Just months after the company raised $123 million in financing, the U.S. founder and CEO of NS8, a cyber fraud prevention and protection company, was charged with fraud. It was announced on Thursday by the Department of Justice and the Securities and Exchange Commission (SEC).
Adam Rogas, 43, of Las Vegas , Nevada, was arrested and charged with securities fraud, securities offering and selling fraud, and wire fraud, the DoJ said. The offences of stock fraud and wire fraud both bring a potential gaol term of 20 years.
Rogas, who also served as CFO of the company, had control over a bank account that held the company’s customer revenue, according to authorities. He periodically provided the company’s finance department with statements from that account.
Rogas allegedly changed financial records between 2018 and June 2020 to make it appear as if the company had revenues of tens of millions of dollars, money that did not exist in reality. In a Series A funding round led by Lightspeed Venture Partners and AXA Venture Partners, he used the fake financial statements to raise $123 million in June 2020. From these funds, Rogas allegedly pocketed at least $17.5 million.
“As alleged in our complaint, by fabricating revenue figures and providing them to investors, Rogas falsely presented NS8 as a successful business,” said Kurt L. Gottschall, director of the Denver Regional Office of the SEC. “Investors are entitled to accurate information about the financial condition of a company and the SEC is committed to holding corporate executives accountable who mislead investors.”
Last week, the first signs of trouble at NS8 came to light when it was reported that Rogas had resigned abruptly on September 1 and that much of the company’s 225-person workforce was being laid off. The board of directors of the company has announced the launch of an internal investigation.
Speaking to Forbes one week before his arrest, Rogas said, for personal reasons, he had left NS8 and refused to walk away with the company’s money.
As alleged, the proverbial fox guarding the gallery was Adam Rogas. Rogas himself was reportedly engaged in a blatant scam when collecting over $100 million from investors for his fraud prevention business. Rogas’s detention today means that he can be held responsible for his supposed scam, “said Audrey Strauss, New York ‘s Southern District’s acting US attorney.