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

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Re: CEO of Cyber Fraud Startup NS8 Arrested by FBI, Facing Fraud Charges

#31

Post by mandelbrotwurst »

WrtCdEvrydy wrote: post #20
AdmiralAsshat wrote: post #3

I feel sorry for any CEO who actually steps down to spend more time with his/her family. That explanation has now more or less been completely co-opted by "Our CEO got caught in an embarrassing scandal and they need to fade from the public eye for a bit." I now assume that anyone who gives that reason on their way out must have done something terrible that is yet or about to come to light.

LOL, if I ever make it at that level, my explanation for wanting to spend more time with my family will be "wanting to spend time with hookers"

When you've invested that much into something you're not very likely to suddenly decide to make that sort of strategic blunder for giggles.

Re: CEO of Cyber Fraud Startup NS8 Arrested by FBI, Facing Fraud Charges

#32

Post by clint »

joering2 wrote: post #5

Sounds like a witch hunt. Big corpo tries to get rid of competitor. And once again government destroyed someones life. Now that he cannot do his part anymore its so easy to proof he deceived investors because well he doesn’t have any numbers to show si yeah he was lying. And besides, who didn’t flex a slide or two to show future numbers how they hoped it will look instead of honest truth. If thats the case then DOJ h…

Most people would call that "lying", "unethical", and probably "stupid."

Re: CEO of Cyber Fraud Startup NS8 Arrested by FBI, Facing Fraud Charges

#33

Post by billyhoffman »

squashua667 wrote: post #23
billyhoffman wrote: post #13

Being an executive at a (substantially smaller) SaaS startup I have no idea how having up to 90% of your revenue be fabricated could happen without others knowing: - where are the contracts corresponding to revenue? Yeah they are SaaS focused on SMB but this is a financial product, there will be contracts, NDAs, etc - if the majority of the customers are fake there is such little load on the system. How does engineer…

- where are the contracts corresponding to revenue? Yeah they are an SMB SaaS but this is financial, there will be contracts, NDAs, etc SMB, especially the small end of SMB, does not often have contracts. It's more subscription based. That said, there were 2 versions of the software running at NS8. One was the original software that Adam Rogas and a co-founder created early on. That version was rather "opaque" and re…

Obviously something terribly shady is going on here. I’m not disagreeing with you, I just don’t understand how any director level position, let alone an executive, wouldn’t be able to see serious irregularities if such a significant percentage of revenue was phony. There are just way too many knock-on effects when the overwhelming majority of your customers aren’t real, aren’t paying you, and aren’t putting any load or impact on any of your other systems (technical or otherwise). That is some bullshit clown shoes management across the entire company right there

And the CEO or others saying “oh yeah you can’t see all those customers and growth because they’re in this old legacy system that doesn’t report it” is an insane excuse to buy. Holy shit you mean to tell us that the majority of our most important revenue is coming from a legacy systems that we have zero insight into? And it’s continuing to grow? Why aren’t those people on the new system?

> “customer revenue” account controlled solely by the CEO

I cannot fathom a VP of Finance, let alone an outside accounting firm, that would be OK with this arrangement of accounts.

Edit: To be clear I’m not trying to blame the victims. This is a terrible loss to all the employees who have been pouring so much of their efforts into the company. I just am having a hard time understanding how such a thing could happen. Maybe I’ve just been blessed to work in extremely transparent organizations.

Re: CEO of Cyber Fraud Startup NS8 Arrested by FBI, Facing Fraud Charges

#34

Post by qaq »

jedberg wrote: post #28

> It seems ironic that the co-founder of a company designed to prevent online fraud would engage in fraudulent activity himself I don't find that ironic at all. Having worked in the security space for a long time, it seems like the best people in the business are the ones who would be great at committing the crimes if not for their own morality. Someone with a weak sense of morals could easily turn to evil.

"Having worked in the security space for a long time, it seems like the best people in the business are the ones who would be great at committing the crimes if not for their own morality." Well and truth be told none would know so maybe they are doing it ?

Re: CEO of Cyber Fraud Startup NS8 Arrested by FBI, Facing Fraud Charges

#35

Post by alchemism »

jedberg wrote: post #28

> It seems ironic that the co-founder of a company designed to prevent online fraud would engage in fraudulent activity himself I don't find that ironic at all. Having worked in the security space for a long time, it seems like the best people in the business are the ones who would be great at committing the crimes if not for their own morality. Someone with a weak sense of morals could easily turn to evil.

