Mick Hall (2:46)

The. It is. We in 2024, discovered an embezzlement in our accounting department.

Eugene Shotsman (2:55)

Yeah. And how. Just ballpark, how bad was this?

Mick Hall (3:02)

Well, by the time the investigation was over, and that took a period of almost a year to investigate it fully, both internally and then with the charges that were brought through the U.S. attorney's office that include both the FBI and. And the IRS, the person is currently been charged with 16 different offenses with a total of $4.8 million is stolen.

Eugene Shotsman (3:31)

Wow. And over what period of time did the theft happen?

Mick Hall (3:35)

Sure. So the. She had been here with us for about nine years, and during the investigation, what I found was that she started stealing almost immediately. It was relatively small amounts. I think, like a lot of thieves do, it's test what you can get away with. Okay. Insulate yourself in the work that you do so that others can't see what you're doing. And so those things started off pretty early on in the time that she was with us, but the vast majority of it occurred in the last two or three years that she was with us.

Eugene Shotsman (4:12)

Wow. Okay. So now that we know what we're talking about, and hopefully we've gotten everybody's attention, because the truth is, you know, maybe it's not at that high of a number, but Mick's got a theory that we've talked about in the past, about what percentage of employees may have attempted, maybe on a smaller level or. Or even a substantial level, have attempted some sort of dishonesty, fraud, or theft with perhaps practices. So this is what we're talking about today, and it's going to make you a little bit uncomfortable. Mick, let's go. Let's go to the beginning of the story. So you and I actually. I don't know if you remember this, but you and I actually talked like two or three days after it happened. And you and I were. Mick's been a client for a long time, and I think I reached out to you for one thing or another, and we were having a quick conversation. I said, mick, is everything okay? And I remember you saying, no, it's really not.

Mick Hall (5:07)

That's crazy.

Eugene Shotsman (5:09)

And you had very little information at the time, but you did have one piece, which is maybe take me back to that original thing that led you to discover this whole. That this had Been going on under your nose for a long time?

Mick Hall (5:25)

Yeah, sure. So in our practice we have an accounting department that was filled with people that were really good employees. In fact, the employee here who is the subject of the criminal charges, again, had been with us for years. I would have told you she was one of our most trusted employees, somebody who had a lot of private information about the company and about those of us in charge, which is very typical, of course, for a family owned business, which we are. Okay. So even though we're a large practice, we have 22 locations, we're a family owned company that is run as a family owned company. Okay. So what had happened was on juneteenth of 2024, I happened to have come into the office that day, some folks from our accounting firm, and they were showing us year end documents for the previous year and also Q1 documents. Okay. And so we were going over those and one of the numbers that stuck out in my head when I looked at it was cash on hand. Okay. And within the framework of the documents that they were providing, it was something I glanced at and it didn't make sense to me because I'm in our account all the time. So years ago we had set up some financial controls where ACHs that were to pay vendors were uploaded by this, this person on our accounting department, but they had to be approved by me. So I was in the account to do those things on a regular basis. And I knew having been in the account that that cash on hand number just wasn't correct. Okay. So I said to the accountants and to the others in the room, I'm like, this doesn't look right to me. I was just in there. And they said, well, yeah, this came from your accounting department and we have the records from the bank that were provided from your accounting department. So I asked to see those which they provided. And like a lot of bank statements, there's a recapitulation page on the front, right? And so as we looked through that, the number that they had in their documents was the number that was listed. But even a quick kind of a glance at the columns, it didn't add up correctly. In fact, if you just went off of the sense line, sense column, it didn't add up correctly. And so I said, this doesn't look right to me. They agreed, but they had no explanation because from the look of what was provided, it appeared to be a copy of our bank statement. Okay.

Eugene Shotsman (8:18)

Yeah, so it was a bank statement with. And what they had taken is the balance number. Like basically what they count balance or whatever at the, at the end of this thing. But when you started looking down the line and they, your accountants started looking down the line, they probably like, oh crap, like this doesn't, this, this doesn't add up.

Mick Hall (8:36)

Yeah, it just didn't add up. But, but because this appeared to be an original. Okay, the color was correct. In other words, our bank uses a blue and a white kind of color. Um, the, it had all the markings on it of our, of a regular state. Right. So I told him, I said, well, let me look into this and I'll get back to you. So they left. At the time in that meeting, it was myself and I mentioned we're a family owned business, I work with my mom. And so I said to her, something's not right, I will investigate this. So I came back into my office with that document. I go to the website again. What's on the website is not what's on the document. And I'm allowing for a little bit of play because there were a few weeks difference in there, but it was substantially different. And so I started to grow more and more concerned. I called the bank, actually the bank president, who's a friend of mine, and he answered the phone, but he reminded me that it was a bank holiday. And he's like, so I can't meet you at the bank and do anything, but tomorrow I can have the executive vice president of the bank meet you and she can kind of go over stuff with you and see if we can't figure out what's going on. So the next morning, bright and early, I met the vice president, the bank. I handed her the documents. It took her, I'm going to say, 15 seconds, okay, to look at these documents. And she looked at me and she said, these are forged. And I said, well, how are they for? They've got like your watermark on them. They've got everything. And she said something that triggered a memory for me. She said, somebody is using Adobe Acrobat Pro to go into your PDFs and change them. And it occurred to me, so I'm a, I'm a lawyer and I have to do continuing education every year. Well, about three weeks before this, I took a class on how people use these different programs to change both PDF documents and then how to find them in Word as well. Okay. How to find changes that have occurred in your documents that you send to each other in Word. So I, I, when she said that, I'm like, oh, wait a minute, I, I, I, I've heard This, I know this. I took a class on this. So as she pulled up the stuff and showed me the actual documents from the bank, of course they were different. Okay. So she gave me a copy of the real ones. I had the other ones. I came back to my office and I kind of sat down. I thought to myself, if I was going to try to steal money, not product, if I was going to try to steal money from a company like ours, how would I do it? The first couple things that came to mind were ACHs because that's how we pay most of our vendors. Okay. I would also think that forging checks would be another way of doing that. And credit cards. Those were kind of the three things that came to my mind.

