Feds probe KPMG insider trading, tax startup founder charged with fraud

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! David Leary: [00:00:04] Imagine me taking the car to the mechanic and the mechanic saying, can you provide me the documentation that says what kind of battery to put in this car? Like, imagine if I had to do all this work with a mechanic or a plumber or anybody, like, why do I have to do work to work with an accounting firm? Like accounting firms have to understand. That's the difference. That's what the threat is. It's not AI. The threat is the experience for the client. And they have to understand that. Coming to you weekly from the OnPay Recording Studio. Blake Oliver: [00:00:35] Hey, everyone, and welcome back to the Accounting Podcast, your weekly roundup of news in the profession. I'm Blake Oliver. David Leary: [00:00:41] I'm David Leary. And not just welcome everybody. Welcome you back to the United States. You were on a little guy floating around Europe. There I saw. Blake Oliver: [00:00:50] What's that word. David Leary: [00:00:51] Flatten. What's the word? Yeah. Fix that. Blake Oliver: [00:00:55] Gallivanting, gallivanting. David Leary: [00:00:58] Work. Yes, yes. Blake Oliver: [00:00:59] I was in London. In Paris for 12 days, and for the first time in my life as an adult, as as like a professional. I did not open my laptop for 12 days. That's great. And I gotta say, I highly recommend it if you can do it. Just do it. Uh, it will reset you completely. David Leary: [00:01:21] So any accounting stories were there? Did you is anything interesting? You're like, oh, I saw this on vacation. It ties back to accounting. Blake Oliver: [00:01:27] No, I didn't even think about it. It was great. I'm sorry. No stories. David Leary: [00:01:31] Good, good, good. Blake Oliver: [00:01:32] No, no. No discussion of how the French pay too much in tax or whatever it is, I don't know, but. Yeah. Uh, by the way, they have amazing public pools. The best. I went to the best pool, like for lap swim that I've ever been to in my whole life. Uh, it is. I can't even pronounce it. Um, Eastport pond. Pontoise, Pontoise. Uh, in Paris. Uh, just. You got to go. If you're a swimmer, you got to check it out. €5 tax and. David Leary: [00:02:01] Taxpayer funded, right? Blake Oliver: [00:02:02] That's right. Exactly. So that was amazing. But David, we have to get to the news. There's a lot to discuss this week. We don't have a ton of time. Uh, we've got this federal investigation now that the Wall Street Journal is reporting into the poly market better. That was apparently a maybe a KPMG employee using audit info to make bets on poly market and winning a lot of them. And this compliant founder, this, uh, founder of a tech startup called, uh, compliant, actually a tax services business has been charged with wire fraud. Two big stories about fraud or insider trading. You've got some stories about KPMG, about revolute, uh, how AI is making fraud 4.5 times more profitable for scammers. And we've got that whole zero influencer mess in the UK. Not a great week for zero. But first, let's thank our sponsors, David, our sponsors. David Leary: [00:03:02] This week we have Cloud Accountant staffing on pay Thomson Reuters and Savant Labs. Are you tired of the endless search for qualified accounting talent? You're not alone. Growing accounting firms are struggling to find available and affordable team members when they need them most. Cloud counting staffing has a solution with their revolutionary candidate portal. Unlike traditional staffing agencies that waste your time with sales calls, paperwork deposits, the Cloud Accounting Staffing candidate portal gives you instant access to highly vetted, qualified accounting professionals. No waiting, no hassle, just top talent right now. What makes this different? Speed and simplicity. While other firms make you wait weeks or months with Cloud Accountant staffing, you could interview someone as soon as tomorrow. Their boutique support ensures you're getting the quality talent that's both available and affordable. Exactly what a growing firm needs. The candidate portal puts you in control. You can browse live candidates, make your selections on your timeline, and build your offshore team without the traditional headaches. To find, review and book interviews with potential team members, all in less than ten minutes, head over to The Accounting Podcast dot promo dot The Accounting Podcast dot promo slash The Accounting Podcast dot promo forward slash CAS. Cluster networks. Obviously. Blake Oliver: [00:04:17] Cluster of poly market accounts one big on companies audited by KPMG. That's the headline in the Wall Street Journal. A mystery trader made about $22,000 by winning 41 out of 42 Polymarket bets tied to companies audited by KPMG. David Leary: [00:04:37] And I brought this up months ago because we saw a post about this where people noticed there's a connection, and