Editor's Note
The story is pieced together from interviews with more than 40 former employees and business associates, active and retired county officials, as well as federal and county law enforcement; state court records, arbitration, arrest and corporate records in the U.S. and Canada; other public records in six California counties; Genius Fund corporate records and emails. Some former employees and business associates spoke to dot.LA on condition that their names not be mentioned out of fear of reprisals.
This is the fifth and final story in our "Green Rush" series. Read more:
Part 1: Rise and Collapse of LA's Genius Fund | Part 2: Growing Pains in Plumas County | Part 3: A Line of Failed Products | Part 4: What Happened in Adelanto
Bosov, 52, was a father of five who reportedly ice skated with Putin. He was 86th on Forbes' richest Russian billionaires, with an estimated net worth of $1.1 billion in 2020.
Because he died alone, of an apparent gunshot wound to the head, the oligarch's passing resulted in a great amount of speculation in Russian and other media reports that he was murdered. Russian authorities have been investigating his death as a suicide or accident.
One early report was in Kremlin-controlled news outlet Sputnik. It provided few details other than that the billionaire was "found with a gunshot wound to the head" with a gun next to his body.
But Genius Fund executive Ari Stiegler told people he believed it was murder, according to a business associate with whom Stiegler spoke.
Stiegler told him "Putin took one of Dmitry's coal mines" and "that's what happens when a $1 billion oligarch gets in a fight with a $5 billion oligarch."
A representative of the Bosov family told dot.LA they want Russian authorities to investigate whether foul play was involved in Bosov's death.
A screenshot of an online memorial to Dmitry"Dima" Bosov.
Turmoil in Russia
Bosov's last months alive were turbulent. Genius Fund was trying to restructure itself under Bosov's advisor, Gary "Igor" Shinder, and evaluate its financial losses. Bosov was also dealing with drama in Russia.
Bosov was known in Russia as a coal industrialist who more recently sought to build the largest railway infrastructure project for Russian Federation President Vladimir Putin. The eccentric billionaire was a majority owner in multiple Russia-based companies that are involved in the production of coal-linked projects.
He was the chairman of the board of directors and the owner of 86% of Moscow-based Alltech Group, a 27-year-old private investment company that manages oil and gas, coal and anthracite, as well as residential and commercial real estate, according to Genius Fund documents and Alltech'swebsite. The investment group controls Sibanthracite Group, a coal exporter that calls itself Russia's largest producer of metallurgical coal — a crucial component for making steel, Sibanthracite's website states.
Bosov was also co-owner of other coal companies including VostokCoal MC, which manages coal extraction projects, with his longtime business partner Alexander Isaev, according to a Russian media interview on Sibanthracite's website.
Russian media reported that the state's environmental agency fined it roughly $8.4 million for illegal mining. The fine was related to a 2018 case against Bosov and Isaev's VostokCoal subsidiary, which was involved in a project to mine vast coal reserves in the Arctic's Taymyr Peninsula, Russia's largest nature reserve and a haven for wildlife like the muskox.
The Russian Federal Security Service, or FSB, also opened a criminal case against the management of Bosov's company for the illegal mining and sale of that coal, Russian media reported in April 2019. That was the same month Bosov and his wife's visas were rescinded by the U.S., said Genius Fund ex-CEO Francis Racioppi in a whistleblower retaliation lawsuit filed this past April.
A few months into 2020, Russian media reported that the Russian state's nuclear power company created by Putin sought to buy VostokCoal MC.
In early April, weeks before his death, Russian media and Forbes Russia reported that Bosov accused his longtime business partner Isaev of "egregious abuse and theft," and had him removed from his position atop coal company VostokCoal MC and also from the board at Sibanthracite. Isaev has denied the accusation.
It was later reported that less than 24 hours before Bosov's death, a former business partner was arrested in Russia on suspicion of ordering contract killings in the 1990s. Russian media outlets speculated that Bosov was about to be called as a witness.
During this period, the price of coal dropped precipitously in the face of the ongoing COVID-19 pandemic, putting the companies "in a desperate crisis," Anders Åslund, a senior fellow and Russia expert at the Atlantic Council think tank, told dot.LA.
A person familiar with Bosov's state of mind in the months prior to his death told dot.LA that he had talked about increasing turmoil, including theft, at a company.
As the pandemic spread, Bosov reportedly armed himself, believing rampant crime would break out, and yelled at people to "stay home or die."
