In light of recent public statements by Arturo Devesa, founder and CEO of Medwhat.com, Inc. (Medwhat), Stanford-StartX Fund, LLC (SSF) takes this opportunity to address the nature and status of litigation initiated by Medwhat investors against Medwhat and Devesa.
On April 9, 2018, SSF and four other Medwhat investors sued Medwhat and Devesa in San Francisco Superior Court (Case No. CGC-18-565596) for breach of contract, fraud, and other causes of action. As set forth in the complaint, SSF alleges that between 2014 and 2015, SSF loaned Medwhat approximately $160,000, and in early 2017 SSF invested another $400,000 in a putative Medwhat “Series A” round of investment based on representations by Devesa that others already had invested $3.6 million in the Series A. The complaint further alleges that Medwhat refused to repay the loaned funds when they came due (with Devesa falsely claiming that the loans had “converted” to equity) and that at least $3.2 million of the supposed $3.6 million in Series A investments was fictitious.
After losing challenges to both the complaint and the Court’s authority over him, Devesa asserted counterclaims against SSF and the other plaintiffs, as well as fifteen others, most of whom are individual officers, employees, and/or affiliates of Stanford University. When the Court rejected Devesa’s counterclaims, he refiled them, first in the same Court, and then in a second superior court, each time adding new parties.
Ultimately, Devesa sued Stanford President Marc Tessier-Lavigne, General Counsel Debra Zumwalt, Stanford Management Company CEO Robert Wallace, and dozens of the university’s trustees, none of whom had any personal knowledge of Devesa or Medwhat prior to the litigation.
On September 17, 2019, the San Francisco Superior Court permanently dismissed Devesa’s claims against SSF, Stanford University, and their individual officers, employees and/or affiliates. Devesa has been representing himself in the case since the Court granted his former counsel’s request to withdraw in April 2019. Since July 2019 alone, the Court has imposed monetary sanctions on Devesa three times. In one such order, the Court held that Devesa had violated California’s anti-SLAPP statute by suing parties for allegedly filing a false complaint against him, noting that Devesa “fails to . . . make any evidentiary showing to establish his claims.”
SSF intends to continue vigorously prosecuting its own claims against Devesa and Medwhat.
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SSF was established by Stanford University to support StartX, a non-profit community of entrepreneurs. SSF selected investee companies in a systematic fashion based on pre-defined criteria. These investment decisions were made independently of Stanford Management Company, which manages the University’s endowment. Stanford Management Company provided bookkeeping services and administrative support to SSF, but no investment advice.