Allegiant Professional Business Services Inc (EM)【APRO】株式ニュース

More on the Nigerians...

Jan 10, 2024,06:30am EST
The accountants certified that Tingo Group had $462 million in the bank. The SEC says it was just $50. Short sellers are rejoicing.
Brandon Kochkodin, Forbes Staff
Hindenburg Research, known for sniffing out corporate scams, took aim in June at an obscure Nigeria-based outfit named Tingo Group. Hindenburg rolled out a report with a title that left little to the imagination: “Fake Farmers, Phones, and Financials – The Nigerian Empire That Isn’t.” But Hindenburg didn’t just call Tingo a clear-cut scam. The short-seller also threw a spotlight on the auditor who green-lit Tingo’s financials, challenging its competence, and perhaps its willingness, to see the truth.

“The issues in Tingo’s financials are glaring enough that we’d expect they could have been spotted by any semi-conscious finance undergrad with severe vision loss,” Hindenburg wrote. “These issues were apparently not glaring enough for the company’s auditor, however.”

The auditor in question was Deloitte, the behemoth Big Four accounting firm with annual revenue of $65 billion through a global network that stretches from Amsterdam to Zhengzhou.

In November, after Tingo’s stock had already fallen about 80% wiping out more than $700 million in market value, the Tingo saga took a sharp turn. The Securities and Exchange Commission stepped into the fray, slamming the brakes on Tingo’s stock trading. In December, the SEC slapped Tingo CEO Dozy Mmobuosi with charges of “massive fraud.” Things only got worse this month, when the regulator tacked criminal securities fraud charges onto the bill of consequences. According to the SEC’s civil complaint, Tingo, whose audited books boasted a $462 million treasure chest socked away in Nigerian banks, actually had only $50.

“The issues in Tingo’s financials are glaring enough that we’d expect they could have been spotted by any semi-conscious finance undergrad with severe vision loss.”

Hindenburg Research
Auditors are supposed to be the financial world’s most trusted sources of information, armed with calculators and sworn to sniff out fiscal misconduct. A flip through history tells a different story: too often auditors, who are paid fees by the clients they are examining, fail to dig below the surface, and essentially rubber stamp seemingly obvious inconsistencies and problems in financial statements. Worse, some would even say they’re part of the problem, either by not being sharp enough or by looking the other way at the outrageous claims of their clients.

“As outsiders, we’d like to think that auditors are looking for fraud, but fraud detection isn’t one of their mandates,” Matthias Breuer, an accounting professor at Columbia University’s Graduate School of Business, told Forbes. “Auditors don’t go into their work with an adversarial mindset. Their mandate isn’t to be a whistleblower, and because of that it’s usually insiders and short-sellers that uncover these issues.”

Need a few examples? Ernst & Young, after nodding approval at Wirecard’s books, could only watch as the German firm imploded over a $2.08 billion vanishing act. Remember Arthur Andersen? Once an auditing giant, it crumbled under the weight of its involvement in Enron’s notorious collapse. And let’s not forget the infamous 1MDB saga, which roped in the trifecta of Ernst & Young, KPMG and Deloitte, as billions earmarked for development in Malaysia were splurged on lavish parties, opulent real estate and a cache of Monets and Van Goghs. That one cost Deloitte $80 million when it settled with the country in 2021, a hefty sum, but nothing compared to the $150 million it paid to the U.S. government in 2018 for its role in auditing failed mortgage lender Taylor, Bean & Whitaker.

Routine Failures
Auditing failures, despite the cost in money and reputation to the auditors, are practically routine. A 2020 study by the Association of Certified Fraud Examiners showed that auditors uncover less than 4% of frauds. That’s a dismal track record, for sure, but there are a couple of reasons why it actually makes a bit of sense.

First off, auditing is pretty much a by-the-book routine, says Columbia’s Breuer, which provides an opinion on whether companies’ financial statements are prepared in accordance with accounting standards, and whether companies maintain sound financial controls. It’s a straightforward, no-frills affair, and that’s just how the auditing world prefers it.

“What’s happened in the audit industry is that they’ve lobbied to do check-the-box exercises to limit their legal liability,” he told Forbes. “They’re just trying to satisfy the auditing standards, they’re not necessarily trying to attest to the real economic reality of the business.”

Secondly, despite their expertise, auditors are often outfoxed by companies willing to lie to them. Firms can concoct a tangle of fictitious documents, hide critical information, or devise schemes so elaborate they’re nearly impossible to decipher without a whistleblower’s help.

A 2020 study by the Association of Certified Fraud Examiners showed that auditors uncover less than 4% of frauds

But Deloitte’s Tingo case isn’t one you can just brush off with the usual excuses. It stands out because Hindenburg, along with a crew of independent internet detectives, managed to cut through the smoke and mirrors without any insider help.

