In this chapter, the true antagonists of the story come to light, compounding the red flags mentioned earlier and leading to the eventual downfall of Verse Us. If you thought Bryan at Fancy was bad, brace yourself for the incompetence and corruption of Derek, the CEO, and his sidekick, the COO. Unlike Bryan, who was merely incompetent, Derek and the COO displayed a complete lack of skills and moral integrity. This chapter will delve into the tale of bribery, blackmail, whistleblowing, and how it eventually entangled both the SEC and FBI.
Verse Us started showing signs of financial difficulties. Although they never directly disclosed this, rumors began to circulate among vendors that they were not being paid on time. I started asking pointed questions about cash flow, which seemed to puzzle Derek. He never seemed to grasp the fact that vendors collaborate and network with each other, often seeking reassurance when payments are delayed. From my perspective, it was evident that the company was facing a major cash flow problem. However, officially, we were assured that “everything is fine” and that they were in the process of securing a bridge loan while closing their investment round. Some vendors, including myself, received payments during this period, while others did not.
From an external standpoint, you wouldn’t have known that the company was struggling financially. In fact, they continued to engage with more agencies and hire additional employees, seemingly without any regard for their cash flow issues. Based on hearsay and what I gathered during this time, it appeared to be more of the same shenanigans as before. Key9, the investment company, had apparently provided a bridge loan to help Verse Us navigate the first quarter of 2022. However, once the investment dollars came in, Key9 immediately called in the loan. The board was displeased with this action and the interest terms included in the agreement. They reprimanded Derek, sending him a clear message: “Don’t do that again.” This incident, coupled with the false claims made to investors, began to look like fraud. I felt my stomach wretch during this chapter, which I later discovered was a stress-induced ulcer.
The second major event that took Verse Us on a downward spiral was the hiring of Jamie as the new COO. He turned out to be the worst individual I had encountered in my entire career. Even before meeting him, I had a gut feeling (though maybe it was that ulcer) that something was off. Within a few weeks, it became clear that Jamie was both incompetent and prone to excessive pivoting.
Now, I believe in the mantra of “fail early, fail often” and acknowledge that startups should be prepared to pivot at least once in their first year. However, these decisions should be data-driven and not based on the biases of a single person. Jamie came in with a strong desire to reinvent Verse Us from scratch. While I understood his reasoning, I disagreed with his methods. At that time, Verse Us was far from being ready to go to market due to several reasons:
- They were significantly behind on producing an adequate quantity and quality of video content.
- There was no established course curriculum or plan for the end-user experience.
- The company hadn’t defined its revenue or pricing strategies.
- Partnership deals had not been secured.
- The monthly expenses were skyrocketing.
Despite my dislike for Jamie, he was the first person in a position of leadership who could tolerate criticism. I held onto that fact and worked closely with him, knowing it was our only common ground. However, Jamie had many false preconceived notions about how products should be built, and his character left much to be desired. Nevertheless, I was willing to push forward if it meant getting to market with a leader who could handle the truth.
We embarked on a massive rewrite of the entire mobile app experience, a task that had previously taken six months to build. Remarkably, we completed the rewrite in just 40 days, working at an incredibly fast pace. What I couldn’t foresee was that this initiative, along with others in the first and second quarters, would later become a significant debt burden for my own company, almost pushing us to the brink of collapse. Nevertheless, at the time we remained committed to Verse Us, still holding onto the belief that things would work out.
Finally, we reached the market with a feature-rich UI kit containing over 200 components and numerous screens. We used a subset of these to create a “MasterClass” experience that would work with the available content (two courses with around a dozen videos each). While other aspects of the company were crumbling, at least we had achieved this milestone. However, as we celebrated this win, I observed Jamie belittling the marketing team and vendors while taking credit for the small victories that were only possible because of the vendors’ contributions.
Then, things took another dark and even more disturbing turn.
By this point, I had gathered enough evidence to know that I needed to distance myself from the company. However, I also realized the importance of staying close to gather more information. Additionally, despite attempts to make my company a scapegoat, we had passed an audit and were being asked to do more work.
The tipping point came for me shortly after Jamie attempted to blame me and have my company’s work audited. I couldn’t understand why finding someone to blame was so crucial to them. But I knew a few key facts: Jamie had important board meetings coming up to solidify his position, Derek wanted to step down as CEO, and Jamie was being nominated to take over.
Privately, I voiced my concerns to a couple of the founders. I strongly believed, and still do, that Jamie was dangerous to be associated with. I also highlighted a significant red flag that should have alerted everyone to something suspicious: Why was I, a vendor, being given information and details about private board-level conversations? I had access to information known only to the CEO and COO, and I had more insight into internal politics than the rest of the company combined.
