Startup NS8’s Former CEO Tells Forbes What Drove Him To Commit $100 Million Fraud

Time was running out for Adam Rogas. It was August 2020, and the board of his fraud prevention software company, called NS8, was about to discover there was no cash in the bank and that their CEO had been lying to them for years about revenue figures — before personally pocketing millions of dollars of investors’ money, according to the U.S. Justice Department.

Now, in an interview with Forbes, hours after pleading guilty to a count of fraud in U.S. federal court in New York on Wednesday, Rogas says that his actions were driven by a fear of his company failing. “The fraud happened because there was an inordinate amount of pressure,” he says, “both on myself internally, and just in general with having that many people dependent on what we were doing, and what we were building.”

Rogas, now 44, was arrested in September 2020 by FBI agents after the Justice Department found evidence that he had provided false financial statements — claiming the company had up to $40 million in cash — to investors who gave the company more than $100 million, including $17.5 million he personally received by selling shares on the secondary market. The company laid off its 200 workers and began winding down.

U.S. Attorney Damian Williams described Rogas as the “proverbial fox guarding the henhouse,” in a press release Wednesday. “While claiming to be in the fraud prevention business, Rogas himself defrauded investors in his company of over $100 million,” Williams’ statement said. “Now Rogas will be held accountable for his fraudulent scheme.”

Facing up to 20 years in federal prison, Rogas told Forbes he takes full responsibility for his actions. “I feel sorry to the investors, to the employees, to my family, to my daughters,” Rogas says. “This is not at all who I am, other than the fact that somehow I did this.”

Rogas co-founded NS8 in 2016 after running a series of marketing and software companies. He was a well-liked figure in the NS8 office, former employees previously told Forbes, and the company became one of the hottest startups in Las Vegas as it jumped from one funding round to another, including a $123 million raise led by Lightspeed Ventures in 2020 – a deal in which Rogas cashed out $17.5 million by selling shares.

But the financial statements Rogas provided to raise funding were falsified for years. He was the only person with access to a company account with Bank of America that received customer payments and revenue, while investor funding and payroll went in and out of a separate account accessed by other employees, according to the Justice Department. At one point, Rogas told investors there was $23.7 million in the Bank of America account, while the real number was $5,636, according to a 2020 Securities and Exchange Commission complaint.

Reporting by Forbes at the time revealed that Rogas’ secret was uncovered when he failed to meet NS8’s then-chief vice president of finance at a Bank of America branch to hand over the account’s login credentials. The saga also raised questions about the lack of due diligence conducted by NS8’s investors, including Lightspeed Ventures and AXA Venture Partners.

Rogas says the pressures facing startup founders was in part what led him to defraud his company. “There’s a tremendous amount of pressure in a growing company,” he says. “The belief I had in what we were doing drove me to a number of small poor decisions that snowballed into me ultimately making these false representations.”

In the case of NS8, Rogas says the company was adding customers, but the problem was that the company wasn’t adding paying customers “as fast as it should have been,” Rogas says. He adds: “there was still this concept of growth, this concept of users that supported the company…these were all metrics that were growing.”

In the end, Rogas says that his singular-focus on growing the company led him to cross the line into illegal activity. “All I could think about was buying us more time,” he says, “and ensuring the company would survive.”

Rogas isn’t the only startup founder in recent years to have been indicted for fraud. The recent trial of Elizabeth Holmes, the CEO of blood-testing startup Theranos found guilty of multiple counts of wire fraud, described a founder who was driven to succeed, at seemingly any cost. “There is no doubt that the idea of failure is a difficult one for the type of personality that goes into a startup,” Rogas says. “Unfortunately the people that make really good leaders also don’t deal well with failure – that should never be more important than being true to your principles.”

Last week, a federal judge approved a plan by NS8, now known as Cyber Litigation Inc., to repay defrauded investors $38 million as part of a Chapter 11 bankruptcy proceeding started after Rogas’ 2020 arrest. Rogas is expected to be sentenced in New York on August 10.

No matter his likely prison time, Rogas says he plans to spend his life paying back “some form of restitution.” What form that may take remains to be seen. “I went into all of this trying to build something, and trying to build value. and through the process, the unwinding, all the things that happened, it’s created nothing but a negative,” Rogas says. “It’s very hard for me to deal with that.”