US: Founder of cyberfraud prevention company sentenced to prison for defrauding investors
Mr. Rogas, who was primarily responsible for the company’s fundraising activities is also accused of personally benefiting from approximately $17.5 million of investor funds.
A US Court in New York has sentenced a co-founder and former CEO of cyberfraud prevention company NS8 Inc, to five years in federal prison for engaging in securities fraud.
According to a US Justice Department statement, Adam Rogas created and used fraudulent financial data to obtain over $123 million in financing for NS8, a Las Vegas, Nevada firm that developed and sold electronic tools to help online vendors assess the fraud risks of customer transactions.
Mr. Rogas, who was primarily responsible for the company’s fundraising activities is also accused of personally benefiting from approximately $17.5 million of investor funds.
“In the fall of 2019 and the spring of 2020, NS8 engaged in fundraising rounds through which it issued Series A Preferred Shares and obtained approximately $123 million in investor funds. Rogas used the materially misleading financial statements to raise those funds.
“During the fundraising process in the fall of 2019 and spring of 2020, Rogas altered the bank statements before providing them to NS8’s finance department to show tens of millions of dollars in both customer revenue and bank balances that did not exist. In the period from January 2019 through February 2020, between at least approximately 40% and 95% of the purported total assets on NS8’s balance sheet were fictitious. In that same period, the bank statements that Rogas altered reflected over $40 million in fictitious revenue. Rogas also falsified nearly all of NS8’s purported customers on internal tracking spreadsheets,” the statement said.
Additionally, it said: “Rogas provided the falsified bank records he had created to auditors who were conducting due diligence on behalf of potential investors. After these fundraising rounds concluded, NS8 conducted a tender offer with the funds raised from investors, and Rogas received $17.5 million in proceeds from that tender offer, personally and through a company he controlled. After Rogas’s fraud was uncovered, NS8 ultimately entered bankruptcy proceedings. Rogas used his fraudulent proceeds to purchase, among other things, luxury goods and a residence in the Dominican Republic.
Having pleaded guilty on March 16, 2022, Rogas was also sentenced to three years’ supervised release and ordered to forfeit $17,542,259.
“Adam Rogas took the ‘fake-it-till-you-make-it’ saying to a criminal extreme. While claiming to be in the fraud prevention business, Rogas himself faked nearly all of his company’s customers, revenue, and assets. In doing so, he defrauded investors out of over $100 million. Now Rogas will report to prison to be held accountable for his fraudulent scheme,” U.S. Attorney Damian Williams is quoted as saying.
