The Securities and Exchange Commission filed and settled charges against BDO USA, a national audit firm, and five of its partners, for issuing misleading, unqualified audit opinions on the financial statements of General Employment Enterprises, a employment staffing services company, for the firm’s fiscal years ending September 30, 2009, and 2010. According to the SEC, near the end of BDO’s 2009 audit of GEE, GEE’s chief financial officer advised BDO that a US $2.3 million certificate of deposit the firm had purchased had not been repaid timely by the issuing New York State-chartered bank. At the time, the amount of the CD represented approximately one-half of GEE’s assets and most of its cash. In following up on this matter, BDO received conflicting stories from GEE management and board members regarding the CD although the firm ultimately received a series of payments equaling the amount of the CD from three entities unaffiliated with the bank. In response, BDO issued a letter to GEE saying that the firm had not provided sufficient evidence to BDO to resolve its audit and demanded that GEE’s audit committee engage an independent firm to conduct a full investigation. After GEE’s then-chief executive officer resigned, BDO agreed to withdraw its letter and issued an audit report which included an unqualified opinion on the firm’s 2009 financial statements that were filed with the SEC. Subsequently, BDO learned that the president of the bank that purportedly had issued GEE its $2.3 million CD had been criminally charged with participating in a conspiracy with, among others, GEE’s then-CEO and the then majority shareholder and chairman of the firm’s board of directors, and that the purported CD never existed. Notwithstanding, BDO never considered the impact of this and other related information on GEE’s 2009 financial statement and subsequently did not consider this information in issuing an unqualified opinion on GEE’s financial statements included in the firm’s 2010 mandatory financial statement filing with the SEC. The SEC charged BDO and the individual partners with failing to comply with professional standards and thus violating various federal laws and SEC rules. The SEC also charged BDO and the individual partners with causing GEE to file inaccurate financial statements with it. To resolve the SEC’s charges, BDO agreed to pay a US $1.5 million penalty, to disgorge profits and pay interest totaling approximately US $600,000 and to commit to various undertakings. The five partners agreed to pay, in aggregate, a fine of US $75,000 and four of the partners were prohibited from appearing before the SEC as an accountant for at least one to three years. The SEC also brought separate actions against GEE’s former board chairman, Stephen Pence, who is a former US attorney and Kentucky lieutenant governor, as well as against two former GEE chief executive officers.