Ex-KPMG partners David Britt and Thomas Whittle were told by the SEC on Wednesday that their accounting privileges were being taken away for a long time because of their involvement in a multiyear scheme with three other KPMGers to steal regulatory information from the PCAOB to cheat on audit inspections.
The administrative proceeding orders released by the SEC for Britt and Whittle did not say how long they will be barred.
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. He was sentenced last October to six months of home confinement which was completed on June 6.
Whittle, who was the national partner-in-charge of inspections at KPMG, pleaded guilty to wire fraud and conspiracy charges on Oct. 29, 2018. He was sentenced last December to two years of supervised release.
Two of the other three former KPMG executives who were indicted and sentenced for their involvement in the scandal have also received indefinite bans from the SEC.
Cynthia 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, 2020. Holder was barred by the SEC in November 2019.
David 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. He was barred by the SEC in January 2020.
The only one who hasn’t yet been barred by the SEC (but will eventually) is former KPMG partner Brian Sweet, who 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.
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.
The only non-KPMGer indicted and sentenced in the scandal, Jeffrey Wada, 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. He was barred by the SEC in January 2020.