Eugene Shotsman (11:46)

Okay, well, those are the three ways that most people pay their bills, right?

Mick Hall (11:50)

Correct. That's exactly right.

Eugene Shotsman (11:51)

Check and credit card.

Mick Hall (11:53)

Correct.

Eugene Shotsman (11:53)

I mean, I guess maybe some people do wire transfers, but not very common.

Mick Hall (11:58)

Exactly. And I think that most vendors, they accept ACH charges. That's kind of the standard. Right. And it's easy to get them done, and they're fast, they're easy to set up. Okay. And so it really made a lot of sense to me that those were the three. Well, then I'm assuming, because I'm looking at documents that I now know are forgeries. Okay, well, I'm only going to deal with what's in the bank website. I'm not going to deal with anything that was sent to me. I'm only going to deal with what the bank website says. So I went onto the bank website. The first thing I did was I looked at outbound ACHs for the last three or four years, some timeframe like that, and I wanted to see all of them. Okay? So on their website, I printed a list. I sat down and started going over the list. And within, oh, I don't know, maybe three or four minutes of going through this document, I realized that the name of our accounting manager is the name of the person who received eight different transfers. Okay. Well, obviously our accounting manager is not our vendor. And so all of these are fraud. They're all. They're. They're. It's. It's theft. Okay? So I had those added up to 50, 60 thousand dollars. Okay? So that was enough for me to know she needed to leave.

Eugene Shotsman (13:30)

Now, now, hold on. When you found the first one, when was the first one out? When was the first one going out?

Mick Hall (13:37)

So I was again, I had only queried, like, the previous three years, and there were ones from earlier that same year of 2024. So I knew there were probably ones. If I had opened the query going back further and what it appeared to be, these were like, eight different times. She had ACH money to credit cards that were in the names of her and her husband. Okay. So I knew that she was stealing now. And I also realized at the time this is likely the tip of the iceberg, okay? Because it was very easy to find these. So I got to find them now and keep going. But I wanted her out of the building, okay? So I had her and our HR director myself, my mom brought her into the. Into a conference room. I started by showing her the list of the things that I found in the achs. At first she tried to say they were just mistakes. That. That obviously made no sense. Then I showed her side by side the documents that were given to me from the bank and the ones that she had provided to the accounting firm just for that couple of month period of time. And then she knew that I knew. And I said, these documents here are forgeries, aren't they? And she said, yes. And I said, it's because you created them to hide what you were doing. And she said, yes. And so then she made a couple of other comments, and I told her, you don't speak anymore. You're, you know, obviously you're terminated. We're going to walk you out of the building. The FBI will reach out to you at some point and question you. And so that day, the 25th of June, of 2024, then she was walked out of the building. And I started my internal investigation to try to figure out the amount due.

Eugene Shotsman (15:30)

God, this whole story just sends, you know, like, as sitting here on this rail, on this podcast with you as a fellow business owner, this whole story, first of all, like, I just feel for you. Second of all, I got goosebumps thinking, like, man, any business owner can be in this same situation. This is one of your most trusted employees that worked for you for almost a decade. And you just. You looked a little bit under the hood. And one. And we'll talk about some of the signs of how people can find this. But, you know, the. The interesting thing, I guess it seems like your first call or your first thing was like, okay, I have enough information to know who's doing this. Once I know who's doing this, I need them out now. Did you call the police or anything beforehand?

Mick Hall (16:18)

No. So it was literally within moments of her walking out the building. As a lawyer, I knew that this was going to be a federal case, not a state case. But the way that the feds get those cases is through a handoff from the local law enforcement to the FBI. So I called the local police department. They did send out an officer right away who took an initial report. And then he indicated he's like, you know, this is federal. And I'm like, yeah, of course I do. And so he's like, the FBI will be reaching out to you, which I knew would take just a matter of a day maybe or so before the FBI got involved. And so it was reported right away. I wanted her out of the building because I think when people start to, when a thief is in a situation where they think they're about to get caught, there's all kinds of things that they can do to obfuscate what they were doing even more than they were obfuscating it before. And so they're going to try to poison pill things. Right. I needed her to, to literally walk out the door. We shut off access to everything so that I knew that at least now I could kind of begin that, you know, the. There were really three different levels of investigation. One was mine, one was through a forensic accounting firm, and then the third was through the federal government, through the FBI and the irs. And so I knew I needed to get mine done so that I would have a basis of knowledge to provide direction to the other two entities that were going to do their investigation.

Eugene Shotsman (17:52)

That makes sense.

Mick Hall (17:53)

So.

Eugene Shotsman (17:54)

And you're saying she just kind of fessed up and admitted it while you did?

Mick Hall (17:58)

She admitted part of it. Right. And she made a comment which was, I didn't understand at the time. She said something about, I know that the issue in Europe was a problem and I should have done something about it. And I had no idea at the time what that meant. Okay. Later on, all the, that aligned with things that I, that I saw. But at least initially, at that point, all I was thinking was, this is going to be finding some ACHs, this is going to be finding some checks and things like that. I didn't spill over until the others, until I was further along in my, in my internal investigation.

Eugene Shotsman (18:42)

Okay, so. And we'll come back to the Europe comment in a little bit, but let's, let's talk about, like, what happened next. So she's out of your building, you talk to the cops and now what happens?

Mick Hall (18:55)

So, and obviously what the, what the police want to know is what do you, what evidence do you have today? Right. Well, at the time, all I had was these ACHs for three years to her and her husband's account. That's all I had. And so I told them, I am shifting my attention away from every other piece of business that I do to investigate this internally myself. I didn't want any other employees to know. Like anybody else in the accounting department, I needed to do this and I wanted to do it personally. I didn't want anyone else.

