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The CPA Who Controls Epstein's Fortune · The Accounting Podcast

• Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! Blake Oliver: [00:00:04] This startup founder raised 13 million from VCs, told investors that the company was earning a quarter million a month in revenue, and then allegedly spent 2.2 million on her wedding, house and Super Bowl tickets. Her company's actual revenue $250 per month. And now the FBI and SEC are both investigating her for fraud. David Leary: [00:00:32] Coming to you weekly from the OnPay Recording Studio. Blake Oliver: [00:00:39] Hello, and welcome back to the Accounting Podcast, your weekly roundup of news in the profession. I'm Blake Oliver. David Leary: [00:00:46] And I'm David Leary. And Blake. I saw in the news yesterday they're releasing even more, uh, Jeffrey Epstein files and photos and things like that, and reminded me that you've been sitting on a news article for three weeks about. Jeffrey Epstein, CPA. Is this correct? You have that article. Finally. We can talk about it. Blake Oliver: [00:01:05] It's fascinating. It's a investigation by the Wall Street Journal into Epstein's CPA and lawyer. Epstein wasn't a one man show. An operation like that takes help. David Leary: [00:01:17] So this is one person that was a dual threat, a lawyer and a CPA. Blake Oliver: [00:01:21] No, no. The two different men. David Leary: [00:01:22] Two people. Okay, gotcha. Blake Oliver: [00:01:23] Two different men. Yes. Richard Khan and Darren Indyke. They worked for Epstein for years handling payments and banking and legal matters for him and the women in his orbit. And they deny that they knew about Epstein's crimes, but they have not faced any, you know, like, I don't think they're in any legal jeopardy at this point. Wall Street Journal dug into it. The articles called the CPA, and the lawyer who served Jeffrey Epstein and control his fortune and secrets. And I want to just read the beginning of this for you because it's just fascinating. But before that, how about we thank our sponsors? David Leary: [00:02:03] Yeah. Our sponsors today is Cloud Accountant, Staffing Relay and Onp. Want to hire remote team members but dread high pressure sales calls and commitments before you've even reviewed the candidates. The good news is you can now review potential candidates without any sales calls or commitments. Cloud Accountant Staffing has just launched their candidate portal, where you can browse resumes, intro videos, assessments and personality test results anytime of the day or night. No sales call, no pressure, no commitment. The cabinet portal is updated daily and all the candidates are available for an interview within 24 hours. You can browse candidates by both roles and experience. If you want a bookkeeper that knows QuickBooks and has experience with nonprofits, you can drill down to find those candidates. How different would your firm look in 2026, and honestly, how differently would your life feel if you could instantly add 40, 80, 120 hours of extra capacity every single week to explore the new cloud account and staffing candidate portal. Head over to The Accounting Podcast that is The Accounting Podcast. Blake Oliver: [00:03:08] Thank you. To cloud account Staffing. All right. I'm going to read the beginning of this article, this Wall Street Journal article for you, David. Okay. In 2016, a letter was drawn up for US immigration officials with a glowing endorsement. It described a very healthy marriage between two women, their bond so deep they often complete each other's sentences. Its author, a New York accountant named Richard Kahn, said he had personally witnessed the women's passion for each other during meetings. He had his signature notarized to make it official, but the marriage turned out to be a sham. Kahn prepared the letter on behalf of his longtime boss and patron, Jeffrey Epstein. The convicted sex offender was trying to secure US papers for an Eastern European woman he wanted to keep in the country. The plan required a spouse. Epstein had pressured an American woman he had abused into marrying the woman, and Khan's letter gave it legitimacy. Soon after, the American woman told attorney Darren Indyk that she wanted a divorce. Indyk, who had previously advised her on how to communicate with U.S. immigration officials, warned against it. He, too, worked for Epstein. Epstein wasn't a one man operation. He ran a well-oiled machine with members of his inner circle performing specific roles. Former girlfriend Ghislaine Maxwell recruited girls and young women whom Epstein would abuse, as did victims whom Epstein coerced into his scheme. His secretary, Lesley Groff, scheduled appointments, but it was Khan, the trusted accountant, and Indyk, the loyal lawyer, who kept the engine running for years with their financial and legal maneuvers. Indyk started working exclusively for Epstein around 1996. Khan became Epstein's in-house accountant in 2005 and in separate statements to the Wall Street Journal, they both said they didn't know their boss was engaged in sex trafficking and denied being complicit in or knowingly, knowingly facilitating any crimes, and said that they never witnessed Epstein sexually abuse a woman and that none of the women ever reported to them they were being sexually abused. David Leary: [00:05:11] Is there why would the why would the CPA have to write this letter? Was this just like a, like a a character letter type of a thing? It's like I'm trying to see the jump where like, has any other CPAs on the planet been asked to write letters like this before for an immigration proceeding. Blake Oliver: [00:05:29] To help, to help facilitate a marriage? Yeah. David Leary: [00:05:32] Like trying to understand like the the the jump here of of all the people to ask to do this letter. Blake Oliver: [00:05:37] Yeah. Well, um, I, I mean, I don't, I don't know. I've never done one of these myself, David. But like, you're asking the wrong guy, if any. David Leary: [00:05:45] If you're a listener and you've ever written a character reference for an immigration case. I would love to understand that because that's what this essentially kind of was, right? Blake Oliver: [00:05:54] Yeah. So, um, I mean, both of these guys, the CPA and the lawyer, they were working closely with Epstein when he was arrested in 2019 on federal sex trafficking charges. And what Epstein did is he made these two guys the co-executors of his estate. So now that he's dead, they have the power to control access to evidence and assets which are worth more than $100 million. David Leary: [00:06:20] So they're still running the show? Blake Oliver: [00:06:22] Yep. Um, while he was alive, they were officers of entities that obscured transactions for him. So Khan managed the expenses and indyke the lawyer. He would withdraw cash, small amounts of cash less than $10,000. Um, and they would also facilitate those marriages, like in the example at the beginning of the article, they sent payments to women. They provided cash and logged costs for things that Epstein was covering for these women, like doctor's visits and rent. They were they were they were moving the money around. And for about two years, they both worked