Tag: Accountants Behaving Badly

Accountant Steals from Toys ‘R’ Us, Buys Hookers Bentleys

Thumbnail image for Thumbnail image for prostie.jpgBefore we get started, we just want to kindly request that you keep any thoughts or comments you have about Geoffrey masks to yourselves, okay? Thanks.
Anyhoo, an accountant in the UK has pleaded guilty to 18 counts of theft of £3.7 million from Toys ‘R’ Us that he spent on hookers and other necessities including said hookers’ mortgages and their transportation needs.

[Paul] Hopes encountered most of the call girls while touring the country on business, drinking in the bars of luxury hotels. He spent about £500,000 of the money on “food, drink and entertainment”, according to one source. He also gave thousands of pounds to call girls and bought one a Bentley.
“He developed an infatuation with at least a couple of the girls,” said one investigator. “Sometimes thousands of pounds in cash were passed over in envelopes and they could do what they wanted with it.”
He paid off the mortgage of at least one escort — although he failed to do the same for the loan on his own home. According to the economic crime unit of Thames Valley police, there is no suggestion that Hopes’s wife or his two children benefited from the fraud in any way.

Yes, the man was married with children. And yes, the man was willing to make sure that a lady of the evening had a roof over her head before his own family. So, mild-mannered, grey-haired, double-chinned number crunchers that are leading double lives. Consider this your warning. Everyone will be looking at you differently.
Quiet Paul from accounts in £3m secret life of fast cars and call girls [Times Online]

KPMG Partner Named in $240 Million Tax Fraud

This is getting awkward, KPMG. Tax shelters continue to be a problem for some of your partners.


Fairfax Times:

Three local businessmen have been indicted on a charge of conspiracy to defraud the Internal Revenue Service of more than $240 million.
According to the indictment filed in federal court on Oct. 22, two of the men allegedly attempted to defraud the IRS by making several “false and misleading statements” concerning a corporate tax shelter that was implemented by them.
Daryl J. Haynor, a partner in KPMG’s federal tax practice for the mid-Atlantic Area, based in Tysons Corner; and Jon Flask, a Vienna-based attorney, are both named in the suit.
“Mr. Haynor has been placed on administrative leave pending a review of the situation,” said George Ledwith, a spokesman for KPMG, on Monday.

Obviously our little warning concerning tax shelters was way too late.

According to the federal indictment, Flask, Haynor and Parker implemented and marketed a tax shelter named “Sale Leaseback of Tenant Improvements Strategy (SLOTS),” from 1998 through 2006.
The shelter enabled various U.S. corporations to claim tax deductions totaling more than $240 million on corporate income tax returns.
The indictment alleges that Flask, along with Haynor and Parker, misled and deceived the IRS by misrepresenting facts concerning the SLOTS tax shelter during IRS audits of companies claiming tax losses generated by the shelter in the years 2002 through 2004.

Mr. Haynor has been with KPMG for over 25 years. He and Mr. Flask face up to eight years in prison and $500,000 in fines. If you know any details, shoot us an email or discuss in the comments.

Cynical Executives are Expecting More Bad Behavior Out of You

fraud.jpgLet’s talk about fraud, friends. We’re all sure that you’re number crunching sleuths and that no accounting hocus-pocus would ever get past you but apparently executives are still expecting more of it. This probably means one of two things: A) You’re not as smart as you think you are, or 2) You’re in on it.
Now, we should clarify that in Web CPA’s piece, these executives polled expect a rise in one of three areas: “financial reporting, asset misappropriation, or as another illegal or unethical act”. If you’re involved in the first kind, that’s boring. If you’re involved in the second kind, we suggest you retain counsel.
More, after the jump.


