CEO of Cyber Fraud Startup NS8 Arrested By FBI, Facing Fraud Charges

An anonymous reader quotes a report from Forbes: The CEO of a startup that sold fraud prevention software is facing fraud charges after he was arrested Thursday by the FBI in Las Vegas. Adam Rogas, who abruptly resigned from NS8 earlier this month, is accused of misleading investors who poured in $123 million to his company earlier this year, a deal in which he allegedly pocketed more than $17 million. “Adam Rogas was the proverbial fox guarding the henhouse,” acting Manhattan U.S. Attorney Audrey Strauss said in a press statement. “While raising over $100 million from investors for his fraud prevention company, Rogas himself allegedly was engaging in a brazen fraud.”

NS8 launched in 2016 to provide online fraud detection and prevention software for small businesses. More than 200 NS8 employees were laid off last week after executives told them the company was under investigation by the SEC for fraud. The news was startling for many, considering the company had announced a $123 million Series A funding round in June, led by global VC firm Lightspeed Venture Partners. In a statement, NS8 said that its board “has learned that much of the company’s revenue and customer information had been fabricated by Mr. Rogas.” The company added that no other employees or stakeholders had been charged and that it is cooperating with federal investigators. In its complaint, filed in the Southern District of New York, the Justice Department alleged that from January 2019 to February 2020, between 40% and 95% of NS8’s assets were made up. During that period, the agency alleged, Rogas presented doctored bank statements to reflect over $40 million in fictitious revenue. Charges by the Justice Department carry penalties up to 20 years in prison. Rogas is expected to face a judge in Nevada on Friday.