In ongoing litigation battle in SF Court between MedWhat and the University, Stanford University and its venture capital firm "Stanford-StartX Fund Limited Liability Company" have received subpoenas for their bank accounts related to investments made by Stanford-StartX Fund LLC from Bank of New York Mellon to over 300 tech startups in its portfolio in the amount of $250,000,000 from 2014-2019.

The subpoena puts under heavy scrutiny Stanford University's IRS tax-exemption, as the University is exempt as an educational institution from paying state and federal taxes under section 501(c)(3) of the Internal Revenue Code, and from California state income tax as an educational institution under the Revenue and Taxation Code (R&TC) Section 23701d. Tax law regulations govern the limits of a non-profit venturing into for-profit business and direct involvement in venture capital operations outside of its educational mission under Department of Education rules and regulations..

The Stanford-StartX Fund LLC announced it was shutting down briefly after being sued for fraud in January of this year. The Fund was a legally separate entity created by startup accelerator StartX and its Founder Cameron Teitelman in 2013. The Fund partnered with Stanford University as Limited Partner investor in the Fund, while the fund was a legally separate entity from the University managed by independent Fund manager Suzanne Fletcher. Tax laws require arm's length separation between non-profits and their for-profit subsidiaries and prohibits the endorsement of any commercial for-profit activity by a tax-exempt University.

According to Stanford's policies website, the University wants to "maintain its tax-exempt status and avoid the appearance of endorsing non-Stanford entities.  Stanford is a non-profit institution that can not allow the "endorsement or the appearance of endorsement of commercial entities".  These statements contradict Court bank records that show MedWhat is a commercial entity that received investments directly from Stanford University's own bank accounts and not from Stanford-StartX Fund LLC. as advertised by the University from 2013-2018.

The subpoenas are part of an ongoing lawsuit between medical AI startup MedWhat and its CEO, Arturo Devesa, and its investor the Stanford-StartX Fund LLC. MedWhat claims its investments were misrepresented since all STANFORD-STARTX FUND LLC investment never came from such entity, but discovered years later they came from a bank account under the name of Stanford University from University tax-exempt bank accounts. MedWhat claims this amount to money laundering and tax fraud under US Code 26 USC 7201 & 7206 of the Internal Revenue Service (IRS).

The Fund gave communication guidelines to MedWhat from 2014-2018 with clear instructions to only use the fund's official name Stanford-StartX Fund LLC., and to never use Stanford University's name as investor in StartX companies given tax-exemption laws, all while MedWhat and all StartX companies did receive in fact investments and wire transfers from Stanford University from bank accounts under that name, and not from an entity called Stanford-StartX Fund LLC or a bank account with the Fund's name. There are no bank records of Stanford-StartX Fund LLC. having its own bank accounts. Records seem to indicate assets where commingled by the non-profit university and the investments.

Stanford MBA's offices involved in fund

State of Delaware records shows the Stanford-StartX Fund was a shell company without its own officers or offices. Officers for the fund in government records in California and State of Delaware appears as Debra Zumwalt, General Counsel of Stanford University, and Stanford University employees Sabrina Liang and Susan Weinstein, under the supervision of Stanford's CFO Randy Livingston and endowment CEO Rob Wallace, as managers of the Fund according to Court records. However, MedWhat says in lawsuit the manager and officer of the Stanford-StartX Fund LLC always was non-Stanford employee Suzanne fletcher and advertised as such by StartX and the Stanford-StartX Fund LLC. Employees of Stanford under tax laws are prohibited from running for-profit operations. Records show the Fund's address was at the Stanford University Graduate School of Business address at 635 Knight Way, Stanford, CA, 94305, implying that the Stanford MBA buildings are the offices of a for-profit $250,000,000 venture capital firm making investments in Silicon Valley tech startups and with access to valuable private technology information, something prohibited under Federal Tax Laws for educational institutions. Stanford University being directly involved in running the fund was strictly prohibited by tax laws and never advertised as such to StartX companies.

Bank accounts in which StartX and Stanford-StartX Fund LLC startups received money were under the entity name THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY

Stanford Trustees are:

•  Marc Tessier-Lavigne, President, Stanford University, Stanford, CA

•  Felix J. Baker, Co-Founder and Managing Partner, Baker Brothers Investments, New York, NY

•  Mary T. Barra, Chief Executive Officer, General Motors, Detroit, MI

•  Bret E. Comolli, Chairman, Asurion Corporation, Atherton, CA

•  RoAnn Costin, President, Wilderness Point Investments, Cambridge, MA

•  Michelle R. Clayman, Managing Partner & Chief Investment Officer, New Amsterdam Partners LLC, New York, NY

•  Dipanjan Deb, CEO & Co-Founder, Francisco Partners, San Francisco, CA

•  Henry A. Fernandez, Chairman and CEO, MSCI Inc., New York, NY

•  Angela S. Filo, Co-Founder, Yellow Chair Foundation, Palo Alto, CA

•  Sakurako D. Fisher, San Francisco, CA

•  Bradley A. Geier, Co-Managing Partner, Merlone Geier Partners, San Diego, CA

•  James D. Halper, Senior Advisor, Leonard Green & Partners, Los Angeles, CA

•  Ronald B. Johnson, Founder & CEO, Enjoy, Menlo Park, CA

•  Marc E. Jones, Chairman & CEO, Aeris, San Jose, CA

•  Tonia G. Karr, San Francisco, CA

•  Carol C. Lam, Attorney, La Jolla, CA

•  Christy MacLear, New Canaan, CT

•  Kenneth E. Olivier, Chairman Emeritus, Dodge and Cox, San Francisco, CA

•  Carrie W. Penner, Chair of the Board, Walton Family Foundation, Aspen, CO

•  Laurene Powell Jobs, Founder/Chair, Emerson Collective, Palo Alto, CA

•  Jeffrey S. Raikes, Co-Founder, The Raikes Foundation, Seattle, WA

•  Mindy B. Rogers, Atherton, CA

•  Victoria B. Rogers, President, Rose Hills Foundation, Pasadena, CA

•  Kavitark Ram Shriram, Founder, Sherpalo Ventures, Menlo Park, CA

•  Ronald P. Spogli, Founding Partner, Freeman Spogli & Co., Los Angeles, CA

•  Srinija Srinivasan, Palo Alto, CA

•  Jeffrey E. Stone, Chairman Emeritus and Senior Partner, McDermott Will & Emery LLP, Chicago IL

•  Gene T Sykes, Global Co-Head of M&A & Chairman, Goldman Sachs Group, Inc., Los Angeles, CA

•  Jerry Yang, AME Cloud Ventures, Palo Alto, CA

•  Charles D. Young, Chief Operating Officer, Invitation Homes, Dallas, TX

Complaint also states that some University Trustees, such as Steve Jobs wife, Laurene Powell Jobs, and Yahoo co-founder Yerry Yang, co-invested with the Stanford-StartX Fund through their own venture capital firms and thus breaking tax-exemption rules while being Trustees of a tax-exempt organization, failing in their fiduciary duties with the university and creating conflicts of interest.

Stanford Trustee Felix Baker is a managing director of KODIAK SCIENCES, a company that has received investments from the STANFORD-STARTX FUND LLC, which based on lawsuit it received money from a bank account with the name THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY, in which Baker is a Trustee of.

Kodiak Sciences did an IPO on October 4th, 2018 in NASDAQ in NYC with STARTX featured on its billboard in Times Square alongside Stanford-StartX Fund Manager Suzanne Fletcher.

For more information on case visit webapps.sftc.org, case number CGC18565596