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 sentencing was announced by Matthew Podolsky, Acting U.S. Attorney for the Southern District of New York. Roberts had pled guilty to defrauding investors and auditors by causing Kubient to falsely recognize over $1.3 million in revenue during its initial public offering.
U.S. District Judge Jennifer L. Rochon imposed the sentence on Roberts, who also served as Chairman of the Board of Directors at Kubient, a digital advertising technology company.
Podolsky stated: “Paul Roberts cooked the books. 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."
From October 2019 through March 2021, Roberts orchestrated a scheme that led Kubient to report fraudulent revenue figures amounting to more than 94% of its reported revenue for 2020 at its IPO in August 2020. At the center of this scheme was a $1.3 million transaction between Kubient and another digital advertising firm referred to as "Company-1". The companies agreed to provide services to each other but failed to do so while still exchanging payments.
Roberts further directed employees at Kubient to create fake reports from their proprietary fraud detection tool, KAI, misleading accountants into believing obligations were met for financial reporting purposes.
He repeatedly made false statements in SEC filings regarding KAI's efficacy in detecting ad fraud and misled investors during both initial and secondary public offerings. As a result, Kubient raised significant funds—over $12.5 million from its IPO and more than $20 million from a secondary offering—but is now undergoing Chapter 7 bankruptcy proceedings.
In addition to his prison term, Roberts will serve one year of supervised release following incarceration.
Podolsky praised the U.S. Postal Inspection Service's efforts and acknowledged assistance from the SEC which pursued civil action against Roberts post-guilty plea.
The case is managed by the Office’s Securities and Commodities Fraud Task Force with Assistant U.S. Attorney Justin V. Rodriguez leading prosecution efforts.