"It's clear that since the beginning of the year, there had been something going on," said Brian Whitmore, director of the Russia Program for the Washington, D.C.-based Center for European Policy Analysis. "Russian media was reporting that his financial affairs appeared to be in turmoil since the beginning of the year, when he began transferring assets and dismissing employees."
Whitmore said despite much speculation in the Russia media it's hard to know exactly what may have led to Bosov's death. Whitemore said the billionaire was known for "adventurous," high-risk investments.
"We had a saying in Russia: was it suicide or were they suicided?" Whitmore told dot.LA.
In April, as the turmoil at his Russian companies' was unfolding, Genius Fund ex-CEO Francis Racioppi filed a more than $3.5 million whistleblower retaliation lawsuit in Los Angeles federal court against Bosov and Genius Fund. And in June Genius Fund, itself, filed a second arbitration claim alleging their former business associates embezzled and unjustly enriched themselves.
Bosov's manner of financing and lack of strict accounting controls prompted speculation among Genius Fund staff. In particular, as to why he was "repeatedly dumping millions of dollars into the company without requiring any accountability from company management or executives as to how the money was being spent," according to allegations in Racioppi's lawsuit.
"I'm surprised the company didn't get raided by federal authorities only because there's one investor," a former Genius Fund employee told dot.LA. "He's a billionaire oligarch and it looks like a classic play of moving assets to the West."
Bosov's Plans
Just how much Bosov was involved in day-to-day decision-making at Genius Fund remains unclear.
In his whistleblower retaliation lawsuit, Racioppi contends that Bosov was not a passive investor but exerted "complete control" over the business. A Bosov family member told dot.LA this was not true. That person declined to provide details beyond that the family hoped Genius Fund would be "grown as father wished and be a great company."
Racioppi's lawsuit alleges that Bosov ran Genius Fund's day-to-day operations while living in the U.S. from fall of 2018 to the around May 2019, just as the company was getting off the ground.
During that time, Bosov lived in a garish Beverly Hills mansion described as a modern-day tribute to Versailles that he eventually purchased through an entity created a few weeks prior, paying $30 million in cash, according to property and court records.
In his lawsuit, Racioppi alleges Bosov mixed his personal funds with Genius Fund's, blurring the lines between corporate and personal investments.
Attorneys representing the defendants denied the allegations and characterized Racioppi as a disgruntled CEO who was unwilling to take direction from the new owner, and was never terminated.
Amit Sharma, a former U.S. Treasury Department official and a startup owner himself, said it's crucial that there be a firewall between business funds and personal funds. "Commingling is a notable red flag in the money laundering world," he said.
Genius Fund operated more than 50 entities, but had only one main account through which the investor's money came in and from which money was spent, according to corporate documents and former employees.
The Beginnings of the Power Struggle
By fall of 2019, back at Genius Fund's Culver City office, Racioppi said he was communicating with Bosov daily regarding the company's growing debt, according to his lawsuit.
As the year went on, funds wired from Bosov's company, Alltech Group, to Genius Fund became less frequent. Genius Fund's sole investor began requiring more details on profits and losses before sending additional funds, multiple employees said.
"In the past, these two kids, whenever they wanted money, he just sent it," Evan Kagan, an executive in one of Genius Fund's ventures, said of Stiegler and Borden.
Internal company records and former employees show the plan had been that Genius Fund expected to be financially self-sufficient by the fall of 2019. But by that December the company was still not cash flow positive, and it looked unlikely it would be anytime soon, according to company records.
Bosov summoned the team to the Mexican resort town of Cabo San Lucas for a meeting, according to multiple employees and company records. He made Stiegler and Racioppi co-CEOs and made it clear that they should not meddle in the staff's future financial projections, according to multiple former employees. The billionaire introduced his friend, Shinder, who lives in the U.S., as his new consultant on matters related to Genius Fund.
When the executives returned in early December, former staff members realized that many of them had received the same calendar invitation.
They told dot.LA that one by one, they were brought over to talk to a representative of HR and legal and told they were being let go. The casualties included the C-suite of products, the THC team and anyone redundant, three former employees said. Stiegler and Borden stayed away and waited it all out, the three remembered.
The next day, Stiegler went over to the product team and said, "If you're around, congratulations, get ready to work really fucking hard," according to the three former employees.
In a video clip of a Genius Fund meeting reviewed by dot.LA, Stiegler announced at a staff meeting that he and Racioppi are now co-CEOs and said he's in charge of "investment decisions." Stiegler told his employees, "I'm deciding where our money is going."
The mid-January 2020 forecast prepared for Bosov found if Genius Fund wanted to continue operating in the same fashion, he would need to invest tens of millions — on top of the more than $150 million he'd already spent without profit, two former employees said.
