Original

Approved:

/s Richard Cooper /s Jared Lenow_
RICHARD COOPER/JARED LENOW
Assistant United States Attorneys

Before:

HONORABLE KATHARINE H. PARKER
United States Magistrate Judge
Southern District of New York

- - - - - - - - - - - - - - - - UNITED STATES OF AMERICA
- v. ADAM ROGAS,
Defendant.

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20 MAG 9794

SEALED COMPLAINT
Violations of
15 U.S.C. §§ 77q, 77x,
78j(b) & 78ff; 17 C.F.R.
§ 240.10b-5; 18 U.S.C. §§
1343 & 2.
COUNTY OF OFFENSE:
New York

SOUTHERN DISTRICT OF NEW YORK, ss.:
NICHOLAS KROLL, being duly sworn, deposes and says that he is
a Special Agent with the Federal Bureau of Investigation (“FBI”)
and charges as follows:
COUNT ONE
(Securities Fraud)
1.
From at least in or about September 2019 up to and
including in or about September 2020, in the Southern District of
New York and elsewhere, ADAM ROGAS, the defendant, willfully and
knowingly, directly and indirectly, by the use of means and
instrumentalities of interstate commerce, and of the mails, and of
facilities of national securities exchanges, used and employed in
connection with the purchase and sale of securities manipulative
and deceptive devices and contrivances, in violation of Title 17,
Code of Federal Regulations, Section 240.10b-5, by: (a) employing
devices, schemes, and artifices to defraud; (b) making untrue
statements of material fact and omitting to state material facts
necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading; and
(c) engaging in acts, practices, and courses of business which
operated and would operate as a fraud and deceit upon persons, to
wit, ROGAS, while Chief Executive Officer (“CEO”), Chief Financial
Officer (“CFO”), and a member of the Board of Directors of

 cyberfraud prevention company NS8, Inc. (“NS8”), knowingly used
falsified bank statements to cause material misrepresentations to
be made to investors in connection with two NS8 securities
offerings.
(Title 15, United States Code, Sections 78j(b) & 78ff;
Title 17, Code of Federal Regulations, Section 240.10b-5; and
Title 18, United States Code, Section 2.)

(Fraud

COUNT TWO
in the Offer or Sale of Securities)

