Imagine you could turn back the clock and put money into Nvidia when Jensen Huang was first dreaming up the chipmaker at a Denny's in Silicon Valley. Or into Facebook before Mark Zuckerberg found a way to generate revenue from all the eyeballs on his social network. You'd be extremely rich. 

But for every Nvidia or Facebook, there are many more flameouts. Some hardly get off the ground, while others raise money at lofty valuations before vanishing into obscurity. 

And sometimes there's lots of drama. It's as much a part of the fabric of Silicon Valley as the enigmatic billionaire founders, though not every scandal makes the front page. 

Denis Grosz and Taso Du Val exist in that realm of startup lore. 

More than twelve years ago, Grosz, a Bay Area tech investor, put money into a tiny but profitable startup with a novel mission: Matching talented software developers around the world with companies looking for the most affordable skilled labor. 

A few years later, Grosz told other investors he expected a healthy return on his early bet. The company was called Toptal, which is short for top talent, and his investment marked the beginning of a soap opera that has soiled reputations, caused turmoil within a promising startup, and sparked a battle that today is raging in federal court. 

Du Val is founder and CEO of Toptal. He launched the company in 2010 after working engineering jobs at other startups. Du Val didn't go to college, deciding instead to gamble on himself.  

Toptal got speedy traction, and Du Val was determined to run it as a lean operation. Less than two years in, word of the company's success started getting out, and venture capitalists began looking to invest.  

Then Du Val met Grosz through a mutual friend.  

Du Val describes Grosz as a sophisticated investor, having backed startups including Thumbtack, Udemy, and Apartment List, according to Grosz's website.  

The two men were on a mission together – to turn the tiny business with fewer than 50 employees into an industry powerhouse. In 2012, Grosz loaned Toptal $1 million at a 4% interest and also signed an advisor agreement with the company to provide expertise on search engine optimization to assist growth. The advisor agreement stated that Grosz was prohibited from "competing or preparing to compete" with Toptal and from "soliciting any employee or consultant" of the company.

And the company grew. Du Val says Toptal now has more than 600 employees. By 2021, the business was generating more than $200 million in annual revenue and was valued as high as $3.6 billion, court documents show.  

According to the loan agreement, Grosz's million-dollar credit line could convert into shares of Toptal, but only if certain conditions were met. The document stipulated that an equity capital raise needed to occur before the loan's maturity date to trigger the conversion of the loan to equity.  

Grosz claims he had a handshake agreement with Du Val. The promise was that Toptal would raise capital that would lead to the investor owning stock. However, Toptal never raised additional funding. So Du Val maintained 100% control of the company, and he says Grosz had no legal claim to an ownership stake.  

Grosz declined an interview with CNBC. In 2023, Grosz argued in court that Du Val built a successful company with the help of early employees and lenders, who all expected equity in exchange for their efforts. He testified that Du Val repeatedly assured him that the million-dollar loan would become a stake in the company.    

"He gave me full confidence that this was not something I needed to worry about," Grosz said in court. "I couldn't imagine someone would do a deal like this and not live up to their side of the deal."  

It was Grosz's actions at that point that eventually led to the lawsuit, which Du Val filed in Nevada in 2021. Du Val said that in 2019 he was sent a document from a mutual contact showing that Grosz had formed an early-stage venture firm called Mechanism Ventures. The company also declined to comment.

"I knew he wasn't up to any good at that point in time," Du Val told CNBC.  

According to documents referenced in court, Grosz initiated a complex scheme to cripple Toptal, seeking to force a hostile buyout or a renegotiation of the previously agreed-upon terms. 

"They constructed what they called a 'cancer patient strategy,' basically turning Toptal into a cancer patient and then making it so crippled that they could steal the company," Du Val told CNBC.  

Part of the scheme involved Grosz's plan to create a company called Cavalry, which was designed to directly compete with Toptal. Cavalry poached several executives and top employees from Toptal to weaken the company, according to Du Val's lawsuit.  

From there, Grosz orchestrated a media campaign against Toptal. He developed detailed, written outlines memorializing his plans to discredit Toptal in various media outlets, according to the complaint. The negative coverage, the suit says, led Toptal to lose contracts with current and future clients. 

Over a decade after investing in what looked to be a big winner, Grosz not only never got his equity but may be forced to pay up for his actions. 

In a unanimous decision in November of last year, an eight-person jury found Mechanism Ventures liable for intentional interference and awarded Du Val $15 million in punitive damages and $535,270 in compensatory damages. The judge denied Mechanism Ventures' motion for a new trial in April 2024, but did reduce the award of punitive damages to $1.6 million, writing that the $15 million was "grossly excessive" in relation to the compensatory damages. 

"The evidence presented at trial revealed a deliberate, purposeful plot — committed to writing — to attack Toptal, with the ultimate goal of bankrupting the company," Judge James Hardesty wrote after the trial. 

But the saga continues, as Grosz and Mechanism Ventures are appealing the case. Toptal still has a $31 million fee petition, the amount of legal fees it is attempting to recoup from Mechanism Ventures. Toptal also has a pending lawsuit in New York against a competitor company called Andela. It alleges the company hired at least 30 former Toptal employees, improperly used Toptal's trade secrets, and poached its clients. The lawsuit also says some of Andela's employees previously worked at Mechanism Ventures, the company Grosz co-founded. Andela told CNBC it's committed to "fair and lawful competition" and said it has "full confidence" in its case.  

"We are optimistic both our companies can thrive in the freelance talent space," Andela also wrote in its statement to CNBC. 

— CNBC's Scott Zamost and Agne Tolockaite contributed to this report.