Wednesday, May 22, 2024

Trump Media’s accounting firm charged with ‘massive fraud’ | CNN Business

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New York
CNN
 — 

BF Borgers, Trump Media & Technology Group’s independent accounting firm, was charged by the Securities and Exchange Commission on Friday with widespread fraud and accused of operating a “sham audit mill.”

The SEC made no allegation of wrongdoing against Truth Social owner Trump Media (DJT), which is not mentioned in the charges from the regulator.

The SEC accused BF Borgers of “deliberate and systemic failures,” including “fabricating” audit documentation and falsely representing to clients its work would comply with accounting standards.

The agency described this as “massive” fraud taking place between January 2021 and June 2023 that impacted more than 1,500 SEC filings and more than 500 public companies.

The SEC imposed a severe penalty against BF Borgers, permanently suspending the firm from practicing as accountants before the agency effective immediately. The firm and its owner, Benjamin Borgers, also agreed to pay $14 million collectively in fines.

“Borgers and his sham audit mill have been permanently shut down,” Gurbir Grewal, director of the SEC’s enforcement division, said in a press release.

Public companies that have hired BF Borgers will need to find new accounting firms, the SEC alerted companies in a separate statement on Friday.

Trump Media announced plans to do just that.

“Trump Media looks forward to working with new auditing partners in accordance with today’s SEC order,” Trump Media spokesperson Shannon Devine told CNN in a statement.

According to filings, Borgers served as Trump Media’s independent registered accounting firm before the social media company went public in March. Later in March, the audit committee of Trump Media approved the hiring of Borgers as the public company’s accounting firm.

Although Trump Media may be the highest profile client of BF Borgers, the firm had 350 clients during this time period subject to SEC rules, according to the agency.

The SEC review only focused on public companies, meaning BF Borgers’ work for Trump Media when it was private was not included.

BF Borgers did not respond to a request for comment.

Trump Media is chaired and majority owned by former President Donald Trump, who is also the most popular user on Truth Social.

Even though Trump Media has achieved a valuation north of $9 billion on Wall Street, the company generates little revenue and Truth Social remains a relatively tiny player in the social media world.

Truth Social’s average daily active US users on iOS and Android fell 19% year-over-year in April to 113,000, according to Similarweb, a data intelligence company. X, the app formerly known as Twitter, has more than 300 times as many users.

The SEC found that out of the 369 BF Borger clients whose public filings incorporated the firm’s audits and reviews, at least 75% did not comply with accounting standards.

This is hardly the first time BF Borgers or its founder have gotten into trouble.

Dating back to 2019, regulators in Colorado have repeatedly brought disciplinary action against Borgers.

Last year, the Association of International Certified Professional Accountants terminated BF Borgers in its peer review program because the firm was “found to be so seriously deficient in its performance that education and remedial, corrective actions are not adequate.”

Trump Media announced in late March that BF Borgers would be its public accountant.

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