June 21, 2024

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Fraud Prevention Firm’s Ex-CEO Charged With Fraud

The previous CEO of fraud prevention startup NS8 has been charged with fraud for fabricating thousands and thousands of dollars in profits to raise $123 million from investors.

The U.S. Section of Justice stated Adam Rogas, 43, altered NS8’s bank statements prior to delivering them on a monthly basis to its finance office to exhibit profits and bank balances that did not exist, ensuing in an above $60 million inflation of belongings as recently as June 2020.

When NS8 elevated somewhere around $123 million in two offerings, he allegedly delivered the wrong statements to present and potential investors, pocketing just about $17.5 million of the proceeds for himself.

Rogas, who was arrested Thursday on federal rates of securities fraud, is also going through a civil complaint submitted by the Securities and Exchange Fee.

“As alleged, Adam Rogas was the proverbial fox guarding the henhouse. While increasing above $a hundred million from investors for his fraud prevention corporation, Rogas himself allegedly was partaking in a brazen fraud,” Acting Manhattan U.S. Attorney Audrey Strauss stated in a information release.

NS8, which Rogas co-launched in 2016, provides fraud detection and prevention software to e-commerce merchants. In accordance to the SEC, Rogas started no later than 2018 to obtain electronic copies of the firm’s profits account statements and “altered the text of these statements to grossly exaggerate the dollars paid out by clients to NS8.”

“As a consequence, each and every of the NS8 financial statements from 2018 to 2020 had been also wrong and materially misstated, amongst other items, the balance of the profits account, NS8’s profits, and NS8’s belongings,” the commission stated.

A doctored balance sheet as of Feb. 29, 2020 showed there was $38.one million in the profits account in January and $forty two.two million in February when the genuine balances had been $39,005 and $45,408, respectively, according to the SEC.

Rogas resigned on Sept. one, the SEC stated, soon after an personnel in NS8’s finance office identified the legitimate balance of money in the profits account. Far more than two hundred workers had been laid off final week soon after executives told them the corporation was below investigation by the SEC for fraud.

Adam RogasFinancial Statements, fraud prevention, NS8, U.S. Securities and Exchange Fee