Speaker, Author, Consultant, Fraud Examiner

When the end of the day cannot come soon enough, and the tension in the office can no longer be ignored, you know something must be done. But where do you even start?

Snippiness fills the office and employees are lashing out, but your head is already reeling with a hundred other thoughts to even concentrate. A spiraling cycle of worry about the numbers not adding up could mean you have a bigger issue on your hands. A dreaded case of employee theft.

“She’s been here so long,” you think to yourself. “The calendar has been full all day, and I have been working so hard, but there isn’t anything to show for it in the bank.”

Thoughts get repeated in your head.

“I should just talk to her.”

“Is there something else I’m missing?”

“She has total control of the front desk and won’t let anyone help her.”

“I just want to go home and forget about it all.”

“Maybe it will be all different tomorrow.”

You’re not sure, but there is this stirring in your gut that something isn’t quite right.

Signs of employee theft

You’ve had a consultant come in, but the Office Manager didn’t get along with the consultant. Tensions continued to rise, and the feeling in your gut continued to worsen. Though the consultant was concerned about some specific issues, the Office Manager convinced you she had everything under control. After all, you do trust her, right?

You’ve been working harder, but the deposits seem less. You asked the Office Manager about it, and she said the insurance companies are simply slow in paying. And they are paying less than prior years, so the adjustments are greater. She adds on that the clients/patients are also slow in paying due to the economy. You don’t have a clue how to check the software, but you know something isn’t adding up. It’s all incredibly overwhelming.

What should you do?

It’s possible some staff issues need to be addressed. It’s also possible you are in need of Practice Financial Analysis. Or, it may even be time for a fraud examination.

Looking for answers? Find a solution.

What should you not do?

Ignore the problems and hope they go away. Ten years ago, a practice software trainer told me that 4 out of 5 doctors that suspected embezzlement in their practice were 100% correct. I would say that is an accurate number today. A more recent study shows that 68% of all employee theft cases are committed in small businesses.

Yet, so many business owners do not pick up the phone and call a qualified person to investigate. They will talk to their spouses, they will talk to their CPA, and they will talk to their colleagues, but the fear of the unknown seems to prevent any real action beyond conversation. Let’s walk you through what to anticipate.

Who should you call?

A Certified Fraud Examiner (CFE). Within the Association of Certified Fraud Examiners, there are many hard-working CFEs, such as Harry Markopolos, who unveiled the Bernie Madoff securities fraud scheme to the world, or Cynthia Cooper, who discovered the discrepancies within MCI Worldcom. Most CFEs never reach this level of a household name but are quietly behind the scenes bringing evidence to the justice system.

A Certified Fraud Examiner has completed a thorough application process, studied and tested on fraud prevention, deterrence, fraud schemes, United States criminal and civil laws, as well as all aspects of the investigation. There is a strict requirement for continuing professional education hours.

There is a standardization process not only in the fraud examinations but the reporting to you as well. The investigations yield reports stating what was determined and the process completed to reach that determination. The results and process of the examination are both information you need, especially in filing a report with law enforcement.

A suspected embezzlement should not be investigated by anyone currently employed, any past employee, or the practice’s accountant. I have had cases where all three of these were involved. No one ever knows the extent of an embezzlement until it has been thoroughly investigated.

What to expect?

The investigation is a process and may take several weeks before a determination is made. Communication with the business owner is imperative. The more direct an owner is with the CFE, the more complete the investigation results.
Depending upon the nature of your business, the investigation can be done either remotely or onsite. When done remotely, there is complete access to your management software, bank statements, credit card statements and, if applicable, patient plan statements. Remote access also tends to be less costly and more covert.

What are your options?

When the CFE makes a determination, it is your turn to take the reigns. You can terminate employment, file a police report, and/or file a civil suit. It is imperative to contact a qualified local attorney for legal advice to your specific case.

If you terminate and do nothing, that employee will more than likely continue their reign of terror at another place of business. Sadly, this tends to be the more common route.

If you terminate and file a report with law enforcement, CFE’s are accustomed to working with all levels of law enforcement. It can take up to two years for prosecution. After a thorough investigation, typically the subject pleads guilty with no trial. Then, there is a sentencing hearing and restitution is usually a component of the sentence.

Unfortunately, law enforcement agencies are overwhelmed and do not have budgets to investigate. So, if there is not clear evidence of employee theft, the law will not prosecute. If you go to law enforcement with “I think an employee is stealing” they won’t even file a report.

Why is an official report necessary?

Insurance carriers require a law enforcement report to be filed to process the claim. The average maximum amount is $15,000. This, however, is not the average amount of embezzlement, so I recommend additional coverage of up to $150,000 minimum.

Prepare yourself for an onslaught of emotions

What you should expect, but is hard to prepare for, is the gamut of emotions you will experience when it is determined someone you trust has betrayed you and your business. It can be overwhelming. It is a process – you are grieving the loss of trust. It will be a hard road but a do-able road with qualified support and patience.

Dealing with the emotional loss of employee theft? Read “Be The Boss: Reflections From Embezzlement Nightmares”

Suspect embezzlement now? That gut feeling will not go away. Call me and let’s do something about it.

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