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Danny McCance 12 Feb 2019 11:37am

Ex-KPMG US managing partner faces trial

Former KPMG US national managing partner David Middendorf faces charges of conspiracy and wire fraud

The trial, which began yesterday in New York, will investigate any involvement Middendorf may have had in a scheme to improve KPMG’s performance in Public Company Accounting Oversights Board (PCAOB) inspections by stealing confidential information.

 Middendorf and co-defendant Jeffrey Wada, a former PCAOB inspections leader, face charges of conspiracy and wire fraud, with both pleading not guilty, according to the Wall Street Journal (WSJ).

The trial, which is expected to last four weeks, will include testimony from former and current PCAOB and Securities and Exchange Commission (SEC) officials.

According to the WSJ, prosecutors indicated that SEC chief accountant Wes Bricker and former PCAOB director of inspections Helen Munter might also be called as witnesses.

In October last year, co-defendant Cynthia Holder, former KPMG partner and PCAOB inspector, pleaded guilty to one count of conspiracy to defraud the United States and one count of conspiracy to commit wire fraud, along with two counts of wire fraud.

Two weeks later, Thomas Whittle, KPMG US’s former national partner in charge of inspections, pleaded guilty to five conspiracy and wire fraud charges relating to the use of leaked regulatory information.

A third ex-KPMG partner, Brian Sweet, who had also moved from the PCAOB to KMPG, had previously settled with the SEC and cooperated with the watchdog and the US Department of Justice on the investigation.

Meanwhile, the final co-defendant, David Britt, will reportedly go on trial separately in October.

KPMG US declined to comment.

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