Paul Roberts, the founder and former CEO of Kubient, Inc., has been sentenced to one year and one day in prison for securities fraud. The announcement was made by Matthew Podolsky, Acting United States Attorney for the Southern District of New York. Roberts admitted to defrauding investors and auditors by causing Kubient to improperly recognize over $1.3 million in fraudulent revenue during its initial public offering.
U.S. District Judge Jennifer L. Rochon imposed the sentence following Roberts' guilty plea. "Paul Roberts cooked the books," stated Acting U.S. Attorney Matthew Podolsky. "He lied to investors and auditors about his company’s revenue and about his company’s premier product: an AI-powered tool that, ironically, was supposed to detect fraud in the digital advertising industry."
Court filings revealed that from October 2019 through March 2021, Roberts orchestrated a scheme involving a fraudulent transaction with another digital advertising technology company referred to as Company-1. Both companies agreed on services with nearly identical fees but did not fulfill their obligations while still recognizing $1.3 million as revenue.
Roberts further concealed his actions by directing employees to create fake reports using Kubient's fraud detection tool, KAI, misleading auditors into believing contractual obligations were met.
The misrepresentations extended to U.S. Securities and Exchange Commission filings concerning KAI's efficacy in detecting digital ad fraud, influencing Kubient's ability to raise significant funds during its IPO and secondary offerings.
Kubient is now undergoing Chapter 7 bankruptcy proceedings.
In addition to prison time, Roberts will serve one year of supervised release. The investigation involved cooperation between the U.S. Postal Inspection Service and the SEC, which filed a civil action against Roberts post-guilty plea.
Assistant U.S. Attorney Justin V. Rodriguez leads the prosecution under the Office’s Securities and Commodities Fraud Task Force.
