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Cyber Ninjas CEO Launched Second Company Last Year - Updated
A spokesman for the controversial company said Thursday that it was dissolving and laying off the CEO and all employees, after a court levied heavy fines against it. But the CEO has a second company.
The founder and CEO of Cyber Ninjas, the Florida cybersecurity company that was hired by Arizona Republicans last year to lead a controversial partisan review of Maricopa County’s 2020 election results, has a second Florida company that he created last year.
The company, called Akolytos, was incorporated March 22 last year, days before Arizona State Senate President Karen Fann announced on March 31 that Cyber Ninjas would be conducting the 2020 election review.
Douglas Logan is listed as CEO of both entities, and both businesses share the same address. The Greek word akolytos means “unhindered” or “freely, without obstruction.”
The information is significant because a Cyber Ninjas spokesman announced on Thursday that the company was shutting down after an Arizona judge found the company in contempt and threatened to fine it $50,000 a day until it complied with a court order to hand over documents related to the election review.
American Oversight, a non-partisan nonprofit watchgroup, filed a public records request with the state Senate on April 6 last year seeking correspondence, contracts, financial records and other documents related to the election review, including Cyber Ninjas records. The Arizona Republic newspaper filed its own records request.
The Senate refused, saying because Cyber Ninjas was a private company, its records did not fall under the public records law. Both American Oversight and the Arizona Republic sued and won, but Cyber Ninjas refused to comply with the court order to hand over its records. The fines were set to begin accruing the day after Cyber Ninjas announced it was shuttering its operations.
"Cyber Ninjas is shutting down. All employees have been let go," Rod Thomson, the company's representative, told NBC News Thursday evening, saying that even CEO Doug Logan had been laid off.
Cyber Ninjas’ attorney Jack Wilenchik told Maricopa County Superior Court Judge John Hannah that the company was insolvent, hadn't paid his attorney fees and couldn’t afford to sift through all of its records to find ones related to the election review.
But Judge Hannah said the company couldn’t get out of the judgment, and that he may apply the $50,000 daily fine to individuals of the company to force them to comply even if the company closes.
“The court is not going to accept the assertion that Cyber Ninjas is an empty shell and that no one is responsible for seeing that it complies,” Hannah said, noting there was no evidence that the company is insolvent, according to the Associated Press. He also said that if company employees couldn't review the documents themselves, they could turn the records over to the state Senate, which hired the company, and Senate lawyers could sort through them to find the ones pertinent to the records request.
The existence of the second company, Akolytos, raises questions about whether it was also shuttering operations and whether Logan and employees of Akolytos were also laid off. It’s possible that assets held by Akolytos could become part of the judgment against Cyber Ninjas.
Cyber Ninja spokesman Rod Thomson did not immediately respond to an inquiry. Logan also did not respond to an email sent to his Acolytos address. Neither the email sent to his address, nor an email sent to a Cyber Ninjas employee at her Cyber Ninjas address bounced back, indicating the accounts are still active.
Andrea Matwyshyn, professor of law and engineering policy at Penn State, says the issue around Akolytos assets depends on how rigorously and independently the two companies operated and whether assets were shifted from Cyber Ninjas to Akolytos “for purpose of hiding them and keeping them from falling within the scope of any possible fines from the court."
If assets were transferred after the court order to produce records, and if the court determines they were transferred with the intent to avoid having the assets fall into the hand of the court, “that is potentially a sanctionable act of trying to avoid the reach of the court order and non compliance,” she said.
The court would generally look at whether corporate formalities were followed and the officers and directors maintained each entity separately, managing books, records, and assets distinctly.
“The CEO needs to be able to demonstrate to the court that there was a rigorous adherence to maintain the books and records as a standalone entity, and that the company was its own self-contained unit, wholly separate,” she told Zero Day.
The mailing address for both is listed as: 5077 Fruitville Rd, Suite 109-421, Sarasota, Florida. The Fruitville Rd address, however, is the address of a UPS store.
It’s not clear why Logan created Akolytos, though it was likely to create a division between his cybersecurity consulting business, which he launched in 2013 as Cyber Ninjas, and the new side business he hoped to create conducting election reviews in other states, following the Maricopa County election review.
Last year, Arizona Secretary of State Katie Hobbs told reporters on a press call that Maricopa was being used as a rehearsal for an audit show that would eventually hit the road to Georgia, Pennsylvania, Wisconsin and other states, setting precedent for how elections in the future would be challenged. It's believed that Logan hoped to become the go-to person to manage those election reviews for the Republican party and anyone willing to put up the money.
