September 23, 2021

Last Indicted Ex-KPMG Partner to Be Sentenced In PCAOB Scandal Won’t Be Going to Prison

Almost three years after being indicted for his involvement in one of the biggest ethics debacles in public accounting history, former KPMG partner Thomas Whittle was sentenced today to two years of supervised release. And that’s all, folks. The six accountants who were charged with fraud and conspiracy by the feds on Jan. 22, 2018, have now received their sentences.

To recap, only three of the six got jail time for misusing confidential auditing information from the PCAOB. Those three are:

Cynthia Holder

Holder, a former PCAOB inspections leader who eventually got a job as an executive director at KPMG, was sentenced to eight months in federal prison on Aug. 9, 2019.

Holder had pleaded guilty to one count of conspiracy to defraud the United States, one count of conspiracy to commit wire fraud, and two counts of wire fraud on Oct. 16, 2018. Holder reported to jail on Oct. 15, 2019, and served her sentence at a minimum security federal prison camp for women in Bryan, TX. She was released from custody on June 13.

David Middendorf

David Middendorf

Middendorf, former national managing partner for audit quality and professional practice at KPMG, was sentenced on Sept. 11, 2019, to one year and one day in federal prison, exactly six months after he was convicted by a jury on three counts of wire fraud and one count of conspiracy to commit wire fraud.

Middendorf is currently appealing his conviction.

Jeffrey Wada

Wada is the only non-KPMGer who was indicted. He was given a nine-month jail sentence in October 2019 after he was found guilty by a jury in March 2019 of one count of conspiracy to commit wire fraud and two counts of wire fraud.

Wada was a PCAOB inspections leader who gave Holder, a former PCAOB colleague, the secret information on which KPMG clients would be inspected by the audit regulator in 2016 and 2017, in the hopes of landing a job at the firm.

Wada also is appealing his conviction.

The remaining three ex-KPMG executives who won’t be spending time behind bars are:

David Britt

David Britt

Britt was sentenced in mid-October to six months of home confinement and ordered to be deported to his native Australia to serve his punishment.

Britt, who was a co-leader of KPMG’s Banking and Capital Markets Group, pleaded guilty to one count of conspiracy to commit wire fraud on Oct. 3, 2019.

Brian Sweet

Sweet, who was a partner in KPMG’s Department of Professional Practice, was sentenced on Nov. 20 to time served, three years of probation, and “significant” restitution in an amount yet to be determined.

Sweet, who also was an associate director at the PCAOB from March 2014 to April 2015, pleaded guilty in 2018 to conspiracy and wire fraud charges as part of a plea deal with the government. He was a key witness for prosecutors during the jury trials of Middendorf and Wada.

Sweet and Holder joined KPMG to help them improve their dismal PCAOB inspection results in 2015. Sweet took confidential inspections materials on his way out the door from the PCAOB and gave them to audit leaders at KPMG.

Thomas Whittle

Whittle, who was the national partner-in-charge of inspections at KPMG, was sentenced on Wednesday to two years of supervised release. Like Sweet, Whittle testified against Middendorf and Wada at their trials in March 2019.

He pleaded guilty to wire fraud and conspiracy charges on Oct. 29, 2018.

And because of this scandal, as well as some unrelated cheatin’ going on among audit professionals taking their internal training courses, KPMG was fined $50 million by the SEC in June 2019.

Ex-KPMG Inspection Leader Avoids Prison in Cheating Plot [Bloomberg Tax]

Latest Accounting Jobs--Apply Now:

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

1 Comment

Comments are closed.

Related articles

KPMG Poaches Someone From PwC and Issues a Press Release, Part XVI

It looks like the hot spots for Big 4-on-Big 4 poaching lately are the U.K. and Australia, where KPMG Down Under recently made champagne wishes and caviar dreams come true for one PwC managing director. Australian Financial Review reported: Sally Torgoman, 38, has joined KPMG as a partner in the firm’s infrastructure business. Ms Torgoman was […]

Number of the Day: 53

The average age of a non-Big 4 public accounting firm partner hasn’t really changed at all in the last three years. In late December 2018, CPA Journal analyzed the results of the 2018 NYSSCPA–Rosenberg Practice Management Survey and mentioned this in regards to partners’ ages: Partners have gotten slightly younger, both in terms of average […]