BACKGOUND OF THE CASE

 Lisa and Mark were known to be extraordinarily charitable. Lisa had an

extravagant lifestyle.

Lisa was awarded the responsibility of paying the clinic’s bills. She was protective

of her job and never allowed anyone to open the mail or get involved with the payments.

During a subsequent audit, the clinic’s accountant noticed that expenses

increases substantially and costs were higher.

Despite the cash-flow problems, Lisa was well liked and trusted by the owners

and other employees of the clinic.

Upon examination of Dr. Franklin and Dr. Johnson, they noticed that all of their

credit cards and the lines of credit were at their maximum.

They confronted Lisa, she admitted she had been stealing money over the past

five years and was using the business credit cards and lines of credit to pay vendors

and keep the checking account balanced. All in all, she said she had stolen $800,000.

After a preliminary audit the dentists discovered that the amount of the theft was

higher than $800,000. Lisa was promptly terminated.

The first thing Detective Lawrence (who handles the case) did was to examine

the records provided to him by the clinic which is the verbal confession of Lisa Thurston

to Dr. Franklin and Dr. Johnson

Detective Lawrence started by obtaining a search warrant for the Thurstons’

residence. He found out a proof of an extravagant lifestyle. Financial documents were

found showing the expenditure of substantial sums of money. Each item was

photographed and collected as evidence.

Through the Information gathered Detective Lawrence discovered the accounts

were not in the name of Lisa or Mark, but in the name of Lisa’s mother.
 On the day of the search warrant, Lisa was arrested. Detective Lawrence knew

that Lisa will call her family members and he reviewed the recording, he found that Lisa

told Mark whom to contact to raise her bail money and where to hide evidences.

Detective Lawrence also served a search warrant on the Sanders’ home. And

search warrant produced some items of interest.

Detective Lawrence felt he had sufficient information assembled, he filed a case

report with the country prosecutor.

Two weeks after Lisa was arrested, the police took custody of her husband,

Mark. He was charged with conspiracy to commit theft and money laundering. Detective

Lawrence determined in his analysis that the Thurstons and the Sanders had spent over

$2.1 million over a six-and-a-half-year period. Of this amount, $1.9 million was from

embezzled funds from the Franklin/Johnson Dental Clinic. There were at least 332

forged checks. An analysis of Mark’s business account showed he laundered between

$20,308 and $118,210 of embezzled money through his company account each year.

After Detective Lawrence completed his analysis he amended the criminal

complaint against Lisa and Mark and added a long list of additional charges. And the

money was all gone.

The case “Dental Queen” was all about asset misappropriation and manipulation

of Debit and Credit Cards for Lisa’s personal gain. It was a detailed investigation

regarding the theft made by Lisa together with her family. In this part we will discuss the

fraud schemes perpetrated by the fraudster.

Asset Misappropriation

This kind of fraud scheme occurred when Lisa committed the fraud by forging

one of the dentist signatures to the checks that used to pay her personal credit card

charges and steal money to pay here extravagant vacations and lavish lifestyle.

Debit or Credit Card Fraud

This kind of fraud scheme occurred when the dentist examine and noticed that all

of their credit cards and line of credit were their maximum and Lisa admitted that she

stealing money over 5 years and using business credit cards to pay vendors.
 KEY TAKEAWAYS OF THE CASE

This case may be a mind-blowing one, but there are lots of lessons that we can

learn from it. Here are the key takeaways of the case:

1. Know your employees very well.

Just because you have close relationship, doesn't mean they will not

deceive you. The fact that the dentists have so much trust on Lisa, could be a huge

opportunity for her to commit the fraud. The dentists could end up blaming

themselves for trusting her which may also cause conflicts on their business.

2. Internal control problems shouldn't be ignored.

Regardless of the size of the problem, it must be checked and looked

closely to determine what caused the problem to occur. In this case, The cash flow

problems and large expenditures were enough red flags to notice that something is

up. Immediate investigation should have been made to detect the embezzlement

earlier.

3. Do not rely on a single confession.

Lisa had confessed that she embezzled $800,000 from the dental clinic

which is actually not true. Some confession happens with an intention to hide the

fictitious activities of the fraudster. Since committing fraud is a dishonest behaviour,

it is not a surprise that some information from a confession are falsified. That's why,

detective Lawrence made a deeper investigation about this case.

4. Use time efficiently.

Due to the length of time that had passed, detective Lawrence wasn't able

to retrieve all of the necessary financial records from the banks. That's why he had

to depend on all the information he got from the initial investigation. This is the

reason why the detective hadn't find all the embezzled money. It was all gone

5. Do not be deceived with a lavish lifestyle.

Having and living an abundant life is good but nothing feels better if it

comes from hard work and in legal ways. Everytime we get pressured with all the

luxuries around us and see opportunities, we tend to rationalize of some ways to

temporary and regret and repentance takes lifetime to handle.

 Know your employee well

Employee theft is one of the most serious problems facing

business owners in recent days. The management should be alert to key

indicators of potential theft, a sudden change of lifestyle and strong objections to

procedural changes related to financial are a strong indicator of red flag.

Background checks should be performed for all staff handling cash or managing

payments. Investigation of profile of every employees should be regulated in

every business and company.

 Check and review all financial/bank statements by yourself (owner)

With online banking options, it’s easy to view account

activity and statements whenever is convenient, and business management

should do this frequently to make sure that paper-based statements in the office

have not been manipulated. Simply letting staff know that reviewing check

activity is part of the accounting review process can help prevent fraud.

 Provide training and communications to ensure that every employee is

aware of what constitutes a fraudulent activity and what the consequences

are.

Employees in fraud-prone areas of the business should

know the warning signs of fraud or red flags, prevention skills and how to report

suspicious behaviour or actions by co-workers and customers.The management,

including owners of small businesses, should create a code of ethics that makes

it clear that unethical behaviour will not be tolerated.

 Segregate duties to other employee

Businesses should have at least two persons handling

accounting financial functions interchangeably, keep the handling of cash and

accounting functions totally separate.

Be on the know and be vigilant to the signs and red flags in the company. The

management should pay attention to details. Trusting employees are good but

too much trust can be a burden to the company.

 Compare the check if it is original or forged.

This is the best way to prevent fraud from happening. Forging of signatures of

checks are the usual way of every fraudster to get money from the company for

their own benefits. It is necessary to check it carefully to avoid fraud and avoid

big losses in the business.