A recent survey from The Wealthy Dentist reveals that 52% of dental practices who responded have been been embezzled, while 48% have not been a victim of fraud.

The reason why dental practices are at high risk is because the dentist is the central figure generating the revenue stream that moves the practice forward.

Many dentists do not have the time, the interest, or the resources to establish effective internal control systems and monitor them on a regular basis.

As a pediatric dentist expressed, “You need to have several checks and balances to help prevent embezzlement, plus do random audits to let staff know you keep on top of checking records and books.”

Of the dentists who responded, 90% of urban dentists answered yes to being embezzled, with only 43% of suburban dentists and 40% of rural dentists stating they had been embezzled.

Here’s what dentists has to say about dental practice embezzlement:

“Always double-check. Remember what Harry Truman said, ‘The buck stops here’ Do not create or allow situations to occur that would allow some one to embezzle you.” (General dentist)

“Do not blindly trust even your most loyal employee! Run an audit trail every week!” (Alabama dentist)

“Much easier with computer dental management software. Hard to do with a pegboard system of old. Balancing day-sheets by using old defunct accounts, etc. makes it easier to hide in a variety of ways. Small offices with key employees tied up with no cross-trained duties, one person business offices.” (General dentist)

“We need to be more educated on how they manage to do this.” (California dentist)

“Many dentists make so much money when some of our staff are not well-paid, so it is not a surprise.” (California dentist)

“You can only make it more difficult, you can’t prevent it entirely.” (Florida dentist)It happens to 95% of dental offices. The other 5% are ignorant, or have a spouse working the front desk.” (Colorado orthodontist)

“It’s the person w all the passwords and been with you the longest. They know your moves and you trust them. Don’t have that person have access to your check book. Have your CPA’s bookkeeper do you checkbook reconciliation and run periodic reports for account receivable and check against bank deposits. Watch your cash.” (Michigan dentist)

“Don’t trust anyone except your wife, especially your most trusted, long-term employee. Monitor, audit, but never trust!” (General dentist)

“Thank God for computer systems that can now track corrections made!” (Texas dentist)

“I make all the deposits and look at the daily reports. You have to be hands-on to some degree otherwise you leave the door wide open for theft.” (California dentist)

“Over 1,000,000 dollars!” (Texas periodontist)

Each year Marquet International, an independent investigative, litigation support and security consulting firm studies major embezzlement cases in the United States and issues a report on their findings.

The following statistics are highlights based upon The 2011 Marquet Report on Embezzlement. Here’s what they found:

• Vermont had the highest Embezzlement Propensity Factor followed by Connecticut Pennsylvania, Montana, Virginia, Iowa and Idaho – identifying these states as having the highest risk for loss to embezzlement in 2011;
• The financial services industry suffered the greatest losses due to major embezzlements;
• Non-profits and religious organizations combined accounted for about one-sixth of all the major embezzlement incidents in the 2011 study;
• The average loss for 2011 was about $750,000; the median loss was $340,000;
• Nearly three-quarters of the incidents (72.3%) were committed by employees who held finance/bookkeeping and accounting positions;
• The average scheme lasted nearly 5 years;
• The most common embezzlement scheme involved the issuance of forged or unauthorized company checks;
• Nearly 22% of the cases in which a motivating factor was known involve perpetrators who reportedly had gambling issues;
• 5% of the cases involved perpetrators who had a prior criminal history;
• The average embezzler in this study stole $15,189 per month from their employer;
• Nearly two-thirds (64%) of the incidents involved female perpetrators;
• Male perpetrators, on average, embezzled about 25 percent more than females;
• Nearly 90 percent of the cases involved individual perpetrators;
• The average adjusted age of perpetrators at the commencement of their embezzlement was just under 43 years;
• 40 – 49 year-olds caused the greatest overall losses;
• Most major embezzlers appear to have been motivated by a desire to live a relatively more lavish lifestyle, rather than driven by financial woes; and,
• The average prison sentence was 4 1/3 years (52 months) for convicted major embezzlers.

For tips from The Wealthy Dentist on preventing embezzlement see Dental Practice Fraud Causes 200k Embezzlement Warning.

What has been your experience dealing with dental practice embezzlement?

Do you have advice for other dentists?