Court Allows Mismanagement Claims Against Former Genius Fund Executives Ari Stiegler and Gabriel Borden to Move Forward

LOS ANGELES, Nov. 14, 2024 /PRNewswire/ -- In a pivotal ruling, the Los Angeles Superior Court has cleared the way for Genius Fund I ABC, LLC to proceed with its mismanagement lawsuit against former co-CEOs Ari Stiegler and Gabriel Borden. The lawsuit alleges gross mismanagement that led to the rapid downfall of Genius Fund, a cannabis venture once poised to be a leader in California's cannabis industry. This decision denies Stiegler and Borden's attempts to dismiss the case, enabling Genius Fund's claims of breach of fiduciary duty, breach of the duty of loyalty, and breach of contract to proceed in full as it seeks millions in damages inflicted upon the company.

Background on Genius Fund and the Lawsuit
Backed by an over $160 million investment from the late Russian billionaire Dmitry Bosov, Genius Fund launched with the ambitious goal of leading California's vertically integrated cannabis market by controlling every stage of the cannabis supply chain—from seed to sale—under the leadership of co-CEOs Stiegler and Borden. Aiming to dominate California's "Green Rush," the venture was positioned to become a major player in the legal cannabis market. However, despite tremendous market opportunity, substantial funding, and a promising infrastructure, Genius Fund collapsed within two years due to alleged severe financial mismanagement and leadership failures, never turning a profit. Ongoing litigation seeks to recover value for creditors impacted by its rapid and complete downfall.

The complaint outlines a pattern of fiduciary and contractual breaches by Stiegler and Borden, alleging reckless spending, willful disregard of critical information, and a lack of due diligence in investment decisions. Among the allegations are extensive personal expenses on jet skis, luxury vehicles, and inflated salaries – uncorrelated to any benefit to the company or revenue generation, as well as dubious business decisions, including a $31,000 monthly lease—double the market rate—for an underperforming dispensary. The lawsuit also details a $23 million land deal that failed to meet cannabis licensing requirements and nearly $1.9 million in unnecessary renovations directed to a design firm owned by Borden's mother. Genius Fund contends these and other actions drained company resources and ultimately forced Genius Fund into liquidation.

Ruling Highlights Urgent Need for Accountability in California's Cannabis Sector
The court's decision comes at a crucial time for California's cannabis industry, where licensed operators are grappling with high taxes, complex regulations, and fierce competition from unlicensed businesses. The Genius Fund case underscores the pressing need for responsible, accountable leadership to protect industry credibility and investor trust in a challenging regulatory environment.

"We are encouraged by the court's decision, which affirms the gravity of the allegations against Stiegler and Borden and underscores the necessity of accountability in leadership—not only within cannabis but across all industries," said Armen Avedissian, the Assignee responsible for overseeing Genius Fund's wind-down process. "Our focus remains on recovering damages for the substantial losses caused by their gross mismanagement of Genius Fund, which, but for these breaches of trust, we believe would have stood among the preeminent vertically integrated cannabis operations in California."

Next Steps in the Legal Process
With the court's green light, Genius Fund is prepared to aggressively pursue all legal claims and obtain damages from Borden and Stiegler for the harm they caused. "Despite bold promises of profitability, Stiegler and Borden's lack of industry experience, abysmal judgment, and poor financial decisions led to tens of millions in preventable losses," said Avedissian. "Our commitment is to recover as much as possible for the harm they caused, and this ruling is a critical step toward achieving that goal."

Genius Fund I ABC, LLC is represented by ArentFox Schiff LLP, with Armen Avedissian serving as the Assignee overseeing the wind-down process.

The case is Genius Fund I ABC LLC v. Stiegler et al., case number 23STCV23190, in the Superior Court of California, County of Los Angeles.

About Genius Fund I ABC, LLC:
Genius Fund launched as a private equity startup backed by an over $160 million investment from the late Russian billionaire Dmitry Bosov, aiming to build vertically integrated businesses in high-growth sectors. Led by two co-CEOs, Ari Stiegler and Gabriel Borden, the venture set out to dominate California's cannabis market during the "Green Rush." Yet, despite its ambitious goals and substantial backing, Genius Fund collapsed in less than two years due to severe financial mismanagement and operational failures, never turning a profit. Ongoing litigation seeks to recover damages to the company for Borden and Stiegler's gross mismanagement. For more information on the liquidation process or to inquire about purchasing assets, please contact Armen Avedissian at [email protected].

SOURCE Genius Fund I ABC, LLC