Eugene Shotsman (19:29)

At this point, you don't even know who else is involved, correct?

Mick Hall (19:32)

That's exactly right. I don't know who else is involved. And I wanted to again, narrowly shrink that, you know, that group of folks who would have any knowledge about anything. Right. So I started with the idea of, let's try to get as much information on these ACHs as I could. Right. As I continued to put together information about the ACHs, really all I had initially were the ones that went directly to her. Those are the ones that made sense. Right. Then I decided I wanted to look at every check that we had written going back for 10 years. So with the assistance of our, with our bank, I was able to get the online pictures of all of those checks. Well, for here at Bard, there were only three ways that you could get a check out. One of them was either I signed it. My mom continued to sign up to a point a few years ago, and then we had one signature stamp, but it was only for refund checks. Like if we. We need to refund something to a patient, we had a stamp for that in her name. So I started going through all the

Eugene Shotsman (20:49)

checks in your mom's name or in the manager's name.

Mick Hall (20:52)

In my mom's name, yeah.

Eugene Shotsman (20:53)

Yeah.

Mick Hall (20:54)

So those really the only three. And then again, the stamp was for a very limited purpose. You would only see it on checks that were from a refund account, a very specific account. So I started going through them. And what I found is my signature is too complex for people to kind of mess with. You would never get close to my signature. Okay. My mom's signature is a very. What I would call just a very common female signature, if you can say that. You know what I mean? Very, very nice looking. You know what I mean? Not scratches like most guys are. So what I found were there were a number of checks that were forged, okay. And there were a number of checks that got stamped that should never have been stamped. They were not refund checks. The interesting part was none of these checks were to her. And in fact, none of them were suspicious. They all were checks to vendors. Okay. Well, then as time went on and I'm sitting on these checks and they're Obvious forgeries. Why would she write a check and, you know, sign the check from one? You know, from using a stamper with my mom's signature when we're paying this vendor through ach? Well, then it. Then it kind of reignited the look at ACHs. There's a reason why she didn't want this ACH or this vendor to be paid by ACH this time. Okay, so what was that? And I stumbled upon that a little bit later. Okay? So at this point, I'm pretty deep into the. Into it. So I know by the end of the day, that first day, I've got the ACHs and I've got the checks starting the next day, I began to download from the credit card companies all of the statements for credit cards going back for, you know, 10 years. Okay. And that's when the world imploded for me, because what I found was this. This person or the accounting manager had access to all of the credit card numbers for all of the different employees who had credit cards. And she was also the person that would reconcile the bills when they came in. Okay. And what I found was these charges that were being made on credit cards to fix the biggest group of them to a fictitious company. The fictitious company was her own home business, okay? So it had her name in the name of the business. And so what she would do is whenever she wanted cash, she would charge one of the credit cards, and it would come in through PayPal or one of the other online type of vendors to receive payments, come in directly to her, and then she would book that expense against the vendor. And so if we purchased a piece of equipment for $75,000, that $75,000 piece of equipment became $250,000. And then she had wiggle room then to assign all of these different charges until it added up to the amount that we had allegedly charged with this vendor. So in the end, it completely disrupted all of the vendor accounting because she was adding things in that were just simply fraud. Okay? It was credit card fraud at its ultimate level. And then the biggest thing that I found, and this was the most shocking thing that I found, she had used one of the credit cards on a online Hong Kong gambling site, okay. And they were charging this card up to 300 times a day.

Eugene Shotsman (24:55)

Wow.

Mick Hall (24:57)

As that balance would grow higher and higher, the only way for her not to get caught, the only way for her to avoid coming to me and saying, I got a problem with this credit card. Let's go online and cancel it, because she didn't have the authority to do that was to simply pay it. Okay? And then this is where the kind of. The twist and turn of our situation and one of the things that I've kind of warned other business owners about now is the difference between an ACH push and an ACH pull. Okay? And so let me explain that. If you want to send money directly from your account to a vendor, that is an ACH push. And when you set that up through your bank, they will put together some financial controls. Maybe one person can initiate it, but it takes a person of higher authority to say, and it's approved. Okay? And then you have your internal way of what documentation you look at before you approve it. All right? So that's an ACH push. An ACH pull is when you're on a website and it says, I want to pay my bill, and you log in and say, here's my routing number and my account number, and you click a button and it pulls the money out of your account. Okay. Well, there are no. All of those rules that you set up for your bank for an ACH push do not apply to a pull. And so, for example, she would go onto these credit cards and make these payments to the credit cards for this growing balance on this, the one that had the gambling on it. And I had no idea because there was no way to look at that. And then the one way you would find it would be to look at your bank statement. But then she was taking the bank statements and altering the bank statements. And those bank statements ultimately were the ones that were provided to the accounting firm. And so, again, you know, the. The. The level of sophistication, of thought of that is significant. Right? For a hometown thief, it's a pretty significant way of figuring that out. So to me, that was the. That was one of the key things here was the disruption to the process, the process of, you know, let's pay all of our bills through an ACH push. I had. I guess I really never thought about it. And I don't. Frankly, I don't think a lot of business owners do think about an ACH poll. And I would caution everyone, regardless of the size of your business, to investigate the poll, because that. That is the. In fact, it was the way that most of the money made its way out of our company. And then she was able to use these tools to alter documents so that she couldn't get caught.

Eugene Shotsman (27:59)

Well, and the thing about that pull is that all they really need to initiate a pool is a copy of your check or literally just your account Number, because anybody can go look up your ACH or the routing number by googling your bank or something. So the reality is all they need is an account number. And this is. I. I've read about this level of fraud as well, and we were victim to it. Not at nearly as high of a level as you, but, you know, there were a couple. Couple times where we identified by looking at our bank statements and our business, like, oh, man, we really don't recognize what that is.

Mick Hall (28:40)

Right, right.

