The US authorities have accused Odogwu Banye Mmobuosi, the founder and CEO of Tingo Group, of orchestrating a multi-year fraud that inflated the financial performance of his companies and deceived investors worldwide. Mmobuosi, who is still at large, faces up to 45 years in prison if convicted.
According to a press release by the US Securities and Exchange Commission (SEC) on Monday, Mmobuosi and three affiliated US-based entities of which he is the CEO – Tingo Group Inc., Agri-Fintech Holdings Inc., and Tingo International Holdings Inc. – have been charged with securities fraud, making false filings with the SEC, and conspiracy.
The SEC alleges that Mmobuosi fabricated financial statements and other documents of the three entities and their Nigerian operating subsidiaries, Tingo Mobile Limited and Tingo Foods PLC, since at least 2019. He also made and caused the entities to make material misrepresentations about their business operations and financial success in press releases, periodic SEC filings, and other public statements.
For instance, 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.
The SEC also claims that Mmobuosi fabricated the customer relationships that formed the basis of his purported businesses. He allegedly reported hundreds of millions of dollars in non-existent revenues and assets, creating the false impression that Tingo Mobile was a thriving, multimillion-dollar business when in fact its operations and earnings were fabricated.
The SEC further accuses Mmobuosi of siphoning off funds for his personal benefit, including purchases of luxury cars and travel on private jets, as well as an unsuccessful attempt to acquire an English Football Club Premier League team, among other things.
The SEC obtained a temporary asset freeze, restraining order, and other emergency relief against Mmobuosi and the three entities on Monday. The regulator is seeking permanent injunctions, disgorgement of ill-gotten gains plus interest, civil penalties, and officer-and-director bars against Mmobuosi.
In a parallel action, the US Attorney’s Office for the Southern District of New York announced criminal charges against Mmobuosi on Monday. He is charged with one count of conspiracy, which carries a maximum sentence of five years in prison, one count of securities fraud, which carries a maximum sentence of 20 years in prison, and one count of making false filings with the SEC, which carries a maximum sentence of 20 years in prison.
“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,” said Antonia M. Apps, Regional Director of the SEC’s New York Regional Office. “We filed this emergency action to expose Mmobuosi’s fraud and hold him accountable while protecting investors from further harm.”
Mmobuosi’s whereabouts are unknown, and the FBI is seeking the public’s assistance in locating him. Anyone with information about his location is urged to contact the FBI’s New York Field Office at (212) 384-1000.
Tingo Group is a financial technology company that claims to offer a smartphone-based platform for African farmers, according to its website. The company had come under fire last year when short-seller Hindenburg Research claimed fraudulent activity by Tingo, causing its share price to fall by 48%.
The SEC’s investigation is ongoing and involves assistance from the Nigerian Securities and Exchange Commission. The SEC’s Office of International Affairs, the Department of Justice’s Office of International Affairs, and the Federal Bureau of Investigation also assisted in the matter.
The SEC’s action is part of its ongoing efforts to protect investors from fraud and misconduct in the global capital markets. The SEC has recently taken enforcement actions against several other companies and individuals involved in similar schemes, such as Longfin Corp., Luckin Coffee Inc., and Nikola Corp.
The SEC urges investors to exercise caution when investing in foreign companies, especially those that are not subject to the same regulatory oversight and reporting standards as US companies. Investors should also be wary of unsolicited offers, unrealistic promises, and high-pressure sales tactics.
The SEC also encourages investors to check the background of anyone selling or offering them an investment using the free and simple search tool on Investor.gov.
Despite the allegations against Mmobuosi and his companies, some analysts believe that the Nigerian fintech sector still has great potential for growth and innovation, as it serves the needs of millions of unbanked and underbanked people in Africa’s largest economy. They also hope that the SEC’s action will deter future fraudsters and improve the transparency and accountability of the sector.
Source: Business Day NG
