Adjudicated ES BME Growth

Let's GOWEX: 90% Fabricated Municipal Wi-Fi Contracts and Revenues

CEO Jenaro Garcia used circular billing with front companies controlled by his chauffeur to create fake municipal public Wi-Fi contracts.

CASE PROFILE & BENCHMARKS

Target Issuer: Let's GOWEX S.A. (ES).
Fraud Period: January 1, 2014 to December 31, 2016.
Reported Overstatement: $180.0M.
Total Fines & Penalties: $0.
Maximum Incarceration: No prison sentence.
Independent Auditor: M&A Auditores.
Primary Schemes: fictitious revenue.
Enforcement Status: ADJUDICATED (admitted).

OVERSTATEMENT $180.0M USD reported

TOTAL PENALTIES $0 Civil & disgorgement

PRISON TIME None No prison sentence

FIRST ACTION September 20, 2016 Initial proceeding

DETECTION METHOD Regulatory Enforcement & Forensic Audit Discovery source

PRIMARY REGULATOR Comisión Nacional del Mercado de Valores (CNMV) ES

ACCOUNTING MECHANICS FOR THIS CASE

HOW IT WAS DONE

In settled proceedings with admissions, the regulator found that The company manipulated its accounting records by executing schemes under fictitious-revenue. Financial reports filed with market regulators contained material misstatements that distorted true financial condition.

Applicable Scheme Classifications:

fictitious revenue →

CHARGED RESPONDENTS & OUTCOMES

1 NAMED PARTIES

Respondent	Role	Disposition & Judicial Outcome	Prison	Civil Penalty	O&D Bar
Let's GOWEX S.A.	ISSUER	Enforcement order and financial sanctions imposed.	None	$0	No

RED FLAGS OBSERVED PRIOR TO DISCOVERY

EARLY SIGNALS

CASH FLOW TO NET INCOME DIVERGENCE 2014 Operating cash flow severely diverged from reported earnings

ENFORCEMENT ACTIONS & PRIMARY DOCKETS

PRIMARY SOURCE CITATIONS

foreign regulator ENF-2014-gowex

Filing Date: September 20, 2016

Enforcement Action: Let's GOWEX: 90% Fabricated Municipal Wi-Fi Contracts and Revenues

CEO Jenaro Garcia used circular billing with front companies controlled by his chauffeur to create fake municipal public Wi-Fi contracts.

Provisions: Securities & Corporate Law Compliance

Disposition: admitted View Primary Record ↗

TIMELINE OF EVENTS

CHRONOLOGY

June 1, 2014 • Misstatement

Material accounting irregularities commenced.

September 20, 2016 • Enforcement

Regulators commenced formal proceedings.

FINANCIAL CRIME REFERENCE SERIES

Cross-Domain Investigation Network

Major corporate accounting scandals frequently intersect with parallel financial crime domains. For violations outside financial reporting scope, explore the companion reference libraries in our open research series:

How Scams Work ↗

Consumer fraud, advance fee fraud, romance scams, phishing, social engineering, impersonation

How Money Laundering Works ↗

Placement, layering, integration, trade-based money laundering, smurfing, shell companies, bank secrecy

How Sanctions Evasion Works ↗

OFAC enforcement, dark fleet shipping, transshipment hubs, export control violations, circumvention networks

How Market Manipulation Works ↗

Spoofing, pump and dump schemes, wash trading, front running, insider trading, benchmark fixing

How Tax Evasion Works ↗

Offshore tax havens, transfer pricing abuse, carousel fraud, undeclared foreign accounts, aggressive tax shelters