from offices in a New York City building, where Epstein also housed women who later said they were abused. Um, they helped Epstein. When banks cut him off, they would withdraw cash for him. They'd find new firms where Epstein could open accounts. You know, of course, they say that these are legitimate expenses right through their lawyers. So and and so basically, they were his fixers, right? They they got the work done. They they were, you know, he was their high net worth client. They got the they they made these payments, they got they did his legal work, all that accounting work. And they made a lot of money. He paid them millions. So between 2011 and 2019, Epstein and Epstein owned entities paid more than $16 million to the lawyer Indyke and over $10 million to the CPA Kahn. And I mean, that's that's a lot of money. That's a lot of that's, you know, that's more money than you would expect to receive for those kinds of services. Um. David Leary: [00:08:10] And then they were doing payouts to women. Like, these are settlements or hush money or whatever you want to call that. Blake Oliver: [00:08:16] Well, that's not what the article says, but it says they were paying his their expenses. David Leary: [00:08:21] Okay. Blake Oliver: [00:08:21] Right. So Epstein would bring these women in and then, like, house them, pay their expenses, and they they. These are the women who claim that they were abused. David Leary: [00:08:32] So why? Okay. So going back to the Trump hush money payment, and the reason that was illegal was because that was campaign funds that were funneled and misused. But the lawyer served time for that, right? Blake Oliver: [00:08:44] I don't know, I don't remember. David Leary: [00:08:45] I thought, I thought, I thought he was arrested for that first. I don't remember the guy's name. He was everywhere. Blake Oliver: [00:08:50] Oh. Oh, yeah. Lawyers. Lawyers. Uh, sorry. Trump's lawyer. David Leary: [00:08:54] Trump's lawyer? Yeah. Blake Oliver: [00:08:55] Yeah, I can't remember that. Yeah. David Leary: [00:08:58] But he served time. But what did he serve time for? Aren't these guys doing the same thing? Yeah, he was convicted. But what was that guy's name? Let me Google it. Blake Oliver: [00:09:05] I don't. David Leary: [00:09:05] Know. Blake Oliver: [00:09:06] Um, so anyway, the, you know, Epstein put these guys in charge of his estate, and so they've been left to manage the lawsuits, and they're also the major beneficiaries of the trust. Um, they're the beneficiaries of a major trust that will collect his remaining assets. After all claims against the estate are resolved. It's called the 1953 trust. So they stand to personally benefit from whatever is left of his fortune, which could be tens of millions of dollars each. And they basically managed to stay under the radar until this investigation. You know, I hadn't heard about them at all. Um, but they have Not been questioned by law enforcement. They were not questioned by law enforcement during the New York investigation into sex trafficking. The federal investigation. David Leary: [00:09:57] Yeah. So Michael Cohen, the reason he, uh, he pled guilty to his charges, it was campaign finance violations. Blake Oliver: [00:10:04] Mhm. David Leary: [00:10:05] That's why these guys are probably not getting prosecuted because what they're doing is okay, as long as it's not campaign money. Blake Oliver: [00:10:13] Got it. So you know it's kind of amazing right. Like it's it's like these guys managed to be right there in the middle of it. And they've managed to avoid and they've managed to avoid like legal trouble. Um, here's the background. Right. So Khan I want to find like his background is interesting. David Leary: [00:10:38] And here's the advice. We don't hire don't hire somebody named Khan for your as a lawyer or a CPA, probably. Blake Oliver: [00:10:46] So in 2005, Epstein was in the market for a new accountant, and he used a recruiting firm to find one. He tried out three candidates and then chose Khan. He was a young CPA from New York, who had graduated from college in 1994 and earned his master's in tax in 1999. He worked as an employee of the New York Strategy Group in Epstein Company, and then in 2008, he and fellow accountant Harry Beller established a firm called HBR associates, Inc. and it had one client, and that client was Epstein, and it shared the address of Epstein's building. It was a one bedroom apartment converted into an office. And the lawyer indick he had a similar one, and their doors were across the hall from each other. And Khan had been in the job less than a year when Epstein was arrested in 2006 on charges that he was abusing girls in Florida. Those are the ones he managed to, like, get out of. Or he did some sort of like plea, right? And managed to escape the worst of it. Um, that was his Florida conviction. David Leary: [00:11:54] Now, were they only doing things with his finances? Because, remember, wasn't Epstein doing, like, tax consulting and helping people set up entities and move funds around? And where were they executing that for his clients or just his stuff? Blake Oliver: [00:12:07] I think they were just managing his money. But Epstein like, and this is what's confusing to me, is Epstein made a lot of money. Right. And this is what people, the conspiracy theorists keep saying is like Epstein was working like what he would do. It sounded a lot like like estate and trust planning for really high net worth individuals. And then he would send these massive bills for it. And that's how he got paid. Right. But it's like the amount of money he made doing trust in estate planning is way more than anyone would ever make from doing that kind of work. So what was the money for? For what was the money for? So, you know, they created entities. They they were they held positions at the different entities. Um, it's basically like the whole web of all of his financial operations were there. I'm trying to think if there's anything else that's like, really interesting in this article. Um, yeah. It's just it's just wild. Like, neither was questioned by federal authorities during the Epstein Maxwell investigation. None of them. Right. And, um. David Leary: [00:13:16] That is insane to me. Like, how do you not question like you'd argue that's your inner circle, your your CPA, your lawyer. That's. How do they not get interviewed? Blake Oliver: [00:13:25] I don't I don't question like this is the sort of thing that makes me think the conspiracy theorists are right. Right. Like that just just doesn't it doesn't compute. It's nuts. So anyway, if you want to read all about it, go check out this story Wall Street Journal. It was published uh, November 22nd. The CPA and lawyer who served Jeffrey Epstein and control his fortune and secrets. Um, you know, amazing. I'm sure we'll be hearing more and more about Epstein over the next few months. But anyway, David. Yeah, we got lots to talk about. Um. What's next? David Leary: [00:14:04] We could talk about how cannabis businesses are now real businesses, so. Blake Oliver: [00:14:09] Oh, and before you do that, I want to say thank you. Welcome to live stream viewers. It is Saturday. Uh, thanks for tuning in. And, uh, Valerie says, hi, guys. This is