Audit Firm BF Borgers and Owner Charged with Massive Fraud

The Securities and Exchange Commission (SEC) has leveled charges against audit firm BF Borgers and its owner, Benjamin F. Borgers. The SEC alleges "deliberate and systemic failures" by the firm to maintain compliance with the Public Company Accounting Oversight Board (PCAOB) in over 1,500 SEC filings.

The SEC's investigation revealed a pattern of misconduct, including false representations to clients about compliance with PCAOB standards, fabrication of audit documentation, and misleading statements in audit reports included in more than 500 public company SEC filings.

As part of the settlement, BF Borgers agreed to pay a substantial $12 million civil penalty, with Benjamin Borgers personally liable for a $2 million civil penalty. Additionally, both respondents face permanent suspensions from appearing and practicing before the Commission as accountants, effective immediately.

Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, minced no words in condemning the actions of Ben Borgers and BF Borgers, characterizing their conduct as "one of the largest wholesale failures by gatekeepers in our financial markets." He highlighted the severe risks posed to investors and markets by incorporating noncompliant audits and reviews into SEC filings, emphasizing the critical role auditors and accounting firms play in maintaining trust and confidence in financial markets.

The SEC's order outlines various failures by BF Borgers and Benjamin Borgers, including inadequate supervision and review of audit work, improper preparation and maintenance of audit documentation, and the failure to obtain engagement quality reviews essential for issuing audit reports. Shockingly, the investigation found that a staggering 75 percent of BF Borgers's audits and reviews incorporated into SEC filings did not comply with PCAOB standards.

Moreover, the order reveals disturbing details of the firm's fraudulent practices, such as copying work-papers from previous engagements and passing them off as current, falsifying documentation of planning meetings, and misrepresenting the approval of work by both Benjamin Borgers and engagement quality reviewers.

The SEC's order concludes that the respondents engaged in improper professional conduct and violated antifraud, record-keeping, and other provisions of federal securities laws. While neither BF Borgers nor Benjamin Borgers admitted to the SEC's findings, they consented to the settlement, which includes payment of civil penalties, cessation of practice before the Commission as accountants, censure, and a cease and desist order from committing or causing violations of relevant securities laws.

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