Earmark Team

The Cryptoqueen Who Bought Her Own Forbes Cover and Vanished With Billions

Earmark Team · July 22, 2026 ·

It’s June 11, 2016, at London’s Wembley Arena. 11,500 people are on their feet. The lights go down. Alicia Keys blasts through the speakers. Fireballs shoot up from the stage as Dr. Ruja Ignatova walks out in a floor-length burgundy ball gown covered in black sequins. The crowd goes wild.

To them, she’s not just a founder. She’s the Cryptoqueen who built the next Bitcoin. And tonight she’s announcing OneCoin has become so successful they’re running out of coins. So she’s going to make more. A lot more.

Nobody in the room seems to hear a problem with that.

This scene comes from Episode 114 of Oh My Fraud, hosted by Caleb Newquist. And Ruja’s story shows how a $4 billion fraud needed no complex financial engineering, just a database, manufactured credibility, and victims who were too invested to ask the right questions.

The Woman Who Sold Herself

Ruja Ignatova was born in Ruse, Bulgaria, in 1980. Her father was a mechanical engineer, her mother a nursery school teacher. When Ruja was ten, shortly after the fall of the Iron Curtain, the family moved to a small town in Germany called Schramberg.

Ruja was exceptional from the start. She earned a doctorate in private international law from the University of Konstanz and completed a master’s in European law at Oxford. Her promotional materials also claimed a stint at McKinsey, though journalists haven’t been able to verify that one. But even without McKinsey, the rest checks out. She has a real doctorate and a real Oxford degree.

As Caleb puts it, “She wasn’t bluffing about the homework. She’d done the homework.” Ruja could speak with real authority on monetary policy and financial revolution because she’d actually studied the material. She showed up to meetings like someone who “decided to be the most credentialed person in the room out of pure spite.”

But Ruja wasn’t selling a cryptocurrency. She was selling herself. She was always “Doctor Ruja,” with the title and the gravitas.

The credentials mattered because they made everything else believable. In 2014, she was named Bulgaria’s Businesswoman of the Year. She spoke at an event organized by The Economist. And then there was her face on the cover of Forbes magazine, which she circulated at recruiting meetings and shared in WhatsApp groups. It looked like the establishment had personally signed off on her.

Except Forbes never did. The cover was a paid advertisement tied to the Bulgarian edition in May 2015. As Caleb notes, “She bought the credibility and handed it to herself, gift wrapped with a bow on it.” By the time anyone thought to check, the damage was done.

The Red Flags That Nobody Wanted to See

The warning signs weren’t hidden. In 2012, Ruja was convicted of fraud in Germany. She and her father had bought a struggling steelworks factory in Bavaria, promising to save jobs. The factory collapsed anyway, and a German court found the collapse to be criminal. She got a 14-month suspended sentence and moved on.

The next year, she turned up in something called BigCoin, a multi-level marketing scheme dressed up as a currency that functioned exactly like a Ponzi scheme and collapsed like one, too. Somehow, she walked away clean.

A fraud conviction one year. A failed fake cryptocurrency the next. So naturally, in 2014, she started another OneCoin.

She didn’t build it alone. Her co-founder was Karl Sebastian Greenwood, a Swedish MLM veteran who’d spent years perfecting the art of getting ordinary people to hand over money in exchange for promises. When BigCoin collapsed in 2013, Sebastian was there too. The two didn’t drop the idea; they just gutted it for parts, slapped on a new label, and relaunched.

Federal filings later identified Sebastian as OneCoin’s “Master Distributor 001,” and Ruja herself credited him as the architect of the entire MLM structure. She could fill an arena. He could make sure the arena kept refilling itself.

In a 2014 email, Ruja summed up their partnership bluntly, saying the whole thing would be “MLM meets the Bitch of Wall Street.”

And we know exactly what they thought of the operation because prosecutors later got their emails. Before launch, before a single package sold, Ruja wrote to Sebastian with the exit plan: “Take the money and run and blame somebody else for this.”

They’d already written the ending.

How the Machine Actually Worked

By 2014, Bitcoin had become a cultural phenomenon. Early adopters were sitting on fortunes. Everyone had a story about someone who bought in for a few hundred bucks and was now rich. And everyone who’d heard about it too late was nursing a very specific kind of regret.

Ruja handed that feeling a product. OneCoin was Bitcoin, but better. And it was for everyone, not just the tech bros. She called it “the Bitcoin killer.”

How it works was the whole joke. You didn’t buy OneCoin directly. That would have created securities problems. Instead, you bought “educational packages,” which were courses on cryptocurrency trading sold through One Academy. The packages had names like Starter, Trader, Pro Trader, Executive Trader, and Tycoon Trader. A Starter package costs about €100 and includes a PDF and some tokens. A Tycoon Trader costs €5,000. Eventually, they added tiers up to €118,000, because apparently someone, somewhere, was willing to pay six figures for a PDF.

The PDFs were largely plagiarized from free sources, including Wikipedia. Investors later discovered that thousands of euros’ worth of “proprietary financial education” was just copied and pasted from the internet. Nobody noticed because nobody was buying them for the content. The PDFs were, as Caleb calls them, “a legal costume.”

What you were actually buying was tokens. These got “mined” and converted into coins at a rate OneCoin set, and could change whenever it wanted. The coins showed up in your digital wallet, and you could watch the price tick upward on their internal exchange, xcoinx. The growth was steady and always up.

Think about that feeling for a second. You check your wallet and the number’s up again. Your friends see the same thing. You’re all in a WhatsApp group, sharing screenshots, talking about retiring early. It feels like you’re part of something real.

By the time it was over, OneCoin had taken in more than $4 billion from investors around the world.

Why Nobody Could Get Their Money Out

Being able to cash out is kind of important when you’re investing. But the xcoinx exchange had tight daily withdrawal limits calibrated to ensure only a trickle of cash could ever leave. You could request a wire transfer, but it was slow, frequently delayed, and often just didn’t go through.

Most people didn’t even try to cash out early. They were holding on for the moon, waiting for the public listing Ruja kept promising.