Valerie. Uh, first time I've been available to join live. Awesome. Welcome. Great to have you with us. David Leary: [00:14:25] So cannabis businesses are real businesses. So President Trump has signed executive order directing the Justice Department to fast track the reclassifying as marijuana as a schedule three drug. So currently it's a schedule one or schedule two. But because of that it has tax implications. So previously because of the IRS 280 rule, which essentially made all schedule one and schedule two drugs, if you if you're a company that handled those, you could not deduct routine business expenses like rent, payroll, the equipment you need for that. But as states have now allowed cannabis to be legal cannabis businesses, it's been a struggle because they're paying an effective tax rate, I think as high as 60 to 80% because they can't deduct business expenses. So now they're like a real business, right? You can they now that this is getting if it gets reclassified to a class three, they can have a normal profit and loss statement and deduct their business expenses like a real business. Now it doesn't solve all the other problems which you know, banks don't want to handle their bank account, credit cards, insurance, bankruptcy protections. None of that's been solved. But like, if you I know there's a lot of accountants that don't want to touch cannabis. Cannabis businesses. But now you kind of might be able to because it's like a real business. Now there's expenses. You're going to track them, you're going to categorize them. It kind of opens up the door for that type of stuff. Um, and this this is an old law that's, uh, section 280 was from 1982, and the say no to drug deals that they and it was set up to for illegal drug traffickers. But now we live in a world where there's state legal cannabis businesses, but now they can have real profit and losses and real, real, real deductions. Blake Oliver: [00:16:10] It's so crazy that it took this long to get to this point. It took President Trump to do it. Like, I never would have guessed that this would have been on the agenda for the second Trump administration. Um, well. David Leary: [00:16:22] Especially because I didn't see any, like massive donations from the cannabis industry to Trump. There's no in general like this, didn't you don't you don't. There was no, warning that this was coming because you didn't see him talk about it. That wasn't the ideas weren't floated out there, blurted out. It just kind of happened. Blake Oliver: [00:16:40] Uh, you know, it's funny, since I was just, uh, sharing a Wall Street Journal story, I got to share this, um, opinion piece by the editorial board. The headline is Trump Goes for the Stoner vote. David Leary: [00:16:53] And I thought about this when I first saw it. I was like, hey, this is yeah, he's trying to get more votes. Blake Oliver: [00:16:57] Yeah, yeah. So the you know, I love the reporting by the Wall Street Journal, the editorial board though, like they they just love to put out opinion pieces like this that make them all seem like they're 80 years old or something. And, uh, you know, it's it's an argument against rescheduling, uh, pot, uh, to be a, uh, you know, what did you say it was a schedule. David Leary: [00:17:17] Schedule three. Blake Oliver: [00:17:18] Schedule three instead of one. And, um, you know, it's just like they go through all these, like, classic arguments, right? It's it's way stronger than it used to be in the 60s and the 70s. And, you know, it's it's bad for your brain and all this stuff. And then you go into the comments and like, everybody's like, well, you know, alcohol is really awful for you and kills a lot of people every year, and it's terrible for your brain. And you could basically make the same argument about alcohol, right? And yet and yet that's legal. I've always just found that to be like, it's just so strange. Um, but yeah, good job, Wall Street Journal. So I think this is why I enjoy the Wall Street Journal, because, like, I love the reporting and I just love to laugh at the editorial board. All right. Um, since you brought up taxes, let's talk about, um, and and now, um, taxes will be a lot better for cannabis companies. Let's talk about one industry that has been suffering as a result of new legislation. That's the gambling industry. Under the new tax law, gambling losses are only deductible up to 90% of winnings. So if you win and lose $10,000 each. When $10,000 lose $10,000, you'll still owe taxes on $1,000 of income because you can only deduct 90% of your losses. Why they did this I don't know whose agenda was this right to screw this up, and it still hasn't been fixed. If you think it's a problem, right. Blake Oliver: [00:18:47] It's still not fixed. And so there's some follow on knock on effects here. And um, the issue is uh, the or the question is what happens when you make money or lose money or have gains or losses on prediction markets? Let's say you're betting on a prediction market. These are those websites where you can bet on real world future events, right. It could be the Super Bowl. It could be weather forecasts. It could be who's going to win an election. Polymarket and call she are two of the big ones. But the tax treatment of winnings and losses on these prediction markets is unclear because they say, no, we're not gambling. These are financial contracts which are regulated by the CFTC, not gambling, which is regulated by the states. Right. So, um, but like this is this is not clear because the IRS has not issued any guidance on how to treat prediction market transactions. And James Creech was interviewed, uh, quoted in Accounting Today. He's with Baker Tilly talking about how the IRS hasn't done this. The IRS is also not bound by EFF by CFTC classification. So it could independently determine that these are gambling activities. So right now these prediction market apps are issuing 1099 BES, which is what investment accounts issue, not the W-2 GS the gambling forms that casinos issue. So you know, it's just one of those. Tax questions that I guess, you know, we'll find out the answer to. But an interesting wrinkle. David Leary: [00:20:31] And this is another let the department decide in the same way. Last week you talked about how OnlyFans, the IRS has to determine what's pornographic, what's not. And now it's they have to determine what's gambling and not gambling. Blake Oliver: [00:20:43] You know the IRS man their job just never ends. Um, speaking of the IRS, the Criminal Investigations Unit had a record year. They identified 10.59 billion ten over 10 billion in financial crimes during fiscal year 2025, which is nearly 16% over the previous year. They uncovered $4.5 billion of tax fraud, which is over double the 2024 number. They issued 25% more search warrants than the prior year and referred 14% more cases to the Department of Justice for prosecution. So apparently these, uh, IRS budget cuts and personnel issues like the the Criminal Investigations Unit managed to increase their numbers. David Leary: [00:21:42] Well, the revenue. So maybe the crimes are getting larger and they're identifying less. Blake Oliver: [00:21:46] Maybe it's getting easier, I don't know. David Leary: [00:21:48] It's interesting that