But it's not clear how distinct Cyber Ninjas and Akolytos were. As noted, Logan was CEO of both companies. And last November, while Cyber Ninjas was embroiled in the lawsuit over its records, a Cyber Ninjas employee contacted a cybersecurity expert who teaches security, asking if he would consider providing on-site training in Orlando, Florida for “our staff.” She provided her Cyber Ninjas email and phone number for contact, and said she hoped the training could be conducted in January 2022, though the company was flexible about this, according to the correspondence viewed by Zero Day.
The cybersecurity expert, who asked not to be identified, didn't respond to the request from the Cyber Ninja’s employee, and a week later Doug Logan contacted him as well, from his Akolytos email address. Logan wrote that his company (he didn’t specify the name) conducts annual training and wanted to know if the cybersecurity expert would be interested in teaching a class "in a corporate environment” to 4 or 5 employees.
It’s not clear why Logan contacted the expert from a non-Cyber Ninjas email address. But he may have done so, the cyber security expert surmised, because Cyber Ninjas was being heavily ridiculed at that point for its participation in the Maricopa election review. Logan himself had been marked as a conspiracy theorist who had become associated with Stop the Steal activists who believed Trump had won the presidential election. He repeatedly amplified false claims about fraud on social media, and was a strong proponent of conspiracy theories about Dominion and other voting machine vendors.
Logan began his cybersecurity career working for Cigital Software in its Bloomington, Indiana office and founded Cyber Ninjas there in 2013 before moving to Sarasota the next year. The company’s consulting business involved working with companies and organizations to evaluate their cybersecurity risks, establish security policies and procedures, and develop secure software-development lifecycles. Logan was a participant at the first US Cyber Challenge in 2010 and has helped design capture-the-flag contests that pit contestants against each other to test their hacking skills.
He has eleven children and described Cyber Ninjas in the past as a Christian firm.
“As a Christian company, we also believe we have a responsibility to serve, as Christ served,” reads an old company press release. “Helping the USCC is a great way to be a blessing to others, while helping combat evil hackers.”
The company’s web site is outdated — the last blog posts and press releases posted are years old. It’s also vague about who Cyber Ninja’s clients are, saying only that its customers are in government and the financial sector. A conference speaker’s bio for Logan, however, says he has done cybersecurity work for the Federal Communications Commission, United Services and Administration Corporation, JP Morgan Chase, Bank of America, Citibank, and Sally Mae. Another speaker bio says he has worked in technology for 15 years, including “roles in development, product management, application penetration-testing, consulting and training.”
The Maricopa review has been the target of sharp criticism from the start. When it became clear that President Trump lost Arizona last year, his campaign sued Arizona election officials and accused election workers in Maricopa County of incorrectly rejecting ballots. The suit was dismissed, but Trump, who lost Arizona by 10,457 votes, believed an audit would uncover “thousands and thousands and thousands” of votes for him that went uncounted.
After the election, the county’s Republican-dominated board of supervisors hired two accredited voting-system testing labs to conduct a forensic audit of the voting equipment; they determined that the machines had not been hacked and had tallied the votes accurately. A hand recount of a statistically significant sample of ballots supported this.
But the Republican-controlled state Senate wasn’t convinced and issued a subpoena for the ballots to conduct its own recount. They then hired Cyber Ninjas to oversee it, even though the company had no formal election or auditing expertise. The company was criticized for, among other things, sloppy procedures that raised questions about the security of the ballots Cyber Ninjas was given to conduct the review.
When the review was complete, it found that President Biden had actually won nearly 100 more votes than previously recorded.
UPDATE Jan. 8, 2022: The Associated Press is reporting that in text messages Logan sent five days ago to Republican Senate President Karen Fann, he said he was going to open a new company with the same employees because he couldn’t sell Cyber Ninjas due to “too much negativity around the name.” He said he planned to sell off the old company’s assets to pay debts and file for bankruptcy. Logan told the Associated Press that he’s not trying to circumvent the court fines and public records orders but that he needs to be able to work. It’s not clear if the “new” company he’s referring to is Akolytos, which was already launched on paper last year. He also didn’t tell the Associated Press what kind of work the new company would do.
UPDATE Jan. 9. 2022: This story has been updated to correct the name of the company Logan worked for in Indiana. It was Cigital, not Digital.
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