One of Terry Pratchett's Discworld novels features a thief being deliberately put in charge of the Royal Mint.

https://en.wikipedia.org/wiki/Making_Money

Re: CEO of Cyber Fraud Startup NS8 Arrested by FBI, Facing Fraud Charges

#36

Post by pjc50 »

wakeywakeywakey wrote: post #6
pstoica wrote: post #2

Ex-employee here. Adam Rogas is a pathological liar and sociopath who dragged this out for years. I don't know how multiple audits failed to raise red flags over multiple $999,999.99 fake Stripe payouts. He literally inserted millions every few lines that didn't match up with the data around it. They never asked anyone else to produce the same report. Everyone involved should never be responsible for this amount of m…

Why did you choose not to blow the whistle?

Why would you? Even if you've got all your ducks in a row you've made yourself a target for media attention and lawsuits.

Re: CEO of Cyber Fraud Startup NS8 Arrested by FBI, Facing Fraud Charges

#37

Post by squashua667 »

billyhoffman wrote: post #33
squashua667 wrote: post #23

Earlier quoted context omitted.

- where are the contracts corresponding to revenue? Yeah they are an SMB SaaS but this is financial, there will be contracts, NDAs, etc SMB, especially the small end of SMB, does not often have contracts. It's more subscription based. That said, there were 2 versions of the software running at NS8. One was the original software that Adam Rogas and a co-founder created early on. That version was rather "opaque" and re…

Obviously something terribly shady is going on here. I’m not disagreeing with you, I just don’t understand how any director level position, let alone an executive, wouldn’t be able to see serious irregularities if such a significant percentage of revenue was phony. There are just way too many knock-on effects when the overwhelming majority of your customers aren’t real, aren’t paying you, and aren’t putting any load…

>> “customer revenue” account controlled solely by the CEO

> I cannot fathom a VP of Finance, let alone an outside accounting firm, that would be OK with this arrangement of accounts.

Right? Then again, EY audited everything and gave those fake bank statements the "thumbs up" as part of the last round of funding and due diligence on the part of the investors. Crazy.

Re: CEO of Cyber Fraud Startup NS8 Arrested by FBI, Facing Fraud Charges

#38

Post by CatShitTodd »

billyhoffman wrote: post #13

Being an executive at a (substantially smaller) SaaS startup I have no idea how having up to 90% of your revenue be fabricated could happen without others knowing: - where are the contracts corresponding to revenue? Yeah they are SaaS focused on SMB but this is a financial product, there will be contracts, NDAs, etc - if the majority of the customers are fake there is such little load on the system. How does engineer…

> How does no one see an insanely low COGs when paying the cloud services bills, or the lack of allocated resources when looking in the management interfaces?

Big data and a flawed system. They sell a service that is based off of using integrations. If you stop paying for the integrations, you should stop receiving the service. That in turn hurts their level of service offerings.

To be of any value, they have to monitor a ton of transnational data. So even if you quit paying, they still monitored your data and their modules were flawed that is still showed their acceptance score if you stopped paying.

Re: CEO of Cyber Fraud Startup NS8 Arrested by FBI, Facing Fraud Charges

#39

Post by pstoica »

billyhoffman wrote: post #33
squashua667 wrote: post #23

Earlier quoted context omitted.

- where are the contracts corresponding to revenue? Yeah they are an SMB SaaS but this is financial, there will be contracts, NDAs, etc SMB, especially the small end of SMB, does not often have contracts. It's more subscription based. That said, there were 2 versions of the software running at NS8. One was the original software that Adam Rogas and a co-founder created early on. That version was rather "opaque" and re…

Obviously something terribly shady is going on here. I’m not disagreeing with you, I just don’t understand how any director level position, let alone an executive, wouldn’t be able to see serious irregularities if such a significant percentage of revenue was phony. There are just way too many knock-on effects when the overwhelming majority of your customers aren’t real, aren’t paying you, and aren’t putting any load…

We can't fathom it either!

Re: CEO of Cyber Fraud Startup NS8 Arrested by FBI, Facing Fraud Charges

#40

Post by elliekelly »

rococode wrote: post #15

Have VCs started skimping on DD because problems come up so rarely? Lightspeed (who led the last round for these guys) isn't a no-name firm, they invested in Snap, GrubHub, Telegram, etc. Surely they have the experience to find out gigantic major problems like this? This feels like something that should've come up in diligence before they sent them 120 million bucks... There are so many places it could've shown up or…

What’s absolutely stunning to me is the (former) CEO quote in the article says the company was under SEC investigation for fraud as early as November of last year. And given that the DOJ complaint alleges the fraud occurred between January 2019-February 2020 I would be inclined to believe it. (Fraud doesn’t tend to just stop of it’s own accord.)

So was the investigation disclosed to Lightspeed and they decided to invest anyway? Who on earth would invest with someone currently under investigation for a scheme to defraud investors? And if it wasn’t disclosed, why not? Did that not come up at all during due diligence?

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