they use this word identified. I find that I'm trying to understand that like they identified almost 11 billion. But does that then they decide like, yeah, we're not going to chase these ones and only prosecute and go after, you know. Blake Oliver: [00:22:02] Just identifying it doesn't mean they're actually going to. David Leary: [00:22:04] Do anything. Blake Oliver: [00:22:05] After it. Yeah. So, um, like for instance, here's the examples for abusive tax preparers, big problem tax preparers who are committing fraud. They investigated 206. They prosecuted or recommended for prosecution, 169. They secured 83 sentences and then the average sentence length length was 27 months. That's crazy though. That's a lot of fraud. Uh, financial crimes 11, almost 11 billion if you round up. All right. Here's a fun story. Actually. Let's thank our next sponsor. And then, uh, we'll talk about the lawyer who sued the IRS to recognize her dog as a tax dependent. Thank you to relay for sponsoring this episode. Between David and myself, we now have three, four or maybe five business entities, 20 or so checking accounts, dozens and dozens of virtual cards. It's a lot. And it would be impossible to manage all of this if we weren't using relay as our small business bank. Relay is truly a part of the tech stack that we use to run our businesses. Relay allows David and me to each have our own logins. We can grant access to our team and even our tax accountant without sharing passwords or two factor authentication codes. Relay allows us to grow and scale our banking needs without ever going into a physical branch. I recently added an account to receive inbound merchant services, and with just a few clicks, I could create a payroll checking account. A few more clicks, and then I instantly had access to ACH info to give to the payroll provider. Blake Oliver: [00:23:42] With relays virtual cards, we can issue debit cards to our team around the world for needed business expenses. Also charge cards now with cash back. I can instantly spin up a new visa card and set both daily and monthly spending limits. And when a team member doesn't need their card, I can freeze it until they need to use it again. Relay also has automation features that sweep money automatically from one account to another based on dates, amount or target balances, or percentages too. So, for example, you can set up an inbound checking account and those deposits can be split daily into different accounts such as payroll sales tax payable, operating savings accounts based on predefined rules using percentages. So to learn more about using relay for your firm and clients, head over to The Accounting Podcast. That's The Accounting Podcast. Y and welcome USN A accountant USN accountant finally made it to a live taping. Great to have you here. Uh, Tate Walters wants to know, do y'all have a fixed cadence for the show? Yeah, we were supposed we're supposed to record on Fridays. And, like, I don't know, life just gets in the way. In my case, yesterday, it was the. It was the gardener. Yeah. Like, we don't have real studios here. Uh, and Oswego sharks finally made a live session. Thank you. Welcome. Great to have you here, David. Sounds like you were going to share something. David Leary: [00:25:09] Yeah. Blake Oliver: [00:25:09] You want to talk about the lawyer? The lawyer? Yeah. So. Okay, so attorney Amanda Reynolds has filed a lawsuit in the Eastern District of New York against the IRS, arguing that her eight year old golden retriever named Finnegan Mary Reynolds should qualify as a legal dependent for tax purposes, according to Forbes. Kelly Phillips Erb in Forbes, Reynolds contends that her dog meets every meaningful element of dependency under section one 152 of the tax code, except for being human. So here's the claims in the complaint. Financial dependency. Finnegan the dog has no independent income, cost over $5,000 annually, and relies entirely on Reynolds for food, shelter, medical care, training, and transportation. She also claims that it's arbitrary that service dogs can qualify for tax advantages while companion animals cannot. She alleges violations of the Equal Protection Clause and the Takings Clause, and then argues that dogs should be recognized as quasi citizens entitled to limited civil recognition, including dependency status. For tax purposes. The IRS has prepared a motion to dismiss, and Magistrate Judge James Wicks has already granted a motion to stay discovery. While the IRS does that, I think the, uh, and I think, uh, Kelly Phillips Erb points out in her article, the issue will be lack of standing, because Reynolds has never actually attempted to claim her dog as a dependent or suffered an actual injury. I mean. David Leary: [00:26:47] She should have been trying to do this every year for the last. How old is eight years, right? Yeah, that would be the to establish the pattern. And my understanding too is there's no if you look at all of tax law over, over history, it's always limited the dependance to humans. So this would be really revolutionary if it gets through. But there's just all the precedent is going to say no. Blake Oliver: [00:27:11] But you got to love it, right? I mean. David Leary: [00:27:14] You gotta try. Blake Oliver: [00:27:15] I mean, these days, dogs are like family members. Um, you know, like, there's this, like, doggy daycare. I mean, I'm embarrassed to say it, but, like, we take our dog to a doggy daycare, and, um, there's one there's one in, uh, in in Scottsdale called Furbabies. That's not where I go. But, you know, they are like people. David Leary: [00:27:40] I think this is the first time the white House does not have a dog. Right? And decades and decades. I don't think Trump's like a a pets guy. He doesn't come off as a pets guy or a dog guy. And so but the dog lobby should have been all over this to get this. Just like the gambling lobby and the crypto lobby and the the the pot lobby, they're all over Trump to get this stuff done. The dog lobby needs to make this happen. Blake Oliver: [00:28:04] All right. Uh, what do you got? David, that's all of my tax related stories. David Leary: [00:28:08] Pivot to Trump some more. So I don't know if you saw Trump is forming the tech force. Blake Oliver: [00:28:13] The tech force. David Leary: [00:28:14] And he's. Blake Oliver: [00:28:15] Like the Space Force. David Leary: [00:28:16] Kind of. But he's going to hire a thousand people to basically replace all the employees that Doge laid off. So the Trump administration has announced the creation of a new US tech force, a thousand person Corps of engineers specialists tasked with building AI infrastructure and other major technology projects across the federal government. They're going to work closely with major private sector companies like Microsoft, Amazon, Nvidia, Nvidia and OpenAI. Um, now, what's interesting about this, it's like a career pipeline so participants can pursue full, full time roles with these partners once they go through this program. So it's like us as taxpayers are now going to be training and paying the interns of or the future employees of Microsoft, Amazon, Salesforce, Oracle. Blake Oliver: [00:29:08] Oh that's great. I love that. David Leary: [00:29:09] Like we're