The co-founder of fraud prevention startup NS8 has been arrested and charged with securities fraud.
Adam Rogas, NS8’s founder and former CEO, was arrested last week, according to a statement from the U.S. Department of Justice. NS8 is an antifraud technology provider founded in Las Vegas in 2016.
“In the period from January 2019 through February 2020, between at least approximately 40 percent and 95 percent of the purported total assets on NS8’s balance sheet were fictitious,” the U.S. Department of Justice said in a press release.
Officials allege Rogas used fraudulent financial data to obtain over $123 million in financing for NS8, of which he personally obtained approximately $17.5 million.
“As alleged, Adam Rogas was the proverbial fox guarding the henhouse. While raising over $100 million from investors for his fraud prevention company, Rogas himself allegedly was engaging in a brazen fraud,” said Acting Manhattan U.S. Attorney Audrey Strauss in the statement.
“It seems ironic that the co-founder of a company designed to prevent online fraud would engage in fraudulent activity himself, but today that’s exactly what we allege Adam Rogas did,” added FBI Assistant Director William F. Sweeney Jr.
Rogas allegedly raised millions of dollars from investors based on fictitious financial affirmations, and walked away with nearly $17.5 million worth of that money, said officials.
NS8 recently raised $123 million in Series A financing led by Lightspeed Ventures. In a statement, The Securities and Exchange Commission said Rogas allegedly misled investors by fabricating NS8’s bank statements to show millions of dollars in payments from customers. He presented the manipulated data to investors to falsely claim the company was generating revenue, which was non-existent.
Rogas also served as the CFO of NS8 and resigned a short time before his arrest. Rogas told Forbes that he resigned for family and personal reasons.
The Las Vegas Review-Journal reports that Jim Holborown, vice president of Communications at NS8, told the press that “as a result, the board of directors has launched an internal investigation. As this is still an active investigation, we are not providing any detail at this point.”
The company has laid off most of its staff in the wake of the arrest due to financial reasons, according to published reports.