SEC Charges BF Borgers with Massive Fraud, Imposes $14 Million in Fines

The Securities and Exchange Commission (SEC) has charged auditing firm BF Borgers CPA PC and its owner, Benjamin Borgers, with "massive fraud" resulting in $14 million in fines and permanent suspensions. The SEC found deliberate failures in over 1,500 audits, unrelated to work performed for Trump Media and Technology Group.

Why this matters: This case highlights the critical importance of auditor independence and compliance with regulatory standards, as failures in these areas can have far-reaching consequences for investors and the broader financial market. The SEC's action serves as a warning to auditing firms and their clients, emphasizing the need for transparency and accountability in financial reporting.

According to the SEC's order, BF Borgers and Benjamin Borgers engaged in "deliberate and systemic failures" to comply with Public Company Accounting Oversight Board (PCAOB) standards in its audits and reviews. The firm falsely told clients that its work would comply with PCAOB standards, fabricated audit documents, and falsely stated in audit reports that its audits complied with the standards.

To settle the charges, BF Borgers agreed to pay a $12 million civil penalty, while Benjamin Borgers will pay a $2 million civil penalty. Both respondents also agreed to permanent suspensions from appearing and practicing before the Commission as accountants, effective immediately.

"Ben Borgers and his audit firm, BF Borgers, were responsible for one of the largest wholesale failures by gatekeepers in our financial markets," said Gurbir S. Grewal, Director of the SEC's Division of Enforcement. "As a result of their fraudulent conduct, they not only put investors and markets at risk by causing public companies to incorporate noncompliant audits and reviews into more than 1,500 filings with the Commission, but also undermined trust and confidence in our markets." The SEC's order finds that the respondents failed to adequately supervise and review the work of the team performing the audits and reviews, did not properly prepare and maintain audit documentation, and failed to obtain engagement quality reviews. The order also finds that at least 75% of the filings incorporated BF Borgers's audits and reviews that did not comply with PCAOB standards.

The SEC's order further finds that, at Benjamin Borgers's direction, BF Borgers staff copied workpapers from previous engagements, changed only the relevant dates, and then passed them off as workpapers for the current audit period. This resulted in workpapers that falsely documented work that had not been performed, including purported planning meetings that never occurred.

BF Borgers has been one of the most prolific auditors in the US, with over 80% of its clients trading over the counter. The firm had around 350 clients during the period of the alleged fraud between January 2021 and June 2023. BF Borgers also served as the auditor for TrumpMedia& Technology Group, which became a public company in March 2024 and has used the firm's services since 2022.

The SEC's actionagainst BF Borgers and Benjamin Borgers highlights the critical role auditors play as gatekeepers in the financial markets. The alleged fraudulent conduct affected hundreds of companies and put investors at risk by incorporating noncompliant audits into over 1,500 regulatory filings. The $14 million infinesand permanent suspensions serve as a stark consequence for the audit firm's massive failures.

TheSEC's actionagainst BF Borgers and Benjamin Borgers highlights the critical role auditors play as gatekeepers in the financial markets. The alleged fraudulent conduct affected hundreds of companies and put investors at risk by incorporating noncompliant audits into over 1,500 regulatory filings. The $14 million in finesand permanent suspensions serve as a stark consequence for the audit firm's massive failures.

The SEC's actionagainst BF Borgers and Benjamin Borgers highlights the critical role auditors play as gatekeepers in the financial markets. The alleged fraudulent conduct affected hundreds of companies and put investors at risk by incorporating noncompliant audits into over 1,500 regulatory filings. The $14 million in fines and permanent suspensions serve as a stark consequence for the audit firm's massivefailures.

Key Takeaways

• SEC charges BF Borgers CPA PC and owner Benjamin Borgers with "massive fraud" resulting in $14 million in fines and permanent suspensions.
• Firm engaged in deliberate failures in over 1,500 audits, unrelated to work performed for Trump Media and Technology Group.
• BF Borgers falsely told clients its work would comply with PCAOB standards, fabricated audit documents, and made false statements.
• Firm and owner agree to pay $12 million and $2 million civil penalties, respectively, and permanent suspensions.
• SEC's action highlights importance of auditor independence and compliance with regulatory standards to protect investors and markets.