Fraud Prevention CEO Rogas Pleads Guilty to Defrauding Investors

(Bloomberg) -- The co-founder and former chief executive of cyberfraud-prevention company NS8 Inc. admitted to defrauding investors by using fake financial statements to raise more than $100 million in financing.

Adam Rogas, 44, pleaded guilty to a single count of securities fraud in a New York federal court on Wednesday. He was arrested in September 2020 and accused of falsifying the Las Vegas-based company’s financial statements, which made it appear as if he had generated tens of millions of dollars in revenue and had more than $40 million in cash. He then used the bogus records to lure investors, prosecutors said.

NS8 announced in June 2020 that it had raised $123 million in venture funding led by Lightspeed Venture Partners and AXA Venture Partners. The company, now known as Cyber Litigation Inc., filed for Chapter 11 bankruptcy shortly after Rogas’s arrest. Its plan to pay at least $38 million to defrauded investors was approved by a federal judge last week.

“Adam Rogas admitted to being the proverbial fox guarding the henhouse,” Manhattan U.S. Attorney Damian Williams said. “While claiming to be in the fraud-prevention business, Rogas himself defrauded investors in his company of over $100 million.  Now Rogas will be held accountable for his fraudulent scheme.”

Prosecutors said Rogas controlled the bank accounts that received funds from customers and periodically provided spreadsheets used by the company to create financial statements. He also allegedly falsified bank statements provided to auditors for potential investors. As much as 95% of the assets listed on NS8’s balance sheet from January 2019 to February 2020 were fictitious, according to the government.

Rogas, who personally received $17.5 million from a tender offer conducted after the fundraising had concluded, faces as much as 20 years in prison when he is sentenced by U.S. District Judge John P. Cronan in Manhattan on Aug. 10. 

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