November 29, 2021

Ex-KPMG Partner Pleads Guilty to Using Stolen PCAOB Inspection Information

The former national partner-in-charge of inspections at KPMG pled guilty on Oct. 29 for his involvement in a scheme in which the Big 4 firm repeatedly used stolen confidential Public Company Accounting Oversight Board information to cheat the regulatory inspection process.

Thomas Whittle, 55, pled guilty to wire fraud and conspiracy charges, pursuant to a plea agreement with the government, in a Manhattan federal court on Monday afternoon, according to a Law360 report. He is expected to be sentenced on Sept. 13, 2019.

He is the third former KPMG leader who has admitted guilt for their role in the scandal. Earlier this month, Cynthia Holder, a former PCAOB inspector who later joined KPMG as executive director, pled guilty to wire fraud and conspiracy charges. Her boss at KPMG, partner Brian Sweet, who was a former associate director at the PCAOB, pled guilty to conspiracy and wire fraud charges in early January.

Whittle and Holder were among five people indicted by federal authorities in January for trying to game the PCAOB inspections process.

The others were:

  • Jeffrey Wada, a former PCAOB employee who is accused of leaking insider information to Holder in the hopes of landing a job at KPMG;
  • David Middendorf, national managing partner for audit quality and professional practice at KPMG; and
  • David Britt, co-leader of KPMG’s Banking and Capital Markets Group.

At the time, KPMG had a high rate of audit deficiencies, and the firm’s executives allegedly wanted the information to help the firm improve its inspection results. The cheating scandal went down from about May 2015 until February 2017 when KPMG finally figured out what was going on.

While she was inspecting KPMG as an employee of the PCAOB, Holder used her position to share confidential information about certain pending inspections with Sweet. She did this while simultaneously seeking employment with the accounting firm.

She also shared stolen PCAOB inspections information with Sweet after she landed at KPMG.

Holder received confidential PCAOB information on audit selections for KPMG from Wada in both 2016 and 2017. In both instances, she shared this information with Sweet, who passed it along to Middendorf, Whittle, and Britt so extra attention would be placed on these audits before they were inspected by the PCAOB.

The trial for Wada, Middendorf, and Britt is scheduled to begin on Feb. 11, 2019.

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