Eugene Shotsman (28:40)

And, you know, and it's kind of like what you said. It gets progressively worse. You know, one day it's like $171, and you're like, okay, well, I'm not. That. That seems like it belongs there. I don't know what that is. But then next day it's like. Or, you know, three days later, it's a slightly different version of the same vendor, and it's like $1,662.27. And you're like, okay, yeah, like, I don't know, like that.

Mick Hall (29:08)

That.

Eugene Shotsman (29:08)

I don't know. I should probably look into that. And then, like, it's $30,000, and you're like, okay, wait a second. Like, that's the one I'm gonna notice, and I'm gonna call my bank. We actually have this happen where we noticed it. I think it was after business, after, like, banking hours. On the next day, like, our. Somebody was doing reconciliation. They found it, and they. And they're like, oh, my God, we gotta go find it. And it was like the. The. The business, when they traced it, the business that had stolen the money was like a trailer park in Louisiana somewhere. And it was like, okay, that's not. And. And it looked like that the name of the business looked like a law firm or something like that. And it was a, you know, some law firm and associates. And it kind of looked like it was like, okay, well, you know, it looks like a normal bill we would maybe pay or something. But, you know, we. We were lucky that I think our damages were under $5,000 when we. When it was all caught, said and done. But it is, you know, this. Ach pull. All they really need is an account number.

Mick Hall (30:09)

That's it. And then this.

Eugene Shotsman (30:11)

And you hear about, like, people, you know, mailing checks to people, and like, the. The fraud doesn't happen when. I guess the fraud does happen when somebody, like, takes the check out of the envelope and, you know, like, changes the name. I've heard of that happening for sure, but, like, that's one way to do it. Another way is just to take a picture of the check. And now I know your account number and now I can, I literally can go into any website with a fictitious business and pull, pull money out of your account, I guess.

Mick Hall (30:39)

Yeah, that's exactly right. And the interesting thing is whether this lady was doing it either as a credit card charge to her own small business or the use of the ACHs, you could tell that she gave it some aforethought. It's going to look odd if it's a particular amount of money, like 25,000 or 15,000. It was always more like $14,848.92. As if it's going towards something. Right. Because that's what most people are used to seeing. So again, there was, it was a fairly sophisticated way of doing it. You know, I definitely have, you know, thoughts on whether the accounting firm should have caught it, whether, you know, should we have caught it? There you have all of the second guessing that occurs after.

Eugene Shotsman (31:31)

Of course, you know, now, now everybody was listening to this, is going to go pull up their credit car, analyze every single charge. And that's actually when I heard, when I heard your story. That's exactly what I did the next day as I pulled up and I, you know, we, we have somebody who, whose job it is to go look at all this stuff. And I was like, okay, now it's my job. I'm the business owner.

Mick Hall (31:50)

Yes.

Eugene Shotsman (31:50)

I'm going to zoom in on this. So when we come back from break, Mick, I'm going to ask you to think about like signs, signs that this might be happening in your business. Signs that you know, there's people who are more likely than others to do it. And also like any of your other learnings, because you mentioned this ACH1, that's a good one. But yeah, this is again, it's like a bone chilling story for every business owner and you really hope it's not happening to you. But when we come back on the Power Hour, we'll talk more about how to make sure that it isn't.

Mick Hall (32:20)

Sounds great, Power Hour listeners.

Jamie Rosen (32:22)

I'm here with my good friend Jamie Rosen. And if your practice is doing okay, but it still feels way harder than it should be, this is for you, right, Eugene?

Unknown Male Speaker (32:31)

So if you're busy and you're growing, but somehow everything still runs through you,

Jamie Rosen (32:35)

and if you're in the day to day minutiae and every time you think about growth, it feels like more stress, more problems, not more freedom and a

Unknown Male Speaker (32:43)

lot of owners just assume it's normal

Jamie Rosen (32:45)

and it doesn't have to be. Which is why we're super excited to announce something that we're officially unveiling this March at Vision Expo. It's the I Care BOSS system. B O S S. So the Acare

Unknown Male Speaker (32:57)

BOSS stands for Business Optimization and Scalability System. So it's a system that helps you optimize and scale your practice whether you're one location or whether you're 20 or more locations.

Jamie Rosen (33:08)

And we developed it after working with thousands of practices coast to coast and seeing the same gaps and the same patterns over and over again. And Jamie and I used what we

Eugene Shotsman (33:18)

saw from some of the most successful

Jamie Rosen (33:19)

practices out there, and we also use some other business literature, but we adapted this to specifically serve the unique needs of eye care today, which is really important.

Unknown Male Speaker (33:29)

So what we see is that many successful practices have made a ton of mistakes and kind of tripped their way to success. But this is obviously slow, super iterative, and takes a ton of work and literally years. And the system we've created helps you learn from your mistakes and really the mistakes of others, eliminating those mistakes and fast tracking your own success.

Jamie Rosen (33:51)

So most practices do not have a clear system for how to optimize their practice and also how to scale without the owner becoming the bottleneck or a few key people in your practice becoming the bottlenecks. And again, that's why we created ICARE boss, because it focuses on five important parts. People, accountability, revenue, data and patient experience.

Unknown Male Speaker (34:11)

Yeah, and all those five parts. Parts working together as a system is really critical. And that's what leads to the actual optimization or constant improvement of your practice. But also we include the tools that you'll need to support the growth, which is all part of the ICARE BOSS system.

Jamie Rosen (34:28)

And scalability is really growth that doesn't have to break stuff as it happens. Right? So growth where practices run on structure and not just talent of a few key people is what scalability is.

Unknown Male Speaker (34:40)

We'll be walking through the system on the Vision stage at Vision Expo, offering CE and sharing tools and resources you can actually take back to your practice and use. This is not just theoretical information. It's super practical and very usable.

Jamie Rosen (34:56)

So if you're doing fine, but you know you're capable of much, much more. And if you want growth and also some sanity, I think.