Confidentially, I conducted some investigation into Jamie and Derek on my own. Utilizing connections in the investigative field, I discovered more about their backgrounds. Jamie’s reputation was the first to come to light, and it was quite terrible. He had been sued for fraud in previous ventures and was known as a dishonest individual in many circles. These stories were even available with a simple Google search. However, I did not disclose this information to anyone. Instead, I relied on my own experiences and presented factual evidence of how destructive Jamie had been to the company. Despite his lack of expertise in various areas, he made decisions that impacted the business in significant ways. From technology choices to hiring his own acquaintances, Jamie was spending money and making commitments without justification:
- A friend of Jamie’s was hired for a fabricated role of “data processing,” but he contributed nothing and took credit for the work my development team had done.
- Jamie’s fiancé, who had worked at an AI company, was hired as a consultant to fix the company’s data manually instead of using technology.
- A defunct software development company was brought in to audit the code for security vulnerabilities and check if my company had delivered the required features.
- Salesforce was chosen as the marketing technology solution, intentionally excluding most of the marketing team from the decision-making process, and Jamie failed to disclose his personal financial interest in the choice.
- Jamie attempted to bribe vendors like me and others, using statements such as, “I need you to side with me on this decision. If you support me as CEO for the next seven years, I’ll ensure you can bill for more work at higher rates.” I have recorded evidence of this conversation.
The list of Jamie’s misconduct went on and on, and I was utterly disgusted. I refused to be bribed, and after witnessing the deception between Derek and investors, I couldn’t tolerate any more snake oil tactics. It was time to take action.
Doing the Right Thing
Let me make it clear: I’m someone who stands firmly by their convictions. When I’ve had enough, I’m willing to endure any potential damage to my reputation in pursuit of truth and justice. I genuinely believe that if more people took a stand against deception and corruption, our society would be more prosperous.
On April 22, 2022, Jamie called me late at night. He tried every manipulative tactic in the book, from demanding to pleading and bargaining. He even shed crocodile tears, claiming he was only trying to help me. I listened carefully, asking pointed questions to uncover his true intentions. Although I gave him a vague and disingenuous acceptance of his request, I had already made up my mind to terminate our contract with Verse Us. Unbeknownst to Jamie, I had recorded that call, along with every other interaction we had. After sleeping on it, I made the decision to expose his corruption. Here are some excerpts from the email I sent to the founders and executive team:
I chose not to reveal all the details of our conversation to the founders, and up to this point, I haven’t disclosed the full extent of the dark events to anyone. However, I decided it was necessary to disclose it to a couple of three-letter agencies…
No Choice Left
The period from March to July was a chaotic blur. I focused on transitioning my company out of the partnership with Verse Us and closing the door on our involvement. Despite Jamie’s attempts to engage us in additional work, I declined and concentrated on documenting and handing over our deliverables. It may not be the most heroic action, but sometimes you have to prioritize saving yourself when faced with overwhelming corruption. The extent of fraud, deceit, and corruption I witnessed during that time was truly sickening.
Months later, it came as no surprise that Verse Us had failed to settle our invoices. They owed over $2.4 million to all vendors combined, with approximately $250,000 owed to my company. Two vendors even became insolvent as a result. Jamie either quit or was fired, while Derek, seemingly oblivious to his role in the company’s downfall, continued to operate under the delusion that he was the good guy in the story.
I sought guidance from a tenacious attorney. While there was little hope of collecting directly from Verse Us due to their insolvency, I had a case to pursue Derek and Key9 due to their financial entanglement. Additionally, I would be seeking damages which I cannot disclose at this time.
The most important lesson from this experience is what I learned about fraud and whistleblowing with government agencies. In the past, I hesitated to report instances of fraud due to the perceived complexity and intimidation of reaching out to federal authorities. However, I discovered that it’s not as convoluted as it seems, and there are protections in place for whistleblowers. The investigators I worked with were empathetic and genuinely cared about seeking justice. It was cathartic to share my experiences openly and without fear of misinterpretation. I passed the torch to someone who had the authority and determination to take action. While I’m not privy to the case’s status, I wouldn’t be surprised if Derek and Jamie make headlines in the coming months, exposed for their involvement in a Ponzi scheme and the damages they caused to investors and businesses.
If you’re interested in the details of safely whistleblowing or writing, feel free to reach out to me on Telegram. You can create an anonymous account, and I’ll be happy to share more about my experience and offer any advice I can.
That concludes the tale for now. I may return to revise, add, and edit in the future, but this has already turned into quite a novel. Thank you for reading, and I hope this story somehow helps you in your own journey.
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