I think we brought up, but we didn't have any details. Blake Oliver: [00:04:46] It was originally exposed on I think it was Reddit. And Polymarket is a blockchain based. Uh uh uh uh uh uh, what do they call it? Uh. Betting site. It's a. David Leary: [00:04:58] Predictor. Blake Oliver: [00:04:59] Prediction. Market prediction. Prediction market where you can make bets on real world events. And you can bet on the earnings of companies. And somebody noticed because it's on the blockchain, you can, you can see, uh, who is betting on what not who they are, but their username or there's like a unique identifier and they saw that somebody's making all these bets and the bets all happen to be about the earnings of companies that are audited by KPMG. And this particular account won 41 out of 42 bets. That's a 98% hit rate. And now there is a federal insider trading investigation. Blockchain forensics firm Bubble Maps analyzed dozens of yes or no contracts, predicting whether companies would beat quarterly earnings estimates. The activity covered 18 KPMG audited companies that includes Wells Fargo, Home Depot, DoorDash. It started in November of 2025 and continued for several months across the KPMG bets. All but one succeeded, and this individual got $22,000 in earnings. The. The trader also wagered smaller amounts on companies with other auditors and got an 82% win rate. Bubble maps was able to link 19 different Polymarket accounts through a complex flow of digital funds, which suggested. Controlled by one person or a team, and attempts to obscure this by using multiple accounts. Some of the accounts also traded on sports and politics, but a vast majority of the profits came from KPMG audited companies. David Leary: [00:06:46] And the success rate is insane. Blake Oliver: [00:06:50] Oh yeah. I mean, that's extremely high, right? 98%. How could you know that these companies are going to beat their earnings or not? Unless you had some kind of information ahead of time. The CEO of Bubble Maps, Nicholas Wyman, called the pattern highly symptomatic of an unfair information advantage. It's not proof of insider trading, and The Wall Street Journal couldn't determine whether the accounts were actually connected to a KPMG employee. But now there is an investigation. The Journal previously reported that feds were preparing possible charges against a KPMG employee suspected on a suspected of betting on on these earnings announcements. Charges could come in the fall of this year, but authorities have not yet made a final decision. And these insider trading cases can be criminal or they can be civil. Kpmg said it has zero tolerance for trading on nonpublic client information. Uh, Polymarket said it refers matters to law enforcement and supports investigations, but would not discuss this particular case. David Leary: [00:07:59] So law enforcement has named and said we were probably going to bring up charges against a KPMG employee, because it's that black and white. Blake Oliver: [00:08:08] That is what the Journal is saying. And I think that was like off the record type of stuff, right? Like sources are saying there's possible charges coming. So I mean, it makes sense, right? Like who else could it be? It's either somebody they're like, or it's somebody connected to somebody with access to this information. It's hard to imagine how it could be anything else. David Leary: [00:08:32] Yeah. Because it was too coincidental. Right. And the only, what, 80% on other companies that they didn't audit. Blake Oliver: [00:08:38] Yeah. No. I mean, you know, the KPMG related win rate was 98%, but they also won 82% of bets involving other auditors. David Leary: [00:08:46] So it's probably friends with other auditors at other big four firms probably. Blake Oliver: [00:08:51] Right. That that's possible. So, you know, I mean, what does this say? It's it's like these prediction markets are making it harder in some ways to prevent insider trading in the sense that anyone can create an account. They're anonymous. The money moves through the blockchain. But at the same time, all of it's public. So if you can analyze all this stuff like this company did, what was it called, a bubble maps. Then you can get caught. So new ways to do insider trading. But also you. David Leary: [00:09:23] Could use you could use the prediction market. Assuming there's insiders doing things and to buy or sell the actual real stocks based on the data you're seeing in the markets, which I'm sure somebody probably did. I mean, that's what bubble bubble, what's your what's it called? Blake Oliver: [00:09:40] Bubble bubble maps. Yeah. That's what I would be doing actually. That's what I would be doing is because that's not as far as I know, that's not illegal. David Leary: [00:09:48] No, you're. Blake Oliver: [00:09:48] Just taking. David Leary: [00:09:49] Data you found. Blake Oliver: [00:09:50] Right? Monitor the prediction markets and then buy stocks based on