Sometimes, you have to fight fraud with… more fraud?
Paul Roberts, the former CEO of Kubient, has pleaded guilty to securities fraud. According to The Southern District of New York, Roberts orchestrated an elaborate, multi-year scheme to inflate Kubient’s revenue by over $1.3 million before its IPO. Kubient, which went public in 2020, claimed to offer “artificial intelligence-powered pre-bid ad fraud prevention” technology.
Now, Roberts faces up to 20 years in prison and will be sentenced in December. Additionally, the SEC has filed a civil suit against him.
Why This Matters:
Kubient’s KAI was marketed as pre-bid “proprietary ad fraud identification and prevention technology.” However, KAI didn’t really exist. In fact, the SDNY alleges Roberts demanded employees create entirely fake KAI reports to mislead the market.
Thanks to the fraud, Kubient raised over $12.5 million in its August 2020 IPO and more than $20 million in a secondary public offering shortly after. The company has struggled, however. Late last year, Kubient “voluntarily” delisted from Nasdaq due to persistently trading below $1 per share and an inability to meet listing standards.
In May 2023, Kubient announced a merger with Adomni. While Adomni became a subsidiary of Kubient, the merger effectively transformed Kubient into Adomni. Post-merger, the company now operates as Adomni (shocker), with a focus on programmatic out-of-home (OOH).
Experts React:
According to the SDNY’s press release, Kubient’s “Fraudulent Revenue was over 94% of Kubient’s reported revenue for 2020 at the time of its initial public offering (“IPO”) in or about August 2020, over 74% of its reported revenue for 2020 at the time of its secondary public offering in or about December 2020, and approximately 45% of Kubient’s reported revenue for all of 2020.”
Our Take:
Is there something in the water?
Between OpenWeb, Kubient (or Adomni), and Google’s antitrust case, adtech drama is at an all time high.