Unknown Male Speaker (35:03)

Join us at Vision Expo March 11th through the 14th in Orlando.

Jamie Rosen (35:08)

And by the way, for Power Hour listeners, use a special coupon code VE26POD to register and get free entry into vision Expo. That's VE26 pod.

Unknown Male Speaker (35:19)

So go to visionexpo.com, click the register now button and use the code VE26 pod and we'll see you there.

Eugene Shotsman (35:28)

All right, we're back on the Power Hour. I'm here with Mick hall, and we're just getting into the meat of this whole fraud and embezzlement story, which is, you know, just. It's so freaking scary to, to, to hear this. And I, I can't believe that you're telling me this story right now with, you know, with the positive attitude that you have. But this is also what I know about you as a human is that, you know, you're. You're inherently like a forward thinker, not a. Not. Not a live in the past type of person. So kudos to you for making these lessons available to everybody. How often do you think this happens?

Mick Hall (36:05)

So it happens a lot. So I've had an opportunity to speak not only in the optometry world, but with others now about the situation. And part of what I go back to, there was some research that was done. It was the University of Cincinnati did a study about businesses that experienced embezzlement. Okay. And what they found were 64% of small businesses had embezzlement. Only 16% of those had reported. Okay. And the most common reasons that they, that they didn't report it, number one, the most common reason was embarrassment. Okay. Others were, you know, lack of. They knew they were gonna need a forensic accounting. It's very expensive. They knew they were never gonna have the money to pay for it. So it was basically just, well, we'll take our loss where it is and not compound it, okay? A fear of publicity. They were afraid that the word would get out and people wouldn't wanna come to that business. And there is, the last thing, is there's a perception of the ineffectiveness of the judicial system, which, as a lawyer, makes me sad, but it's true. I mean, my case, we reported this to the federal authorities in June of 24, and here we are now in March of 26. The case is pending, but it's not resolved. These cases take a long time to investigate, and our federal courts right now don't have enough prosecutors. And so these types of cases just move along slowly. And so I think there's reasons out there why people don't want to report this stuff. My thought when it happened was if we can't as a community, learn from each other's issues, each other's mistakes, okay. Each other's heartbreaks, then we're not doing much of a service for each other. Right. And so to share this. Is it embarrassing? Hell yeah, it's embarrassing. Right. But the fact of the matter is, I hope there's somebody out there who goes and checks that credit card, goes and looks for those ACH polls that, you know, for example, one of the things that I do now, I go online every month and look at our bank, the. All of the reporting that we get from the bank. And because of the number of our locations, there's a lot. But I go on and look at it. You know, one of the things that I think you'll find too, one of the things that thieves do is they insulate themselves away from everybody else. They want all of the information in a small silo. Okay. Yeah.

Eugene Shotsman (38:53)

That I was going to go to. That is the, you know, how do you, how do you tell if somebody not even like is stealing from you, but has a propensity to steal? And before I ask you that question in a second, I just wanted to comment on something you said before I forget is that, you know, in, in all reality that, that 16% of people who report to two thirds of business owners that report that they've been stolen from. That's a really, really concerning metric. And at the same time, you know, if people did a surface look, now, in your case, the surface look was in the tens of thousands of dollars, right? Like when you glanced and you were like, I found this stuff, it's in the 10, it turned out to go from tens of thousands to millions, which is just unbelievable. And also, I bet that there are people out there who are like, oh, well, you know, I caught him stealing 500 bucks. You know, I'm just going to let them go and whatever. But, like, what you don't realize is, you know, chances are that's the 500 bucks you caught, not the 50,000 that you didn't.

Mick Hall (39:56)

That's exactly right. You, you may have seen just that one piece and that's what led you to have somebody leave. You don't know what all the other part were. And if you don't go looking for it, you never will. Now, I would say this being afraid of the cost of forensic accounting is real, okay? The forensic accounting that we had done was. The cost was substantial. It was substantial. I don't want to call it lucky because I don't think lucky is the right word. I think we, we did have theft insurance, employee theft insurance. Okay. Which I highly recommend. I think that if for no other reason, that insurance that you have for the employee theft can help offset the cost of a forensic accounting. Okay. And so I do think that that's something that everybody needs to consider. It was only a fraction of what was stolen. Okay. But it did help offset that cost for the. For the accounting. Now, in the prosecution of this person, can they ask for that to be added? Yes. Am I going to get any money out of her? No. In the end, we know that she had a gambling problem. We now know that. Right. And so it's not like this person was stealing this money and going and buying, you know, rental apartments. Okay. Like most people. The people steal money for a lot of reasons, but two of the biggest ones are they have a gambling problem or they have a drug problem. This particular employee had a gambling problem.

Eugene Shotsman (41:38)

Well, and it's. We'll come back to your point about the insulation. Now, you said your case is still pending.

Mick Hall (41:45)

Yes.

Eugene Shotsman (41:46)

Well, does that mean that this person is, like, out there in the world and free and.

Mick Hall (41:50)

Very much, very much so, in fact. So one of the interesting things about her current situation, when she left here, when we fired her, she went and got a job in the accounting department of another local small business.

Eugene Shotsman (42:04)

No way.

Mick Hall (42:05)

Oh, yes. And stole money from them as well. Okay.

Eugene Shotsman (42:10)

No way.

Mick Hall (42:11)

So the owner of that business, when the charges here became public, okay, they became public in October of last year. So no one knew for the first year. Plus, when the charges became public, I got a phone call from another local business owner, and he, come to find out, had some friends. We had shared friends, got my number, called me, and he said, I'm her boss. And I'm like, what are you talking about? And he's like, yeah, she works in my accounting department. What should I go look for? And that was a. I was like, listen, kind of along these same lines. Hey, if you read the criminal complaint, it talks about Ach's checks and credit cards. And he's like, okay, that was it. Well, come to find out later that day when, once he saw it in the local newspaper, another employee walked through their accounting department and was showing everyone a link on their cell phone to the story. They showed it to her, she got up and left and never came back. And so. But in the meantime, she did it, you know, allegedly steal from him as well. And that conduct will be used in her sentencing hearing. So it was. And come to find out, this is another little lesson that we learned. She had a prior conviction for embezzlement. Okay, so then everybody, before she worked for you, before she worked for us. Okay.

