The SEC sued Tingo and two related companies in December, alleging they booked billions of dollars in fraudulent transactions through two Nigerian subsidiaries and reported hundreds of millions of dollars in fake revenue and assets. Tingo CEO Mmobuosi Odogwu Banye, also known as Dozy Mmobuosi, was accused of initiating the scheme.
"The magnitude of the fraud is quite something," remarked United States District Judge Jesse Furman at a hearing. Furman called the fraud "brazen" in court, ruling in favor of the regulators, who followed claims by investment research and investigative firm Hindenburg Research that Tingo was booking "billions" in fraudulent transactions.
Furman granted the SEC’s request for a default judgment in the case, saying that the fraud was “brazen.” The SEC sought to force the corporate defendants to pay a penalty of more than $1.15 million each and Mmobuosi almost $32 million – reflecting the $25 million he misappropriated and three times more than $2.1 million he made from insider trading.
It was in June 2023, that Hindenburg Research cited fraudulent activity by Tingo in a report, causing the company’s share price to fall by 48 percent. The SEC claims the NASDAQ-listed Tingo doubled down on its alleged falsehoods and has continued to fabricate its results in public filings.
Mmobuosi, a Nigerian who was once identified as a possible buyer of the English football club Sheffield United, was charged criminally in January by federal prosecutors in Manhattan, who accused him of falsifying financial statements to make Tingo and its subsidiaries appear to be flush with cash.
Robert Horowitz, an attorney for Tingo Group, told the SEC in a letter in March that he was awaiting the completion of a probe by police in Nigeria that could exonerate the companies. A judge in Delaware found Tingo Group in contempt for failing to produce internal files.
In December, the SEC charged Tingo with "massive fraud," claiming that almost every aspect of the company – including its partners and financials – was fabricated.
SEC: Mmobuosi runs multi-year scheme to inflate financial performance of his companies
In a release, the SEC announced that it obtained a temporary asset freeze, restraining order and other emergency relief against the company's founder Mmobuosi for running an "alleged multi-year scheme to inflate the financial performance metrics of his companies and key operating subsidiaries to defraud investors worldwide."
"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," the SEC wrote in a release.
Tingo Group's fiscal year 2022 Form 10-K filed in March 2023 reported a cash and cash equivalent balance of $461.7 million in its subsidiary Tingo Mobile’s Nigerian bank accounts. In reality, those same bank accounts allegedly had a combined balance of less than $50 as of the end of fiscal year 2022.
"Defendants also fabricated the customer relationships that formed the basis of their purported businesses," the SEC alleged. "Mmobuosi and the entities he controls have fraudulently obtained hundreds of millions in money or property through these schemes."
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."
Hindenburg Research founder Nathan Anderson noted that auditor Deloitte gave Tingo a clean audit opinion for 2022 and was seeking to work with the company for 2023. He called it an "astonishing audit failure" for a Big 4 firm.
"We think Tingo is a worthless and brazen fraud that should serve as a humiliating embarrassment for all involved," Hindenburg wrote at the end of their June report.
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