BF Borgers CPA PC, which agreed in a settlement on Friday to be banned from the industry, had 20 broker-dealers as clients, with at least one a highly prominent, family-owned firm, Geneos Wealth Management Inc.
The Securities and Exchange Commission at the end of last week charged the firm and its owner, Benjamin F. Borgers, with “massive fraud” and systemic non-compliance with critical auditing standards. The firm and Borgers agreed to $14 million in penalties, without admitting to or denying the SEC's findings in the matter.
According to the SEC's order, Borgers and his firm were responsible for 20 registered broker-dealer annual filings, a small but meaningful percentage of the 2,175 public filings it was supposed to work with and review from 2021 through the middle of last year.
Most notably, Trump Media was a client of BF Borgers CPA PC. But the broker-dealers the firm worked with and were possibly duped by Borgers also have concerns, accountants and compliance executives said, and are likely engaged immediately in a hunt for a new auditing firm.
Ben Borgers on Monday did not return a phone call to comment.
Geneos Wealth Management is based in Englewood, Colo., and Borgers was its auditor starting in 2015, according to its latest public audited financial statement, called a Focus report, which the company filed this winter. The former auditor was based in Lakewood, Colo.
InvestmentNews was not able to track down any of the other firms Borgers counted as clients by the end of Monday.
Ryan Diachok, CEO of Geneos, did not return calls Monday to comment. Opened in 2002, Geneos controls close to $5.2 billion in advisor assets, according to its most recent Form ADV. Geneos Wealth Management is controlled by the Diachoks, who count at least three generations of independent broker-dealer owners and executives in their family.
Meanwhile, all the broker-dealer clients of BF Borger CPA PC are likely scrambling to find a new auditor.
"These firms have to go back, hire a new accounting firm and restate financials," said one senior industry executive, who asked not to be named. "Who knows how that lands. The broker-dealers could be operating while violating certain industry regulations, like the capital rule, for example. And that would be a big deal."
On the BF Borgers CPA PC website, Ben Borgers is the only person listed under the heading of the firm's team. The firm and its owner ran a “sham audit mill,” according to the SEC.
"It’s amazing to me that with one partner they did so much work over a short period of time for a bunch of clients," said Gordon Yale, a forensic accountant based in Denver. "That didn’t make sense to me."
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