The real money was in recruitment. Bring in new people, and you earn commissions on their purchases, on the purchases of people they recruit, and so on down the chain. The aggressive early recruiters with big networks were making extraordinary sums in real currency.

This created a perfect loop. The people making the most money were the most devout believers, and their success was living proof to everyone below them that this was real. Why would you doubt the guy one rung up when you could see his commission checks clearing?

The community that formed called itself “One Life.” They had private WhatsApp groups, newsletters and motivational events in hotel ballrooms across continents. When regulators or journalists raised concerns, they had a script ready. These were attacks from the banking establishment, terrified of losing power. Anyone inside who asked uncomfortable questions got the same treatment. They were told they’re being negative, letting the team down, and to just trust the process.

By 2016, money was pouring in from China, Uganda, Pakistan, Brazil, Germany, Norway, Yemen, and dozens of other countries. It spread through churches, immigrant communities, professional networks, and families. As Caleb puts it, it went “wherever trust already existed. And then it burned that trust for fuel.”

The Moment It All Should Have Ended

Back to Wembley Arena, June 11, 2016. The entire fraud revealed itself, and the crowd cheered anyway.

To understand why this moment matters, you need to know one thing about cryptocurrency. In Bitcoin, the hard cap of 21 million coins is the whole point. It’s enforced by a decentralized network of thousands of computers that no single person controls. The scarcity is structural, built into the protocol.

OneCoin’s supply cap was different. It was, as Caleb describes it, “a number in a database in an office building in Sofia, Bulgaria, controlled entirely by Ruja. She could change it whenever she wanted.

So when she announced she was expanding the supply from 2.1 billion to 120 billion coins, multiplying it by nearly 60 with a few keystrokes, she was showing everyone exactly what OneCoin was. There was no protocol or blockchain. She could change it on a whim.

She sold it as a gift. For their support in “phase one,” she’d double the coins in everyone’s account.

The crowd cheered.

She had just told 11,500 people that their life savings were sitting in something she could multiply by 60 whenever she felt like it. And they cheered because by June 2016, most of them were too far in to hear what she’d actually said. They’d recruited their families and staked their credibility on this being real. The cost of hearing “the founder just proved the coin supply is completely made up” was too high to pay.

So they didn’t hear that. They heard, “I’m so confident I’m doubling your coins.”

The Collapse and the Getaway

By 2017, the walls were closing in. Multiple countries had enacted restrictions. Journalists kept publishing investigations. Prosecutors in Germany and New York were building cases.

Then came the clearest evidence yet. In early 2017, xcoinx went down “for maintenance” and never came back up. A real exchange doesn’t have a switch one person can flip. But xcoinx did, because it was never a market, just a number OneCoin employees updated on a ledger nobody else ever saw.

There was no blockchain underneath any of this. In an email prosecutors later obtained, Sebastian spelled it out: OneCoin was “not mining actually, but telling people shit.”

On October 12, 2017, a federal arrest warrant went out for Ruja on charges of wire fraud, securities fraud, and money laundering. She was scheduled to appear at an event in Lisbon shortly after. She never showed.

FBI documents revealed what actually happened. On October 25, 2017, she checked in at Sofia airport, boarded a Ryanair flight to Athens, landed, and disappeared. The FBI believes she likely had help.

She’d seen it coming. Prosecutors say she had bugged her American boyfriend’s apartment and discovered he was cooperating with the FBI. She was executing step one of her 2014 exit plan: “Take the money and run and blame somebody else.”

The Human Cost in Three Stories

While Ruja vanished, real people were left holding the bag.

Jennifer McAdam, the daughter of a Scottish coal miner, got into OneCoin through a family member she trusted completely. She lost £15,000, the entire inheritance her father left her. She’s spent years trying to get it back, helping found a victim support group. As she put it, “The pain and suffering from losing all your finances, your home, your family and your loved ones come alongside with trusting these fraudsters.”

Igor Alberts, an experienced MLM professional from Amsterdam, made €90,000 in his first month. Within a year, he and his partner were clearing €2 million a month. They poured it straight back into more packages, doing the math on how many coins they’d need to become billionaires. They lost everything.

Daniel Lionheart, 22 years old in Uganda, sold three goats to buy a $250 starter package in 2017. By 2019, when BBC journalists visited, neither Daniel nor the woman who recruited him had told the other people they’d brought in that the money was gone. His recruiter told reporters, “I’m somehow hiding myself. I don’t want those people I introduced to OneCoin to see me moving around. They can easily kill me.”

The people running the scam said what they thought of these investors in private emails, calling the coin “trashy” and the investors “idiots” and “crazy.” Constantine, Ruja’s brother, who later ran the company and went to prison for it, texted Sebastian, “The network would not work with intelligent people.” Then he added a winking emoji.

Where Is She Now?

OneCoin somehow kept going after Ruja disappeared. Constantine stepped in as the new face. Events kept happening, and packages kept selling for almost two more years.

Eventually, the co-conspirators fell one by one. Karl Sebastian Greenwood was arrested in Thailand in 2018, pleaded guilty, and got 20 years in prison. He had to forfeit $300 million. Mark Scott, a lawyer who laundered $400 million through fake private equity funds, got 10 years. Constantine was arrested at LAX in 2019, cooperated with authorities, and served 34 months.

In June 2022, the FBI put Ruja on its Ten Most Wanted list. She’s currently the only woman on it and one of only 11 women ever to appear on it since 1950. The reward is up to $5 million. She still hasn’t been found.

The theories about where she is range from grim to exotic. One Bulgarian report claims she was murdered on a yacht and dumped in the Ionian Sea. German investigators think she’s living in Cape Town under a false identity. The strongest active lead points to South Africa. German documentary filmmaker Johann von Mirbach, who’s tracked Ruja for years, says she’s living in an upscale part of Cape Town under a false identity, based on information from South African security sources.

Another theory links her to Russia, where a journalist reported that Ruja was connected to Kremlin-linked interests through her former security adviser.

Meanwhile, the legal machinery keeps grinding on without her. In 2025, German prosecutors in Bielefeld filed charges specifically to stop the statute of limitations from running out on a woman they can’t find. In January 2026, the Royal Court of Guernsey seized more than £8.5 million from accounts tied to two Kensington flats Ruja bought through offshore shell companies, with the money now routed to Bielefeld for victim compensation. All told, over years of seizures in multiple countries, authorities have clawed back tens of millions of euros from the $4 billion invested.

