IHI's Outside Accountant Pleads Guilty, Will Testify Against Ex-CEO

In a case the Securities and Exchange Commission called one of the biggest pyramid schemes in history, federal prosecutors secured a guilty plea from another participant, who has agreed to testify against Stan Van Etten, former chief executive officer of International Heritage Inc., the News-Observer in North Carolina reported.

David Walter Brown, 50, of Raleigh, IHI's outside accountant, pleaded guilty in federal court in Raleigh to a conspiracy charge, agreeing also to testify against Van Etten. Brown agreed to surrender his certified public accountant licenses.

As the managing partner of the firm Eilers, Jones, Brown and McLeod, Brown supervised the firm's largest account-IHI, a luxury good company with an Amway-like business model, the News Observer reported. Court records indicate that Brown certified audits of IHI's financial statements that were then sent to the SEC, which was reviewing the IHI's application to become a publicly traded company in the late 1990s. That was later abandoned in favor of the bond sale, the News Observer reported.

Brown's lawyer, David Long of Raleigh, told the News Observer that they opted to cooperate despite believing they had a good defense. "It's sort of like getting a hurricane warning-you either stay and ride it out or evacuate," Long said. "We decided to evacuate."

Brown specifically pleaded guilty to conspiring to lie to SEC officials about IHI's financial health in the course of the federal agency's litigation against the company, according to court records, the News Observer reported.

You may like these other stories...

Many accountants struggle with payroll, either because they have too much of it or they don't want to do any of it. Either way, they are at odds with the needs of their business clients. Most clients are looking for a...
Hertz and Icahn make peaceThere won’t be any nasty, protracted proxy battle between Hertz Global Holdings and activist investor Carl Icahn. The rental car chain agreed last Thursday to give Icahn – who has...
For bitcoin users, the taxman cometh. And you best know how to calculate taxes owed on what the IRS calls convertible virtual currency.In March 2014, the IRS issued Notice 2014-21, which declares virtual currency will be...

Already a member? log in here.

Upcoming CPE Webinars

Sep 18
In this course, Amber Setter will shine the light on different types of leadership behavior- an integral part of everyone's career.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.