Subsequently, the SEC just announced that it has filed a separate suit against Ahmed for fraud and self-dealing based on the information provided to it by Oak. More than $55 million of Ahmed’s assets have been frozen and, according to court records, he has signed a $9 million surety bond.

The venture capital firm’s decision to terminate Ahmed for cause is not surprising. The firm had not been aware Ahmed was under investigation until after his arrest, and had been in the process of trying to raise its first fund since spinning out its healthcare and financial tech teams (it is unclear where that effort now stands, given that Ahmed was considered one of the group’s top investors).

What was surprising, however, was that Oak uncovered some questionable behavior related to its own portfolio. Ahmed’s arrest was related to his alleged purchase of stock in a publicly-traded company that was in secret merger talks, not anything having to do with Oak or its (mostly) privately-held investments.

In its complaint, the SEC alleges that Ahmed “transferred approximately $27.5 million in illegal profits to accounts under his control at the expense of investors in the Oak funds, including public pension investors.” In one case, he allegedly managed to get the firm to pay $20 million for a $2 million equity stake in what the SEC refers to as an “Asian e-commerce joint venture.” Based on the timeline, that company is most likely Hong Kong-based online marketplace Giosis Mecoxlane. In another, he is said to have convinced Oak to put $25 million into a U.S. e-commerce company whose existing shareholders included an entity in which Ahmed had an undisclosed financial interest.

Below is the text of the letter sent from Oak to its investors, which was obtained by Fortune:

Dear Oak Investor,

Following the arrest of Iftikar Ahmed on charges unrelated to his activities at Oak, we commenced a thorough review of all investments in which he was directly involved. We are working with our outside counsel, Schulte Roth & Zabel LLP, who have retained the forensic accounting firm FTI Consulting to assist it in this process. We initially focused on three transactions of particular concern involving portfolio investments made by Mr. Ahmed on behalf of Fund XII and XIII that total $31 million. These three transactions represent approximately 0.71% of the limited partner capital commitments for Fund XII and approximately 1.44% of the limited partner capital commitments for Fund XIII. We have brought these transactions and our concerns to the attention of the offices of the United States Attorney and the Securities and Exchange Commission, and have been actively assisting those authorities with their investigations, including with respect to efforts to secure assets of Mr. Ahmed. We are now focusing on other transactions involving Mr. Ahmed, and are continuing to work with Schulte Roth & Zabel and FTI Consulting going forward in connection with this review. We will report to you later on any additional findings.

On Thursday, May 7th, the United States District Court for the District of Connecticut granted a motion made by the SEC for a temporary restraining order and entered an order freezing up to approximately $55 million of assets of Mr. Ahmed and certain entities and accounts related to him. The SEC’s motion was made in connection with its filing of a civil action against Mr. Ahmed for violations of, among other things, various anti-fraud provisions of the federal securities laws. The Court’s order was unsealed on May 12th and is now publicly available. Oak has coordinated the timing of this disclosure and the notice of termination for cause we sent Mr. Ahmed to allow the SEC sufficient time to secure such relief.

In light of the above, we have delayed the issuance of the Q1 2015 financial statements pending the outcome of our review. We will be sending investors draft financials as soon as we can, and will provide you with final versions of the Q1 financials following approval by the Valuation Committee. The date of that committee meeting will be set following the outcome of our review.

We are proud of the business that Oak has built over the last 37 years. We are stunned by Mr. Ahmed’s actions, which are deeply disturbing and, as you know, completely contrary to our core value system. Oak will pursue all available legal remedies against Mr. Ahmed to recover any damages Oak and its investors have suffered as a result of Mr. Ahmed’s fraud. In addition, we are working with Schulte Roth & Zabel and FTI Consulting to better understand how Mr. Ahmed was able to circumvent our internal controls.

Please be assured that this situation has not distracted us from our core mission. We continue to operate day-to-day normally and remain focused on managing your investments. We have transitioned all of Mr. Ahmed’s responsibilities to other Oak partners and are cooperating with the relevant portfolio companies to replace him on boards where a new Oak designee is required.

We understand that you will have many questions and we will, of course, get back to you after we have gathered all the relevant facts and can give you a complete and accurate picture of the situation.

We appreciate the trust and confidence you have placed in Oak and thank you for your patience as we continue to work through this matter. We also request that you keep this information strictly confidential in order to not impede ongoing investigations.

Sincerely,

The Oak General Partners

A firm spokesman declined to comment on the letter.

Ahmed’s active portfolio companies included Attivio Inc., Circle Financial, Kenet LLC, Wonga, and Nomorereack.com. Past deals included Airespace (acquired by Cisco), GMarket (acquired by eBay) and Kayak (acquired by Priceline).

Prior to joining Oak in 2003, Ahmed had spent time with both Goldman Sachs and Fidelity Ventures. He is a graduate of both IIT Delhi and Harvard Business School.

Fortune has reached out to Ahmed’s lead defense attorney, and will update this post if we receive a reply.

UPDATE: Here is a copy of the unsealed SEC complaint:

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