The Lesson Underneath the Fraud

Strip away the arena, the ball gown, the Forbes cover, and the fugitive on the run, and OneCoin comes down to one sentence: every piece of evidence that it was real came from the people selling it. The price, the wallet balance, the market cap that supposedly beat every coin but Bitcoin, all of it was generated by the same company collecting the money. There was no ledger, auditor, or independent party confirming a single number on that screen.

What makes this case interesting is there was no exotic financial engineering or elaborate accounting tricks. Just timing, that Bitcoin FOMO hit right when Ruja needed it to. Just trust, since your recruiter was your aunt, your brother-in-law, or someone from your church. Doubting OneCoin meant doubting them. And by the time most investors had real doubts, they’d already recruited people and vouched for it personally. Admitting they were wrong meant admitting it to everyone they’d brought in.

The one question that would have protected every person in this story is, “Says who?”

There’s a lot more in the full episode that doesn’t fit in a blog post. Listen to Episode 114 of Oh My Fraud, and if you’re a CPA or work in accounting, you can earn free NASBA-approved CPE for listening through Earmark.

How Florida CPAs Beat Back a Bill That Would Have Erased Their Own Licensing Board

Earmark Team · July 20, 2026 ·

Shelly Weir stood in the rotunda of the Florida Capitol building. The House floor was on one side, the Senate floor on the other. The clock was ticking toward midnight on the final day of the legislative session. Shelly was physically pulling senators off the floor while CPAs across the state called and texted lawmakers. These were college roommates, siblings, fellow churchgoers, basically anyone with a personal connection to a senior member of the Senate.

Around her, realtors, engineers, and harbor pilots were lined up too, all fighting for their professional lives inside the same 550-page bill. “If there’s one lifeboat,” she recalls thinking, “I’m getting on it. Good luck to you people.”

That was the scene at the end of Florida’s legislative session, and it shows just how close the CPA license came to being dismantled.

On this episode of the Earmark Podcast, host Blake Oliver sits down with Shelly, president and CEO of the Florida Institute of CPAs (FICPA), for her first live interview about a two-year battle most of the profession has never heard about. The legislation she and her team fought would have eliminated Florida’s Board of Accountancy, wiped out continuing education requirements, and paved the way to eliminate licensure education requirements.

FICPA beat it twice.

What’s remarkable is how they won. The strongest defense wasn’t digging in, or what Shelly calls “the agent of no.” It was showing up as the efficiency experts CPAs claim to be. By combining a hard-nosed commerce argument with a genuine willingness to modernize the profession’s outdated rules, FICPA turned an existential threat into an opportunity to reform accounting on its own terms.

The 550-Page Threat That Almost Changed Everything

To understand what FICPA faced, you need to know how Florida makes laws. The state legislature meets for just 60 days a year. As Shelly puts it, “for 60 days, it’s fast and furious. That’s when you get bills passed, or you don’t.”

The warning signs had been there for years. “Anytime you have a piece of legislation that is this significant, there are normally signals it’s coming,” Shelly explained. “There are chess pieces that get put onto the chess board.” She’d been talking to her board and national entities about the threat for years before the bill actually dropped.

When it finally arrived in early April 2025, about halfway through the legislative session, it was a 550-page “behemoth,” in Shelly’s words. Accountants weren’t alone in this fight. The bill included architects, engineers, veterinarians, realtors, and harbor pilots (which, Shelly notes, are “really important in Florida”). The bill bundled them together with a single goal of eliminating their regulatory boards.

For CPAs, that meant three devastating changes. First, the Board of Accountancy would be gone. Second, all continuing education requirements would disappear. Third, it would clear the path toward eliminating licensure education requirements. “Everything we’ve spent the last few years talking about relative to 120- and 150-hours would go away,” Shelly explained. Instead, licenses would be awarded based only on work experience or on passing an exam.

The bundling of professions frustrated Shelly. “Respectfully, hairdressers are not the same thing as a CPA or an engineer.”

FICPA saw two distinct dangers. The immediate threat was breaking Florida’s mobility infrastructure. That’s the system that lets CPAs work seamlessly across state lines. That would cause damage “on day one.” The long-term danger was even worse. The license would either be eliminated or become “so degraded that it carried very little value.”

Why Lawmakers Wanted to Kill Professional Licensing

Shelly’s insight is crucial for understanding how FICPA fought back. Deregulation, she stresses, is bipartisan.

In red-leaning Florida, it’s about free-market enterprise. Republicans believe licensure creates too many barriers, too much red tape, and too much government interference. They want consumers to have more freedom of choice. They want more people to move to Florida and find work easily. They want more businesses to relocate there.

In blue and purple states, Democrats frame it as an issue of access and equity. If barriers are too high, they limit opportunities for disadvantaged groups. But the common thread between the two parties is the workforce. Everyone wants more people working and more businesses thriving.

“If you can take your CPA hat off for a moment, which I know is hard to do, you can understand where they were coming from,” Shelly said. She even acknowledges that “not all deregulation is bad and scary and ugly. There are a lot of deregulation proposals that, frankly, our profession and our license would be highly supportive of. We don’t want to be a barrier to entry. We’re the champions of efficiency.”

This particular bill, however, was “the most extreme version the profession had seen.”

After surviving the 2025 session by the skin of their teeth, FICPA had only a couple of months before facing the same threat again in 2026. They had to beat it twice, back-to-back.

The Two-Pronged Strategy That Saved the License

The bill moved at lightning speed. “From the time the bill was introduced until it passed the House floor was 18 days,” Shelly recalled. “It flew through three different committees, went to the House floor for a vote, and then got sent over to the Senate.”

FICPA knew early that the Senate would be their battlefield.

The resources they marshaled were impressive. Nine registered lobbyists worked the FICPA account, which included four in-house staff members (including Shelly herself) and an external firm they’d partnered with for 25 years. Two public affairs firms shaped their message in political trade journals. Voter polling projects studied constituent opinions. Members wrote letters, made calls, and traveled to Tallahassee.

