(Bloomberg) -- Tingo Group Inc., a financial technology company that was the subject of a short-seller report, and its chief executive officer were found liable for fraud by a federal judge after they failed to respond to a US Securities and Exchange Commission lawsuit accusing them of a overstating financial results.
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. The regulator accused Tingo’s chief executive officer, Mmobuosi Odogwu Banye, of orchestrating the scheme.
On Wednesday, US District Judge Jesse Furman granted the SEC’s request for a default judgment in the case, saying that the fraud is “brazen.” The SEC was seeking 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 the more than $2.1 million he made from insider trading.
“The magnitude of the fraud is quite something,” Furman said at a hearing.
In June 2023, short seller Hindenburg Research cited fraudulent activity by Tingo in a report, causing the company’s share price to fall by 48%. The SEC claims 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. He has not appeared to answer the charges.
While lawyers for the corporate defendants initially appeared in the case, they didn’t respond to subsequent orders from Furman. 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 Tuesday for failing to produce internal files.
The case is Securities and Exchange Commission v. Mmobuosi Odogwu Banye, 23-cv-10928, US District Court, Southern District of New York (Manhattan).
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