Donald Trump, 45th President of the United States, before the Formula 1 Miami Grand Prix at Miami International Autodrome in Miami, United States on May 5, 2024. (Photo by Jakub Porzycki/NurPhoto via AP)
The independent accounting firm tapped by Donald Trump‘s media company, Trump Media, for its auditing has been charged with running a “sham audit mill,” that led to “massive fraud,” according to a statement from the Securities and Exchange Commission.
Trump Media is the owner of Truth Social, the former president’s social media platform.
The SEC made the announcement about the firm, BF Borgers CPA, and its owner, Benjamin Borgers, on May 3. The agency said both company and owner engaged in “deliberate and systemic” compliance failures with the SEC’s public oversight rules for more than 1,500 individual filings from January 2021 through June 2023.
BF Borgers has agreed to pay $12 million in civil penalty; Borgers agreed to pay $2 million. The company and individual are now both suspended permanently from providing accounting services.
Gurbir Grewal, the director of the SEC’s enforcement division, called the case “one of the largest wholesale failures by gatekeepers in our financial market,” and dubbed Borgers a “sham audit mill” which undermined trust for investors across the board.
Audit reports “play a critical role in our financial markets” because investors “rely on the audited financial statements of public companies when making their investment decisions,” the SEC statement says. By agreeing to pay a total of $14 million in settlement, neither company nor owner are required to admit or deny the SEC’s claims.
According to reporting from CNBC, Borgers was hired by Trump Media during the period of fraud outlined in the SEC allegations. At that time, Trump Media was privately held but has since merged with Digital World Acquisition Corporation. That happened in March. It was only a matter of three days on the public trading market when Trump Media agreed to keep BF Borgers as its auditor, the outlet said.
The SEC accused Borgers of failing to adequately supervise or review audit work as well as failing to prepare and maintain the proper documentation, also known as “workpapers” by the SEC, while simultaneously failing to obtain “engagement quality reviews.”
“Without which an audit firm may not issue an audit report,” the regulator said of the reviews.
From January 2021 to June 2023, of the 369 clients who hired Borgers, at least 75% of their filings failed to comply with oversight standards.
The SEC said it further found that:
[A]t Benjamin Borgers’s direction, BF Borgers staff copied workpapers from previous engagements for their clients, changing only the relevant dates, and then passed them off as workpapers for the current audit period.
As a result, the order finds, BF Borgers’s workpapers falsely documented work that had not been performed. Among other things, the workpapers regularly documented purported planning meetings — required to discuss a client’s business and consider any potential risk areas — that never occurred and falsely represented that both Benjamin Borgers, as the partner in charge of the engagement, and an engagement quality reviewer had reviewed and approved the work.
A spokesperson for Trump did not immediately respond to a request for comment.
Companies that hired Borgers may not necessarily need to amend their own audit reports simply because of the SEC’s order but they may consider finding and hiring a new public CPA, CNBC reported.
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