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The Almighty Buck Businesses Social Networks Idle

Wild Abuse Allegations Taint Indiegogo Helmet Maker Skully (digitaltrends.com) 84

Posted by EditorDavid from the bookkeepers-know-all dept.
Skully raised $2.4 million on Indiegogo in 2014 to manufacture motorcycle helmets with built-in Augmented Reality. Now they're filing for bankruptcy, and informing customers that refunds are unlikely on their $1,500 pre-ordered helmets. But a lawsuit filed by Skully bookkeeper Isabelle Faithhauer "claims the Wellers used the funds raised by the Indiegogo campaign and a secondary $11 million round of funding in 2015 as their personal 'piggy banks' to buy several motorcycles, two Dodge Vipers, groceries, and so on," according to a Digital Trends article shared by KingGypsy: The Wellers took trips to Bermuda and Hawaii using company funds, she said, went to strip clubs, rented a Lamborghini, and paid for personal housekeeping services on the company credit card, as well as paying out funds ranging from $500 to $80,000. Lastly, she claims that the Wellers asked her to fudge the books to obscure the expenses. Faithhauer claims that when accountants came calling with questions about the expenses, she was up front about what was going on. She says that when she took a pre-approved vacation to Disneyland in December of 2015, she was fired upon her return and offered a severance package, which the suit calls "hush money." She declined the offer.
"Following her termination at Skully, Faithhauer claims that when she found a new job, her new employer contacted the Wellers at Skully and were told she could not be trusted with confidential information. She was fired from that job as well."
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Wild Abuse Allegations Taint Indiegogo Helmet Maker Skully More

Wild Abuse Allegations Taint Indiegogo Helmet Maker Skully

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  • She needs some crowdfunding herself (Score:5, Informative)

    by RobinH ( 124750 ) on Saturday August 13, 2016 @11:43AM (#52696233) Homepage

    She did the right thing and she's being punished for it. Does she have a GoFundMe page?

    This kind of stuff seems to be rampant in business, just look at the Wolf of Wall Street, etc. Rampant corruption is a sign of a failing society. If you promise me a helmet for your $1500, that money had better be spent on developing the helmet, not hookers and blow. I understand that crowdfunding is risky, but it should only be risky because they're developing new technology, not because it's just one big lie. Failing to develop the technology is a legitimate risk, but blowing the money is criminal.

    • Perhaps this is why microfunding through the internet is a 'new thing'. If you are giving money how to you know the money will be used for the correct purpose? It seems to me if you participate in micofunding then you are doing so at your own risk.

      • Re:She needs some crowdfunding herself (Score:4)

        by Zumbs ( 1241138 ) on Saturday August 13, 2016 @12:51PM (#52696393) Homepage

        If you are giving money how to you know the money will be used for the correct purpose?

        You don't. But when you are entering into a business arrangement with someone, promising to spend money received on a mutually agreed purpose, but have no intention on spending said money on the agreed purpose and spend the money on something else, you are committing a crime. In my opinion it is good that witnesses to such villainy come forward. Sadly, many of those con artists manage to avoid getting caught.

    • If you are going to fund something you should probably also try to do some due diligence. Sure, it is probably not easy, but in many ways you are acting as an investor and should take the same precautions that a professional investor would.

      • Re: (Score:1)

        by Anonymous Coward

        I don't know if you can find out whether they plan on buying themselves a bunch of cars very easily.

      • Re: (Score:2)

        by RobinH ( 124750 )
        You're just blaming the victims, which is shameful. Sure I'll teach my daughters not to walk down dark alleys at night alone but that doesn't mean it was their fault if someone attacks them. Sure I should lock my front door, but the person who comes in and steals my wallet is committing a crime. Enforcing contracts is one of the 3 basic functions of government (along with military defense and policing) that even libertarians support. If the people took this money and spent it on outrageous personal item

        • I am not blaming the victims. I am simply saying that you try to reduce risk where possible. Even with the belief that you have covered all risk scenarios, there is still a possibility that people will get screwed.

