The United States District Court for the Southern District of New York has delivered a significant blow to Nigerian entrepreneur Dozy Mmobuosi and his associated companies, Tingo Group, Inc., Agri-Fintech Holdings, Inc., and Tingo International Holdings, Inc. The Court issued a final judgment by default in favor of the U.S. Securities and Exchange Commission (SEC), which had brought charges against Mmobuosi and his companies for multiple violations of U.S. securities laws and fraud.

The SEC’s complaint, filed in December 2023, accused Mmobuosi and his companies of engaging in a wide-ranging securities fraud scheme. The charges included violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, which prohibit fraudulent activities in connection with the purchase or sale of securities. The SEC also accused the defendants of violating Section 17(a) of the Securities Act of 1933, which prohibits fraud in the offer or sale of securities.

The defendants failed to respond to the complaint, leading to the Clerk of Court entering a default judgment on June 18, 2024. In the final judgment issued by Judge Jesse M. Furman on August 28, 2024, the Court permanently enjoined Mmobuosi and his companies from violating key provisions of U.S. securities laws.

Key Injunctions and Penalties

The Court’s order imposes several severe penalties and restrictions on Mmobuosi and his companies:

1. Permanent Injunctions: Mmobuosi and the associated companies are permanently barred from violating various provisions of the Securities Act and the Exchange Act. This includes prohibitions against making false or misleading statements in connection with the sale of securities, failing to maintain accurate books and records, and falsifying financial statements.
2. Officer and Director Bar: Mmobuosi is permanently barred from serving as an officer or director of any publicly traded company in the United States.
3. Penny Stock Bar: The Court also imposed a permanent ban on Mmobuosi’s involvement in any offering of penny stocks. This measure is intended to prevent him from engaging in activities related to low-priced, speculative securities, which are often subject to fraudulent schemes.
4. Disgorgement* of Profits: Mmobuosi and Tingo International Holdings were ordered to disgorge a total of $251,179,403.62, representing the net profits and other liabilities incurred through their fraudulent activities. Additionally, Mmobuosi has been directed to relinquish the $204 million promissory note payable to him by Tingo Group, due on or before February 9, 2025, which arose from the sale of Tingo Foods PLC to Tingo Group.
5. Stock Cancellation: The judgment orders the cancellation of shares in Agri-Fintech owned or controlled by Mmobuosi and Tingo International Holdings. This action will significantly diminish Mmobuosi’s influence in the company.

Implications and Industry Impact

This ruling marks a decisive moment in the SEC’s ongoing efforts to hold individuals and entities accountable for fraudulent activities within the securities markets. The case highlights the increasing scrutiny on international entrepreneurs who operate within U.S. financial markets, particularly those from emerging markets like Africa.

For Mmobuosi, the ruling effectively ends his ability to operate within the U.S. financial sector, dealing a severe blow to his business empire. Tingo Group, once an alleged star in the fintech and agritech sectors, now faces an uncertain future as it grapples with the fallout from these legal proceedings.

The judgment also sends a strong message to other companies and executives about the importance of compliance with U.S. securities laws. As the SEC continues to ramp up its enforcement efforts, the case of Dozy Mmobuosi serves as a cautionary tale for those who might consider engaging in fraudulent activities.

The court’s ruling may also trigger further investigations into Mmobuosi’s business dealings in other jurisdictions, as regulators around the world take note of the SEC’s findings. 

*Disgorgement is a legal term referring to the repayment of ill-gotten gains that a person or company has obtained through unlawful or unethical activities.