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Fraud with Kickstarter project

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NOWishgames

Junior Member
I'm a backer of a Kickstarter project (crowd funded), along with 678 other people.

The project was funded, for the sum of $22,559. The individual has not communicated with, or responded to, the backers since the funding was provided 3 months ago.

We've confirmed he's alive. We believe he is committing criminal fraud. He is (or was at least 2 weeks ago) located in California.

Each backer contributed an average of $30 or so to this project. We're a bit lost as to how we should proceed. It's not just about getting refunds, it's about prosecution so we can set an example to would-be perpetrators of fraud within the crowd source funding framework.
 


Silverplum

Senior Member
I'm a backer of a Kickstarter project (crowd funded), along with 678 other people.

The project was funded, for the sum of $22,559. The individual has not communicated with, or responded to, the backers since the funding was provided 3 months ago.

We've confirmed he's alive. We believe he is committing criminal fraud. He is (or was at least 2 weeks ago) located in California.

Each backer contributed an average of $30 or so to this project. We're a bit lost as to how we should proceed. It's not just about getting refunds, it's about prosecution so we can set an example to would-be perpetrators of fraud within the crowd source funding framework.
The problem is discussed here: http://www.kickstarter.com/projects/works/odins-ravens/comments?cursor=3453067&direction=asc

And this link http://www.matrixsynth.com/2013/06/scammer-alert-seth-nemec-of-bananalouge.html says your game-guy is not "due" till August. So what you "believe" and what is true may very well be two different cookies.
 
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tranquility

Senior Member
"Fraud" is a nasty word that should not be associated with Kickstarter unless it is clear the person intended to take the money and run from the start.

One would have to carefully review the promises to know if there is any real tort here--and the facts to even start thinking of a crime. Since each amount is so small, it is unlikely a lawsuit would be worthwhile as it would be a class action.
 

NOWishgames

Junior Member
"Fraud" is a nasty word that should not be associated with Kickstarter unless it is clear the person intended to take the money and run from the start.

One would have to carefully review the promises to know if there is any real tort here--and the facts to even start thinking of a crime. Since each amount is so small, it is unlikely a lawsuit would be worthwhile as it would be a class action.

I'd like to abstract my question a bit here, and remove it from the actual situation.

Assume a person deceived a group of individuals into giving money for a product that they never intended to deliver. Would that be illegal?
 

swalsh411

Senior Member
If there was no intent to deliver the promised product, then generally yes that would be fraud. If there was a good faith effort that did not succeed, then maybe, depending on how the investments were structured. Lots of ventures to develop new products fail. That doesn't mean the investors can sue for fraud.
 

tranquility

Senior Member
I'd like to abstract my question a bit here, and remove it from the actual situation.

Assume a person deceived a group of individuals into giving money for a product that they never intended to deliver. Would that be illegal?
As swalsh411 said, intent is the key. If the intent changed after the money was had, it COULD be embezzlement. Fraud only happens when the intent is to obtain money by false pretenses.

So, in your scenario, it would be fraud. But, fraud is hard to prove.
 

NOWishgames

Junior Member
As swalsh411 said, intent is the key. If the intent changed after the money was had, it COULD be embezzlement. Fraud only happens when the intent is to obtain money by false pretenses.
So, in your scenario, it would be fraud. But, fraud is hard to prove.
So, if this individual originally had intended to deliver, but once they received the money they then changed their mind and just decided to spend it instead of work on the project... then that would be embezzlement? Would there be a chance of criminal charges, or is that just civil?
 

CdwJava

Senior Member
There is the additional problem of WHO would investigate this, IF some form of fraud could be proven. The amount is too small for the feds to get interested, most local agencies lack the resources and jurisdiction to pursue this sort of crime, and state enforcement agencies are faced with similar constraints (low loss value, lack of resources in many cases, and questionable jurisdiction).

PROVING a crime in this instance might be very difficult. If you believe a crime has been committed, you can contact your local police department and see what they have to say. Quite frankly, I don't think you'll get much more than a report - if that.
 

NOWishgames

Junior Member
There is the additional problem of WHO would investigate this, IF some form of fraud could be proven. The amount is too small for the feds to get interested, most local agencies lack the resources and jurisdiction to pursue this sort of crime, and state enforcement agencies are faced with similar constraints (low loss value, lack of resources in many cases, and questionable jurisdiction).

PROVING a crime in this instance might be very difficult. If you believe a crime has been committed, you can contact your local police department and see what they have to say. Quite frankly, I don't think you'll get much more than a report - if that.
Wow, that's grim. I guess he just skips off into the sunset with a bag full of money.
 

CdwJava

Senior Member
Wow, that's grim. I guess he just skips off into the sunset with a bag full of money.
The investors can each try to sue him ... in small claims court. But, again, which court to sue him in might be a head scratcher.

You may say that $30 is too little to waste many hours in Small claims court, and you'd be right. Similarly, $20,000 is not sufficient to compel the state to spend what will likely be five times that amount in order to investigate and MAYBE prosecute the suspect. No local agency will do that, the feds won't, and there are only a few state law enforcement agencies that might have the resources and the willingness to couch it ... provided they can establish jurisdiction. It could be that Kickstarter will become the same scam garden that eBay has become and that Craigslist always has been. We get reports every week of scams on these two sites, but aside from a short report, there's nothing we can do.

When you invest in a Kickstarter project there are NO GUARANTEES that you will receive anything. Like any investment, put in only that which you are willing to risk. If you lose $30, well, maybe don't support any future projects.
 

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