2.
From at least in or about September 2019 up to and
including in or about September 2020, in the Southern District of
New York and elsewhere, ADAM ROGAS, the defendant, willfully and
knowingly, in the offer and sale of securities, by the use of means
and instruments of transportation and communication in interstate
commerce and by use of the mails, directly and indirectly (a)
employed a device, scheme, and artifice to defraud; (b) obtained
money and property by means of an untrue statement of a material
fact and an omission to state a material fact necessary in order
to make the statements made, in light of the circumstances under
which they were made, not misleading; and (c) engaged in a
transaction, practice, and course of business which operated or
would operate as a fraud or deceit upon the purchaser, to wit,
ROGAS, while CEO, CFO, and a member of the Board of Directors of
NS8, knowingly used falsified bank statements to cause material
misrepresentations to be made to investors in connection with two
NS8 securities offerings.
(Title 15, United States Code, Sections 77q(a) and 77x;
Title 18, United States Code, Section 2.)
COUNT THREE
(Wire Fraud)
3.
From at least in or about January 2019 up to and
including in or about September 2020, in the Southern District of
New York and elsewhere, ADAM ROGAS, the defendant, willfully and
knowingly, having devised and intending to devise a scheme and
artifice to defraud, and for obtaining money and property by means
of false and fraudulent pretenses, representations, and promises,
transmitted and caused to be transmitted by means of wire, radio,
and television communication in interstate and foreign commerce,
writings, signs, signals, pictures, and sounds for the purpose of
executing such scheme and artifice, to wit, ROGAS, while CEO, CFO,
and a member of the Board of Directors of NS8, knowingly used
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 falsified bank statements to cause material misrepresentations to
be made to investors, including in connection with two NS8
securities offerings.
(Title 18, United States Code, Sections 1343 and 2.)
The bases for my knowledge and for the foregoing charges
are, in part, as follows:
4.
I have been a Special Agent with the FBI for
approximately three years.
I am currently assigned to a squad
that is responsible for investigating violations of the federal
securities laws, as well as wire and mail fraud laws and related
offenses. I have participated in numerous investigations of these
offenses, and I have made and participated in making arrests of
numerous individuals for committing such offenses.
5.
The information contained in this affidavit is based
upon my personal knowledge, as well as information obtained during
this investigation, directly or indirectly, from other sources,
including documents provided by others, from speaking with
witnesses, and from conversations with representatives of the
United States Securities and Exchange Commission (the “SEC”).
Because this affidavit is being submitted for a limited purpose,
I have not set forth each and every fact I have learned in
connection with this investigation.
Where conversations and
events are referred to herein, they are related in substance and
in part unless otherwise noted.
Where dates, figures, and
calculations are set forth herein, they are approximate.
Summary of the Fraudulent Scheme
6.
As set forth below, ADAM ROGAS, the defendant, was a
founder and the CEO, CFO, and a member of the Board of Directors
of NS8, a cyberfraud prevention company. ROGAS exercised control
over the books and records of NS8, and also maintained control
over the bank accounts where NS8’s revenue was purportedly
deposited.
From at least in or about 2019 through in or about
September 2020, ROGAS operated a fraudulent scheme to deceive NS8’s
investors by falsely inflating the company’s reported revenue and
assets by substantial amounts. As part of his fraudulent scheme,
ROGAS
used
falsified
bank
statements
to
cause
material
misrepresentations to be made to investors regarding NS8’s assets
and revenue, including by showing tens of millions of dollars in
assets and revenue that did not exist.
Through those material
misrepresentations, ROGAS enticed investors to purchase securities
in two fundraising rounds which provided NS8 with at least
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 approximately $123 million in funds. ROGAS subsequently tendered
NS8 shares he owned and otherwise controlled, obtaining at least
approximately $17.5 million as a result.
Background
7.
From my review of materials collected from NS8, publicly
available sources, and my interviews with NS8 employees and
investors, I have learned, among other things, that:
a.
NS8 is a cyberfraud prevention company that
developed and sold electronic tools to help online vendors assess
the fraud risks of customer transactions. NS8 was founded in or
about 2016, and is based in Las Vegas, Nevada.
NS8’s revenues
were generated from its customers (online vendors and e-commerce
websites) paying subscription fees to NS8 on a periodic basis.
b.
At all times relevant to this Complaint until his
resignation on or about September 1, 2020, ADAM ROGAS, the
defendant, served as the CEO, CFO, and a member of the Board of
Directors of NS8, and was primarily responsible for the company’s
fundraising activities.
c.
NS8
engaged
including the following:

in

various

fundraising

rounds,

i.
From in or about September through November
2019, NS8 raised approximately $61 million from investors through
the sale of Series A Preferred Shares (the “Fall 2019 Series A
Round”).
ii.
In or about April 2020, NS8 raised an
additional approximately $73 million from investors through the
sale of additional Series A Preferred Shares (the “Spring 2020
Series A Round”). 1 Following the Spring 2020 Series A Round, NS8
used a portion of the funds raised from investors to conduct a
tender offer through which it purchased stock from NS8’s
stockholders and option holders (the “Tender Offer”).
In
connection with the Tender Offer, ROGAS received approximately
$17.5 million by selling shares held by him personally and through
1