But the smartest tactic was personal. FICPA hunted through its membership to find CPAs with genuine relationships with legislators. “We found college roommates, sisters, people that went to church together, anything you can imagine,” Shelly said. Why? “Hearing from a lobbyist is very different than hearing from, say, your own CPA on this issue.”

With these resources deployed, FICPA ran two strategies simultaneously.

First came the commerce argument. Florida’s system of mobility and practice privileges creates open borders for CPA work across state lines. It puts choice in consumers’ hands, which is exactly what deregulation advocates claim to want. So FICPA flipped the script. Pass this bill, and you don’t reduce red tape; you create it. “Florida’s going to be at a disadvantage,” they told lawmakers. “That’s not what you want.”

The argument “landed really, really well” and came up repeatedly in committee hearings.

The second strategy separated FICPA from every other profession in the bill. Instead of just defending the status quo, they modernized their own rules before the fight even started. “We asked ourselves before the bill even dropped: where and how can we, as a license, be more efficient while still upholding the integrity of our license and protecting the public?”

They examined everything from reciprocity and mobility to the licensure processes and introduced their own legislation to streamline it all.

Take reciprocity as an example. Currently, a CPA from another state must complete about nine steps to get licensed in Florida, including having their college transcript reviewed for specific courses. Shelly asked, “If they have a license in good standing from a board of accountancy that has a regulatory board, do we need to look under the hood and go through all of these different steps?”

Cutting that red tape “only helps people get to work easier and faster and lowers barriers,” which is exactly what legislators wanted, achieved on the profession’s terms.

Playing Offense and Defense at the Same Time

Shelly has a perfect analogy for what FICPA had to do. In Top Gun: Maverick, the pilots play “dogfight football” by running offense and defense simultaneously and trying to score while blocking linebackers coming after them. “That is the definition of what we’ve been doing over the past 12 months,” she said.

The key was avoiding becoming “the agent of no.” As Shelly explained, “I never want a legislator to see us walk in the door and be like, ‘Oh my God, here come the CPAs again, they’re going to complain about X, Y and Z.'”

Instead, the profession leaned into its identity as efficiency experts.

The Pathways initiative became powerful proof. The bill’s supporters argued that students learn more on the job than in the classroom, so why require education at all? FICPA didn’t have to argue theoretically. The profession had already created a work-experience pathway to licensure. It was a nationwide modernization effort states had rallied behind together.

FICPA could tell senators: we agree there should be freedom of choice, and here’s a pathway that prioritizes work experience. “It’s not an or, it’s an and. Let’s work together.”

That framing “landed very, very well” because it met lawmakers’ goals while protecting the system of commerce and the license’s integrity.

What made the difference was posture. FICPA was “the only profession in this particular bill that had taken a moment to self-reflect and taken a moment to modernize.” They were the only ones offering both sides a win.

The Midnight Drama and What’s Coming Next

Despite all the strategy, the fight came down to that single agonizing day, and it was the toughest of Shelly’s career. In Florida, any bill not passed by midnight on the session’s 60th day automatically dies.

On the final day of the 2025 session, with the House having already passed the bill, FICPA was “hanging on for dear life to prevent it from passing in the Senate.”

Standing in the Capitol rotunda, Shelly orchestrated a desperate defense. “We were literally physically pulling senators off the floor and just doing everything we could. I had every single CPA that personally knew one of the senior members of the Senate calling and texting and just physically pulling them aside.”

She credits Senator Joe Gruters, who is himself a CPA, as a crucial ally in that final stretch. Shelly calls him “the staunchest advocate for the profession.” The outcome stayed uncertain until the very end. The session ran “all the way to midnight,” and FICPA didn’t know they were safe until late in the evening.

But surviving twice doesn’t mean it’s over. “I do not think the issue of deregulation is going away. Absolutely not,” Shelly said.

Florida faces an election year with a new governor, speaker of the House, and Senate president coming. It’s “an all new deck of cards,” as Shelly puts it. She expects licensing reform task forces, reduction requirements, and especially the CPE issue to resurface in Florida and other states.

The CPE fight shows exactly what’s at stake. Shelly’s concern wasn’t that lawmakers wanted to examine continuing education. It was that they went straight to elimination. “They weren’t talking about modernization. They wanted to get rid of it altogether.”

FICPA isn’t opposed to CPE reform. “I think there’s a lot that we can do to modernize it, to make sure that the purpose of it is to make a more competent CPA,” Shelly said. But she insists any change must happen collectively across states, just like Pathways, so it doesn’t break the system of commerce.

Whether the board-elimination proposal itself returns is harder to predict. Fresh lawmakers create what Shelly calls “an amazing opportunity” to find common ground before a bill ever gets filed. But she won’t count it out. “That idea has been planted, and it’s landed. There are a lot of people who are still interested in that.”

The Playbook Every State Society Needs

FICPA’s survival story offers lessons that reach far beyond Florida. When faced with a bill that treated a CPA license as no more important than a cosmetology certificate, the instinct to dig in and fight everything would have been understandable and probably fatal.

What actually worked was the opposite. By combining a commerce argument that addressed lawmakers’ concerns with genuine reform of reciprocity and licensure rules, FICPA found common ground while still protecting the public and the integrity of the license.

The profession wins by acting like the efficiency experts CPAs tell their clients they are.

Deregulation is bipartisan and gaining momentum nationwide. Every CPA, EA, and bookkeeper has a stake in whether the license keeps its value. State societies stand on the front lines when these bills drop.

As Shelly put it, “pressure is a privilege.” The profession’s willingness to be efficiency experts rather than agents of “no” may determine whether the license survives the next wave.

This is Shelly’s first and only live interview on a two-year battle that barely made the national press. To hear the full strategy, the midnight drama, and her warnings in her own words, listen to the complete episode on the Earmark Podcast.

The Big Four Keep Publishing Fake AI Citations and It’s Getting Embarrassing

Earmark Team · July 20, 2026 ·

A solo accountant can complete two years of bookkeeping in a few hours using Claude Cowork. But KPMG had to pull an entire AI report after 89% of its citations turned out to be fake. The AI revolution in professional services is already sorting winners from losers.

