Federal Judge Finds Tingo Mobile Guilty of "Blatant" Fraud After Ignoring SEC Lawsuit
The Nigerian "agri-fintech" firm Tingo Mobile, which was the subject of a short seller Hindenburg Research investigation just a year ago in June 2023, has been found guilty by a Federal Judge. This verdict was reached after Tingo Mobile failed to respond to a lawsuit filed by the Securities and Exchange Commission (SEC), which alleged the company was involved in clear financial fraud.
US District Judge Jesse Furman described the fraud as "blatant" during a court hearing on Wednesday, ruling in favor of the regulators. The SEC's accusations against Tingo were based on claims made by Hindenburg Research, which suggested that Tingo was recording "billions" in fraudulent transactions.
In his comments, Judge Furman noted the scale of the fraud, stating, “The magnitude of the fraud is quite something,” as reported by Bloomberg.
In December, it was reported that the SEC had charged Tingo with "massive fraud". The SEC alleged that nearly every aspect of the company, including its partners and financials, was fabricated.
The SEC also revealed that it had secured a temporary asset freeze, a restraining order, and other emergency relief against the company's founder, Dozy Mmobuosi. Mmobuosi was accused of running a "multi-year scheme to inflate the financial performance metrics of his companies and key operating subsidiaries to defraud investors worldwide".
According to a release by the SEC, "Mmobuosi spearheaded a scheme to fabricate financial statements and other documents of the three entities, Tingo Group Inc., Agri-Fintech Holdings Inc., and Tingo International Holdings Inc. and their Nigerian operating subsidiaries."
One of the more glaring instances of fraud alleged by the SEC was the company's claim of having $461.7 million in cash, when in reality it only had $50 in its bank accounts:
The SEC alleged, "Defendants also fabricated the customer relationships that formed the basis of their purported businesses," and that "Mmobuosi and the entities he controls have fraudulently obtained hundreds of millions in money or property through these schemes."
In December, Antonia M. Apps, Regional Director of the SEC’s New York Regional Office, commented, “As alleged, Mmobuosi spearheaded a brazen scheme using phony records and fictitious entities to make the Tingo companies he controlled appear highly profitable, so that he could hoodwink investors and reap massive benefits at their expense. We filed this emergency action to expose Mmobuosi’s fraud and hold him accountable, while protecting investors from further harm.”
Nathan Anderson of Hindenburg noted that Deloitte Israel had given Tingo a clean audit opinion for 2022 and was looking to work with the company for 2023. He labeled this an "astonishing audit failure" for a Big 4 firm.
Hindenburg concluded their June report by stating, "We think Tingo is a worthless and brazen fraud that should serve as a humiliating embarrassment for all involved." Tingo responded shortly thereafter, claiming that the Hindenburg report was full of "misleading and libellous content".
The full SEC complaint against Tingo is available for review.
Bottom Line
This case serves as a stark reminder of the importance of thorough financial auditing and the potential consequences of fraudulent activities. It's a significant development in the world of finance and a clear warning to other companies. What are your thoughts on this situation? Feel free to share this article with your friends and colleagues. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6 pm.
Federal Judge Finds Tingo Mobile Guilty of "Blatant" Fraud After Ignoring SEC Lawsuit
The Nigerian "agri-fintech" firm Tingo Mobile, which was the subject of a short seller Hindenburg Research investigation just a year ago in June 2023, has been found guilty by a Federal Judge. This verdict was reached after Tingo Mobile failed to respond to a lawsuit filed by the Securities and Exchange Commission (SEC), which alleged the company was involved in clear financial fraud.
US District Judge Jesse Furman described the fraud as "blatant" during a court hearing on Wednesday, ruling in favor of the regulators. The SEC's accusations against Tingo were based on claims made by Hindenburg Research, which suggested that Tingo was recording "billions" in fraudulent transactions.
In his comments, Judge Furman noted the scale of the fraud, stating, “The magnitude of the fraud is quite something,” as reported by Bloomberg.
In December, it was reported that the SEC had charged Tingo with "massive fraud". The SEC alleged that nearly every aspect of the company, including its partners and financials, was fabricated.
The SEC also revealed that it had secured a temporary asset freeze, a restraining order, and other emergency relief against the company's founder, Dozy Mmobuosi. Mmobuosi was accused of running a "multi-year scheme to inflate the financial performance metrics of his companies and key operating subsidiaries to defraud investors worldwide".
According to a release by the SEC, "Mmobuosi spearheaded a scheme to fabricate financial statements and other documents of the three entities, Tingo Group Inc., Agri-Fintech Holdings Inc., and Tingo International Holdings Inc. and their Nigerian operating subsidiaries."
One of the more glaring instances of fraud alleged by the SEC was the company's claim of having $461.7 million in cash, when in reality it only had $50 in its bank accounts:
The SEC alleged, "Defendants also fabricated the customer relationships that formed the basis of their purported businesses," and that "Mmobuosi and the entities he controls have fraudulently obtained hundreds of millions in money or property through these schemes."
In December, Antonia M. Apps, Regional Director of the SEC’s New York Regional Office, commented, “As alleged, Mmobuosi spearheaded a brazen scheme using phony records and fictitious entities to make the Tingo companies he controlled appear highly profitable, so that he could hoodwink investors and reap massive benefits at their expense. We filed this emergency action to expose Mmobuosi’s fraud and hold him accountable, while protecting investors from further harm.”
Nathan Anderson of Hindenburg noted that Deloitte Israel had given Tingo a clean audit opinion for 2022 and was looking to work with the company for 2023. He labeled this an "astonishing audit failure" for a Big 4 firm.
Hindenburg concluded their June report by stating, "We think Tingo is a worthless and brazen fraud that should serve as a humiliating embarrassment for all involved." Tingo responded shortly thereafter, claiming that the Hindenburg report was full of "misleading and libellous content".
The full SEC complaint against Tingo is available for review.
Bottom Line
This case serves as a stark reminder of the importance of thorough financial auditing and the potential consequences of fraudulent activities. It's a significant development in the world of finance and a clear warning to other companies. What are your thoughts on this situation? Feel free to share this article with your friends and colleagues. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6 pm.