          For the scenario you provided, while the ultimate blame is still on the attacker, you can still argue that they increased the risk factor by choosing the passage they did. I experienced a similar situation recently, where my bag was stolen. While the ultimate issue is with person who took the bag

    • While the owners sound like scum, the story sounds a bit fishy. As a business owner who has had to deal with a problem office manager, I have first-hand experience with someone that "can't handle confidential information." Also, the fact that they had "personal" expenses folded into the company isn't really a surprise-- the things listed are only really suspicious if they actually spent $10MM on them; I wouldn't blink as long as the expenses were more than 10% of their operating expenses, excluding assets

      • We generally say "Not eligible for re-hire", but I live in an At Will [wikipedia.org] state so we don't have to give any reason for terminating someone's employment..
        and for legal reasons that's a good idea almost all the time.

      • I have first-hand experience with someone that "can't handle confidential information."

        Although... in this case that information may be "how they misused investor monies for blackjack and hookers." I don't know if a her position and/or a confidentially agreement (if there was one) covers keeping improper actions a secret.

      • Now, if the company had only one other employee, the owners paid themselves $500k a year each, plus squandered over $2MM per year on unnecessary expenses, their creditors will very likely see to it that the Wellers spend a lot of time in court and have some fun with the IRS.

        The people who are burned are the investors. People who had the poor judgement to think that a no-strings donation on Kickstarter or some other "indie" funding site will actually get them something in return.

        It's a classic internet scam

  • This is why I don't consider crowd funding schemes (Score:5, Insightful)

    by Hasaf ( 3744357 ) on Saturday August 13, 2016 @12:10PM (#52696299)

    Crowdfunding is not an investment, it is pre-purchasing a product that isn't in production, that is all it is. The buyers have no management, or ownership, control of the company. If a company has such a great idea then they can seek funding through selling shares of ownership. The investors, as owners, they can demand accountability from the other owners.

    Crowdfunding is nothing but giving money to a person in the hope of a product at some future time. Investing is ownership.

    • Re: (Score:2)

      by mspohr ( 589790 )

      There is a fairly high failure to deliver rate for Kickstarter and Indiegogo projects. I've been burned by a few. Others are late and/or not as promised.
      You are taking a big risk on inexperienced people who don't have a lot of business skills.
      Best to not invest and wait for an actual product to ship or consider your "purchase" as likely to fail.

    • Crowdfunding is not an investment

      I'm just wondering if this will lead to regulation of crowdfunding when Congress folks hear about it.

      It's sad. Yet again something that has worked well a lot of folks, both producers and consumers, will be train wrecked by a couple of assholes.

      • I seem to recall that the fact that it's not an investment is what makes it legal at all - there's so many regulations around investment that small timers can't realistically hope to get into the game - even if they met all the requirements, hiring the professionals required to keep the paperwork straight would eat all the funding they received.

    • I am happy to contribute to crowd-funded projects.

      The reason is, a lot of things get made that never would be otherwise.

      Sure some of them don't work out at all. Some of them are more mediocre than you were expecting.

      But I've had a number of items that were just as good or better than I was expecting. In all honestly I am happy to pay some overhead via failed projects, for the really great products I have received over the years in return for crowdfunding.

      You can say "just wait and buy if it's any good" -

  • Erh... people? Could we wait for the verdict? (Score:4, Insightful)

    by Opportunist ( 166417 ) on Saturday August 13, 2016 @12:27PM (#52696333)

    What we have so far are allegations of an ex-employee. I have had that before. You have to fire someone for being an insufferable asshole and the next months are spent in a court room.

    Don't get me wrong, if they embezzled their customer's money, hang them on their nuts 'til they fall off and ensure they land on their heads, preferably on something sharp. But I'd like to know that they really did it before I put the wire 'round their gonads.

    • Re: (Score:1)

      by Anonymous Coward

      What we have so far are allegations of an ex-employee

      That, and as I understand it, that there's been no helmets delivered.