Hindenburg’s exposé on Tingo, echoed by the SEC allegations, hints at a more unsettling issue. Auditors get their paychecks from the companies they’re supposed to keep honest. (Tingo paid $1.6 million in audit fees in 2022.) This setup can lead to auditors playing it safe, avoiding the hard-hitting questions that could upset a paying customer.

How did Deloitte, the auditing heavyweight watching over Tingo’s books, miss a scam that Hindenburg, an outsider, called out as painfully obvious?

Maybe the answer lies in who was holding Deloitte’s magnifying glass. Tingo, balancing its act between Nigeria and the Nasdaq in New York, wasn’t checked by Deloitte’s team in Nigeria. Instead, it was Deloitte’s Israeli branch, Brightman Almagor Zohar & Co., that certified the books. That’s a head-scratcher, especially since, as Hindenburg highlighted, Tingo didn’t really do much business in Israel. Why not use auditors who operate where the action is? It almost seems like a move to keep the auditors just far enough away so they wouldn’t stumble upon anything they shouldn’t.

In response to questions from Forbes, a spokesperson for Deloitte Israel declined to comment, saying “professional standards prohibit our commenting on client matters.” Tingo didn’t respond to a request for comment.

Astonishing Gap
The discrepancy between what Deloitte certified — $461.7 million — and Tingo’s actual cash balance of $50 was “astonishing,” Ed Ketz, an accounting professor at Penn State’s Smeal College of Business, told Forbes in an email. “The cash account is the most important balance sheet account and one of the easiest to audit,” he said. “One wonders how Deloitte Israel could have missed that.”

Verifying a company’s cash is a foundational part of the auditing process and one of the boxes auditors are supposed to check, said Stephani Mason, an accounting professor at the Driehaus College of Business at DePaul University.

“In the process of an audit there are some pretty basic things that should be done,” Mason told Forbes. “One of those is confirming cash balances by sending a form that goes directly to the client’s bank. The standard essentially says that the auditor has to verify the bank account independently.”

You’d think the obvious move would be to tighten standards on checking companies’ bank balance claims. But just cranking up the standards might not stop the deceit. In fact, academics argue that squeezing the fraud balloon doesn’t deflate it, it just pushes the hot air somewhere else.

A 2021 paper from folks at the University of Minnesota and Indiana University, titled “Everlasting Fraud,” lays it out. Fraud, they say, shifts shapes, constantly morphing as crafty companies stay one step ahead of regulators in a relentless game of cat and mouse. While regulators are busy learning from old scams like Enron’s off-the-books creativity, companies like Wirecard, and allegedly Tingo, are out there boldly cooking up fake bank balances. It’s a gutsy move, a bet that it’s so obvious that auditors might figure no company would even try it, and not even check.

Not Their Job
“If the auditors were really after fraud, I think they could find it,” Columbia’s Breuer told Forbes. “But that’s not the nature of their business. It’s not great for an auditor’s career to claim fraud with a client. They’re very cautious to not be too alarmist too often. That’s why they may look the other way or never get started on these things.”

An added impediment to accountability is the way auditing firms are set up, with offices in different countries acting more like independent franchises than branches of a central tree. That means Deloitte’s main office may never have to pay for this ridiculous oversight. Each office is its own island, so the fallout tends to stay local.

Where you might spot some consequences for auditors, however, is in the stock market. In the short term, Deloitte’s other client companies could feel a bit of a chill. There’s precedent for this. Consider what happened with PricewaterhouseCoopers’ clients after the “OscarGate” fiasco.

Rewind to 2017. PwC had the seemingly simple job of tallying votes for the Academy Awards. In the world of auditing tasks, this was so easy it was a bit dull, but with a hefty upside of a mountain of free publicity. Still, PwC screwed the pooch. Its accountants handed over the wrong envelope for the best picture award (La La Land instead of Moonlight) and what should have been a seamlessly glamorous affair turned into a comedy of errors, swapping the auditor’s PR triumph for a dose of public embarrassment.

Researchers Lawrence Abbott and William Buslepp decided to investigate how PwC’s blunder — witnessed by millions of TV viewers around the world — might ripple out to its clients. They dug into the data and, lo and behold, it was PwC’s roster of clients who ended up feeling the pinch.

“We find that abnormal returns in the days following the error are significantly lower for PwC clients,” the researchers wrote, “suggesting an impaired reputation for audit quality.”

Basically, for a brief spell — the study pegs it at a month — the market was giving PwC’s clients the side-eye. Investors discounted the companies’ financial statements, all because they started wondering if they could really trust what was in them.