In episode 493 of The Accounting Podcast, hosts Blake Oliver and David Leary tackled a cluster of stories that paint a clear picture of how AI is restructuring professional services right now in real workflows, real paychecks, and real embarrassments for the Big Four.

There’s a growing divide between professionals who use AI carefully with human oversight (and get massive productivity gains) and those who rush to market themselves as AI experts while failing basic verification. This episode covers the Big Four’s repeated AI failures, the incredible productivity gains available to practitioners who use AI right, and the broader industry signals showing how AI is reshaping everything.

The Big Four’s “Vibe Citation” Problem Keeps Getting Worse

KPMG’s 2025 report, “Total Experience: Redefining Excellence in the Age of Agentic AI,” was supposed to showcase its AI expertise. Instead, it became the latest example of Big Four firms publishing AI-generated content they apparently never checked, also known as “vibe citations.”

GPTZero, a platform originally built to help teachers detect AI-generated text, analyzed KPMG’s report and found out of 45 citations, only five were accurate. Twenty-eight pointed to real sources but had made-up details. Twelve were too vague to verify. At least 16 were complete hallucinations. The tool rated the report 89% flawed.

The fake details weren’t subtle. KPMG claimed an Austrian utility called Verbund was using AI for real-time household energy optimization. In reality, the citation was about Verbund investing in a startup that might do this someday. They said Emirates airline had a chatbot named “Sara” that could change flights. Sara was actually a robot assistant from 2023 with no flight-change capability. The biggest gaffe was claiming East Japan Railway was using AI agents in 2019, before this type of AI even existed commercially.

UBS, NHS Greater Manchester, and Transport for London all said KPMG’s claims about their use of AI were “completely false or misleading.”

“We have to create a database and just track these because the Big Four just keeps doing it over and over again,” David said, noting similar recent incidents at EY and Deloitte.

The irony is KPMG’s website features an article titled “Essential Elements of Responsible AI: How Solid Guardrails Can Help You Scale AI Faster.” They’re selling AI expertise while failing at basic fact-checking.

David’s sarcastic take nailed it. “The only way I could think this could work is if the Big Four can go to the Fortune 500 and be like, ‘Look, we know all the mistakes that can be made. Now listen to us because we know what not to do.’”

How to Actually Use AI: A Real-World Success Story

While KPMG was publishing fantasy case studies, Blake was using AI to do real client work and showing what responsible AI use looks like.

He needed to complete two years of write-up work for a service business: 2,200 transactions across nine accounts, with source documents in a messy mix of PDFs and CSVs from different banks. In the old desktop days, this would have taken days of manual entry. Even with cloud accounting, it would take many hours of importing and coding.

Using Claude Cowork, he finished everything in about four hours, including gathering documents.

His approach was smart and deliberate. He pointed Claude at folders of bank statements and had it extract all transactions into Xero-compatible import files. It did OCR on PDFs, merged CSVs, and organized everything by account. Then he gave Claude the prior year’s general ledger and asked it to categorize transactions, but with a key addition: a confidence score for each categorization.

“I could open that up, sort by that score, and look at the transactions that are less than 90%,” Oliver explained. Instead of reviewing 2,200 items, he focused on exceptions.

The results were impressive. Claude missed just six transactions out of 2,200, and two of those were due to credit card statement date issues, not AI error. When a $5,000 clearing account discrepancy appeared, Claude opened Xero in a browser, analyzed the details, and identified the problems itself. One was a returned payroll miscoded to transfers. The other was more complex: undiscovered transfers to a business line of credit. Claude suggested this possibility, Oliver confirmed by pulling statements, and Claude then created the loan account, separated principal from interest, and fixed everything. That kind of discrepancy usually requires hours of investigation.

“I didn’t just say, ‘Here’s the GL detail, here are the transactions, go code them all and enter them into Xero,” Oliver emphasized. “I wanted to review it first, and I caught significant stuff.”

This capability is becoming more accessible. Microsoft’s Copilot Cowork is now available, with over half of Fortune 500 companies trying it during preview. Microsoft says it’s 30-40% cheaper per prompt than Claude, and since most accounting firms use Microsoft 365, it might already be on your computer.

Not everyone’s getting it right, though. David shared his frustration with QuickBooks AI. When he uploaded a PDF containing 12 monthly bills, QuickBooks mashed them into a single bill with line items from each invoice. No questions asked.

“It should say, ‘Hey, I noticed there are 25 bills in here. Do you want one bill or 25 separate bills?’ And I would just answer,” David said, comparing it to AI coding tools that ask before acting.

The Market Is Already Picking Winners and Losers

Meanwhile, CPA firms are seeing interesting pricing patterns. According to CPA Trendlines, overall pricing is up 4.2% year-over-year, reversing last year’s decline. But looking more closely at the breakdown, tax prep and planning jumped by nearly 8%. Advisory work rose over 6%. Audit only increased by 2.3%.

Clearly, clients will pay more for services requiring human expertise and judgment. Tax planning and advisory command the biggest premiums. More routine, standardized work, like audit, lags behind.

“Clients are willing to pay for tax planning advisory, for the human in the loop to make sure that the numbers are right,” Oliver said. “AI isn’t putting pressure on those fees at this point. And I don’t expect it to.”

The Real Divide: Verification vs. Vibes

The stories from this episode are different views of the same shift. KPMG publishes an AI report that’s 89% wrong while a solo practitioner uses AI to finish two years of work in an afternoon with near-perfect accuracy. CPA firms raise tax planning fees by 8% because clients value human judgment.

AI compresses the value of routine, unverified work while amplifying the premium on carefully applied expertise.

The divide in professional services is between those who verify and those who just publish. Between practitioners who build workflows with confidence scores and exception review, and firms that let AI-generated content sail through with fake citations. Between organizations that treat AI as a force multiplier for human expertise and those that use it to substitute for expertise they never had.

The practical takeaway is to learn the tools, whether that’s Claude Cowork, Copilot Cowork, or whatever comes next. But build human checkpoints into every workflow. Use confidence scoring. Review exceptions. Don’t set it and forget it. The productivity gains are potentially five to ten times traditional methods, but they disappear the moment you skip verification.

