Did my old job only exist because of fraud?

Early in my software engineering career, the UK-based startup I worked at, GenieDB, was taken over by a US Venture Capital fund, Frost VP, owned by Stuart Frost. I was functionally the only piece that came to the US. The code was rebuilt, the rest of the team eventually rotated out, even the core strategy was replaced. But I was early in my career and excited to be working in the VC tech-startup world. I ended up making my life in the US, so this was a pretty pivotal phase in my life.

For a while I lived the start-up life: building rapidly and playing Foosball . GenieDB actively rejected revenue opportunities (a la Silicon Valley) with the aim of getting acquired for pioneering technology. We limped along for years with never more than 3 customers, even when big-tech and eventually open-source did what we tried to do better than us. I left with mixed feelings and eventually came to realize we never had the serious footing it would have taken to actually develop significant technology.

A decade later I heard from a former colleague that Frost was being sued by the SEC for fraud. Still not sure what to make of my time at GenieDB, I was curious enough to skim the complaint, where I saw this line:

Was GenieDB involved in this fraud somehow? I chewed on this question and it evolved to a form that began to haunt me:

Did my old job – the one that brought me to the USA and changed the course of my entire life – only exist because of fraud?

With this burning question I dove into the record of the case. The alleged fraud was simple: Frost VP operated as an incubator, providing services to the portfolio companies, and the investors say these fees charged were excessive.

The case went to binding arbitration and the investors won, after which the SEC sued to bar Frost from managing funds in the future. There’s some great elements like claiming a personal chef and cleaner as expenses, telling investors no salary would be paid by the fees (it was) and starting a marketing company just to sponsor someone’s visa.

But what about GenieDB? Both the arbitration and SEC suit elaborate on this idea of creating companies just to charge them fees:

This allegation was never litigated though, neither court nor arbitrator were kind enough to rule on why GenieDB was in the portfolio. I had to dive into the evidence and decide for myself. First of all, my old CEO testified that GenieDB was paying excessive fees:

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