“In my expectation, this isn’t likely to affect the Deloitte U.S. firm,” DePaul’s Mason told Forbes. “The SEC can fine Deloitte Israel, disgorge profits, or even give them the death knell, so to speak, by barring them from auditing companies in this jurisdiction. But what I’m interested in is what other companies have they done work for? If I was an investor long on a client Deloitte Israel audited, I’d be very concerned.”

https://www.forbes.com/sites/brandonkochkodin/2024/01/10/how-auditor-deloitte-missed-a-nigerian-companys-massive-fraud/?sh=752cea4059f4

A 2011 post detailing FACTS about BONAR.

He is a crook.

STTN some research inspired by the filing of the last 10Q on November 21, 2011

The stock started to plummet the day before the 10Q filing (maybe some insiders with advanced knowledge that the 10Q was going to be brutal decided they better start getting out early?)

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So what was in this 10Q?

Before we get to that a quick rundown on the events that have happened over the past few months:

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Starting shortly after the former Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer and founder of the company, Perry Law, tendered his resignation from his last remaining position of Director effective immediately on June 3, 2011 things have taken a very bad turn for the worse.

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On June 9, 2011, Brian Bonar signed a toxic financing agreement with La Jolla which included a $500,000 debenture agreement and the right for La Jolla to purchase up to $5,000,000 worth of stock at 80% below the market price. To date this agreement has not been executed.

http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=7997447

On June 15, 2011, Brian Bonar issued himself 21,897,999 shares at no cost. According to the recently filed 10Q those shares were issued for $218,979 in compensation owed. On June 15, 2011, STTN closed at $.071/share making the actual value of those shares $1,554,757.93.

http://www.sec.gov/Archives/edgar/data/947011/000106299311002630/xslF345X03/form4a.xml

On June 17, 2011, Brian Bonar issued to his Director, Owen Naccarato, 3,000,000 shares at no cost for $225,000 in compensation owed.

http://www.sec.gov/Archives/edgar/data/947011/000106299311002672/xslF345X03/form4.xml

On July 29, 2011, Brian Bonar and Owen Naccarato met at the Rancho Bernardo Inn and used their 24,897,999 shares to elect themselves as the new Directors for the STTN shell.

http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=8069037

On October 17, 2011, Brian Bonar brought his son, Colin Niven Bonar (aka C. Niven Bonar aka C N Bonar), into the picture by purchasing a group of companies which were all wholly owned subsidiaries of American Marine LLC, a company controlled by both Brian Bonar and C. Niven Bonar, for $50,000 and a $500,000 debt Note.

http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=8194094

Solvis Medical Group consists of three revoked Nevada entities

Solvis Medical Inc and Solvis Medical Staffing Inc and Solvis Physical Therapy Inc all with Eric Gaer and Robert Dietrich listed as officers.

Former chairman of the Solvis Medical Group is Brian Bonar.

American Marine LLC is controlled by both Brian Bonar and C. Niven Bonar

http://www.corporationwiki.com/California/Escondido/american-marine-llc/47532519.aspx

Owen Naccarato (STTN Director) served as the legal counsel for the signed agreement between father and son.

C. Niven Bonar and Brian Bonar were previously linked with Dalrada Financial Corp (DFCO). Both C. Niven Bonar and Brian Bonar's daughter, Pauline Bonar, were initial shareholders in Dalrada Financial Corp back in 1999 while Brian Bonar was the CEO. Not so coincidentally Owen Naccarato was and still is the legal counsel for Bonar linked Delrada Financial Corp.

http://www.otcmarkets.com/stock/DFCO/company-info

The Bonar, Bonar, Naccarato connections don't end there.

The three can be linked to Allegiant Professional Business Services, Inc. (APRO)

Where daddy Bonar served as a Director and president, son Bonar served as the COO, and Naccarato once against served as legal counsel:

http://www.otcmarkets.com/stock/APRO/company-info

http://investing.businessweek.com/research/stocks/people/people.asp?ticker=APRO:US

APRO was (I used past tense because that company is basically dead now) a PEO company just like STTN is now.

APRO even uses the same address as STTN

11838 Bernardo Plaza Ct.
Suite 240
San Diego, CA 92128

Which is in shouting distance from American Marine LLC

11838 Bernardo Plaza Ct
Suite 210
San Diego, CA 92128

And is within walking distance from Dalada Financial Corp

11956 Bernardo Plaza Drive
#516
San Diego, CA 92128

John Capezzuto who works with Brian Bonar with APRO also worked with Brian Bonar with scam company Warning Management Services Inc. (WNMI) which was revoked by the SEC on May 22, 2009

http://www.sec.gov/litigation/admin/2009/34-59968.pdf

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=64388493

Legal counsel for scam company WNMI was Owen Naccarato.

