Ex-KPMG partner, oversight board employee found guilty in leak case

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By Reuters
Ex-KPMG partner, oversight board employee found guilty in leak case

<p>By Brendan Pierson</p> <p><span class="caps">NEW</span> <span class="caps">YORK</span> (Reuters) – A former <span class="caps">KPMG</span> partner and a former employee of an accounting industry oversight body were found guilty on Monday of taking part in a scheme to give confidential information to the Big Four audit firm to help it pass inspections.</p> <p>David Middendorf, who was head of a department at <span class="caps">KPMG</span>, and Jeffrey Wada, who worked for the Public Company Accounting Oversight Board (<span class="caps">PCAOB</span>), were both convicted of wire fraud and conspiracy to commit wire fraud by a jury in federal court in Manhattan.</p> <p>They were both acquitted of one of the counts against them, conspiracy to defraud the U.S. government.</p> <p>A lawyer for Wada, Justin Weddle, declined to comment on the verdict. Nelson Boxer, a lawyer for Middendorf, could not immediately be reached.</p> <p>The case emerged from a 2017 shakeup in which <span class="caps">KPMG</span> said it fired six people over leaks to the <span class="caps">PCAOB</span>.</p> <p>The <span class="caps">PCAOB</span>, a private nonprofit, is responsible for carrying out regular inspections of audits performed by firms like <span class="caps">KPMG</span>. The results of the inspections, including any areas of concern, are passed on to the U.S. Securities and Exchange Commission.</p> <p>Prosecutors claimed Wada leaked confidential information about upcoming <span class="caps">PCAOB</span> inspections to people at <span class="caps">KPMG</span>, including Middendorf, between 2015 and 2017. The charges were unveiled in January 2018.</p> <p>Prosecutors also charged Cynthia Holder and Brian Sweet, two former <span class="caps">PCAOB</span> staffers who joined <span class="caps">KPMG</span> during that period, with taking part in the scheme by bringing confidential information with them to their new jobs. Wada was angling to make a similar move, according to prosecutors.</p> <p>Former <span class="caps">KPMG</span> executive Thomas Whittle was also charged. Holder, Sweet and Whittle all pleaded guilty before trial.</p> <p>A lawyer for Wada argued during the trial that prosecutors had failed to prove Wada was the source of the leaks, while a lawyer for Middendorf said his client was not involved in any wrongdoing at the company.</p> <p/> <p> (Reporting by Brendan Pierson in New York; editing by Jonathan Oatis)</p>