Plus, Australian accountant caught up in cheese scandal, and an accountant in Fiji accused of defrauding a client pleads not guilty.
Sipho Malaba arrested in connection with the R2,7 billion VBS Bank robbery [Pindula News]
Former KPMG South Africa auditor Sipho Malaba was one of seven people who were arrested on June 17 for their alleged involvement in the theft of over R2.7 billion from VBS Mutual Bank.
The theft caused the bank to go bankrupt in 2018.
Pindula News cited this graph in a recent article by the Daily Maverick that explains Malaba’s alleged involvement in the scandal:
Former KPMG auditor Sipho Malaba helped [VBS CFO Philip] Truter to hide the black hole in VBS’ finances. He received more than R33,9-million for his trouble. Malaba was a qualified chartered accountant who was KPMG’s engagement partner on the 2017 VBS audit. Malaba had obtained substantial facilities from VBS which were not at arm’s length. He was severely compromised, borrowing from the bank that he audited. Malaba also signed off on the fraudulent annual financial statements and lied to the Reserve Bank in VBS’ DI returns. He spent his VBS riches on Land Rovers, a Mercedes Benz, properties, and paid off his debt with big cash transactions.
Edward Cooper, 71, of Mammoth Springs, was sentenced today to five years in federal prison for embezzling more than $9 million from a corporate client in Trumann, the U.S. attorney’s office announced.
Cooper handled accounting at a Jonesboro firm for Roach Manufacturing in Trumann. According to the Justice Department, he began requesting extra checks to himself in 1996 when preparing divided and tax checks for the family-owned company. He took 138 unauthorized checks through 2018. An audit uncovered the fraud in 2017.
Cooper pleaded guilty in January 2020 to fraud. In addition to 60 months in prison, Chief Judge Price Marshall sentenced Cooper to two years of supervised release and to pay $7.4 million restitution.
Denver CPA sentenced for conspiracy to defraud Xcel Energy and the IRS [Justice Department]
Stephen Yobst, CPA, was sentenced on June 15 to 27 months in federal prison, followed by three years of supervised release, for wire fraud, conspiracy to defraud the United States, filing false tax returns, and theft of government funds.
Here are the dirty details from the DoJ on why Yobst, 64, is getting sent to jail:
According to the information and plea agreement, in 2005, Yobst was employed by Xcel Energy with the title of “Category Manager, Sourcing and Purchasing”. Yobst’s co-conspirator, James Brittain, incorporated a company called Pacific Exchange Group, Inc. (PEG) in Colorado in March 2005. On March 18, 2005, Yobst opened a Vectra Bank account representing himself as the “President” of PEG. Brittain was added as an authorized signatory in November 2005. In December 2006, PEG entered into a Master Exchange Agreement (MEA) contract with Xcel designed to allow Xcel to postpone paying taxes on gains from the sale of certain assets if the sales were reinvested in similar property as permitted by the Internal Revenue Code.
Yobst participated in the MEA contract negotiations as an officer on behalf of Xcel while Brittain represented PEG. As part of the agreement, Xcel would deposit the proceeds from disposing Xcel’s transformers and fleet vehicles and hold the funds until directed by Xcel to distribute them for the purchase of replacement assets. Xcel agreed to pay PEG 5% commission on the sale price for vehicles and a 12% commission for transformers. Additionally, with Xcel’s prior approval, PEG could be reimbursed for out-of-pocket expenses for “professional legal and tax services and other expenses”.
Beginning in 2005 and continuing through approximately May 14, 2015, Yobst and Brittain worked together to divert, use and convert funds for their own personal benefit without Xcel’s authorization. The diversion of funds included withdrawals from the PEG account to a Scottrade Account for $400,000, which were used by Yobst and Brittain to conduct stock transactions and other investment activities; $363,966 in payments to American Express for Yobst’s personal expenditures; and Yobst wiring $42,250 to an automotive dealer to purchase a 2011 Honda Pilot.
Yobst and Brittain purposely concealed Yobst’s involvement in PEG and failed to provide Xcel with a detailed accounting of the exchange funds deposited or copies of PEG’s Vectra Bank account statements. Xcel filed a civil suit in September 2014 seeking an accounting of all exchange funds in the PEG bank account and the return of unspent funds. Brittain and Yobst provided false and misleading information in connection with the litigation.
Additionally, between March 2011 and October 2014, acting as PEG’s accountant, Yobst transferred $10,500 monthly from the PEG bank account to an account Yobst personally controlled. Yobst mischaracterized the transfers as “ACH Offsets” to an entity labelled “Havfund” when in fact they were personal income payments from PEG to Yobst. Also, during this time, Yobst used a PEG American Express credit card for personal expenditures, including golf supplies, leisure travel, cigars, and other items. Finally, in 2015, Yobst obtained accumulated disbursements totaling $1,324,644. Yobst filed personal federal income tax returns which did not reflect the PEG income or taxes due for these disbursements.
Brittain was sentenced on June 21, 2019, to serve 12 months and one day in prison, followed by three years of supervised release, for wire fraud, aiding and abetting, and conspiracy to defraud the United States.
Other accountants behaving badly:
- Accountant struck off in $48 million cheese scandal [Australian Financial Review]
- Lawyer and accountant plead not guilty [Fijian Broadcast Corporation]
- ICPC arrests accountant over N250m fraud at Sokoto hospital [The Punch]
- Accountant suspended in transport scam [Free Press Journal]