The market is already pricing this reality. Clients pay more for advisory, planning, and the assurance that a qualified human reviewed the work. Firms and practitioners who master this balance will command premiums. Those who don’t will find themselves on the wrong side of a restructuring that’s happening right now.

To hear Blake Oliver’s complete breakdown of his AI workflow, David’s full critique of accounting software AI, and more details on KPMG’s “vibe citation” disaster, listen to episode 493 of The Accounting Podcast.

What If You Managed Your Private Company Like It Was Publicly Traded?

Earmark Team · July 20, 2026 ·

Ask any business owner what their company is worth, and you’ll likely hear a number they picked up at a conference, borrowed from a buddy’s sale, or scribbled on a napkin using some multiple of EBITDA. Ask them how they’re actively managing toward that number, and the room usually goes quiet.

It’s a huge blind spot in privately held businesses. Owners spend years, even decades, building something valuable. Yet they operate without the one metric that could guide every decision: a clear, defensible stock price.

In a recent episode of the Best Metrics podcast, host Glenn Dunlap sat down with Michele Hammann, Chief Strategy Officer at SSC CPAs + Advisors. She’s a certified valuation analyst and author of Go Public in Private: A Strategic Blueprint to Go From Owner to Investor. The conversation explored the idea that every privately held business has a stock price, whether the owner knows it or not. And the businesses that calculate it, track it, and manage toward it operate completely differently from those that don’t.

Michele has spent more than two decades working with privately held companies, from family businesses to larger enterprises, helping owners shift from thinking like operators to thinking like investors. Her message isn’t that private companies should go public. They should adopt the disciplines that make public companies investable without giving up control.

Your Business Has a Stock Price. It’s Time to Find It

Your company has a quantifiable stock price right now, whether you’ve calculated it or not.

Michele knows this firsthand. Her firm, SSC CPAs, is 100% employee-owned through an ESOP, meaning they get a formal valuation every year. Every team member knows the share price. And that single number is the metric that connects daily work to enterprise value.

“You feel like maybe you can move a $50 needle easier than you can move a $5 million needle,” Michele explained. When you translate a multi-million dollar valuation into a per-share price, the concept of value creation becomes real. It’s a number your team can discuss the same way people talk about Apple or Nvidia stock prices.

So how do you actually calculate a stock price for a private company? Michele walked through it on the episode, and it starts somewhere that might surprise owners used to looking backward. “The market doesn’t buy what you’ve done. They buy what you say you’re going to do.”

The process begins with forecasted future cash flows, which the business can realistically generate going forward. You apply a discounted cash flow model to bring those future dollars back to present value. Then you check it against comparable transaction data, similar to pulling comps when selling a house. There are databases where business brokers log closed deals, searchable by industry code, region, and revenue size.

Interestingly, Michele describes value as a three-legged stool. First is profitability relative to peers. Second is cash flow and balance sheet health, i.e., how much cash you can actually pull from the business. The third leg is intangibles. “There’s a lot of soft side to increasing your enterprise value,” Michele noted. Things like management depth, customer concentration, and whether you produce regular financial statements all affect the capitalization rate used to value future cash flows.

Stop Watching the Scoreboard and Focus on What Moves the Needle

Michele shared a scenario every business owner should pay attention to: something goes wrong on the manufacturing floor on June 1st, starts eroding margins immediately, but the books don’t close until July 15th. “We’re 45 days behind a decision that could be made differently,” she said.

This is why financial results are lagging indicators. They tell you what already happened. Operational metrics, on the other hand, show what’s happening right now. They’re the leading indicators that actually drive financial results.

“It’s not 50 metrics,” Michele emphasized. “It’s finding two or three where you can marry that operational data with the financial data that really tells the story.”

She gave a perfect example from a coin-operated laundry company. Their biggest expense was machine repairs. So they track minutes per repair and minutes per swap. The technicians don’t need to know that each stop costs $40. They just need to know the target is under 15 minutes. That’s something they can control through better tools, having the right parts on the truck, and efficient restocking.

The same principle works across industries. In nursing homes, where labor is the largest expense, the key metric is nursing hours per patient-day. How many nurses are on the floor relative to the census? It’s something a floor supervisor can manage in real time, not discover six weeks later in the financials.

Michele described two approaches to finding the right metrics for your business.

Bottom-up. Start with what you’re already tracking operationally and add the financial layer.
Top-down. Benchmark your financials against peers, find where you’re underperforming, and trace those gaps back to operations.

Either way, simplicity is crucial. “You don’t want this to be where we have to get out an Excel spreadsheet and call four people to figure it out each time,” Michele said. If it’s too complex, it won’t stick.

Build the Accountability That Creates Value

Knowing your stock price and tracking the right metrics is just the beginning. What separates businesses that drift from businesses that compound is structure: the kind of structure that public companies are forced into and private companies get to choose.

First, forecast forward, not backward. Michele’s entire methodology is built on forecasts, not history. She compares monthly financials to forecasts, not last year. “They’re a different company than they were last year,” she explained. And consistently hitting or beating the forecast dramatically increases value.

Second, hold regular check-ins. Public CEOs do quarterly investor calls. Michele recommends private owners do something similar at least three times a year. “Sit down and synthesize what you’re hearing from suppliers, clients, and the market,” she said. Compare it to where you said you’d be and recalibrate.

Third, build an advisory board. Move beyond dinner table conversations or management team meetings where everyone has a vested interest. Assemble a mix of professionals from the accounting, legal, and banking sectors, plus fellow business owners. “Most business problems are just a form of something else that happened before,” Michele observed. “Someone at the table has probably seen your version.”

If you’re not ready for a formal board, Michele recommended starting with AI. Load your forecast and industry context into Claude and have it ask challenging questions quarterly. It’s not a replacement for human advisors, but it’s a legitimate first step.

Once you have a stock price and forecast, filter every decision through one question: Does this increase or decrease enterprise value? “It gives you a framework for decisions,” Michele said. “Is it perfect? No. But is it better than the absence of that information?”

It’s Not About the Exit; It’s About the Choice

This isn’t just about selling your business. Michele wrote her book specifically because too many conversations get reduced to “exit planning” when most owners aren’t ready to quit.