Eugene Shotsman (43:44)

Oh, My God.

Mick Hall (43:45)

And so people are like, well, how didn't you know that? Like a lot of companies, our onboarding documentation asks for your name and your maiden name. Okay, well, she had been married once before, and so the conviction was not under her married name. It was not under her maiden name. It was under this third name. All right? So we had no way of knowing about it until everything became public. Then somebody who read it said, hey, wait a minute, I think she got arrested for this in this other county, you know, years and years ago. But that was with her first name. And it all came out that, in fact, that she had stolen from a local governmental unit. And it wasn't. It was. I forget the exact amount, eight or ten thousand dollars. But she'd been prosecuted and sent to jail for it. And we had no idea because our. Our background check didn't look for the name that it needed. Um, and so now all of our stuff asks for every name you've ever had, but at the time, it. It asked only for main name and current name.

Eugene Shotsman (44:53)

Wow. Wow. And, you know, and then there's probably a bunch of people who hire with a very low amount of background check, due diligence type of stuff in the first place.

Mick Hall (45:04)

Yes, yes, 100%. That's. That's a. That's a big thing. But, you know, going. Going back to that. That comment I made earlier, like, you know, so if you look back at that, if I make a list of all the lessons learned, okay? So one of them is you cannot have information siloed. You have to have information that comes to a broader group of people, because then no one can hide it or change it. Okay? So. And I think this is a really, really big one. So now instead of having one person who all this information flows into, in our accounting department, now it flows into the department. Everybody has access to it, so they can all see what's going on. Obviously, I have access to it as well. So there's no way to segregate information away from other people. And that has been one of the biggest changes that we made was, hey, listen, we're going to have some transparency in our financial department so that we look at it. No one is bigger than the financial team. The team needs the information. Not an individual needs the information. But, you know, it makes it better.

Eugene Shotsman (46:21)

Logically, though, speaking to that, and you can maybe give me some examples of some ways that this. This individual was siloed. But logically speaking to that, you know, there's sensitive information in there. There's your personal information because you're the owner. Like, you know, there's, there's payroll information about each one of your doctors and each one, you know, and so if you, if you have more than one person and they, you know, and I'm thinking your practice, you got a large practice. But if I'm listening to this and I'm like, okay, I got one or two locations and you know, my financial person is not an apartment. It is one person. So who else needs to be part of that? Because I don't want, you know, every office manager knowing how much everybody else makes. I don't want, you know, I don't like. So solve that for me.

Mick Hall (47:10)

So to me, I would solve that in one of two ways. That other person either needs to be someone who's independent, like your outside accounting person, okay? Or you, but, but in other words, you don't ever accept financial information from the staff. Only you, you have it coming. So that if it comes in, let's say, your bank statement comes in from the bank every month, you are getting that email, they are getting that email. And then you can always look to make sure that everything is aligned as it's supposed to be, right? So if you need to take on, because you're a smaller business and you need to take on that responsibility, that is a responsibility you need to take on because there has to be somebody else who can listen and see that. So.

Eugene Shotsman (48:00)

Well, and third party bookkeepers aren't that expensive either. You know, there are lots of, lots of services that will offer a small amount of book or for a small fee, we'll offer a variety of bookkeeping services that are, you know, it's a couple hundred bucks a month, but it's another third party. And so if you've got some, you know, if you've got some things going on inside your business that somebody doesn't want somebody else to figure out. That may be an easy litmus test is to say, hey, we got a third party bookkeeper that, you know now, now has to be part of everything, right?

Mick Hall (48:34)

And so in situations like, you know, credit card statements and vendor statements, anything to deal with your bank account just so that the originals are the things that are making their way to that group of people, even if the group is two, you and somebody else, so that no one can take data and manipulate it so that what you're getting from them is work product as opposed to the actual document. I think that's that to me is

Eugene Shotsman (49:01)

that, that to me is the silo of responsibility. The kind of, the expansion of the group makes. Makes good sense. Are there any other signs that somebody is inappropriately positioned to kind of. I'm not even saying they're stealing from you. I'm saying they're. They're positioned to steal from you.

Mick Hall (49:20)

So here's one of the problems. I think we have all heard of GAAP principles, right? Your Generally Accepted Accounting principles. GAP principles are great when you have a department. Okay. And that's why we kind of went. Shifted away from the way that we were doing things before and now treat it more as a team. If your accounting department is a person or two, it's harder. Should you have the same person handling vendor bills and paying bills? No, but in smaller companies, you do. That is just the way of things because you don't have the. You haven't expanded big enough to meet any more people, Right? So to me, the, the salve for that wound is transparency. And so again, as long as the, the principal has access to all of the data so that you can make sure, hey, my folks did this. I've seen all the credit card bills. They're all correct. I've seen my bank statement. I know that the right people are getting paid, and they're just handling the, you know, their filings and the filings with the state for your employee withholdings and your state taxes and stuff like that. That's all great as long as, you know the data that they're using is accurate and you have the ability to see the reports coming back from your bank, your credit cards and whatever. I think that's. That's a better position to be in if you have a smaller business than. Than to allow somebody to just tell you everything's fine. And now you got to believe them because. And I will tell you, there are myriad stories about people out there who had family members who were the ones that were handling their accounting, okay. And those family members were the ones that ended up stealing from them. And so when, you know, when you think about that, and you may have heard of some of these, like the singer Billy Joel, his brother stole $70 million from him, right? His brother did that to him. Dane Cook, same thing. His brother stole like $12 million from him. And, you know, you know, those are family members.