"Until it became a problem, they probably never thought they had a financial problem," Kagan said of Stiegler and Borden.
Things were unraveling.
The Incident in Mexico
Stiegler occasionally set aside samples of the company's branded product with the words "this one's for Dima," according to former employees who saw and heard him do this.
Racioppi's lawsuit alleges that "Bosov insisted that a Genius Group employee transport a sample of its commercial cannabis product to him in Italy" despite Racioppi's objections. The suit describes an executive organizing the transport behind Racioppi's back.
In December, on another visit to Mexico, Stiegler stashed some of Genius Fund's marijuana in his backpack for another visit to meet Bosov. But before Stiegler could exit the airport, he was randomly selected for a search, three former employees said.
He was arrested.
"The one thing I can tell you about the Mexico trip," Stiegler told dot.LA. "There was, like it was kind of like some dirty Mexican cops, who obviously saw me as a rich American and they wanted to exploit that. They were, like, trying to extort me and scare me and stuff like what you see in the movies."
Stiegler added he had a "couple joints, literally like three, four joints in a bag" in a side pocket. "They saw it, then they just really scared me."
He said he was in jail for a "pretty short" amount of time.
Firing
As Genius Fund underwent a crisis at its top ranks in February of this year, the company continued to spend on what some within the company said were unrealistic ventures. An employee flew to Rotterdam in order to research automated greenhouses and hold meetings about potentially buying a $92 million project, a former employee said.
Stiegler also tried to develop a new real estate investment trust to operate as a Genius affiliate, spending investor money on research and travel to meet people in those last months, former employees and business associates said.
Racioppi alleges he told Bosov of the "the gravity of the company's dire financial situation" during meetings in Mexico, presenting him with a plan to turn the company profitable with a minimal additional cash infusion. In court filings he said Bosov then directed him to "implement a reorganization plan" with Shinder overseeing that effort.
By the end of February, Racioppi called a staff meeting where he stood up and told everyone, "I don't know if I have money to pay you or not. So you guys can go home. Don't come back. I'm so sorry. You'll get a letter from us," said several former employees.
For the many off-site employees, the conference call piping them into the meeting didn't work -- callers heard a bunch of people talking in the background before the line went dead, two former employees, who were on the phone call, said. They said they learned they had lost their jobs when they could no longer log into their work Gmail accounts. A week or so later, employees said they received a letter telling them they were laid off.
In the final months, ex-employees described efforts by the company to sell whatever it could, including farm equipment, to make payroll. In March, the company's coffee table and couch disappeared from the office, they said.
The layoff letter was dated the same day Racioppi accepted a new position as sole CEO. His contract was to run through 2021 with an annual base salary of $700,000 plus a $300,000 signing bonus, along with $30,000 in moving expenses and a guaranteed bonus of no less than $350,000 a year, according to Racioppi's lawsuit, which alleges he is owed the remainder of his contract.
But according to the lawsuit, shortly after he was promoted, Bosov pulled the funding and sold the company, its entities and assets to Shinder.
In his final written executive order as Genius Fund's board chair, Bosov detailed the murky corporate structure that made him the company's ultimate beneficiary. He said he indirectly owned the company through a majority stake in Cyprus-based Goldhawk Investments Limited, according to the order. But that name had never appeared on monetary wires to Genius Fund, said four former employees. Bosov's other company, Alltech Group, was cited on internal paperwork as the source of funds. The relationship between the private companies is unclear.
After Bosov washed his hands of Genius Fund in March, Shinder made himself the company's president and chairman of the board of directors, according to Racioppi's whistleblower retaliation lawsuit.
By the end of March, Shinder established a new Genius Fund board of directors that included three active members: Shinder as president, as well as his two attorneys, lawyers at the Washington, D.C.-based law firm Freeh Sporkin & Sullivan.
With the transfer of power complete, Shinder worked for weeks with lawyers to get a handle on the company's financial picture.
The new board's first executive order, submitted as part of Racioppi's lawsuit, was to audit Genius Fund and all of its entities, ban distribution of any assets or funds without written approval from Shinder, and to order an independent investigation regarding "possible fraud and negligence" because of apparently "severe deviations" in the fund's financials, structure and management, the document said.
Liquidation
By the end of March, Shinder laid off all existing staff, including management, citing the "substantial business interruption caused by the ongoing COVID-19 outbreak," even though the state and city said cannabis shops were allowed to remain open. Just a month earlier, the company had set records for daily and weekly revenue, Racioppi alleges in his whistleblower retaliation lawsuit.