While a total of approximately $134 million worth of NS8’s
Series A shares were issued in the Fall 2019 Series A Round and
the Spring 2020 Series A Round, $11 million of that amount was
comprised of a previously issued convertible note that was
converted into Series A shares. Therefore, the amount of new
funds raised between the Fall 2019 Series A Round and the Spring
2020 Series A Round was approximately $123 million.
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 an entity he controlled.
d.
NS8 collected customer revenue through a particular
bank account (the “Revenue Bank Account”) maintained at a financial
institution referred to herein as the “Bank,” and paid its expenses
out of a different bank account (the “Expense Bank Account”) held
at a different bank.
8.
From my interviews with employees of NS8, and my review
of documents obtained during the investigation, including
documents provided by NS8 and the SEC, I have learned, among other
things, that:
a.
ADAM ROGAS, the defendant, maintained exclusive
control over spreadsheets that tracked revenue received from NS8’s
customers (the “Customer Revenue Spreadsheets”).
NS8’s finance
department used the Customer Revenue Spreadsheets to generate
NS8’s financial statements, including the company’s income
statements.
b.
ROGAS also maintained exclusive control of and
access to the Revenue Bank Account until at or about the time he
resigned from NS8. ROGAS was the only individual listed on the
account documents, including the signature card, for the Revenue
Bank Account until in or about early September 2020. On a periodic
basis, ROGAS would provide monthly statements of the Revenue Bank
Account in PDF format (the “Fraudulent Bank Statements”) to members
of the NS8 finance department so that they could create the
company’s financial statements, including balance sheets.
In
addition, deposits into the Revenue Bank Account as shown on the
Fraudulent Bank Statements reflected customer revenue purportedly
received by NS8.
The Fraudulent Scheme
ROGAS Creates Fraudulent Bank Statements and
Customer Revenue Spreadsheets
9.
Based on the investigation and for the reasons set forth
below, I believe that ADAM ROGAS, the defendant, created fraudulent
customer revenue statements and bank statements -- in the form of
the Customer Revenue Spreadsheets and the Fraudulent Bank
Statements -- both of which reflect substantially inflated levels
of customer revenue and assets, and both of which caused the
financial statements of NS8 to be materially misleading.
10. I have compared the Fraudulent Bank Statements to
statements for the Revenue Bank Account that NS8 recently obtained
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 directly from the Bank, and based on that comparison I believe
that the Fraudulent Bank Statements were altered to list
substantially inflated deposits into the Revenue Bank Account.
a.
For example, an excerpt from a March 31, 2020
statement for the Revenue Bank Account contained in the Fraudulent
Bank Statements is depicted below on the left, while an excerpt of
a March 31, 2020 statement for the Revenue Bank Account that was
recently obtained by NS8 directly from the Bank is depicted below
on the right.

b.
In another example drawn from the same two
documents, each version of the statement appears to list the same
number, date, and source of deposits, but the version contained
within the Fraudulent Bank Statements (Figure A below) appears to
have altered deposit amounts for certain transactions compared to
the version obtained directly from the Bank (Figure B below), such
as replacing a $522.87 deposit with a fake $999,999.99 deposit:

6

 Figure A

Figure B

11. I have compared the fraudulently inflated balances in
the Fraudulent Bank Statements with the NS8 balance sheets that
were
made
available
to
potential
investors
and
their
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 representatives in connection with the Fall 2019 Series A Round
and the Spring 2020 Series A Round, and based on that comparison
I believe that for the period from January 2019 through February
2020, the percentage of total reported assets from the NS8 balance
sheet that were fictitious ranged from at least approximately 40%
to over 95%.
12. In addition, as set forth above, the deposits in the
Revenue Bank Account purportedly reflected revenue received by
NS8, and thus were represented in the company’s income statement
and statement of profit and loss. I have compared the Fraudulent
Bank Statements with versions obtained directly from the Bank, and
for the period from January 2019 through February 2020, I have
identified at least approximately $40 million in fictitious
revenue that appears on the Fraudulent Bank Statements but was
not, in fact, received by NS8.
ROGAS Deceives Investors and Auditors
13. As set forth below, the fraudulent scheme of ADAM ROGAS,
the defendant, involved efforts both to disseminate fraudulently
inflated NS8 financial statements to existing investors, and also
to use fraudulently inflated NS8 financial statements to deceive
investors into committing over $123 million to NS8 in the Fall
2019 Series A Round and the Spring 2020 Series A Round.
14. From my review of emails provided by NS8, I have learned
that ADAM ROGAS, the defendant, provided fraudulently inflated
financial statements to existing NS8 investors. For example:
a.
On or about January 14, 2019, in response to a
request from an investor for NS8’s financial statements, ROGAS
sent an email attaching, among other things, a balance sheet and
profit and loss statement for 2018, which included fraudulently
inflated asset and revenue figures.
b.
On or about February 5, 2019, ROGAS emailed to a
New York-based investor one of the Customer Revenue Spreadsheets
that, as described above, contained fraudulently inflated revenue
figures.
15. From my interviews with members of the NS8 finance
department and NS8 investors, as well as my review of documents
obtained from NS8 and the SEC, I have learned, among other things,
that:

