Misconceptions about Embezzlement

Harrisby David Harris

I speak to orthodontists daily about embezzlement, so I have a pretty good idea what they misunderstand about the topic. I'm going to highlight a couple of the things that are often misunderstood, and I’ll explain a bit about the misconceptions.

1. If someone is embezzling from me, I will lose some of my recourse against them if I fire them.

I get calls all the time from people who are wondering whether it is possible to charge someone with embezzlement who is no longer an employee, or are worried if they fire someone, their ability to go after that person will be diminished.

Neither of these are true. Embezzlement is a criminal act in every jurisdiction I have ever worked in. There is no requirement that someone must still be an employee to be charged. In fact, there is no requirement that someone was EVER an employee to commit the crime of embezzlement. The normal requirement is simply that they had to be in a "position of trust" at the time of the theft. For example, if an independent-contractor bookkeeper steals, this is still embezzlement, as is an adult child stealing from an elderly parent.

In exactly the same way that a murderer doesn’t need to be standing over the body when he or she is arrested, it is possible to charge someone with embezzlement YEARS after the crime was committed. Also, as a practical matter, investigating embezzlement is far easier when the suspect is no longer an employee.

I'm not sure of the source of this mistaken belief, but we encounter it enough to make me want to set the record straight. I wonder how many orthodontists aren't firing someone who should be out of fear of somehow compromising their ability to punish that person.

2. If I reduce the amount of opportunity for an employee to steal, the probability of embezzlement decreases.

People assume that the kind of controls that work against other types of crime are also effective against embezzlement. They aren't. Control measures (like locking your car doors or installing an alarm in your house) don't convert thieves into honest people; they simply divert crime to some other victim (which is the part that most of us don’t spend much time thinking about).

Diversion isn't possible with embezzlement, because the victim is pre-ordained. Switching to an alternate victim would take years of preparation, so embezzlers won’t voluntarily change their target. What an embezzler can control is not their choice of victim but their choice of methodology. So the end result of implementing controls is that you still get embezzled, but via a different methodology.

3. Embezzlers predominantly steal cash; it is much more difficult to steal checks, credit card payments, or electronic funds transfers.

The single biggest mistake that I see doctors make is underestimating the ingenuity and creativity of embezzlers. These are smart people who are pushed by some fairly powerful forces, and don't feel a compulsion to follow any rules that you, or your bank, may have established. I'd gently suggest to our readers that ANY form of wealth transfer can be diverted.

I have more myths I'd like to highlight, so expect to see this topic revisited in a future blog. For those of you with embezzlement concerns, I'd encourage you to complete our Embezzlement Risk Assessment Questionnaire, available at www.dentalembezzlement.com/store. It will take less than 20 minutes to complete, and is the best time investment you can make in combating embezzlement.

David Harris is the CEO of Prosperident, the world’s largest firm specializing in the investigation of dental and orthodontic embezzlement. He is a CPA and is “dual-certified” in fraud examination and financial forensics. David was a speaker at the Ortho2 User Group Meeting earlier this year. He can be reached at david@dentalembezzlement.com or at 888-398-2327.

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