The CEO of cyber fraud prevention company NS8 has been arrested and charged with defrauding the company's investors.
Adam Rogas was arrested in Las Vegas, Nevada, the U.S. Department of Justice (DoJ) and the U.S. Securities and Exchange Commission (SEC) said Thursday.
The 43-year-old is the co-founder and CEO of startup NS8, an organization that promotes an intelligence-based platform for detecting fraud. However, according to US prosecutors, the frauds had been going on for some time.
Rogas allegedly fabricated financial data and statements to make it appear that the company was generating significant revenue from its customers. Because the former CEO had access to a bank account used to deposit customer payments, he was able to hack bank statements before they were sent to NS8's finance department for processing.
Rogas added “tens of millions of dollars in both customer revenue and bank balances that did not exist,” the DoJ says, from January 2019 to February 2020.
It is estimated that between 40% and 95% of the assets shown in these statements were fake – such as the inclusion of more than $40 million in fictitious income – and these were the fraudulent statements that appeared to investors.
Faced with a seemingly promising startup enjoying high levels of revenue, investors were enticed to offer about $123 million over at least two real estate. A subsequent bidding war ensured that Rogas personally earned $17.5 million.
“During the process of raising money, Rogas also provided the fake bank records he had created to auditors who conducted due diligence on behalf of potential investors,” prosecutors say.
An FBI investigation led to the arrest of the former CEO. Rogas is now charged with securities fraud, securities fraud and defrauding the Manhattan federal court . The charges could land him in prison for up to 20 years.
