Rich Uncles' auditor charged with accounting fraud by SEC
Updated: Sep 20, 2023
This, on top of SEC investigation for marketing fraud, adds to embattled platform's woes. Now, a new Wall Street Journal article alleges Rich Uncles REIT's cash flow was plumped up after recent accounting change.
(Disclaimer: I'm not a financial advisor or attorney. Consult your own financial and/or legal advisors before making any investment or legal decisions.)
The auditor of Rich Uncles, Anton & Chia, has been charged by the SEC for auditing fraud on behalf of 3 of their clients.
The SEC’s Enforcement Division alleges that Anton & Chia LLP and its accountants ignored numerous indications of fraudulent financial reporting by three of the firm’s audit clients – microcap companies Accelera Innovations Inc., Premier Holding Corp., and CannaVEST Corp. For example, Accelera’s public filings allegedly included revenue, assets, and liabilities from an entirely different company. The Enforcement Division alleges that instead of standing in the way of Accelera’s fraud, Anton & Chia facilitated it.
This news may cause some investors to question whether the accounting firm did this for other clients as well.
These allegations come at a challenging time for Rich Uncles. In our yearly review, we discussed how the SEC has been investigating the company over alleged undisclosed marketing improprieties. Rich Uncles disclosed in their public filings that this could have material negative effects on the company.
Then, two days ago, an investor mentioned in a Wall Street Journal article alleged that Rich Uncles changed its accounting in a way that "makes its business look more robust and its dividend safer."
John Davis, CFO at Rich Uncles, countered that "the change had no impact on the REIT’s cash or net income."
But, Howard Schilit, founder of a New York accounting-analysis and forensics firm, disagreed. Per the Wall Street Journal, he alleged that "the accounting change does seem to have had the effect of making Rich Uncles’ operating and free cash flows appear larger."
All of this controversy may make investors second-guess investing with the company.
At one time, Rich Uncles was a top-ranked platform in the reviews, due to their transparency and willingness to answer all questions. However, since the SEC investigation, the company has refused to answer even our non-SEC-related questions.