“Let’s frame this as growing to where we want to be,” she said. “Let’s just focus on growth and making sure you reach your goals.”

The discipline of knowing and managing your stock price improves everything from financing terms to family transitions, resilience against disruption, and the daily experience of running a business. “You never have to sell to an outside entity,” Michele noted. “But being ready is just good practice.”

Not every business needs to become a transferable enterprise. Michele shared a story about an audiobook producer who tried adding middle managers and discovered “this wasn’t fun anymore.” She went back to working directly with talent, knowing her business value wouldn’t grow significantly. “That’s a great decision,” Michele said. “Are you making good money? Are you happy? Are you having fun?”

The danger isn’t choosing to stay small. It’s arriving at the end of your career without ever making a conscious choice at all.

Start Where You Are

Every privately held business has a stock price. The question is whether you’ll calculate it, track it, and manage toward it or let someone else assign it when it’s too late to change.

The framework Michele laid out is practical and incremental. Calculate your enterprise value as a per-share price. Identify two or three operational metrics that actually drive value. Build accountability through forecasting, regular reviews, and advisors. Use value as your decision framework.

As Michele put it, “We identify what we know today, and then we just let our clients pick the next right thing. Just do the next right thing.”

This is a huge opportunity for advisors and CPAs. Most business owners have never been asked what their stock price is. The professionals who can lead these conversations move from compliance providers to strategic partners.

And if you’re an owner who decides building a transferable enterprise isn’t your path, that’s completely fine — as long as it’s a deliberate choice made with full awareness, rather than a default you stumble into.

You’re the investor. You get to grow at your own timeline. Just do the next right thing.

To learn more about Michele’s framework, listen to the full episode of Best Metrics.

Shared Business Activity—not Mere Co-Ownership—Often Determines Partnership Status

Earmark Team · July 20, 2026 ·

Two friends buy a short-term rental together. They split everything, from income and expenses to responsibilities, 50/50. One manages the bookings while the other handles repairs. They never wrote up any agreement, registered an LLC, or created any paperwork at all.

Did these friends accidentally create a partnership with federal filing requirements?

Now make it more complicated. What if those two friends are married? What if they’re flipping houses instead of renting them? What if one spouse does all the work while the other occasionally helps with administrative tasks?

These are real questions that come across the desk of tax professionals every week. While they might seem straightforward, the answers are anything but simple or academic Partnership status affects filing requirements, basis calculations, elections, self-employment tax, audit procedures under the BBA, and the availability of numerous Subchapter K provisions. That’s why correctly identifying whether a partnership exists is the first step in any partnership analysis.

In episode 31 of Tax in Action, Jeremy Wells, EA, CPA, tackles this tough question in small business taxation: When does co-ownership cross the line into a partnership under federal tax law? Drawing from IRC §761(a) and §7701, Treasury regulations, and Supreme Court cases dating back to the 1940s, Jeremy builds a practical framework you can apply to client situations starting today.

Determining whether a co-owned activity is a partnership requires more than checking if someone filed an LLC with the state. You need to analyze the shared profit motive, business activity, and genuine intent. The analysis is shaped by decades of court-tested criteria. You also need to understand the distinct exceptions available to married couples.

Get this analysis right, and you’ll meet reporting requirements while positioning clients for partnership planning opportunities. Get it wrong, and you face unfiled return penalties, missed planning strategies, or both.

The Federal Definition Casts a Wide Net (With Important Limits)

To determine if your client’s co-owned activity is a partnership, you first need to understand how broadly federal tax law defines the term and where it draws the line.

IRC §761(a) defines “partnership” to include syndicates, groups, pools, joint ventures, and other unincorporated organizations (excluding corporations, trusts, and estates). That’s remarkably broad. As Jeremy explains, essentially any business-like activity with more than one participant could qualify. Add the companion definition in IRC §7701(a)(2) and Treasury regulations, and you have a framework that captures far more arrangements than most people realize.

There’s also the familiar default rule: Under Reg. §301.7701-3(b), a domestic eligible entity with two or more members that hasn’t filed a corporate election is treated as a partnership. This is where we get “multi-member LLC equals partnership.” For foreign entities, you need to check whether any member lacks limited liability, but the domestic rule is straightforward.

Despite this broad sweep, the regulations carve out two important exceptions that do not create a separate entity for federal tax purposes:

A joint undertaking merely to share expenses
Mere co-ownership of property (even income-producing property)

That second exception matters most in everyday practice. Two unrelated people can buy a rental property together, split the income and expenses, and that alone doesn’t necessarily create a partnership.

Jeremy shares an example from Laura and Noel Cunningham’s textbook, The Logic of Subchapter K. Two people co-own a taxi cab. Each drives it 12 hours a day, tracking their own fares and expenses separately. No partnership exists because there’s no joint profit motive. What you earn during your shift has nothing to do with what I earn during mine.

But change the facts and lease that cab to a third party who pays both owners. Now you’ve introduced a collective profit motive, and it looks like a partnership.

The Cunninghams identify two key features: business activity and sharing of profit. When both exist, you likely have a partnership. When either is missing, you probably have mere co-ownership.

This is where things get tricky. A single rental property split between two friends is probably mere co-ownership. But if they offer concierge services for an extra fee or they’re building a portfolio of rentals and managing them like a business, each additional fact pushes the activity toward partnership territory.

As Jeremy emphasizes repeatedly, federal tax law, not state law, controls this determination. You can register an LLC, file articles and get a certificate of formation, but none of these facts, standing alone,

determines whether a partnership exists for federal tax purposes. As the Supreme Court established 75 years ago, states can create entities on their books, but they can’t dictate federal tax consequences.

When Partnerships Actually Form

Knowing a partnership can exist is one thing. Knowing when it forms and triggers filing obligations is another matter entirely. It has nothing to do with filing paperwork at the Secretary of State’s office.

A partnership forms for federal tax purposes when participants join capital or services together with the intent to conduct an enterprise or business. Courts generally look for both genuine intent to carry on a business together and some actual contribution of capital or services.

Plans, discussions, and handshake agreements don’t count. Something tangible must go into the pot.