8

 Fall 2019 Series A Round
a.
During investor due diligence prior to the Fall
2019 Series A Round, NS8 created an online file sharing database
that potential investors and their representatives were able to
access. That online database included NS8’s financial statements
reflecting the fraudulent assets and revenue from the Fraudulent
Bank Statements.
b.
Prior to the Fall 2019 Series A Round, a potential
investor (“Investor-1” at “Investment Firm-1”) was considering an
investment in NS8. Investor-1, who at the time was based in New
York, New York, engaged in communications, including telephone
calls, with ADAM ROGAS, the defendant, about the business of NS8.
During this process, ROGAS made a presentation to Investment Firm1, which included a discussion of NS8’s business and financial
condition.
c.
Investment Firm-1 engaged a firm to conduct due
diligence of NS8 on its behalf. From my review of a copy of the
due diligence report that was produced, I have learned that the
report incorporated the fictitious assets and revenue that ROGAS
caused to be included in NS8’s financial statements. Investor-1
reviewed and relied on the due diligence report, including the
fictitious financial statements, in making the decision to invest
in NS8. Investment Firm-1 thereafter invested approximately $15
million in NS8 during the Fall 2019 Series A Round.
d.
Prior to the Fall 2019 Series A Round, another
potential investor (“Investor-2” at “Investment Firm-2”) was
considering an investment in NS8.
Investor-2 engaged an audit
firm (the “Audit Firm”) to conduct due diligence on NS8. The Audit
Firm obtained financial records from NS8, and thereafter produced
a report that incorporated the fictitious assets and revenue that
ROGAS caused to be included in NS8’s financial statements. The
report also stated, among other things, that “revenue recognized
[by NS8] is supported by actual cash receipts per bank statements.”
Investor-2 reviewed and relied on this due diligence report,
including the fictitious financial information, in making the
decision to investment in NS8.
Investment Firm-2 thereafter
invested approximately $24.1 million in NS8 during the Fall 2019
Series A Round.
Spring 2020 Series A Round
e.
NS8 conducted the Spring 2020 Series A Round in
part to raise funds to conduct the Tender Offer.

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 f.
During investor due diligence prior to the Spring
2020 Series A Round, NS8 created an online file sharing database
that investors and their representatives were able to access. That
online database included NS8’s financial statements that reflected
the fraudulent assets and revenue from the Fraudulent Bank
Statements, as well as one of the Customer Revenue Spreadsheets
which, as described above, contained materially inflated revenue
figures.
16. As set forth below, ADAM ROGAS, the defendant, furthered
his fraudulent scheme during this time period by deceiving auditors
conducting due diligence on behalf of potential investors into
believing that the Fraudulent Bank Statements were accurate
statements of the Revenue Bank Account.
17. From my interviews with Investor-2 and NS8 finance
department employees, and my review of documents provided by NS8
and the Audit Firm, I have learned, among other things, that:
a.
In connection with a potential further investment
in NS8, Investment Firm-2 directed the Audit Firm to conduct
additional due diligence procedures with respect to NS8.
b.
On or about March 10, 2020, a representative of the
Audit Firm sent an email to ADAM ROGAS, the defendant, and others
at NS8 containing an agenda of items that the Audit Firm wished to
discuss with NS8. One of those items questioned why the “Deposits”
total for an August 2019 Revenue Bank Account statement that the
Audit Firm had previously obtained was $3.3 million, while the
individual line items under the “Deposits” heading only added up
to $2.3 million.
c.
ROGAS responded by email approximately 40 minutes
later, writing “I just re-pulled the statements from Aug through
Feb for my own sanity.”
ROGAS attached to that email the
Fraudulent Bank Statements. The statement for August 2019 that
ROGAS attached falsely listed individual line items under the
“Deposits” heading that added up to $3.3 million. The true and
correct statement from the Revenue Bank Account lists $5,739.81 in
deposits for August 2019.
d.
As part of its due diligence process, the Audit
Firm had an employee (the “Auditor”) conduct a physical site visit
at NS8’s offices in Las Vegas, Nevada. The Auditor was directed
by a more senior Audit Firm employee to have someone from NS8 log
in to the online portal for each NS8 bank account, display the
current account balance, and download monthly bank statements for
fiscal year 2019.
10