Are you beginning to wonder if Brian Bonar always uses Owen Naccarato for a reason?

Here is a list of companies for which Owen Naccarato currently provides legal services:

http://www.otcmarkets.com/service-provider/Naccarato-&-Associates?id=2062&b=n&filterOn=3

Allegiant Professional Business Services, Inc. (APRO)
Com-Guard.com, Inc. (CGUD)
Dalrada Financial Corp. (DFCO)
Diverse Media Group, Inc. (DVME)
DPOLLUTION International Inc. (RMGX)
eMamba International Corp. (EMBA)
Family Room Entertainment Corp. (FMYR)
Genco Corp. (GNCC)
Global Digital Solutions, Inc. (GDSI)
Icon Media Holdings, Inc. (ICNM)
ITonis, Inc. (ITNS)
Lexico Resources International, Inc. (LXXI)
Markray Corp. (RVBR)
Quad Energy Corp (CDID)
Ree International, Inc. (REEI)
Smart-Tek Solutions, Inc. (STTN)
South Shore Resources, Inc. (SSHO)
TapSlide, Inc. (TSLI)
Velocity Energy Inc. (VCYE)

This link draws some interesting past connections between Corey Ribotsky and many companies that used Owen Naccarato as legal counsel

http://www.offshorealert.com/WorkArea/threadeddisc/print_thread.aspx?id=60&g=posts&t=37726

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I got side tracked though back to the 10Q

Then on November 21, 2011, the STTN 10Q for the 3rd quarter came out and it was ugly.

Cash on September 30, 2011 - $270,048
Cash on June 30, 2011 - $882,069

STTN lost $612,021 in cash during the 3rd quarter

Accounts payable and accrued liabilities on September 30, 2011 - $8,384,307
Accounts payable and accrued liabilities on June 30, 2011 - $3,256,689

STTN added $5,127,619 in accounts payable and accrued liabilities during the 3rd quarter

The accounts payable and accrued liabilities for the 2nd quarter was only $82,477

$5,127,619 is $2,129,070 more than STTN had in accounts payable and accrued liabilities for its entire existence from 1995 - through the 2nd quarter of 2011.

Why the $5,127,619 in accounts payable and accrued liabilities all in just a 3 month period? Who is all that money owed to?

Gross profit on September 30, 2011 (for 3rd quarter) - negative $155,177
Gross profit on June 30, 2011 (for 2nd quarter) - $1,685,183

STTN went from a profitable business to a company with a failing business. The cost of revenue for the 3rd quarter of 2011 was higher than the revenues themselves. They would have been better off not doing business in the 3rd quarter.

Subtract away the operation costs/expenses and

Overall operating loss on September 30, 2011 (for 3rd quarter) - $2,963,852
Overall operating loss on June 30, 2011 (for 2nd quarter) - $599,161

STTN's operating losses increased by $2,364,691.

During the 1st quarter of 2011 (the period ending March 31, 2011), STTN didn't have an operation loss. They had an operating gain of $363,354 after subtracting away all the costs of operations from the revenues for the quarter. It is obvious the direction that STTN is headed, and it is not good.

A further break down of the Selling, general and administrative expenses helps partially explain why STTN is headed down the toilet.

Salaries & Related Expense
1st quarter - $311,430
2nd quarter - $582,969
3rd quarter - $553,404

Consulting
1st quarter - $220,366
2nd quarter - $158,823
3rd quarter - $353,624

Commissions
1st quarter - $177,223
2nd quarter - $269,583
3rd quarter - $633,742

Outside Services
1st quarter - $31,688
2nd quarter - $62,403
3rd quarter - $211,287

Overall Selling, General, and Administrative Expenses
1st quarter - $1,272,515
2nd quarter - $1,685,183
3rd quarter - $1,997,439

Since revenues dropped by 28% from the 2nd quarter to the 3rd quarter why did commissions increase by 235% during that same stretch?

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The most disturbing parts of the recent STTN filings:

#1) Brian Bonar paying himself $1,554,757.93 in shares for a $218,979 balance that was owed to him then writing off the payment in the books as a $218,979 stock expense.

#2) Brian Bonar issuing himself and his son a $500,000 debt Note for a group of revoked business entities.

#3) The $5,127,619 in accounts payable accrued during the 3rd quarter alone. Who is all that money owed to?

#4) STTN went from a positive balance sheet at the end of the 1st quarter to a failing business whose revenues cost more than what they make.

#5) The past connections and histories of the main players involved in STTN.

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=69486867