But Genius Fund's time and financial backing had run out.
Former employees told dot.LA that the sudden dissolution of Genius Fund left them and their colleagues with thousands of dollars in expenses unreimbursed thus far. In a letter dated April 22 reviewed by dot.LA, employees received a "notice of unavailability of COBRA (healthcare) continuation coverage."
Some upset employees sold heavy machinery in the field to a competitor and then split and pocketed the cash, two people familiar with the sale said. Meanwhile, the company notified vendors it was terminating their relationships even though many of them were still owed money, according to recorded liens, Racioppi's lawsuit, and interviews with former employees and vendors.
Today Genius Fund's website is just a landing page with an email address. Slowly assets have been sold or appeared for sale, according to property records and documents submitted as part of Racioppi's lawsuit.
The company grew more than one million pounds of industrial hemp, but none of it ended up in any of Genius Fund's branded products during the company's less than two years of operation, multiple ex-employees said.
In April, property records show that Genius Fund sold its Santa Barbara County land for $5.4 million. The Adelanto site, used to manufacture CBD and THC oils and extract, is for sale, according to an arbitration claim Genius Fund filed in June against its former partners at the site, which alleges they stole, embezzled funds and were grossly negligent.
The arbitration has since been settled, according to Kagan, one of the parties to the claim.
Genius Fund's new owner, Gary Shinder, did not reply to repeated requests for an interview, but said in a letter to dot.LA that after significant examination, "I did not find anything that could support any allegations of embezzlement, theft, or mismanagement by Heli Holdings or its principals." He wrote that he instead found what was likely "the only successful project in the Genius Fund portfolio."
"Everybody's just trying to get what they can out of it," said former Genius employee Jeff Davis in May. Davis lives with Stiegler and is one of the people Racioppi's lawsuit said is helping on a commission basis to distribute remaining assets for what Davis called the now "defunct" company.
In the meantime, the FBI has shown some interest in talking to Stiegler. Federal agents showed up at Stiegler's house, but he wasn't home, Stiegler told dot.LA.
Stiegler said an FBI agent called him afterward and asked if he was OK in light of Bosov's death saying, "we want to make sure you're safe." The agent then proceeded to ask him questions about Bosov, but Stiegler said he didn't want to speak about him.
A spokeswoman for the FBI declined to comment.
'A Case Study in Excess'
Former VP of Cultivation Jason Taylor told dot.LA that the company could have been the largest player in the cannabis industry today, but "they just couldn't get out of their own way. They were too busy on drug fueled binges and parties."
"He gave them everything. The ability to have a private chef at the offices…they bought vehicles, all kinds of stuff," Taylor said of Bosov. "This was a billionaire who stood up and stopped meetings to shake my hand. He was not a monster, he just wanted results."
Borden and Stiegler were also let go in the final round of layoffs, but Shinder subsequently hired them back on a commission basis — along with a skeleton crew of at least six others — to "liquidate" the multi-millions in assets, including 1.7 million pounds of hemp, real estate assets, business entities, vehicles and other equipment, as quickly as possible, Racioppi said in his sworn declaration filed in his whistleblower retaliation lawsuit.
Stiegler said "that's not accurate," and that there were "two or three remaining employees and I'm pretty sure they've all been fired or quit now."
In his letter to dotLA, Shinder wrote: "While the public relishes in the success stories of young brash entrepreneurs in Silicon Valley, they usually don't hear about the colossal failures... To everyone's embarrassment, the prior Genius management can serve as a case study in immaturity, ego, financial irresponsibility, and excess."
He declined to comment further.
One former employee called it a "tragedy" that hundreds of people lost their jobs. So far, no one has accepted responsibility for the company's failings.
Stiegler said since Genius Fund's dissolution he's been working on new investments and new projects, "just kind of on to the next."
He's also hired a public relations and crisis management firm to improve his online image, a former business associate with direct knowledge told dot.LA.
Former employees who spoke to dot.LA say they are still dealing with the sudden job loss.
"It'd be great for some kind of justice to come out of (everything that happened)," said a former employee." There were a lot of good people who were trying to do right."
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This is the fifth and final story in dot.LA's "Green Rush" series looking at the rise and fall of cannabis-related startup Genius Fund. Read part one, part two, part three, and part fourand sign up for dot.LA's newsletter to be notified about new stories.
Do you have a story that needs to be told? My DMs are open on Twitter @latams. You can also email me at tami(at)dot.la, or ask for my contact on Signal, for more secure and private communications.
Lead art and illustrations by Candice Navi.
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