Eugene Shotsman (51:33)

Makes me happy. I don't have a brother.

Mick Hall (51:35)

Well, there you go.

Eugene Shotsman (51:37)

Or I don't work with my brother.

Mick Hall (51:38)

The singer Leanne Rimes, the country singer Leanne Rhymes. Her parents stole millions of dollars from her.

Eugene Shotsman (51:45)

No way.

Mick Hall (51:45)

Okay? So again, it's. When you can look at the documents yourself. And go, something's wrong. Okay, do that. I think another option, but again, this is an option typically for larger companies, is to, to have an independent audit done every year. I mean, if you have an independent audit done, you're not going to be able to overcome that. Those people get so deep into the weeds. And since we went through the forensic audit, I can tell you that they look at everything. And I will tell you, there were charges that were made on our credit cards that were absolutely outrageous. This lady, for example, about three months before I figured out what she was doing, her mother passed away. Okay? So I used my company credit card and sent flowers to her mother's funeral. Okay. What I didn't know was she had already used my credit card to pay for the funeral.

Eugene Shotsman (52:44)

Oh, geez.

Mick Hall (52:45)

Okay. So literally paid for the funeral. And again, all these other charges where she was ordering clothing or food or vacations. She, she took her entire family on a couple of big vacations, Airbnb vacations. That, that, that her family was talking about her on Facebook as if she was the greatest thing since sliced bread. It was paid for on our credit cards.

Eugene Shotsman (53:10)

Wow.

Mick Hall (53:10)

Okay. And then again buried in the minutia of other vendor expense or other travel expenses, stuff like that. So, you know, like.

Eugene Shotsman (53:20)

So Nick, the, this is like, okay, so one thing is, okay, I gotta look at every single charge on the credit card bill. I get it. The other part of this, though is there's probably, and you've probably thought about this a lot. Before we run out of time today, I wanted to ask you, like, what are other non obvious ways that people steal from optometry businesses? And I want to think a little bit about, like, inventory, because that seems maybe, maybe that's more obvious or not obvious, I don't know. But like, you know, I look at, I look at inventory, there's just hundreds of thousands of dollars sitting out in the open every single day.

Mick Hall (53:59)

Every day. Every day. So here's a story that goes back more than 20 years. Here in our practice, we had an office that had a missing deposit. Okay? One of the common ways people steal in an office, in a retail office is a deposit that's heavy on cash will go missing for a period of time. It goes missing until your next payday because they're borrowing the cash that's in that deposit until payday. They replace it and then they go make the deposit, okay? And so all of a sudden it dropped behind the counter. It did all these things, but they'll find it remarkably right after a payday, okay? And so we had an office where they had a rather large deposit that was supposed to have been made, but it was, it was a lot of cash. And this was again 20 some years ago before credit cards were basically 90% of what we do now, but it was a lot of cash. Okay, so we go to the office and we say, look, listen, here's the deal. I'm going to bring in a polygraph person, okay? We're going to polygraph everybody here. If you want to come and talk about it before the polygraph person gets here, then we're going to try to figure something out. And if you're the one who stole the money, like if you're the one who did it and you come and admit it, you're going to get fired. But we're not going to call the cops. Okay? There's one of those non reporting situations. We did it ourselves. Right? So we get people into a room. Okay. There were five people who worked in the office. How many of them admitted to stealing? Five out of five.

Eugene Shotsman (55:43)

No way.

Mick Hall (55:44)

Five out of five. And the other four of them, it was little things. I, I'm sorry. I took a pair of Maui Jim sunglasses for my husband for Christmas. One of them was taking things like office supplies, but generally speaking, it was small thefts of things like plain old sunglasses because it was the easiest thing to say. Walked out the door. Right? So those four people all ended up paying back what they said that they had stolen. They were very scared but kept their jobs. And then one of them who came in and said, yeah, I'm the one who took the cash and I'm going to put it back. And she was let go and replaced. So I would say this, your shrinkage number in your office is likely highly influenced by your staff. And that's unfortunate. Okay, it's unfortunate. It's the world that we live in. It's unfortunate. And again, if you told somebody that you're going to have a polygraph person show up, you may have an office that lacks staff that day. Because the tempting nature of some of what you find in an optometry office is they know it. And because we all do have theft, they just kind of lump it into. Well, they're never going to figure it out because we get stuff stolen all the time. Well, yeah, if you're in retail, you're getting stuff stolen. There's no question about it.

Eugene Shotsman (57:18)

Well, and it's interesting because I, there was another client of ours who told me a story of they figured out that somebody was processing refunds or something like that. That, that's another way to potentially do it.

Mick Hall (57:33)

So I had that, I had that happen as well. We had a guy who was actually a manager in one of our locations. And so when you had somebody who wanted to do a return, he would handle everything in the office so that the person, everything, maybe he gave them a different pair of glasses. Maybe whatever way he was doing it, they were satisfied when they left. Okay. Then he went onto our system and said that he was making a refund to the patient. It went to his credit card, not the credit card of the patient. And now that is one of the things that over the years has, we have been able to lock down because now in most point of sale systems you can lock down that returns that are done within your system must go to the same credit card. But at the time that, that wasn't a feature that, that existed in our

Eugene Shotsman (58:26)

pos or people give cash refunds and. Yeah, yeah.

Mick Hall (58:30)

And so if you're, you know, if you're in an office and you tell somebody, well, he came in and gave, you know, I gave him this cash or whatever, you, you really don't know. Right. Unless you call the person and ask them. So that's why we don't do, we don't allow that. We don't allow cash refunds. If you need a refund, it's gotta come through the home office so that we can document it correctly.

