Former Public Company Accounting Oversight Board Inspections Leader Jeffrey Wada was sentenced to nine months in prison Friday for his role central to the long-running KPMG inspections scandal.
Wada was convicted of one count of conspiracy to commit wire fraud and two counts of wire fraud in March 2019 for providing KPMG employees with confidential information on certain of the PCAOB’s 2016 inspection selections in an effort to cheat the system. In addition to his jail time, he received a three-year sentence of supervised release.
“Jeffrey Wada violated not just the terms of his employment with the PCAOB but also the law when he provided confidential information about upcoming audit reviews to co-conspirators at KPMG,” said U.S. Attorney Geoffrey Berman in a statement. “Wada hoped to secure a job at KPMG. What he got was a nine-month prison sentence.”
Wada is the third figure in the KPMG scandal to receive jail time for his actions. In September, David Middendorf, former national managing partner for audit quality and professional practice at KPMG and the individual found by Berman to be “at the top of a chain of corruption,” was sentenced to one year and one day in federal prison and three years of supervised release. Cynthia Holder, another ex-KPMG and PCAOB employee whom Wada provided the confidential information to, was sentenced to eight months in federal prison and two years of supervised release in August.
Former KPMG partner David Britt pleaded guilty to one count of conspiracy to commit wire fraud earlier this month, and fellow ex-KPMG employees Thomas Whittle and Brian Sweet both pleaded guilty to wire fraud and corruption charges in 2018.
Wada joined the scheme in the fall of 2015 when he first provided confidential information to Holder, and he repeated the crime in January 2017 after being passed over for a promotion at the PCAOB. Referring to the confidential information as the “grocery list” in a voicemail, he again went to Holder in 2017, but this time provided his resume and asked for assistance in gaining employment at KPMG.
Prior to the scheme, KPMG fared poorly in PCAOB inspections and in 2014 received approximately twice as many comments as its competitor firms. The cheating scandal is documented as having taken place from 2015 to 2017.
In June, the SEC settled charges related to the scandal with KPMG for $50 million, in addition to revealing allegations of cheating on internal exams that were also covered in the settlement.