SEC Charges New Defendant and Adds Whistleblower Impeding and Retaliation Claims in $149 Million Offering Fraud Case

Litigation Release No. 25583 / December 1, 2022

Securities and Exchange Commission v. Adam Rogas, et. al, No. 1:20-cv-07628-PAC (S.D.N.Y. filed Sep. 17, 2020)

On November 22, the Securities and Exchange Commission filed an amended complaint against Adam Rogas, the former CEO of Las-Vegas-based NS8, Inc., who was previously charged with defrauding investors by falsely claiming millions of dollars in revenue for NS8. The amended complaint adds charges against Rogas for allegedly impeding and retaliating against an NS8 employee who blew the whistle on Rogas' fraudulent conduct. The amended complaint also charges Paul Korol, an NS8 co-founder and former Chief Customer Officer, with assisting in and profiting from Rogas' fraud.

According to the SEC's initial complaint, which was filed on September 17, 2020, in the U.S. District Court for the Southern District of New York, from at least 2018 through June 2020, Rogas falsified NS8's revenue figures and, in multiple securities offerings, provided investors and potential investors with false financial information.

The amended complaint alleges that in August 2019, Rogas limited an NS8 employee's access to NS8's systems in an attempt to impede the employee from communicating directly with the SEC staff, and ultimately retaliated against the employee by firing him.

The amended complaint also alleges that Korol participated in and helped perpetrate the fraud. According to the amended complaint, Korol was aware that revenue numbers used by NS8 and provided to investors were falsified. Despite this, between late 2018 and mid-2019, Korol allegedly solicited numerous potential investors for NS8. Further, the amended complaint alleges that in August 2019, Korol and Rogas devised a scheme for Korol to offload his shares in NS8 in a transaction funded by a third-party investor. Korol allegedly earned approximately $6.22 million from the transaction.

The SEC's amended complaint charges Rogas with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), as well as Rule 10b-5 thereunder. It also charges Rogas with violating whistleblower protections in Exchange Act Rule 21F-17 and with aiding and abetting NS8's violation of Section 21F(h) of the Exchange Act. Finally, it charges Korol with violating Sections 17(a)(1) and (3) of the Securities Act, and Section 10(b) of the Exchange Act, as well as Rules 10b-5(a) and (c) thereunder. Korol is also charged with aiding and abetting Rogas' violations of Sections 17(a)(1) and (3) of the Securities Act, and Section 10(b) of the Exchange Act, as well as Rule 10b-5 thereunder. The SEC seeks injunctions, disgorgement of ill-gotten gains with prejudgment interest, financial penalties, and officer and director bars.

The SEC's investigation was conducted by John Dwyer of the Denver Regional Office and supervised by Danielle R. Voorhees and Jason J. Burt. The SEC's litigation is being led by Nicholas Heinke and John Dwyer, under the supervision of Gregory A. Kasper. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.