Eugene Shotsman (58:49)

Yeah. One of the craziest stories I've heard was somebody at a few locations and said, you know, one of their former employees opened a store on the other side of town and they actually sent the welcome wagon to congratulate him and you know, and say like, hey, you know, if you ever have patients on our side a town, send them over, we'll send over ours that you know, like just as a friendly welcome wagon. And the, and somebody walked in to the, to the store and was like, oh, their inventory looks remarkably similar to ours and even includes some private label brands that we, that we know we're the only ones who carry. So like that's pretty, that, that is a pretty high indication of the fact that that inventory investment was made by our business, not somebody else.

Mick Hall (59:39)

That's exactly right. It, I definitely have heard that story. So I'm pretty familiar with that one. But I will tell you that when you think about it, there's nothing like the mind of a thief. Okay. It's just they're going to try to find a way, you know, and what you have to do is to Protect yourself as best you can. If you are in business long enough, you're going to have people who steal from you. It is just a matter of fact.

Eugene Shotsman (60:07)

Right.

Mick Hall (60:07)

And that's disheartening. And especially when you, when you like most business owners, do you care so much about the company because it's like one of your kids, Right. And to think that somebody could harm it on person, on purpose is, is abhorrent. It's going to happen. And so do whatever you can do to try to protect yourself. And like I said, I think, number one, all of the major decision makers in your business have to have direct access to documentation because at least then, and if everybody knows that, hey, look, I can go get that bank report, I can get that credit card statement at least. If they know that, then if they're going to try something, man, that takes some gumption when they know that you've got the original data.

Eugene Shotsman (60:58)

Yeah. And the thing is, and I want to say this one more time, as I said in the beginning of the episode, as we conclude, I want to make sure people understand, like, Mick, you have a really sophisticated operation. Like you guys, you guys have lots of locations, lots of doctors. This thing is one of the most respected practices in the entire country. I'm sure private equity would love a chance to partner with you at some point and they're probably calling you ten times a day. But the thing is, you guys are fiercely independent, family owned business that is one of the most respected practices in the country and extremely sophisticated in the way that you run your operation. And yet this happened to you at such a ridiculous scale. And, you know, I'm just so grateful that you shared the story because I think all of us can learn from it. And you know, and I think anybody who listens to this episode and doesn't, you know, feel uncomfortable is probably not listening hard enough or maybe listening to at too fast of a speed. Because like I, I know I've now heard the story from you. You know, there's that first day that I heard this story you told me, kind of give me some updates and then, you know, you've shared it multiple times. And every fricking time I get so angry on your behalf and then I get so scared on my behalf of my good, you know, as a business owner, like, how much of this is happening to me? And then start, start asking questions in the back of my mind and then, oh, well, it can't be me. But like, no, I'm, I'm, I'm after, after we're Done recording this episode, I might log into my bank account and do a little bit of research myself, you know, just.

Mick Hall (62:34)

Just to make sure. I think, again, part of being a.

Eugene Shotsman (62:37)

In.

Mick Hall (62:38)

In a community of. Of like optometry is we all kind of know each other, right? And we want the best for each other. And so when bad things happen, talk about it, get it out there, and let somebody else learn from the mistakes that occurred or the bad actors so that you know what to look for. You know, for example, one of the things that we often do here, locally, where we're at, in all the different cities that we're in, in central Illinois, if we have somebody who comes in, you know, because you'll get these people who float into town, who are. Who come into your locations to steal, okay, inventory, and they'll come in and they'll hit us. And if we know we just got hit, we call everybody else in town because they're going from place to place to place. And then the nice thing is then if it happened at one of our competitors, they call us and they'll say, hey, we just had somebody came in and stole five frames. Be on the lookout for. And then we'll get a description of what that person looks like. Right? And I think that kind of goes hand in hand here. I'm ringing a bell for you. If it can happen to somebody as big as us, it can happen to somebody smaller. And do all you can to protect yourself.

Eugene Shotsman (63:50)

Yeah. Mick, thank you so much. I have one last question that I just curious. You mentioned. As she said, I wish I would have taken care of that Europe situation. Or I knew I should have taken care of that Europe situation. What is that?

Mick Hall (64:02)

That was the. That was the gambling on the. On the Hong Kong website. When she started to see the amounts that they were taking every day. What she should have done was come and told me that someone lost the card or did something for me to contact them and stop the card from being able to be used. She didn't do that and instead just paid the amounts. And then eventually she let them know because the credit card was canceled. But that wasn't for a couple of months. And in that couple of months, there was over a million bucks that got charged in that card.

Eugene Shotsman (64:37)

Oh, wow. So it wasn't even her doing the gambling. It was.

Mick Hall (64:42)

That's part of the question that the. That the. That the prosecutors are looking into is was it her or was their fraud done by this credit card or. I'm sorry, by the gambling site of stealing the credit card number and doing that. And I will tell you, by the way, because I think a lot of folks might be asking this question, did you report the fraud to the credit card companies and get relief? The short answer to that is, yes, I reported it. Not all of the credit card companies gave relief. One of the credit card companies said, because this is your employee, you're on the hook for it. That is a position that we may end up litigating, to be honest, because that's not what our cards. Your cardholder agreement says. And so that'll be something that might come down the line as some additional recovery from us. But, yeah, the biggest amount. The credit card company that had the biggest amount on it from fraud did not give us relief.

Eugene Shotsman (65:47)

Wow.

Mick Hall (65:48)

They acknowledged it was fraud, but said that because that was our employee that was on us. And again, I asked them, hey, where in your credit card holder agreement does it say that there's an exception? They couldn't point to it. So, again, that might be something that we. That we end up having to litigate.

Eugene Shotsman (66:05)

Yeah. Mick, I am so grateful for you coming on the show. Telling your story is a lot of little pieces and big ones for. For all of our listeners to learn from and certainly for any business owner to learn from. Just, you know, again, super grateful for you having this kind of attitude that, hey, if it happened to me, somebody might as well get something out of it and somebody might as well learn something from it. So just thank you for being here.

Mick Hall (66:32)

Absolutely. My pleasure.