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Credit card scams hit California dentists

October 15, 2018

By David Burger

Sacramento, Calif. — When dental office manager Sophia McNeil arrived at the Walnut Creek location of her husband’s endodontic practice one day in 2016, she feared the worst, she told the ADA News.

The glass door to the office had been smashed open, so she quickly went in. Initially it didn’t look like anything was taken.

When she called her husband, he asked her if the credit card terminal was still there.

She looked, and it wasn’t.

Her husband had recently heard in a dental society meeting that Bay Area dentists and physicians had been targeted by criminals who conspired to defraud victims throughout California by hacking the credit card terminals and merchant accounts of dozens of medical and dental businesses. They didn’t think they’d be victims, though.

“It was a complete surprise,” Ms. McNeil said.

Ms. McNeil, who said the practice was robbed of about $25,000, got some payback when on Sept. 10 California Attorney General Xavier Becerra announced the arrest and indictment of 32 individuals associated with criminal street gangs throughout Northern California known as the BullyBoys and the CoCo Boys.

Attorney General Becerra announced a 240-count indictment that included 63 counts of conspiracy to commit grand theft; 54 counts of hacking, computer access and fraud; 56 counts of grand theft; 59 counts of burglary; and eight counts of identity theft.

As a result of the investigation, about 40 stolen credit card terminals were recovered and dozens of receipts depicting fraudulent returns were located. In addition, agents seized other stolen property, such as laptops and personal files detailing social security numbers or bank information.

“Street gangs target and intimidate our families and businesses to feed their criminal enterprise,” said Attorney General Becerra in a statement. “It takes the collaborative effort of multiple law enforcement agencies to take down criminal gangs. It’s indispensable work if we’re to reclaim our neighborhoods. Today’s announcement serves as a reminder to all business owners to take all necessary precautions to avoid becoming the target of fraud.”

“This investigation remarkably demonstrates the increasing level of sophistication by which criminal gangs operate in California,” said the executive director of Western States Information, Kent A. Shaw, in the attorney general’s news release.

The arrests were the culmination of a three-year multi-agency investigation of a series of burglaries and credit card schemes occurring in 13 counties across Northern California, said Tawnya Austin, deputy attorney general and prosecutor, in an interview with the ADA News.

The investigation, which began in early 2016, discovered similarities between schemes in which credit card terminals were burglarized from businesses in cities around Northern California. Law enforcement discovered the schemes were tied to two criminal street gangs, who worked together to burglarize businesses in order to steal credit card terminals, Ms. Austin said. The perpetrators allegedly used the stolen terminals to process returns. But instead of the value of the returns going to the business or to the customer, it was reportedly placed onto a debit card that the perpetrators pocketed.

Dental practices were targeted, Ms. Austin said, because dental offices generally close at 5 p.m. and aren’t utilized at night, when the burglaries happened. In addition, she said, dental offices’ merchant accounts tend to have money to draw from.

“Wherever there’s money, there’s going to be crime,” Ms. Austin said.

Ms. Austin said to protect themselves from similar schemes, credit card terminals should be password-protected, and even locked in a safe at night. Surveillance has value, too, she said.

Since the incident, Ms. McNeil instituted passwords for all of the credit card terminals in the five-office practice, and has a sign outside the front doors saying that all credit card terminals are removed every night.

“There’s a lesson to be learned here,” she said.

The ADA Center for Professional Success, Success.ADA.org, contains resources for help prevent fraud in dental offices. Go to the website and search for “Fraud Protection.”