painting. Well, the thing that's ridiculous about this. My $0.02. During Doge, we already had this service. It was part of the US digital service that they basically rebranded into Doge. But a portion of that was the branch called 18 F, and we talked about this tens of episodes ago. 18 F is the branch that built Direct File and Atnf, when it was created a decade ago, was was billed as Uncle Sam's new tech startup. So we already had this high tech group that was supposed to build out the future technology, the US government. And then Doge got rid of it and it had 85 employees. And now Trump wants to hire 1000 people. I just don't like it doesn't reconcile. Like I thought the whole point was to make things smaller and now he's going to hire 1000 people. But if you look, those are all the big donors, right? All those companies donated to Trump. Blake Oliver: [00:30:04] Mm. Well, I can't explain it. No. David Leary: [00:30:10] It's it's it's the pendulum. Right. Blake Oliver: [00:30:14] It leaves me at a loss for words. So. But, uh, here's something that doesn't. Fraud. I always love talking about fraud. And we've got a good one for you this week, listeners. It's a startup fraud, and it's in our space. Tax accounting. This startup founder raised 13 million from VCs, told investors that the company was earning a quarter million a month in revenue, and then allegedly spent 2.2 million on her wedding house and Super Bowl tickets. Her company's actual revenue $250 per month. And now the FBI and SEC are both investigating her for fraud. The startup is called compliant. Uh, it is like it's spelled c o m p l y a n t compliant with a y. And the founder is Shiloh Lucky. She allegedly diverted 2.2 million of VC funds for personal expenses, including a Caribbean destination, wedding, a personal residence, Super Bowl tickets, luxury trips to Aspen, Miami Beach, Turks and Caicos and Lisbon, as well as a personal vehicle. Compliant is a or was a tax compliant startup helping small businesses navigate state to state tax regulations that was founded in 2019, in LA. And they had raised. David Leary: [00:31:47] I think I met I don't know if I met her, but I met somebody from the company in this app, I think, at the LA accounting show when we were there that year, because I always felt like because I know I get out of compliance on stuff and I was like, oh, it'd be great to have some sort of app that would just tell me all these things. I was like, this makes a lot of sense. And in theory you would use this app for your clients, and then the clients would get text notifications and push notifications of all their deadlines and when things are due. So the app itself made a lot of sense, but apparently she didn't. She stopped building the app and just spent the money, according to you. Blake Oliver: [00:32:19] Yeah, well, like, they. David Leary: [00:32:20] Just. Blake Oliver: [00:32:21] They never. It sounds like they basically never made money because, um. David Leary: [00:32:27] Like most startups that take VC money. Blake Oliver: [00:32:30] Yeah. So so, you know, it's basically she claimed that they grew from 2500 in monthly recurring revenue to 250,000 over the course of about two years, never had more than $250 a month of revenue, and had fewer than four new subscribers per month on average. Oh, she also represented herself as a CPA, even though she wasn't allegedly. Um, well, I guess we know that she wasn't. Speaker3: [00:32:59] What did you say. David Leary: [00:33:00] The users were? They never had more than how many. Speaker3: [00:33:02] Users. Blake Oliver: [00:33:03] For new subscribers per month on average. David Leary: [00:33:06] Wow. Like, you have to, like, be really bad. And but this is all during like 20 2019, 20, 20, 2020 when money was kind of free and investors were just investing in everything. But that that those are that's atrocious numbers from. Blake Oliver: [00:33:20] Um, and they had like 50 employees at the time. They shut down in 2023. And those employees all lost their jobs. They it took seven weeks for them to get their final paychecks. They discovered the 401 (K) contributions were missing. And here's the crazy thing is that, uh, you know, Shiloh, the founder, Shiloh Luckey, is currently on TikTok, dispensing financial advice to nearly 24,000 subscribers and has launched a new startup called Habit Loop that is a digital financial assistant. She is representing herself in court and has not yet responded to the SEC allegations. Fake it till you make it. David Leary: [00:34:04] So I wonder how. What alerted to the the authorities. It must have. It has to be investors that were unhappy. Or. Blake Oliver: [00:34:10] I forgot to mention this. Uh, David Sacks of the All In podcast and and Trump advisor. It was his VC firm that invested in this company. He co-founded the firm that invested in it. All right, David, let's stick with app news. Tech news. What's top of mind for you this week I got a story about Intuit and Circle. I don't know if you saw that one. What else? Speaker3: [00:34:34] Um. David Leary: [00:34:36] With stablecoins. Well, that's the same one right. And circle stablecoin payments are coming to QuickBooks. Mercury and PayPal are officially submitting to become banks. Um, Gocardless is going to be acquired by a Dutch payments company. Um zero launched their new home page with that, whatever you want to cover. I think the stablecoin thing in QuickBooks and circles is interesting. Blake Oliver: [00:34:56] Yeah, this is interesting. So like tell me about it. Like, so it sounds like we're going to be able to use QuickBooks to send stablecoin payments. Like, are we talking about like Usdc. David Leary: [00:35:05] Usdc? So Intuit has signed a multi-year partnership with circle to integrate UDC stablecoins into its payment infrastructure. So the the initial plan is, you know, for paying bills in that instant settlement to other people. So they'll be using to avoid the bank's rails. Essentially, it cuts out the banks when you send through these stablecoins. Um, it doesn't it's not clear if it's going to, um, allow, you know, small business owners that are using Intuit products to hold the balance or hold these stablecoins. It's not clear the timeline of the rollout of this technology is not clear. That hasn't been declared. Um, and but initially, they're saying it's going to be a back end payment rail. So they're avoiding the typical, you know. Speaker3: [00:35:49] Wire transfer fee. Blake Oliver: [00:35:50] Ach fees, all that. Speaker3: [00:35:52] Yeah. Cool. Blake Oliver: [00:35:54] So so we can there's there's no timeline on it, but it sounds like we'll be able to do stablecoin payments in QuickBooks at some point. David Leary: [00:36:03] Yeah, and it's the, you know, Intuit's positioning itself to modernize high volume money movement while maintaining reliability and compliance. Um, I saw some of the crypto sites kind of implying that this is going to make accounting more accurate and easier. I don't know on all that. Like at the end of the day, like, I don't know if money moves into a bank feed and you can get it, or if it's converted to a digital coin and then sent to somebody and you pull it somewhere, there's got to be a feed or a pullback and has to match