A lawsuit alleges that Arizona’s small business audit Donald Trump’s media company was kicked out of the National Accounting Alliance because it worked for him.
Phoenix-based Semple, Marchal & Cooper intervened in Trump’s social media business auditor in May after its previous accounting firm was shut down for running what regulators called “mass fraud.”
According to Semple's head of BDO Alliance USA and BDO responsible for the partnership, new clients immediately created tensions with accounting giant BDO, which dates back to 1994's company with SM&C's software and training.
The lawsuit says BDO, the sixth largest U.S. accounting firm, said it will terminate Semple's alliance membership unless Trump Media & Technology Group is revoked as a client. As of June 2024, it terminated the relationship.
According to the lawsuit, when asked why BDO was angry about the reason why SM&C was serving as TMTG as a client, BDO executive Michael Horwitz "yelled because he (the major shareholder) was a criminal!"
Trump was on trial in New York at Semple's appointment and was accused of forging a business record related to fundraising by porn actor Stormy Daniels. He was eventually convicted. His main business, the Trump Organization, was also convicted of fraud in an unrelated civil case.
Trump owns a majority stake in TMTG, which runs social media platform Truth Social and has difficulty sticking with an auditor. Its first draft pick was less than a year after deciding not to want to have connections with Trump’s business, the Financial Times reported.
The SEC said BF Borgers, a small Colorado company, had TMTG as a client after Withum resigned, was shut down by the Securities and Exchange Commission because it did little work to verify its clients’ financial statements, committing "mass fraud" against people using its services and investments.
TMTG is just one of the few listed companies reviewed by SM&C and is much larger than one listed company listed as a client earlier in 2024. According to regulatory documents including 20 accountants, the company has 32 employees.
TMTG is listed on Nasdaq with a market value of more than $5 billion.
BDO has over 300 U.S. accounting firms in its alliance, providing practical support, business recommendations, and marketing benefits to small companies without national coverage.
"While members are independent companies responsible for their professional decision-making, BDO Alliance USA rarely uses this relationship when there are quality and other issues, including important and complex involvement with limited experience and personnel participation," the alliance said in a statement.
It said SM&C's allegations were "freckless, lacking any basis in the reality of why the American BDO Alliance chose to exercise its right to cut off relations".
SM&C founder Robert Semple said his company “has no comments on the complaint because it is self-evident.” He added: “BDO’s comments are untrue and defamatory and will be dealt with in our revised complaints.”
SM&C's lawsuit claims that BDO "infects" its independence by "taking into account by criminal belief claims", i.e., by allowing BDO's political viewpoint to "infect" SM&C's role as an auditor for publicly traded companies.
It said its termination was “forced to remanufacturing all materials and documents and retraining at a huge economic cost” and led to the false meaning of its misconduct.
TMTG did not respond to a request for comment.