We’d like to focus on the “illegal and unethical act” part. Now, assuming you’ve passed the CPA, and also passed the grueling ethics exam that most states require, this shouldn’t be an issue for you.
For the rest of you, we’re assuming that your typical day is rife with unethical behavior. Some of you are probably unable to consume lunch and turn the entire work environment into a biohazard. So what we’re getting at here is that your clients and/or bosses don’t trust seem to trust you. We’re sure they’re right. We want to know why.
What kind of chicanery is going on that the bigwigs wouldn’t want to know about? Do you jimmy the vending machine on a regular basis for your lunch? Are you raiding the supply closet to build replicas of the [insert city here] skyline with staples? Let’s keep it to minor offenses though. Nothing that qualifies as misdemeanors and above will be allowed.

Possible Confirmation for Your Unfounded Rumors about Partner Expenses

magic money.jpgThere’s a large misconception that partners and directors can run anything through on their expense reports. Lapdances, red meat at Bobby Van’s, shoes at Bergdorf’s, you know, the usual rumored fare.
Alleged abuse notwithstanding, one KPMG director in London has managed to live up to the reputation of flagrantly assaulting the expense reimbursement policy:
More, after the jump

Andrew Wetherall, a director at the firm, fraudulently claimed expenses to pay for holidays, cars, computers and even his divorce from his first wife. The 49-year-old also used them over five and a half years to keep his second wife happy by funding her £15,000-a-month lifestyle. Southwark crown court heard today how he falsely claimed £545,620.89, making several claims for flights abroad and expenses relating to business trips he never went on. After a boss raised the alarm, Wetherall initially claimed it was a mistake. But he owned up to the fraud after an internal probe.

We’re all for bending the rules for some bagels here and there but seriously. What did this guy spend his salary on? Did he have a Stevie Nicks-type coke habit? Whatever happened, all’s forgiven because according to the piece, Wetherall was “suspended by KPMG and has repaid more than £337,000.” It’s only money, right?
Accountant paid for divorce and holidays with £545,000 fraud [London Evening Standard]

McGladrey & Pullen Sued for Helping Bad Guys

fraud.jpgMark this suit in the “Accountants are Crooked” column as opposed to the “Accountants are Stupid” column.
McGladrey & Pullen, its predecessor auditor, and the partner on the audit engagement, G. Victor Johnson, are being sued by the Sentinel Management Group Trustee for being a knowing participant in the fraud put on by Sentinel who collapsed in 2007.
More, after the jump


M&P is accused of “knowingly and substantially assisted and participated in the fraud by [Sentinel], and as a result, committed and are liable for fraud themselves.”
Many suits against accounting firms accuse negligence related to technical mistakes that were made so we’re impressed see a lawyer say “To hell with it, these guys are crooks, I’m taking them down like Arthur Andersen.”
On a more personal level, between this suit and the messy divorce with RSM McGladrey, we’re expecting to M&P to have the CPA firm equivalent of a nervous breakdown any day now. Feel free to speculate as to what that might actually be.
Collapsed Financial Company’s Trustee Claims Accountants Knew About Fraud [Chicago Bar-Tender]

Do You See What Happens?

accountant.jpgThe PCAOB was kind enough to issue a couple of examples this week of what happens when you don’t take your role as auditor seriously.
We wouldn’t dream of putting them both in one post so we’ll give you one in the morning to ponder and save the second for later right about the time you’re ready to flip out, so hang in there.
We’ve also done you the courtesy of reading (sort of) both of the orders so that you can remain fully chargeable (not counting the time you take to read this post of course):
Thomas Linden was a partner in the Chicago office of Deloitte and lead engagement partner on Navistar Financial Corporation (NFC). At the 11th hour, prior to filing the fiscal year 2003 10-K, the engagement team realized that assets, revenues, and net profits were overstated by $19.7 million.
Check out the rest, after the jump


Having a typical over-confident management team, NFC had already taken the liberty of announcing the fourth quarter earnings prior to filing the 10-K.
Because Tom Linden was a Big 4 Partner and thus impervious to any challenge he encounterd, he took the following action (all our emphasis):

• Initiated an increase of approximately 50 percent in Deloitte’s planned tolerance for misstatements in NFC’s reported financial results
• Authored, with the assistance of a member of the NFC engagement team, an NFC auditwork paper that inaccurately characterized the reasons for and circumstances surrounding the increase
• Failed to evaluate adequately the risk that NIC’s financial statements were materially misstated due to error or fraud
• Otherwise failed to act with the requisite due professional care and professional skepticism