something in your bookkeeping. I don't know if it's going to make bookkeeping any better, but this is coming. So start learning about stablecoins and how it's going to be a payment rail. Blake Oliver: [00:36:43] In on YouTube. Tate asks do stablecoins really cut out banks? And the answer is sort of. I'm no expert, but I have been using stablecoins to make some payments and you still got to get the money from your bank account into an exchange. So there's that wire transfer that happens once it's in the exchange, which is not a bank, such as, uh, Kraken, for instance. You can then exchange your US dollars into, let's say, Usdc, which is the that's the circle stablecoin. Right. And then you can send it via a variety of networks. Ethereum would be a really common one to any wallet address. And that cuts out the banks because you're no longer using wire transfers. Speaker3: [00:37:36] So that's instant. Blake Oliver: [00:37:38] It's well, it depends on the speed of the network. But if you use bitcoin, for instance, it's a lot slower than if you use Ethereum. There's other ones that are even faster and the fees vary. But yeah it can be nearly instant. David Leary: [00:37:51] And because current ACH it's a day at your bank. It's a day being transferred and a day at the receiving bank. Usually it's like. It's almost like a three day process for ACH. Speaker3: [00:38:01] But now, the same day. Blake Oliver: [00:38:02] Ach. Speaker3: [00:38:03] So that's the same day. Ach. Now. Yeah, but like, for international. Blake Oliver: [00:38:06] Wire transfers, that's where the fees really add up. Right? And so then, of course, you know, your recipient gets the Usdc in their wallet address. And they can then, you know, convert that into their local currency, get it into their bank if they want or not. So in that sense, you know, it cuts out the traditional banking system. And it can be a it can be a lot cheaper than what it costs to send an international wire, although sometimes it's not. It's it's like it's still really complex. And it was interesting for me as like an accountant who's been hearing about this stuff for years, finally actually doing it. It was really hard. It was not easy to get set up and get verified and be able to, to do these stablecoin payments. Like, that's why I'm one of the reasons I'm so critical about like crypto Is that like when you actually go and try to do it and use it? It's not easy. It's not a great experience. And so you have all these people that are like crypto enthusiasts that love to do this stuff and don't mind all the friction. But most businesses and consumers are not going to. Speaker3: [00:39:10] There's just too much jumping, right? Blake Oliver: [00:39:12] So the real application is like this one where it's like behind the scenes lowering costs, but into it can hopefully make it easy to use. David Leary: [00:39:21] So so that's going to be it's it's going to have to build this in a way where the customer experience is just a no brainer to use it. And then all the magic is happening in the back end. But you're not having to, like, I got to get moonpay and get this thing to convert it to this, then put it into this other app so I can send it to here. Yeah, all those headaches should be gone. Blake Oliver: [00:39:38] And as Tino points out, once you get it, um, once you once you have it, like, in exchange, like Kraken to get it out, you have to convert it to cash, right? And that means usually going through the traditional banking system, unless you're using some sort of like black market service in order to do that, right? You could you could go find somebody on the street who is willing to, you know, take your crypto and give you cash, uh, which, you know, we got to assume is happening a lot as well. Speaker3: [00:40:06] And I bet. David Leary: [00:40:07] Into it's going to have to tie this to their banking services. So yes, you can get it sent to your bank, but it's going to take an extra day, day and a half. But you can get it to your your QuickBooks bank account much faster. Um, so basically yeah, the money's never going to leave the Intuit ecosystem. Blake Oliver: [00:40:25] Some app news, uh, that came across my desk double formerly keeper, has raised 6.5 million in a series A. They have some pretty great growth numbers. It sounds like 4000 plus firms are using the platform and 150% net dollar retention. I don't really have anything else to add to that. Congrats! Congrats to to double. David Leary: [00:40:51] If 4000 firms are using it. That's an average firm. That's a cash practice, probably has 20 to 60 clients. That's they have a significant base of users now. Speaker3: [00:41:03] That's right. Blake Oliver: [00:41:03] Well it's like there are what, 40,000 CPA firms in the United States. Now that's not all of the accounting businesses out there. I'm trying to remember how many there are. There's like maybe it's like 100,000 total or more ish. Speaker3: [00:41:19] Yeah. Blake Oliver: [00:41:19] So like they've got like good those are good numbers but they've got a lot of room to grow. So congrats. Um, and yeah, check out if you're looking for like a month end close like checklist automation app. I don't know how they describe it, but that's that's kind of how I describe it. It's like that checklist every month syncs with your accounting software like yeah, check it out. David Leary: [00:41:43] Reconcile. Speaker3: [00:41:44] Oh yeah. David Leary: [00:41:44] Know who on your team is doing what for what client. Yeah, it's a little bit of a workflow, but historically they've always been focused on CAS. But now you can use it for your tax practice too. But historically, it's always been cast. Blake Oliver: [00:41:56] Zoho has just announced two new products with uh for finance. They've got Zoho Spend, which is an all in one solution that includes procurement, API automation, expense management, payroll processing, and travel management. And then they've also announced, uh, Zoho Billing Enterprise Edition, which is. E-invoicing. This is all like international stuff, but I thought that was interesting. Zoho spend. David Leary: [00:42:28] What's the target on that? Is that going to be like for businesses that aren't doing real bookkeeping yet, but they have these small needs as an entry level product, I'm trying to figure out where that fits in in the ecosystem because they already used to have Zoho Expense. Speaker3: [00:42:41] Yeah. Blake Oliver: [00:42:42] So this is beyond that, right? Zoho expense was just travel and expense management. This is like the full suite. So it sounds like more upmarket, right? Um, let's see what else. White collar workers are nervous as we enter 2026. This is a Wall Street Journal story, um, with some stats here that are a little bit. Well, they're not I don't know if they're scary, but it indicates these these numbers indicate that white collar workers are more nervous about their job prospects than they used to be, as they probably should be given Gen AI college educated workers, they now see a 15% chance of losing their job in the next year. That's up from 11% three years ago. So pretty significant increase 11 to 15%. And they also think there's only a 47% chance of finding a new job within three months if they're