The former CEO of Kubient, an advertising tech company that developed a cloudy product capable of detecting fraudulent ads, has been jailed for fraud.
CEO Paul Roberts was sent down on Thursday for a year and a day, for faking financial records after also faking a test of his company’s software.
As detailed by the office of the United States Attorney for the Southern District of New York, Roberts and an unnamed company conspired to provide $1.3 million worth of services to each other.
The scheme saw Kubient promise to use its KAI fraud detection software to scan data provided by the unnamed company and an affiliate. The scan was billed as a test of KAI’s powers.
According to the Attorney’s Office, Roberts “directed Kubient employees to generate fake KAI reports based on made-up metrics and no underlying data at all.”
Despite doing no work of value, Kubient charged the other company $1.3 million and then recognized that as revenue. Kubient also claimed to have paid the unnamed company $1.3 million for services.
Both companies therefore ended up with a nice slug of extra revenue on their books. Which was useful to Kubient, because it had very little real revenue and hoped to go public. Roberts used the fake reports generated for the unnamed company to convince Kubient’s auditors the $1.3 million of revenue was real.
The company listed in 2020 and raised over $33 million after initial and secondary public offerings.
The US Securities and Exchange Commission got wind of the situation and in 2024 filed charges against Roberts, plus Kubient’s CFO and Audit Committee Chair who learned of the faked revenue before the secondary public offering and didn’t inform investors.
Roberts pled guilty and on Thursday was sentenced to jail, plus a year of supervised release.
In May 2024 Kubient announed a plan to with an outfit called Adomni. The latter company said the deal would mean “Kubient’s AI product KAI will be harnessed to deliver better advertising campaigns via Adomni’s platforms. These include enhanced accuracy of fraud prevention via AI-powered algorithms, real-time data monitoring and analysis of incoming data, advanced pattern recognition within the data, brand protection from fraudulent media, and more.”
At this point, readers might think KAI was real and useful.
But by November 2023, Kubient voluntarily delisted from the NASDAQ stock exchange. And in December 2024 it terminated [PDF] the merger agreement in December 2024. The company appears to have wound up. ®