The lawsuit also claims that Mostaque “embezzled funds” from external investors to pay the rent for his family’s London apartment and his children’s schooling. It cites an unnamed “former investor in one of Mostaque’s businesses” who disclosed to Weitzman that Mostaque “has a pattern of bamboozling investors and misappropriating investor and company assets for personal use.
Hodes was an early collaborator with Mostaque on a business idea of using artificial intelligence to help governmental agencies address the Covid-19 pandemic. He appears alongside Mostaque in a for the project’s launch on YouTube. But the business failed to take off and was scrapped the following year. “Lots of people promised a lot and they didn’t come through,” Mostaque previously told. Hodes’ lawsuit alleges that a key reason for the project’s failure was that Mostaque was “secretly diverting” his attention and company resources to Stability’s AI image generation efforts.
The case has similarities to another lawsuit leveled against the startup best known for its association with the viral text-to-image generation system Stable Diffusion. In May, Tayab Waseem claimed that Mostaque reneged on an agreement to grant him a 10% cofounder stake in the company. That suit, which wasWaseem’s complaint also portrays Hodes as a cofounder of Stability. It includes a slide from a company investment pitch deck which states that “Emad [Mostaque] founded stability.