 e.
Based on my interview with a member of the NS8
finance department (“Finance Employee-1”), I have learned, among
other things, that on or about March 11, 2020, Finance Employee-1
and ROGAS met with the Auditor in ROGAS’s office. The purpose of
that meeting was for ROGAS and Finance Employee-1 each to log into
the online portals for the bank accounts to which they had access
(for ROGAS, the Revenue Bank Account) and download monthly account
statements for the Auditor. During that meeting, Finance Employee1 logged into the online portal for the Expense Bank Account -- to
which Finance Employee-1 had access -- and downloaded monthly
account statements. Finance Employee-1 understood that ROGAS was
doing the same for the Revenue Bank Account during the meeting.
f.
Late in the evening on or about March 11, 2020, the
Auditor emailed another employee as follows:
“Attached please
find the bank statements and screenshots that I observed [Finance
Employee-1] and Adam [ROGAS] download this afternoon.” Attached
to that email, among other things, were the Fraudulent Bank
Statements for the Revenue Bank Account for the period from January
2019 through February 2020.
g.
The Audit Firm thereafter produced a due diligence
report that incorporated the fictitious assets and revenue that
ROGAS caused to be included in NS8’s financial statements. While
the report noted the issue with the August 2019 Revenue Bank
Account statement described in paragraph 17(b), the report again
stated, among other things, that “revenue recognized [by NS8] is
supported by actual cash receipts per bank statements.”
h.
Both Investor-1 and Investor-2 reviewed and relied
on this due diligence report prepared by the Audit Firm, including
the fictitious financial statements summarized therein, in making
their decisions to invest again in NS8.
Investment Firm-1 and
Investment Firm-2 thereafter each invested approximately $25
million in NS8 during the Spring 2020 Series A Round.
ROGAS Obtains $17.5 Million from the Tender Offer
18. As described above, NS8 used some investor funds raised
from the Spring 2020 Series A Round to conduct the Tender Offer.
From my review of documents obtained during the investigation, I
have learned, among other things, that ADAM ROGAS, the defendant,
received payments of approximately $17.5 million, personally and
through an entity he controls, in connection with NS8 shares that
ROGAS sold through the Tender Offer.

11

 ROGAS’s Fraud is Exposed
19. From my interviews with Finance Employee-1 and another
NS8 finance department employee (“Finance Employee-2,” and
collectively, the “Finance Employees”) and my review of documents,
I have learned, among other things, that:
a.
In or about late August 2020, Finance Employee-2
called the Bank’s automated customer service system and was able
to obtain the balance of the Revenue Bank Account. During that
telephone call, Finance Employee-2 learned that the balance of the
Revenue Bank Account amounted to only tens of thousands of dollars.
Finance Employee-2 had previously believed, based on the
Fraudulent Bank Statements that ADAM ROGAS, the defendant,
provided to the Finance Employees, that the balance amounted to
tens of millions of dollars.
b.
After learning that the Revenue Bank Account did
not contain the funds reflected in the Fraudulent Bank Statements,
Finance Employee-2 reported this discovery to Finance Employee-1.
On or about August 28, 2020, Finance Employee-1 engaged in a text
message exchange with ROGAS. During that text message exchange,
ROGAS claimed the that he was “[o]n the phone with the bank we are
ok, appears to be an issue with the way that the sweep works and
phone banking.”
c.
ROGAS agreed to meet the Finance Employees at a
branch of the Bank near Las Vegas, Nevada on or about September 1,
2020, purportedly to give them access to the Revenue Bank Account.
ROGAS did not show up to that meeting.
d.

On or about September 1, 2020, ROGAS resigned from

NS8.

12

 WHEREFORE, I respectfully request that an arrest warrant be
issued for ADAM ROGAS, the defendant, and that he be arrested and
imprisoned or bailed, as the case may be.

/s/ Nicholas Kroll
_ ____________________________
NICHOLAS KROLL
SPECIAL AGENT
FEDERAL BUREAU OF INVESTIGATION
Sworn to me through the transmission
of this Complaint by reliable electronic means
pursuant to Federal Rule of Criminal Procedure 4.1,
this 14th day of September, 2020

______________________________
HONORABLE KATHARINE H. PARKER
UNITED STATES MAGISTRATE JUDGE
SOUTHERN DISTRICT OF NEW YORK

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