Okay, so the last two are boring but the first two kinda, sorta give us this impression of what happened:
Dude finds out the numbers are bunk, client isn’t cool with telling their analysts (who NFC told that they had a kick ass quarter) that said numbers are bunk, so Dude up and decides to ABBACADABRA make the tolerance for misstatement 50% higher than it was for the entire audit (read: that’s a lot).
Then, after probably putting the proverbial (or possibly literal) gun to head of the “member of the NFC engagement team”, they wrote a workpaper that supposedly explained why the tolerance was all of sudden 50% higher but the rationale was something to the effect of “because we said so”.
So for all that tomfoolery (snap!), Linden gets fined $75,000 and can’t be associated with a registered accounting firm for two years and which point he can petition to be to be reinstated. Yow-za. To better times, Tom.
ORDER MAKING FINDINGS AND IMPOSING SANCTIONS In the Matter of Thomas J. Linden, CPA, Respondent. [PCAOB]

Ex-BDO Partner Won’t Be on His Boat after Plea Deal

Ex-BDO partners that were involved with the firm’s tax shelters are continuing to drop like flies. This time, Mark Bloom, a hedge fund manager and former BDO partner that worked in the Tax Solutions group, pleaded guilty to several charges.
Bloom agreed to forfeit assets as part of his plea agreement including a boat and two Steinway pianos which Bloom performed versions of his favorite songs on:
Check out the song selection, after the jump

What’s the Move When You Get Fired for Looking at Porn?

inappropriate.jpgOkay number-crunchers, we realize you don’t have the most exciting jobs in the world and sometimes you need a little distraction from Excel. Totally natch. Checking out ESPN, Perez Hilton, Going Concern, Facebook is even encouraged in some circles.
Some of you might even be so bold to see what the latest uploads on YouPorn, XTube, et al. are. Fine. We get that. It’s just your biology running wild right? We totally understand. What we can’t understand is those of you that are blatantly watching two girls, one guy, and a Clydesdale reenact the Kama Sutra in your cubicle.
Of course, when somebody catches you drooling on your keyboard, you have to act completely dumbfounded about how such a graphic display of human and equine love could have ended up on your screen. Somehow your superiors don’t buy your stammered out explanation and you’re out on your ass. Time to find to new job that’s not so uptight anyway, right?
So when you’re sitting in the interview with the potential new boss and he/she asks you why you left your last job, how do you explain your penchant for bestiality in a way that gets you hired? The Journal seems to think honesty is the best policy. Just admit what you did and swear that you’ll never, never, never do it again. We’re not convinced this would go over well but whatevs.
Anyone been fired for “inappropriate” Internet use? Did you cover it up in your next interview with “management and I had differences”? Or did you do your damnedest to find a workplace with a less stringent web use policy? Discuss.
Getting Fired for Inappropriate Web Use [WSJ]

Partners at Grant Thornton are Just Getting Lazy

Grant-thornton-logo.JPGGrant Thornton is really making our lives easy today: “Grant Thornton has agreed to pay nearly £6,000 in fines and costs after it failed to correctly sign off 43 audit reports.”
Measly fine, obv but 43 audit reports? And a incorrectly signed off report is one that, “had not been signed off by a responsible individual of the firm”.
So apparently the Brits have got their interns signing off on the audits. Gold star for you today, GT.
ICAEW fines Grant Thornton over audit sign-offs [Accountancy Age]

You Know That Guy Who Panhandles on Your Block? He May Be a CPA.

Anybody out there looking to help their fellow CPA, who’s down on his luck?
The Wall St. Journal is reporting that the former BDO Seidman LLP CEO, Denis Field may have to pay back a portion of $180 million that is being sought by prosecutors in the tax shelter case that involves Field and six others.
Natch, everybody has denied wrongdoing. The charges include conspiracy and tax evasion. Good luck with that.

Prosecutors Seek Ex-BDO Seidman CEO, 6 Others To Forfeit $180M [WSJ]