Former KPMG Partner Scott London: I Got About $70,000 in Kickbacks
Scott London, the former KPMG senior partner accused of securities fraud, said outside court that he would plead guilty to divulging inside information in a case that could land him in prison and forced his long time employer to resign two accounts, Herbalife and Skechers.
"I know I betrayed them," London said in an exclusive interview with CNBC outside of court.
London did not deny any of the charges that federal authorities have laid out against him. But he insisted this is the only time in his career he ever broke the law.
"I had a clean record," he said.
London said he believes the case began after he talked about work during "discussions at dinner and so forth" with his former friend and golfing buddy Bryan Shaw. "I might say something casual about a certain client, and the individual may have traded on that, unbeknownst to me."
Later, he did become aware Shaw was trading on his tips, and London said he provided more information, eventually accepting $50,000 in cash, jewelry and a Rolex watch in exchange, which he said totaled about $70,000. The watch he has returned, the cash has been disgorged through his bond, and the jewelry "is in my car, we just couldn't give it back today because the agents weren't present, but that's the plan," he said.
Bryan Shaw has already pleaded guilty for his part, and London claims he had no idea Shaw made nearly $1.3 million on illegal trades.
"I nearly threw up," London said, recalling when he heard how much Shaw had made. "I was led to believe the number was far less, closer to $200,000."
London said when he was first confronted by the FBI, he warned them that because Herbalife was one of the companies involved, "I told them that this was going to explode" in the media, "because of investor activity" in the stock. But London claimed he came forward nonetheless to protect KPMG.
London could face 20 years in prison, but he is hoping his guilty plea will lead to leniency. With two kids bound for college, he said he's saved some money but will need to eventually go back to work. "I'm only 50," he said, "I'll wait on tables, I'll do whatever it takes."
In the meantime, he has offered to take a polygraph to answer any questions about whether he was a lone wolf at KPMG or if this was truly the first time he'd traded inside information. So far, the feds have not asked him to follow through. He'll return to court to formally plead guilty and then face sentencing.
"I'll regret it 'til the day I die," London said.