Former PCAOB inspector jailed for fraud

Jeffrey Wada, former inspections leader at the Public Company Accounting Oversight Board (PCAOB), has been jailed as part of the scandal involving the US regulator and KPMG

Wada was sentenced to nine months in prison for giving advance notice of surprise inspections to Big Four firm KPMG.

Last month David Middendorf, former managing partner of KPMG’s Department of Professional Practice, was also sentenced to one year.

In March Middendorf and Wada were convicted following a month-long trial in New York. The case involved a scheme in which Middendorf, alongside five others, acquired confidential PCAOB information in relation to upcoming audit inspections at KPMG, which was then used to revise the firm’s targets, improving its inspection results.

Middendorf and Wada were both convicted of one count of conspiracy to commit wire fraud, while Middendorf was charged with three counts of wire fraud and Wada of two counts.

In a statement following Wada’s sentencing, Geoffrey Berman, US attorney for the Southern District of New York, said, “Wada violated not just the terms of his employment with the PCAOB but also the law when he provided confidential information about upcoming audit reviews to co-conspirators at KPMG. Wada hoped to secure a job at KPMG. What he got was a nine-month prison sentence,” according to reports.

In October last year, co-defendant Cynthia Holder, former KPMG partner and PCAOB inspector, pleaded guilty to one count of conspiracy to defraud the United States and one count of conspiracy to commit wire fraud, along with two counts of wire fraud.

Thomas Whittle, KPMG US’s former national partner in charge of inspections, later pleaded guilty to five conspiracy and wire fraud charges relating to the use of leaked regulatory information.

Another co-defendant, David Britt, will reportedly go on trial separately in October.

 

Originally published in Economia on 16 October 2019.