I Fought The Law (And The Law Won) – The KPMG (formerly Arthur Anderson) White Collar Criminals Indictments


(KPMG auditor David Middendorf arrives for his sentencing at federal district court in Manhattan, New York.)

To succeed as an evil, all you need is a criminal mindset coupled with greed. And you’d soon be joined by many who aspire to become exactly what you have set your foot upon initially. Since 1818, KPMG (via Grace Darbyshire & Todd) has been operating as accounting and auditing firm with numerous examples of human greed, criminal wrong-doings and what not. I was watching Worldcom fiasco and how it was aided and abetted by its own external auditors KPMG (formerly Arthur Anderson).

Here are the few excerpts from online news journals;

Starting in 2015, the giant accounting firm wanted badly to improve its standing in the eyes of its regulator. But when KPMG recruited employees from its overseer, a scandal emerged over leaks of confidential information that resulted Monday in the indictments of five people on fraud and conspiracy charges.

KPMG executives urged Mr. Sweet to help recruit others from the PCAOB, including Ms. Holder, who according to the indictment lied to the board’s ethics office about pursuing employment at the firm, allowing her to continue working on KPMG-related matters. At Mr. Sweet’s request, Ms. Holder provided him with an internal PCAOB report, among other confidential materials, according to the indictment. She began working at KPMG in August 2015, according to SEC records.

Prosecutors say Ms. Holder soon drew Mr. Wada into the alleged scheme. In November 2015, Mr. Wada gave Ms. Holder the date of a PCAOB inspection of a KPMG matter in Japan, according to the indictment. He also alerted her to a fraud risk in another matter, which allowed KPMG to prepare an answer for why the firm hadn’t seen it.

In February, as investigators began zeroing in, Ms. Holder and Messrs. Sweet and Wada took steps to cover their tracks, according to the indictment. Among other measures, Ms. Holder suggested she and Mr. Sweet obtain untraceable “burner” prepaid cellphones to communicate, the indictment says. The two also agreed that either one could signal that they wanted to communicate with the other by posting a photo on Instagram related to a specific college football team, after which they would dial in to a designated KPMG conference call number, according to the indictment.

The PCAOB’s 2016 report on the inspection of KPMG—one of the inspections for which the clients’ identities was allegedly leaked—hasn’t been released by the PCAOB, though the same year’s reports for the other three Big Four firms have been.

Authorities likened it to “stealing the exam”: Employees of the Public Company Accounting Oversight Board, the main regulator of the audit industry, gave KPMG executives advance peeks at the secret lists of KPMG audits the PCAOB planned to review during annual inspections of the firm, prosecutors alleged in an indictment unsealed Monday.

That information would have enabled KPMG to better prepare for the inspections, an important report card of the firm’s performance. As the scheme unraveled, accountants deleted messages, and considered hiding their communications using prepaid “burner” phones and codes over Instagram, prosecutors said.

For the SEC, what is the appropriate sanction against KPMG given the senior partner involvement? If KPMG is forced to admit its guilt through a court filing will its lose its license to conduct public company audits. This is what led to the demise of Arthur Anderson and at this point, can the US afford to lose one-quarter of the Big Four auditing firms? What would that do for all the oversight required of auditors going forward? Finally, is the SEC investigating other audit firms? SEC’s co-director of enforcement Steve Peikin told reporters in a Monday press conference that he could not comment on any other investigations because the SEC has not said anything publicly about investigations at other organizations.

I fought the law, indeed. But check it out for yourself.

For a YouTube clip of The Bobby Fuller Four’s version of I Fought the Law, click here (https://www.youtube.com/watch?v=OgtQj8O92eI) or here (https://www.youtube.com/watch?v=AL8chWFuM-s) for The Clash’s version.

For more, check this out;

I Fought the Law (and the law won) – The KPMG Indictments

Courtesy:

I Fought the Law (and the law won) – The KPMG Indictments

https://www.sec.gov/Archives/edgar/data/723527/000093176303001862/dex991.htm

https://www.wsj.com/articles/former-kpmg-executives-charged-with-conspiracy-1516640050

https://www.wsj.com/articles/ex-kpmg-partner-sentenced-to-a-year-and-a-day-in-steal-the-exam-scandal-11568217009

https://www.sec.gov/Archives/edgar/data/723527/000093176303001862/dex991.htm

https://en.wikipedia.org/wiki/WorldCom_scandal

Click to access 22144154.pdf

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