Hello! It’s Thursday.

✍️Accountants Sanctioned for Cheating

The Public Company Accounting Oversight Board (PCAOB) announced two settled disciplinary orders sanctioning KPMG Accountants N.V. (“KPMG Netherlands”), and its former Head of Assurance, Marc Hogeboom, for violations of PCAOB rules and quality control standards relating to the firm’s internal training program and monitoring of its system of quality control.

The $25m sanction is the largest fine ever issued by PCAOB. Mr. Hogeboom was permanently banned and fined $150,000.00.

Why?🤷🏻‍♀️

Hundreds of professionals at KPMG Netherlands engaged in improper answer sharing. Either by providing access to test questions or answers, or by receiving such access without reporting it – in connection with tests for mandatory firm training courses. These courses related to a variety of topics including U.S. auditing standards, professional ethics, and independence. The improper action reached as far as partners and senior firm leaders, including Mr. Hogeboom.

During the PCAOB’s investigation, the firm submitted and failed to correct multiple inaccurate representations to the PCAOB. The firm claimed that it had no knowledge of answer sharing by its personnel until it received the July 2022 whistleblower report. These submissions, reviewed by the firm’s Management Board and Supervisory Board, were false because members of those two Boards had themselves already engaged in answer sharing misconduct before July 2022.

The misconduct revealed an inappropriate tone at the top of KPMG Netherlands and a failure by firm leadership to effectively promote an ethical culture among firm personnel with respect to improper answer sharing and monitoring of the firm’s system of quality control.

❗Director of the PCAOB’s Division of Enforcement and Investigations said, “Today’s orders should send a signal to firms and their leadership that they have a responsibility to set an appropriate tone at the top, particularly with regard to issues of integrity and personnel management.”

🏛️Judicial Corruption in Ecuador Uncovered

Officials raided homes and arrested 14 judges, lawyers and security officials across the country of Ecuador over their suspected connection with organized crime.

The arrests were part of a special investigation dubbed “Caso Plaga,” (plague case), where the Ecuador attorney general’s office says suspects accepted bribes in exchange for special favors for inmates or the release of sentenced prisoners.

Investigators say the suspects are part of a large criminal network once headed by Leandro Norero, a top financial ally of three gangs, Los Lobos, Los Tiguerones and Los Chone Killers. Norero was murdered in prison in 2022. When the attorney general’s office gained access to Norero’s phones☎️, it decrypted his chat logs and found ongoing conversations with numerous judiciary, legislative and security forces who helped the gang leader with special favours.

Renato Rivera, Director of the Ecuadorian Observatory of Organized Crime (OECO), said, “It’s long been an open secret that organized crime has heavily infiltrated Ecuador’s justice system.” While the recent investigations play an important role in signaling the involvement of the highest levels of the judiciary in Norero’s corruption network, it hasn’t yet revealed the corrupt courts or prosecutors working cases outside of this network.

Manipulated trials are also common, Rivera stated. One study by OECO shows that 85% of court cases in Ecuador between 2015 and 2020 that dealt with organized crime (including offenses like extortion, hired hitmen and financing for drug trafficking) received abbreviated proceedings despite the complexity or gravity of the crime. Of those cases that went through regular trials, 41% received the minimum sentencing of 20-24 months, which is usually less than the time it takes to investigate these crimes, Rivera further stated.

🪙Onecoin Legal Officer Sentenced to 4 Years for Crypto Scheme

While co-founder of Onecoin Karl Sebastian Greenwood, was sentenced to 20 years in prison and ordered to forfeit $300m, OneCoin’s head of legal and compliance was recently sentenced to 4 years in prison for her role in a $4b fraudulent cryptocurrency scheme. Ms. Irina Dilkinska, was also ordered to forfeit more than $111m.

Dilkinska ran the day-to-day operations of OneCoin, a Bulgaria-based company that marketed the OneCoin cryptocurrency which in reality was a pyramid scheme.

Dilkinska, a Bulgarian attorney who studied law in both Russia and the United Kingdom, laundered money for OneCoin, arranging the transfer of $110 million in ill-gotten proceeds to a Cayman Islands entity.

Another co-founder of the scheme, Ruja Ignatova, a German citizen also known as the "Cryptoqueen," remains at large and was added to the FBI's top 10 most wanted list in 2022.