laid off, which is down from 60%. And this is a big difference. College grads used to feel more secure than workers with less education, but now they are more worried about losing their jobs. Software development job openings are at just 68% of pre-pandemic levels. Marketing roles are 81% of pre-pandemic levels. So these areas like software development and marketing, which have been really hit by Gen AI a lot of like opportunity but also threat, like those, um, those jobs have decreased. And so white collar workers are nervous. Now, you might ask, David, should accountants be nervous about this? And I saw a study by Stanford School of Business that makes me optimistic. David Leary: [00:44:34] Optimistic as in, like counties are going to lose their jobs. They're optimistic. Like accounts are going to keep their jobs. Blake Oliver: [00:44:39] Optimistic in that accountants will keep their jobs because AI is not going to eliminate them, at least in the short term. So this was a study that appeared on the Stanford website. And they surveyed 277 accountants. They analyzed task level data from 79 small and midsize firms using AI powered accounting tools. And what they found is that accountants using AI can support more clients per week. They can close the books over a week faster every month. They are spending 8.5% less time on back office data entry type work. And they are able to spend way more time with clients. So basically it's not eliminating the jobs, it's allowing them to spend more time with clients and do the work faster. And the amount of additional time they're spending with clients is actually really impressive. Oh, and quality has gone up too. So even though they're using AI to automate the data entry, they're getting more granularity. 12% increase in granularity. So that means more detailed records, right? You're not just grouping expenses into broad categories. You can use AI to break them down into more specific categories, which makes financial reports more informative and easier to analyze, audit and act on. And the one stat that I am trying to find which I'm going to pull up is something is the thing about the clients. It was something like like 50% more clients that the firms using AI were. They were able to serve like a significant percentage more clients every month as a result, which fits right. Speaker3: [00:46:36] Yeah. David Leary: [00:46:36] If you're getting more efficient, you should be able to handle more clients. So I have a stat that might give you more hope or this is actually just good I think, for accountants in general. So Dex did a survey of 500 accountants and bookkeepers across the UK to better understand how small businesses are using AI. And so one of the big stats in this survey is 50% of the UK accountants surveyed are aware of businesses. So obviously some of their clients were suffering direct financial losses from AI generated financial advice. So some of these losses are overpayments, missed allowances, fines, penalties, compliance issues because they just, uh, you know, used off the shelf, uh, uh, GPT type tools, um, 72% reported that clients are now using AI outputs to challenge the professional advice they're getting from their accountant and bookkeeper. Um, but this is the interesting one. 40% of the accountants are saying they spend an extra 4 to 10 extra hours per month fixing AI related errors. So there's a business opportunity here. The more your clients use AI and make mistakes, you have the ability to be that hero and charge for that work. Blake Oliver: [00:47:47] And you know, this is the problem with AI. Um, a stat that is truly distressing is only 8% of people actually bother to verify AI generated information before using it. I spotted that in Accounting Today. It's a McKinsey survey only or no exploding. Sorry, not McKinsey. There were multiple surveys in the same article. It's exploding topics. So this this study found that 8% of people regularly verify information AI information. So basically we're all we're all using AI and we're not verifying it. Speaker3: [00:48:24] And that's such a low number that is shocking. David Leary: [00:48:27] Like not even one out of four people are verifying the information they get from AI. They're just taking it in. Speaker3: [00:48:34] Yeah. Blake Oliver: [00:48:34] And David Wood, He's a BYU accounting professor, told Accounting Today that 95% of errors stem from users just copying and pasting AI outputs without any review, and that most mistakes involve these small hallucinations that go unnoticed due to lack of verification. So this is the challenge, is it makes us way more efficient, but we still have to review the work to catch those small hallucinations that then, um, you know, if you think about it. Right, a lot of small mistakes can become a big mistake or a very embarrassing mistake. So the problem is the humans, right? It's not the AI. Uh, because we know this technology is not perfect. It's. This is well known, right? It gets the job 8,090% done, but it either fails or is wrong. There's something wrong. And we have to find what's wrong in order to get to 100%. So we still have to do that work. So it makes sense, David, that like we have to spend a lot of time looking for the mistakes or correcting the AI errors, Tino said. That happened to me yesterday with an NFP client. They used AI answers to challenge my recommendations on how to get caught up with back payroll taxes. It won't stop. All right, let's talk about that. Oh, yeah. Speaker3: [00:49:55] We got. David Leary: [00:49:56] Last. Speaker3: [00:49:56] Add. Yeah. Blake Oliver: [00:49:57] Let's think on pay. I'll let you I'll let you read on pay. David Leary: [00:50:01] Are you tired of payroll headaches getting in the way of the client experience. You want to deliver manual workflows, creating bottlenecks, compliance nightmares and endless support calls that go nowhere. There's a better way for your team and your clients on pay is the payroll partner that accountants and bookkeepers actually love. Why? Because it's easy to use, packed with value and backed by support that actually supports you. Their team gets rave reviews for being fast experts and actually reachable when you need them on pay. Handles the heavy lifting. You get a dedicated onboarding onboarding coordinator who sets up worker profiles and transfers year to date data from previous providers, all at no extra cost. Their seamless QuickBooks and Xero integrations eliminate manual journal entries, and they support any types of businesses you serve farms, restaurants, nonprofits, you name it. Onp can handle unique requirements without adding complexity. And Onp keeps pricing simple to everything your clients expect from multi-state filing to off cycle payroll runs is included. No hidden fees, no surprises. And here's the kicker for a limited time, earn up to $10,000 when you switch clients to Onp, add three clients and run payroll by January 31st, 2026, and you'll get $1,000. Then earn $200 for each additional client. To book a demo. Head over to The Accounting Podcast that is Accounting Today. Thank you. Onp. Blake Oliver: [00:51:23] So I have a story about AI fraud. Stampley the invoice processing solutions provider, analyzed tens of billions of invoices