The U.S. Securities and Exchange Commission (SEC) has charged a Nigerian "agri-fintech" company with "massive fraud" for allegedly running a multi-year scheme to inflate the financial performance metrics of its companies and key operating subsidiaries to defraud investors worldwide.
The SEC announced it obtained a temporary asset freeze, restraining order and other emergency relief against Tingo Group founder Dozy Mmobuosi.
"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 earlier this week.
The agency alleged that the company claimed to have $461.7 million in cash when it had only $50 in its bank accounts. "Tingo Group's fiscal year 2022 Form 10-K filed in March 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," the SEC stated.
It also alleged the defendant of fabricating the customer relationships that formed the basis of their purported businesses as its founder and the entities he controls have fraudulently obtained hundreds of millions in money or property through these schemes.
SEC New York Regional Office Director Antonia M. Apps said 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," Apps added.
Nathan Anderson of investment research firm Hindenburg Research noted that the auditor Deloitte Israel gave the financial tech company a clean audit opinion for 2022, looking forward to working with it for 2023. Anderson called the move an "astonishing audit failure" for a Big 4 firm.
"The SEC just alleged that Tingo fabricated all of its financials and virtually every aspect of its business. Yet Deloitte gave Tingo a clean 2022 audit opinion. And two weeks ago was seeking '23 audit work," Anderson posted on X.
"We short Tingo Group Inc [NASDAQ:TIO] because we believe the company is an exceptionally obvious scam with completely fabricated financials," the research team said in the June report. Hindenburg concluded: "We think Tingo is a worthless and brazen fraud that should serve as a humiliating embarrassment for all involved." Tingo responded, saying that the Hindenburg report was full of "misleading and libelous content."
Mmobuosi temporarily steps down as CEO, decries SEC charges as invalid
Tingo Group recently announced that Mmobuosi has temporarily stepped down as interim co-CEO of the firm following the SEC's filing of fraud charges. Ken Denos will take over until further notice, the company said. (Related: CEO of world's largest carbon credits company steps down after investigation reveals it’s mostly a SCAM.)
According to a statement released by Mmobuosi, the allegations were untrue and baseless. While noting that he would refrain from making public comments about the issues raised because it is now a matter in court, he described the accusations of wrongdoing as outlined in the civil complaint filed by the SEC on December 18 as invalid. He said that he would contest them with unwavering resolve.
"It is Mr. Mmobuosi's intention to address and resolve these allegations within the appropriate legal framework. He is committed to cooperating with the legal process to ensure a thorough and fair examination of the facts, which he believes will ultimately lead to his exoneration," his statement included. "We appreciate the understanding of the media and the public during this time and request respect for the legal process and the principles of justice."
In the meantime, investors who hold stakes in Tingo Group and its affiliated companies are evaluating the potential impact on their investments as industry watchdogs and regulatory bodies are closely monitoring the case, with potential repercussions for regulatory frameworks governing fintech companies.
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