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Oil refinery and storage company, Brooge, continues to deal with the fallout from its years of alleged revenue inflation. After being fined $5 million fine by federal regulators, Brooge and its former executives are now the targets of a securities class action and an investigation launched by prominent investor rights law firm, Hagens Berman.
The complaint alleges Brooge made misleading statements and failed to disclose that it: (1) overstated revenues because it never received any revenues from related party A1 Brooge International Advisory LLC (“BIA”), as well as from another fake customer (“Customer A”); (2) engaged in a complex pattern of payments with BIA to create the illusion of revenues from BIA and another customer who had no knowledge of the fraud; (3) intentionally lied to its auditors and the SEC about its fraudulent activities; and (4) lacked internal controls.
The truth emerged on Dec. 22, 2023, when the SEC announced it fined Brooge Energy $5 million and issued a cease-and-desist order against Brooge, its former CEO (Nicolaas Lammert Paardenkooper), and its former Chief Strategy Officer and former Interim CEO (Lina Saheb).
The SEC found that the company falsely represented to investors that it had a single customer contractually obligated to rent 100% of its oil storage capacity and certain other services at specific rates, thereby producing revenue of approximately $44 million per year.
The SEC’s order revealed that “[i]n reality, actual customers used a smaller portion of the storage capacity and almost no ancillary services, at rates specified in the single-customer contract[]” and “[t]he difference was addressed through an accounting scheme that relied upon a false second set of invoices” involving BIA and Customer A. Using this scheme, Brooge recorded over $70 million of fake revenues.
This news sent the price of Brooge shares crashing over 15% lower on Dec. 22, 2023, to close at $3.34 per share.
Hagens Berman, a leading class-action law firm, believe investors may have suffered substantial damages as a result of Defendants’ alleged fraud, but they will not be adequately compensated by the SEC’s settlement.
BROG investors with substantial losses, as well as individuals who have knowledge that may assist the firm’s investigation, are encouraged to contact attorneys at Hagens Berman.
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Contact Info:
Name: Heidi Waggoner
Email: Send Email
Organization: Hagens Berman
Website: https://www.hbsslaw.com/investor-fraud/brog
Release ID: 89123732
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