Cyber Litigation Inc. – Fraudulent Transfer Defense Lawyer

On October 26, 2022, Plaintiff Drivetrain, LLC, in its capacity as Trustee of the Cyber Litigation Trust of the estate of NS8, Inc. now known as Cyber Litigation Inc. filed 18 complaints, opening adversary proceedings, seeking to avoid and recover certain alleged fraudulent transfers pursuant to sections 544, 548 and 550 of the Bankruptcy Code and to disallow the claim(s) held by individual defendants pursuant to section 502 of the Bankruptcy Code.

As alleged in the complaints,

1. NS8 was a cybersecurity startup founded in 2016 that reported enormous financial
success with tens of millions of dollars in annual revenue. However, nearly all of NS8’s customers
were fake. Both the phony revenues and thousands of alleged customers were part of a fraud
scheme concocted by Adam Rogas. For nearly the entirety of NS8’s existence, which ended
abruptly in bankruptcy after discovery of Rogas’ fraud, Rogas served as both CEO and CFO.
2. Rogas used altered bank statements, fake financial statements and fictitious
customer counts to convince outside investors to invest more than $150,000,000 in NS8. Rogas
then caused approximately $72,000,000 of these funds to be transferred directly to NS8’s early
investors and employees through a fraudulent tender offer in June 2020.
3. The investors were left with nothing, while Rogas and other senior executives and
employees who participated in, or turned a blind eye to Rogas’s fraud, received millions of dollars
through the tender offer, in addition to significant compensation in the form of wages, bonuses,
commissions and employee benefits for services that provided little to no value but rather
perpetuated a fraudulent enterprise.

Procedural History:

On October 27, 2020, the Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code.

On April 13, 2022, the Plan became effective, and Cyber Litigation Trust was established pursuant to the Debtor’s Modified Second Amended Chapter 11 Plan of Liquidation, and Plaintiff became trustee of the Plan Trust.

The bankruptcy case and these adversary actions are before the Honorable Judge Craig T. Goldblatt.

Common Defenses

For more information, see our page on Fraudulent Transfer Defense Litigation: https://www.tobialaw.com/practice-areas/delaware-preference-defense-lawyer/defense-of-fraudulent-transfer-actions/

If you conducted business with NS8, Inc., now known as Cyber Litigation Inc. and especially if you have received a demand letter, or if a complaint has been filed against you or your business, even if not served yet, contact us here, email us at info@tobialaw.com or call the firm’s Wilmington offices directly at (302) 655-5303 to schedule an initial consultation. We can discuss the situation you are facing and share with you our initial observations at no charge.