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Frank Franklin II

The auditor for former president Donald Trump’s media company was charged with “massive fraud” Friday by the Securities and Exchange Commission, which <a href="https://www.sec.gov/news/press-release/2024-51" target=_blank>accused the firm</a> of being a “sham audit mill” whose failures put investors at risk.

The auditor, BF Borgers, and its owner, Benjamin Borgers, agreed to a permanent suspension from accounting work and to pay $14 million in civil penalties, federal regulators said.

The SEC <a href="https://www.sec.gov/files/litigation/admin/2024/33-11283.pdf" target=_blank>said</a> its review of the firm’s audits found “deliberate and systemic failures” in more than 1,500 filings from January 2021 through June 2023. That period was before Trump Media &amp; Technology Group went public, suggesting that its filings were not among those investigated as part of the review.

Trump Media, which owns Truth Social, saw its share price slide 5 percent Friday morning.

Trump Media spokeswoman Shannon Devine said in a statement that the company “looks forward to working with new auditing partners in accordance with today’s SEC order.”

BF Borgers did not immediately respond to requests for comment.

Trump Media said in an <a href="https://www.sec.gov/ix?doc=/Archives/edgar/data/1849635/000114036124019745/ny20026576x1_s1.htm" target=_blank>SEC filing</a> last month that Borgers had served as its accounting firm before the company went public in March, auditing Trump Media’s financial statements for 2022 and 2023. In March, the Trump Media board also approved Borgers as its auditor for its upcoming 2024 report.

Borgers conducted the audit of Trump Media’s 2023 <a href="https://www.sec.gov/Archives/edgar/data/1849635/000114036124016719/ef20025342_ex99-2.htm" target=_blank>financial statement</a>, which <a href="https://www.washingtonpost.com/technology/2024/04/01/truth-social-trump-media-results/" target=_blank>said</a> the company lost more than $58 million last year and generated about $4 million in revenue. In that statement, Borgers said it had served as Trump Media’s auditor since 2022.

Companies pay auditing firms to review and sign off on their financial statements and regulatory filings, and the SEC requires the firms to abide by professional accounting standards so that investors can rely on them when deciding where to place their money.

But the SEC <a href="https://www.sec.gov/news/press-release/2024-51" target=_blank>said</a> its review of Borgers’s work found a pattern of “improper professional conduct” from its accountants, who documented work that had not been performed, said they held client meetings that never occurred and submitted audit documents that were actually just lightly tweaked versions taken from other clients.

SEC enforcement division director Gurbir Grewal said in a statement that Borgers was “responsible for one of the largest wholesale failures by gatekeepers in our financial markets.”

Founded 15 years ago in a small office in Lakewood, Colo., Borgers quickly became one of the 10 largest audit firms in the country by number of clients, regulatory filings show.

But the firm has a fraction of the workforce of other auditing firms, with just 10 certified public accountants on staff, according to Public Company Accounting Oversight Board <a href="https://pcaobus.org/oversight/registration/registered-firms" target=_blank>filings</a>. The next-closest firm with more than 100 clients, Cohen &amp; Co., had 308 CPAs, while other firms, such as Ernst &amp; Young and Deloitte &amp; Touche, had more than 10,000.

Nearly every Borgers audit that was examined as part of the oversight board’s inspections between 2019 and 2022 contained a “deficiency,” and in some cases multiple errors, the board’s <a href="https://pcaobus.org/oversight/inspections/firm-inspection-reports" target=_blank>inspection reports</a> show.

Among its repeated errors, the Financial Times found in a <a href="https://www.ft.com/content/2556fab5-d168-4d68-aedb-9be4b5ab739d" target=_blank>review</a> of Borgers’ filings last month: the spelling of the firm’s own name.

A second auditing firm that worked with Trump Media’s merger partner, Digital World Acquisition, was <a href="https://www.sec.gov/news/press-release/2023-114" target=_blank>charged</a> by the SEC last June with “systemic quality control failures” and agreed to pay a $10 million fine. The firm, Marcum, <a href="https://www.sec.gov/Archives/edgar/data/1849635/000119312523200578/d491229d8k.htm" target=_blank>resigned</a> from working with Digital World last summer.

Finalist for the Livingston Award in 2022. Member of the "Pegasus Project" team that won a George Polk Award in 2021. 

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Drew Harwell is a reporter for The Washington Post covering technology. He was a member of an international reporting team that won a George Polk Award in 2021.

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