The fraud hunter is working with an unnamed hedge fund that is shorting GE

Harry Markopolos is an accounting expert reputed for exposing Bernie Madoff’s Ponzi scheme.

On Thursday, he released a 170-page report that alleged various accounting irregularities at GE. The report says that many of GE’s filings with regulators could be inaccurate and fraudulent.

Harry Markopolos alleges accounting hocus-pocus

According to the fraud hunter, GE has incorrectly accounted for its oil-and-gas business, its liquidity situation is worse than disclosed, and that the insurance unit of the company would need to beef up its reserves by a cash injection of $18.5 billion.

The accounting irregularities could aggregate $38 billion, Markopolos claims.

Markopolos recently spearheaded a whistleblower campaign that could collect as much as $100 million from banks that allegedly mistreated foreign currency trading clients. Markopolos worked on the case with three former bank employees. He will receive a cut of the whistle-blowing awards.

This time, Markopolos will get a cut from a hedge fund

According to the WSJ report, Markopolos is candid that he and his team are working with an unnamed hedge fund which is shorting GE shares. Markopolos has already made his research available to the fund and “will receive a portion of any trading proceeds.”

On Thursday, GE shares declined $11% to $8.01.

The hedge fund investor backing Markopolos will make money if GE share prices decline. On Markopolos’ team is John McPherson, co-founder of MMS Advisors, forensic accountants. Furthermore, this team reportedly worked on GE’s accounting for seven months.

GE screams foul

“This is market manipulation—pure and simple,” GE Chief Executive Officer Larry Culp said in a statement. “Mr. Markopolos’s report contains false statements of fact, and these claims could have been corrected if he had checked them with GE before publishing the report.”

Culp not only called the effort market manipulation, but he also took the time to purchase roughly $2 million in company stock after shares tanked 13% on the news.

Culp isn’t the only person who purchased GE stock during the weakness. Duquesne Capital founder Stanley Druckenmiller told CNBC Thursday that he also purchased GE stock.

“I believe Culp … I bought stock today,” Druckenmiller told CNBC’s Kelly Evans in a statement.