Paul Roberts, the founder and former CEO of adtech company Kubient, was sentenced on Thursday by the U.S. Department of Justice to one year and one day in federal prison for orchestrating an accounting fraud scheme that misled investors about the company’s financial health and the effectiveness of its flagship product.
The decision was issued by U.S. District Judge Jennifer L. Rochon in the Southern District of New York.
Founded in 2017, Kubient specialized in programmatic advertising and fraud detection. It developed Audience Cloud, a real-time ad marketplace, and Kubient Artificial Intelligence (KAI), a tool it claimed could prevent ad fraud. The company went public in 2020, raising over $32.5 million, but by the end of 2023, the company was delisted from Nasdaq and had filed for Chapter 7 bankruptcy.
Roberts pleaded guilty to securities fraud charges September 2024, admitting to artificially inflating Kubient’s revenue figures.
The charges against Roberts stemmed from actions between October 2019 and March 2021. Kubient and another unnamed digital advertising company agreed to provide services to each other for nearly identical fees; however, neither fulfilled their contractual obligations, according to the DOJ’s findings. Nonetheless, they proceeded with the payments, allowing Kubient to falsely recognize $1.3 million as legitimate revenue. The funds accounted for more than 94% of the company’s reported revenue at the time of its IPO in August 2020.
To cover the tracks, Roberts directed Kubient employees to generate fake reports for its ad fraud tool KAI based on fabricated data, according to the DOJ’s findings. These reports were used to mislead the company’s auditors into believing the company had performed its contractual duties, thereby justifying the recognition of the fraudulent revenue in financial statements. Roberts also misrepresented KAI’s efficacy in combating digital ad fraud in filings with the U.S. Securities and Exchange Commission.
“Paul Roberts cooked the books,” said acting U.S. Attorney Matthew Podolsky in a statement. “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.”
Roberts, 48, will also serve one year of supervised release following his prison term.
The investigation was handled by the DOJ in conjunction with the SEC and the U.S. Postal Inspection Service.
Prior to founding Kubient, Roberts had over 20 years of experience in digital marketing and media. He was well known in the ad industry and previously penned columns for ADWEEK.
