desk person could be stealing checks.

One evening I was scanning the day sheet and checked a number that I usually didn't pay much attention to.  My philosophy had never been to work to a goal but to produce as much as possible every day.   The number I saw was the year to date collections.  I was stunned.  In twenty seven years, I had never collected that much money.  With that number, things shouldn't be tight, they should be pretty loose. 

I use Quicken™ for my checkbook and all the proceeds from the practice go to one account.  All I had to do was pull up the year to date deposits and there it was.  In twelve weeks, she had diverted $12,000.00 and that was just the tip of the iceberg.  I was stunned.  I began to check my deposits.  I have always used duplicate deposit tickets and keep a mirror computer system at my house so that if my office server goes down I just have to switch machines and I am back up and running.  I began running the deposit tickets from that computer and the first four that I ran had checks on them that were not on the duplicate deposit tickets.

I was furious with myself and blamed myself for not checking the duplicates against the printout daily.  Of course I trusted my front desk person implicitly.  She never took much time for lunch and always left after me.

Reprinting the deposit sheets was beginning to be too much like work.  I thought why not just get the day sheets that were filed in the office and go from there.  Here came epiphany number two.  To my surprise the original deposit sheets agreed to the penny with the deposit tickets.  She had worked out a couple of systems.  If, first, for example, the patient paid by check on March 1, she would take the check and generate a receipt.  When the patient left she would delete the payment. The payment would not show up on the day sheet or deposit slip.  She would then enter the payment the next day but backdate the payment to March 1.  The account ledger now agreed with the receipt that had been given and the payment would not show up on the March 2 day sheet or deposit slip because it was dated March 1 and of course the March 1 day sheet had been filed the previous day. If you checked everything every day, you would never see the problem.

She followed a similar scam with checks that came by mail but just held the checks for a day or so before entering them.  Checking for outstanding balances or insurance claims was fruitless because they would be settled before suspicion could be raised.

To find this, it was necessary to check the transaction audit trail to find payments made to a previous date or transactions that had been changed.  Alternatively running a list of the deposits from two months ago and checking them against the actual deposits will turn up the same information.  It is necessary to check not sooner than two months back.  By this time any payments that were made and not recorded would generate too much interest so the thief has to keep things up to date.

So, what did she do with the checks.  She had a stamp made "For Deposit Only" to her personal checking account with her name and my name on the stamp.  Although I was not on the account and had never had an account with that bank, they accepted this 348 times. So much for checks and balances in the banking business.

I hope this information can help other dentists.  I don't actually believe that my front desk person worked this out on her own.  I think she was coached and did not know when to stop.  I probably would never have caught her if she hadn't got out of control.

Forward this article to a friend.

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