The founder of cyberfraud prevention company
NS8 said it is cooperating with investigators and has learned that the founder and former chief executive officer,
“Adam Rogas was the proverbial fox guarding the henhouse,”
The government says Rogas, 43, doctored the company’s financial statements to make it look like the firm had generated tens of millions of dollars in revenue from customers and had more than $40 million in the bank. In reality, prosecutors claim, those customers and accounts didn’t exist, and 40% to 95% of the assets listed on the company’s balance sheet from January 2019 to February 2020 were fictitious. Rogas used the false statements to gather about $123 million in investments in the fall of 2019 and the spring of 2020, according to the U.S.
“The government investigation and an internal investigation into this conduct are ongoing,” NS8 said in a statement. “At this time, no one else has been charged and the company is cooperating fully with federal investigators.”
The company went on to address the impact on its finances.
“The NS8 board of directors has learned that much of the company’s revenue and customer information had been fabricated by Mr. Rogas,” it said. “These events created significant cash flow issues for the company and required a significant downsizing impacting all of its employees. The remaining NS8 leadership and board of directors is working to determine financial options for the company and its stakeholders going forward.”
NS8 describes itself as a “comprehensive fraud prevention platform that combines behavioral analytics, real-time scoring, and global monitoring to help online businesses minimize risk.” It
Prosecutors said Rogas controlled the bank accounts that received funds from customers and spreadsheets that tracked that revenue and periodically provided them to the company’s finance department so it could create financial statements. They claim he gave the falsified bank statements to auditors who were conducting due diligence for potential investors, and personally received $17.5 million from a tender offer conducted after the fundraising had concluded.
Rogas is charged with one count of securities fraud and one count of fraud in the sale of securities and faces as long as 20 years in prison if convicted. He is expected to appear before a judge in Nevada on Friday.
(Updates with company statement and further details of alleged fraud)
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