Concluding the trial that began in New York last month, the former KPMG US national managing partner for audit quality Middendorf and former PCAOB inspection leader Wada were convicted for their role in the scheme to improve the audit firm’s performance by stealing confidential information.
“As this trial revealed, Middendorf and Wada were two links in a chain of corruption, where confidential PCAOB inspection information was taken at the behest of high-level executives at KPMG so they could cheat on inspections,” said US attorney Geoffrey Berman.
“This confidential information was critical to the PCAOB and its core mission of ensuring audit quality.
“As a unanimous jury found, the actions of Middendorf and Wada defrauded the PCAOB,” Berman added.
Middendorf and Wada were both convicted of one count of conspiracy to commit wire fraud, while Middendorf was charged with three counts of wire fraud and Wada of two counts.
Both were acquitted of a count to defraud the United States.
Under US law, conspiracy to commit wire fraud and wire fraud charges each carry a maximum 20-year prison term – both Middendorf and Wada await sentencing.
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.
Thomas Whittle, KPMG US’s former national partner in charge of inspections later pleaded guilty to five conspiracy and wire fraud charges relating to the use of leaked regulatory information.
Another co-defendant, David Britt, will reportedly go on trial separately in October.