Secret audio part of AmTrust probe

The auditor at accounting firm BDO USA casually wandered around the firm’s New York offices, striking up conversations with colleagues about the firm’s audit of workers’ compensation insurer AmTrust Financial Services.

Unknown to the colleagues, a tiny recording device disguised as a Starbucks gift card was rolling. The auditor was taping on behalf of the FBI and cooperating as a whistleblower with the Securities and Exchange Commission.

The recordings in 2014, described to The Wall Street Journal by the whistle- blower, were part of an investigation led by the SEC, according to sources. The focus of the probe includes accounting practices of AmTrust, a fast-growing company that in recent years has attracted skepticism about its results from investors betting against its stock.

AmTrust’s revenue in 2016 totaled $5.45 billion.

The auditor, who was directly assigned to AmTrust audits for at least three years but has since left the firm, has been working since 2013 with a larger group that includes Harry Marko- polos, a forensic accountant who warned the SEC about the Bernie Madoff Ponzi scheme before it became public in late 2008.

The group hopes to profit by collecting a reward under the SEC’s Whistleblower Program.

An AmTrust spokeswoman says that questions about the firm’s accounting practices are “fantasies concocted and intentionally publicized by parties who clearly have a self-serving agenda and appear to be trying to profit from misinformation about AmTrust.”