and identified six emerging AI powered fraud attack vectors, specifically targeting finance teams. So here's a list of half a dozen ways that fraudsters are using AI to try to defraud you. So pay attention if you are on an AP team or you manage accounts payable for your clients. Speaker3: [00:51:56] And your CFO, they. David Leary: [00:51:57] Would just send a fake invoice. That would be kind of the old days that would be targeting the. Speaker3: [00:52:01] Accounts payable. David Leary: [00:52:01] Department. So now with AI there's new stuff. Speaker3: [00:52:04] Yes. Blake Oliver: [00:52:04] And number one is actually that classic scam, which is a fake invoice, but it's been upgraded. It's been enhanced by AI. So now instead of just sending a fraudulent invoice, the scammers are using AI to generate fake companies with convincing websites and digital footprints. So have you seen these, um, apps that will like generate a website or an app with like a single prompt. Speaker3: [00:52:35] Yes. Blake Oliver: [00:52:36] So you can now do that. You can you can like sign up for one of these apps that will generate a website like I'm Lovable. That's a great example, right? Lovable can generate these web apps, and you could use it to create a website for a company that seems completely real. If you're just like glancing at it and then send invoices with that company name and that URL to like an accounts payable team, some big company. David Leary: [00:53:00] So when you drill back up the ladder, you're like, it seems legit. There's a website. Speaker3: [00:53:03] Exactly. Blake Oliver: [00:53:04] So that's something to watch out for. You can no longer just like check out the website to see if it's real. Uh, number two AI enhanced phishing. So criminals will steal legitimate vendor credentials and then send fraudulent invoices or change payment details by by AI helps them fish better. So that means like, you know, you're you're sending like, emails impersonating someone else Or like sending an email from Google, pretending to be from Google and asking somebody to log in and reset their password or something. But it's a fake website. Ai makes these emails even more convincing than. Speaker3: [00:53:39] They used to be. David Leary: [00:53:40] And volume wise, you can just. Speaker3: [00:53:41] Do. Yes. David Leary: [00:53:42] Hundreds of thousands of more than you could do before. Blake Oliver: [00:53:45] Uh, invoice cloning. So it's easier to, like, take invoices and create a cloned invoice using AI, um, credential harvesting portals. So you use, um, AI to mimic vendor portals and send links to teams to log in, and then they, you know, get their credentials. David Leary: [00:54:07] That's really smart, actually. Speaker3: [00:54:09] Yeah. David Leary: [00:54:10] Because like, that's the you're constantly getting invited to these vendor portals to get paid. And you just you just blindly click on it and just fill it out because you're like, I just want to get paid. Like, I'll fill this out quick. But yeah, I would fall for that if somebody sent me a fake vendor portal because there's so many apps that do it. You don't know if it's a real app or a fake app. Speaker3: [00:54:27] At this point. Blake Oliver: [00:54:28] And then deepfake impersonation. So we've talked about this on the show, using AI to generate voice and video of real people to push urgent financial fraudulent requests. So this means that just phone or video authentication is no longer reliable because somebody can clone your voice, somebody can clone your CEO's voice or your cfo's voice because they've been on a, you know, a million like podcasts or investor update phone calls or they're out there right there on the internet, just clone their voice. And now and there's even tech that will do it in real time now. So it's like you can use these apps to like, change your voice to sound like somebody else's. So that doesn't work. Um, and here's here's another one. This is the trickiest one is invisible PDF text attacks. So fraudsters will embed hidden text in PDFs to manipulate AI systems into approving fake invoices or revealing sensitive data. So we have these eyes now that are processing incoming invoices. You can put text into a PDF. Let's say the background of the PDF is white. You put white text in the PDF that gives instructions to the AI to do so. David Leary: [00:55:39] My AI agent that is set up to pay bills and approve bills could get overwritten by a hidden text on a PDF. Now, so we're right back to manual having people do the work. It's full circle. Blake Oliver: [00:55:51] So there you go. Six things to watch out for six ways that AI is supercharging fraud. David, we got a like a minute left. Anything else you want to hit on before we go? Otherwise, we'll save it for next time. David Leary: [00:56:05] We got. Blake Oliver: [00:56:05] Two episodes next week, so. David Leary: [00:56:07] I'm going to save two articles for next week that are related to the Deloitte CTO is talking about how AI spending is causing buyer's remorse. And then another story about why technology deployments die quietly after they're launched. And both of these tie to comments you've made in the past. So I'm really I really want to bring these up next week. Um, but I don't know if I have a all right, a quick story other than, uh. Blake Oliver: [00:56:29] Well, let's wrap it up. David Leary: [00:56:29] We didn't talk about Arthur Andersen's back. Blake Oliver: [00:56:31] That's a oh, I know. Okay. Next week we'll talk about Arthur Andersen's just Andersen. No, the. Yeah, the Andersen IPO. We'll talk about that next week. Uh, yeah. Right now I'm just going to go. It's late afternoon here on Saturday. I'm going to go enjoy some beautiful 75 degree weather here in Scottsdale. David Leary: [00:56:46] 80 degree weather we're going to have today for Christmas or whatever this. Blake Oliver: [00:56:48] Week. We don't mind having a heat wave when it's in December, right. Um, thanks everyone who joined us live. Check us out on YouTube, hit subscribe. And that notification bell icon if you want to get notified when we go live, because we are very unpredictable. With that, don't forget to earn free continuing professional education for listening to this podcast with the earmark app. Go to Earmark App in your web browser or download the free earmark app from the App Store. Create a free account and earn one free CPE per week. You can support our work and get unlimited CPE for the low price of $170 per year. Take thousands of courses across a variety of tax and accounting podcasts. David Leary: [00:57:34] And if you have a deadline of December 31st, you have 11 days to knock out all your CPE. So jump in. Blake Oliver: [00:57:40] Jump in. David Leary: [00:57:41] You do have a lot of it with us. Yeah. Blake Oliver: [00:57:43] Don't be sitting in front of your computer while you're earning your last minute CPE. Take us with you in your ear. Get out on the slopes. Go snowshoe through the countryside, cross country, ski. Or, uh, if you're here in Phoenix, take a bike ride. It's a beautiful day. All right, David. See you here next week for two episodes. Merry Christmas everyone. Happy new year. Um. And, uh, happy holidays, happy Hanukkah. See you around.