This framework comes from two landmark Supreme Court decisions every practitioner should know.

Tower v. Commissioner (1946) laid the foundation. The Supreme Court held that a partnership forms when people join “their money, goods, labor, or skill for the purpose of carrying on a trade, profession, or business” with a “community of interest in the profits and losses.” The critical question: whether the partners “really and truly intended to join together for the purpose of carrying on business and sharing in the profits or losses.”

Tower also drew a bright line between state and federal authority. As the Court stated, a state “cannot, by its decisions and laws governing questions over which it has final say, also decide issues of federal tax law.”

Culbertson v. Commissioner (1949) clarified what Tower meant. Lower courts misread Tower as requiring some minimum threshold of capital or services. The Supreme Court corrected this, saying, “The question is not whether the services or capital contributed by a partner are of sufficient importance to meet some objective standard,” but whether “considering all the facts, the parties in good faith and acting with a business purpose intended to join together in the present conduct of the enterprise.”

Culbertson produced the factors courts use to assess intent, and practitioners should memorize these criteria:

The agreement and the parties’ conduct in executing it
Whether each participant genuinely participates or is just a name on paper
Testimony of disinterested persons (would vendors or advisors see this as a partnership?)
The relationship of the parties
Their abilities and capital contributions
Actual control of income and how it’s used
Any other facts showing true intent

Jeremy notes that family partnership cases of the 1940s-1960s drove much of this development. Families were forming partnerships primarily for tax benefits. Courts had to determine whether these were genuine business partnerships or just tax avoidance vehicles. When the intent was purely to dodge taxes rather than to operate an enterprise, courts rejected partnership status.

Sparks v. Commissioner (1986) adds practical guidance. The Tax Court held that startup discussions, soliciting contributions, negotiating with third parties, and even incurring expenses were “pre-operating activities,” not partnership formation. The partnership didn’t form until members’ capital interests vested, meaning contributions were made and ownership interests received.

The practical takeaway is to document everything. Jeremy emphasizes that small business owners are terrible at this, and tax advisors must encourage better practices. A partnership or operating agreement that records when contributions were made and the ownership interests received establishes the formation date, not the LLC filing, planning meeting, or domain registration.

Three Ways to Avoid Partnership Treatment

Once you’ve determined a partnership exists, the next question is whether an exception allows the parties to sidestep partnership reporting. Three pathways exist, and practitioners regularly confuse them.

Electing Out of Subchapter K

Under IRC §761(a), members of an unincorporated organization can elect out of Subchapter K treatment if they can determine their incomes individually and the activity involves:

Investment purposes only
Production, extraction, or use (but not sale) of joint property
Securities underwriting over a short period

But the catch is that this election only removes Subchapter K rules. It doesn’t exempt the activity from any other IRC provision.

Jeremy highlights Cokes v. Commissioner (1988) as the cautionary tale. A widow inherited her husband’s interest in an oil venture that had elected out of Subchapter K. She never attended meetings, voted, drilled wells, or supervised operations. Her involvement was zero beyond holding an interest. Still, the Tax Court held her income was from a trade or business, subject to self-employment tax under IRC §§1401 and 1402. The partnership remained a partnership, just not subject to Subchapter K.

Qualified Joint Venture for Married Couples

The first spousal exception is available only to couples filing jointly who meet all three requirements:

The spouses are the only members
Both materially participate under IRC §469(h)
Each reports their share as if operating as a sole proprietor (separate Schedules C (or F) and separate Schedules SE)

This splits what would be a partnership into two sole proprietorships for reporting, eliminating Form 1065.

A critical limitation to be aware of is the qualified joint venture is NOT available if spouses operate through an LLC. If they registered an LLC, this door is closed.

There’s no form to file. Spouses simply submit separate schedules with their joint return. The election continues while requirements are met. Revocation needs IRS permission.

Community Property LLCs

The second spousal exception applies when there IS an LLC, exactly where the qualified joint venture fails. But it only works in nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

To be eligible, the LLC must be wholly owned by spouses as community property with no corporate election filed. When met, Rev. Proc. 2002-69 lets spouses report the activity as either a partnership or a disregarded entity.

This isn’t an election, so there’s no form, statement, or revocation. It’s simply a choice the IRS respects. Spouses can theoretically change annually (though Jeremy says they probably shouldn’t).

Your Two-Step Framework for Partnership Determination

Jeremy distills everything into a practical framework you can apply immediately.

Step 1: Does a partnership exist?

Ask these questions in order:

Are there two or more distinct owners? (Not an individual and their disregarded entity. They have to be two separate taxpayers)
Are they merely co-owning property, or operating a business together?
Is there a shared profit motive? Do they act like business co-owners or like investors holding the same asset?

The more parties look like business owners running an enterprise together, the more likely a partnership exists.

Step 2: Does an exception apply?

Check for:

§761(a) election out of Subchapter K
Qualified Joint Venture under §761(f) (spouses, joint return, no LLC)
Community Property LLC under Rev. Proc. 2002-69 (spouses, community property state, LLC)

Key Takeaways for Tax Professionals

Shared property doesn’t create a partnership. Shared business activity does. One rental is probably co-ownership. A portfolio with services looks different.
State entity formation doesn’t control federal partnership status. The Supreme Court settled this in 1946.
Partnerships form when participants contribute capital or services in exchange for ownership interests, not when they form an LLC or buy a domain. Document that moment.
Push clients toward written agreements. Small business owners resist this. Partnership or operating agreements that record contributions and formation dates are essential.
Don’t confuse the spousal exceptions. Qualified joint ventures and community property LLC rules are completely separate regimes for different situations.
Electing out of Subchapter K doesn’t avoid self-employment tax or any other IRC provision.

These determinations have real consequences. Get it right, and you’ve met reporting requirements while positioning clients for planning opportunities. Get it wrong, and you face unfiled returns, unexpected self-employment tax, or missed savings.

If you’re ready to dive deeper, listen to the full episode of Tax in Action for all the case law details, regulatory citations, and Jeremy’s complete analytical framework. In the next episode, Jeremy examines who qualifies as a partner and tackles the increasingly important question of which partners face self-employment tax.