      • One of the links talked about a few dozen having been delivered. A far cry from the couple thousand that apparently ordered, but it seems there is a product.

    • Re: (Score:2)

      by Kjella ( 173770 )

      What we have so far are allegations of an ex-employee. I have had that before. You have to fire someone for being an insufferable asshole and the next months are spent in a court room.

      Well, if I was trying to be an asshole I'd pick claims that were harder to prove one way or the other. I don't doubt that the activities described happened, if they paid it as personal expenses from their executive compensation that's fine from a book keeping perspective. If they were passing off obvious joyrides, personal vacations and services as company expenses it's not. I don't know about the US, but here in Norway our version of the IRS would also be most interested because of the probability of incom

      • This is why I'm more skeptical of the company than the employee. All of her claims are things she was in a position to know, and they're all easily provable or disprovable.

      • Sure, but people are people and people are irrational. Of course a sexual harassment accusation would be easier to pull off and harder to disprove, but people have made stupider decisions.

    • But I'd like to know that they really did it

      Frankly I don't care if they spent it on hookers and blow. As someone who didn't deliver a single promised product the onus is on them to prove they put every cent towards production of the product, not on us to verify the claims of the ex-employee.

      Either way they failed in what they were supposed to do. I'll go get the gonad wire.

  • when she found a new job, her new employer contacted the Wellers at Skully and were told she could not be trusted with confidential information.

    That's technically true: she spilled the beans on their wild spending. "Fair" is another matter.

  • Something tells me that the time-to-market won't be anywhere near the 0 to 60 that the rented Lamborghini was capable of doing

  • I'm actually surprised they fired her. (Score:4, Interesting)

    by hey! ( 33014 ) on Saturday August 13, 2016 @01:10PM (#52696453) Homepage Journal

    I worked for a manager like this; her previous gig almost put the formerly comfortably endowed Christian Science Church into bankruptcy by leading disastrous foray into broadcasting that cost the Church hundreds of millions of dollars. The Church only survived by publishing a book which it had previously condemned as heretical in order to obtain a 90 million dollar bequest that came with that book.

    After she was fired from her job at the Church my boss hired her to transform the medium-sized non-profit I worked for into a media powerhouse -- pretty much the same thing she had promised to do at the Christian Science Monitor. And it had pretty much the same results, but I got a close up view of how people like this operate. The day she took over it suddenly became like working in the Soviet Kremlin. Whereas managers had formerly worked closely together, they were now forbidden to discuss what was going on in their departments with anyone else; all information had to come and go through her. However as IT guy nothing that was going could really be hidden from me; I knew very well that the financial systems were telling us we were overbudget and rapidly running to the end of our cash, but I was literally forbidden by the CEO to pass any information to him except through the COO.

    So I did the only honorable thing open to me. I resigned. As a former senior manager I got an exit interview with the CEO in which I explained that the reason I was quitting was that the organization was going to go bankrupt in about three months if he didn't immediately sideline the COO and put the CFO in charge. The CEO was shaken by this news, but in the end my giving him a last chance didn't matter. His hiring of an obviously dangerous manager was driven by his greed, ego and ambition. To save himself he'd have to set those things aside, and he just couldn't.

    • The Church only survived by publishing a book which it had previously condemned as heretical in order to obtain a 90 million dollar bequest that came with that book.##### This speaks volumes about them. If they really were about their beliefs, they would have gone under instead of caving in and publishing a "heritical" book to save their own asses. Reminds me of a TV show (don't remember which, a crime drama, I think) where a priest was being questioned, and he said that he did not believe in God and tha

    • Either it was God's will or she was Satan's emissary or possibly both (these things can be complicated).

  • It's no secret that a LOT of Kickstarters go bad, sometimes by design (deliberate pre-planned fraud) and sometimes through mismanagement and/or incompetency.

    Hard to tell which category this episode falls into, maybe both. It might not have started out as deliberate fraud but it quickly morphed into it.

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