An auditor linked to former President Donald Trump’s Trump Media is facing serious allegations of fraudulent activities and an illegitimate audit operation, according to the US Securities and Exchange Commission (SEC) on Friday.
The SEC has charged BF Borgers and its owner, Benjamin Borgers, who has clients like Trump Media, with a fraudulent scheme that affected over 1,500 SEC filings. SEC filings indicate that Borgers has also represented financial technology and cryptocurrency companies.
Trump Media’s auditor under SEC scrutiny
In Trump Media’s most recent annual report filing, BF Borgers was named as the auditor for the company on March 28. The company disclosed during that period that BF Borgers had also conducted audits before the company’s public debut through a merger with Digital World Acquisition Corp, a shell company with significant funds.
To settle the SEC’s civil charges, BF Borgers has agreed to pay a $12 million civil penalty, while Benjamin Borgers has agreed to pay a $2 million civil penalty. They have also agreed to permanent suspensions from practicing as accountants on SEC filings, effective immediately.
It is currently unclear which filings or companies have been impacted.
The company had previously gone through at least two other auditors, one of which resigned in July 2023, and the other was terminated by the board in March, just as BF Borgers was re-hired.
Trump Media stated in a statement that it looks forward to collaborating with new auditing partners in compliance with the recent SEC order.
According to the SEC, Borgers failed to adequately prepare and maintain audit documentation, falsely claimed to have conducted audit planning meetings, and sometimes used previous audits as if they were for the current audit period.
Gurbir Grewal, director of the SEC’s division of enforcement, stated that Ben Borgers and his audit firm, BF Borgers, were involved in a significant failure by gatekeepers in the financial markets.
SEC’s stance on BF Borgers
Out of the 369 clients served by BF Borgers, a significant majority of their filings from January 2021 to June 2023 included audits that did not meet the SEC’s regulations.
BF Borgers’ shortcuts involved unethical practices such as duplicating audit documentation from a previous year, altering important dates, and presenting it as current documentation. Moreover, the fabricated documentation not only included records of work that was never performed but also falsely claimed that planning meetings with clients took place and misrepresented that both Benjamin Borgers and another reviewer had endorsed the audit work.
During the period of the SEC’s complaint, BF Borgers represented Trump Media. In late March, Trump Media merged with a publicly-traded shell company, Digital World Acquisition Corp, in a deal that valued the social network at nearly $8 billion. The company now trades under the ticker symbol “DJT,” using the initials of its founder.
Since its initial launch, shares of Trump Media have experienced a significant decline. However, despite doubts about the value of the social media platform and the company’s financial challenges, the stock has continued to greatly increase the former president’s wealth.
On Friday, the share price of Trump Media declined by over 5% but ultimately closed the day with a decrease of 1.54%. However, it has shown an overall increase of nearly 14% over the past five trading days.
The current valuation of the company exceeds $6.5 billion. As the largest shareholder, Trump recently qualified for a bonus based on the company’s share performance, boosting the paper value of his stake to $3.7 billion.