Or it can be the intended manipulation of reported sales and the transfer of cash balances into a non-core business entity. It can be inappropriately capitalizing expenses into inventory or the expensing of capital expenditures. Sometimes “the numbers just don’t add up.” It can be an isolated incident or the cash balances may not match up to the reported profitability. We receive so many calls to come in and look around because “something does not seem right,” or because someone said or saw something. Surprisingly, many if not most frauds, are detected from a tip. He or she sees an opportunity and seems never satisfied regardless of how much money or power. Melgen’s practice, his problems would be your problems!Īvant Advisory Group professionals have uncovered many instances in which a person of trust – the owner or key executives with his hand in the cookie jar or worse. We can only guess at his rationalization which might range from “I deserve it” to “I’m only borrowing it.” Consistent with the executive fraud triangle, we see evidence of greed, pride, and entitlement. He owned his own practice, and as the physician in ultimate control of what goes on the billing sheet, an opportunity was clear.
He had the opportunity because his patients placed their unquestioning trust in him. Melgen was greedy – seeking what seemed like no limits to wealth and power. Melgen abused his position of trust, thinking he wouldn’t be caught. In the article discussed above, the story is compounded by a lifestyle of wealth, excess, and power. Entitled: Executives feel as though they deserve money, position, title, authority, perks, services, etc.”.Pride: Executives think they’re better, smarter, more skilled, or superior.Greed: Executives want money, position, title, authority, perks, services, etc.The Executive Fraud Triangle recognizes those attributes of greed, pride, and entitlement which “surround” the executive: The Fraud Triangle has been further refined as it applies to senior corporate executives with similar and complementary observations. Common rationalizations include (but are not limited to) the following: Thus, the perpetrator of fraud justifies his fraud to himself. That means the person committing fraud sees himself as a normal, honest person who is trapped in a bad situation.
Rationalization : The last leg represents rationalization. The opportunity to commit fraud can arise from various circumstances such as: The person must see some way he can use or abuse his position of trust to solve his financial problem with a low perceived risk of getting caught. Opportunity: The bottom leg is opportunity, which defines the method by which the fraudulent act can be committed. Greed is oftentimes the driving influence. Changes in financial circumstances such as divorce or chronic family illness can also create a financial incentive. For instance, he might steal to conceal and support a drug problem, pay off debts, or acquire expensive cars or houses. The individual often has some “perceived unshareable financial problem,” so he begins to consider committing a fraudulent act. This is what creates the motivation or incentive for the fraudulent act. These three basic circumstances lead to the commission of fraud as depicted by the “Fraud Triangle” below:įinancial Pressure: The upper-left leg of the triangle represents financial pressure. Why would a seemingly well-to-do physician turn to fraud? What possesses a person to commit such acts? The list of inappropriate billing and examples of patient mistreatment are many, but you get the point. Usually performed over several minutes, he completed the tests in seconds, making them useless as a diagnostic tool.
Melgen unabashedly billed Medicare for procedures he claimed were performed on the artificial eyes of one-eyed patients as if they were real. Melgen became the highest-paid Medicare doctor by rendering unnecessary care to his elderly patient population who trusted him.īeyond the financial fraud that was bad enough, the medical tests were agonizing. Salomon Melgen was convicted of 67 crimes involving healthcare fraud for persuading elderly patients to undergo excruciating treatments they didn’t need for diseases they didn’t have. The attention-getting article is titled: “17-Year Sentence for West Palm Beach Eye Doctor in $73 million Medicare Fraud Case.” Dr.
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