iCP2: They're throwing in the towel.

[vcoleiro1]

There has been a precedent set on a KS ruling, ie the guy that sued  the Hanfree project and won.   That has been mentioned before also.  

 

[andmaz777]

The kickstarter was deceitful/misleading but whether or not it was legally so is the question.


Without the misleading information the kickstarter may never have been funded but that is only speculation.


But is it then moral to use those funds to then pay a salary? Is it illegal as it was all based on a misrepresentation of the true position?


Working prototype to me means a hand built unit has been assembled and works and now it is ready to mass produce - it stated ready for mass production in the kickstarter so no reason to think that prototype was just smoke and mirrors.

 

[Exophase]

There has been a precedent set on a KS ruling, ie the guy that sued  the Hanfree project and won.   That has been mentioned before also.

There is actually a big difference between that case and this: Hanfree was being managed by Seth Quest, who acted as sole proprietor of his business. He didn't set up an LLC or equivalent like Link and Craig have.

I don't have any doubt that a failed company that could not deliver on its financial obligations/has outstanding debt will be forced into bankruptcy. In the case of Craig's Ltd that will probably not result in getting any money back. The pertinent question is whether Craig can be found personally liable for the debt. We don't know what he did with the money, but even if he took a considerable amount he may still not be liable for it, unless his Ltd is deemed to be a shell corporation.

The kickstarter was deceitful/misleading but whether or not it was legally so is the question.

Without the misleading information the kickstarter may never have been funded but that is only speculation.

But is it then moral to use those funds to then pay a salary? Is it illegal as it was all based on a misrepresentation of the true position?

Working prototype to me means a hand built unit has been assembled and works and now it is ready to mass produce - it stated ready for mass production in the kickstarter so no reason to think that prototype was just smoke and mirrors.

It's not going to be that easy to prove in court that Craig willfully knew that the Kickstarter deadline was unrealistic. Especially when it's extremely common for Kickstarters to fail to meet their pledge deadlines.

I'm not sure what kind of damages that by itself would warrant anyway. If it came out before something like March 2013 I doubt anyone would have complained, much less taken anyone to court.

 

[ekianjo]

The creation of a product needs (at least some people say so) a manager which needs to be paid. Of course you have to pay for the living of all people who are involved in the project, else they would starve, if they can't pay the rent and buy food for months. This would make the product impossible.

No, there's no "of course" - most people do not see KS as a way of securing a full time job, rather get enough money to finance something they could not finance on their own. It's crowdfunding a PROJECT, not a person. If not Craig should have asked for 500k or something. But even that would be dishonest, since Craig could have been selling the ICP2 once the first units were delivered and make a lot of profit down the road, even if there was none or few to begin with.

 

[ekianjo]

The PCBs were designed, they had a case design that they showed with prototypes, and the thing is much simpler than Pandora (especially mechanically).

Keyboard layout (and therefore the mat) was not fixed, nubs were not ordered (and you know that ordering stuff with 3rd party suppliers in small quantities can sometimes take up to 6 months, right ?), there had been no production test run at all (where additional issues could have been detected), and there was therefore no way everything could be delivered 3 months after the KS ended. I stay by my claim that the timeline was utter bullshit.

 

[vcoleiro1]

The precedent set by the Hanfree case was that backing an item of KS is legally no different to ordering an item from a store.  A number of people over time have made the comment that KS operates as an investment channel and backers have no recourse if they don't get what they backed.  The Hanfree case proved that's not true - effectively you have entered into a purchase contract and have payed an amount in order to receive something back. KS also say the same thing in their terms and conditions ie a product needs to be delivered or if not a refund.

Now it's true that Craig may have spent the money on salaries etc. He would still be obligated to provide Link with what Link paid him for, but this means nothing if the money has run dry and all it means is Craigs ICP2 company declares bankruptsy.  But the thing is, Craig has never said the money he received has run dry or was spent on salaries, he has simply not accounted for it at all.  Given that he hasn't accounted for it, lets not feed him any excuses . After all , I'm looking forward to the stories he comes up with himself

 

[andmaz777]

Well this kickstarter was supposed to be risk free as it was ready for mass production - all that was needed was the money for that mass production run.


Craig played a blinder here leaving Link with all the legal hassle.

 

[andmaz777]

Wording from the kickstarter;


Ready to go to market Now: The iControlPad2 isn't dreamland, it's a real working prototype which builds on the successful iControlPad technology. If we're funded, we're ready to start mass producing in time for Christmas. And, where possible, we always use local companies in Europe and the USA for all production (The iCP1 was made entirely in Europe).

 

[Exophase]

But the thing is, Craig has never said the money he received has run dry or was spent on salaries, he has simply not accounted for it at all.  Given that he hasn't accounted for it, lets not feed him any excuses . After all , I'm looking forward to the stories he comes up with himself

Craig has said:

1) That he doesn't have money for to do the modified keymats and will now have to use his own personal money

2) That he considered ways of raising more money to finish the project

3) That he's going to sell his house and pay back Link from this money

Sure sounds like he's saying his company doesn't have any of the original money Link forwarded to him. I think if he had something resembling a legitimate excuse for where the money went we would have been hearing that too, especially if he can spin it to shift the blame on others, but we aren't hearing it so I agree he probably misused a lot of the money. But if it's gone it's gone.

 

[Exophase]

I've been reading the comments on the Hanfree KS, from when it started slipping to the announcement of failure to all of the back and forth between the creator Seth Quest, Neil Singh, and others. I think the way iCP2 has been handled is actually significantly worse than how Hanfree was, and their debt is significantly higher. If there was someone as aggressive as Singh going after them Link may have been in pretty serious trouble - Craig wouldn't have gotten away without presence in the suit though; Singh was naming other people he to be involved knew as de-facto partners. MWeston and DaveC (assuming he ever got paid for anything, and there's a good chance he got paid for having designed the prototype case) could have been named as partners. It looks like Ryan Lucas was heading down this path as well, and I guess it remains to be seen if anyone else will.

Regarding the nature of the court case, Singh himself admits that it had a lot to do with how the project itself was specified and not necessarily implicit to all KS projects:

It’s an interesting issue and I think it does come down to exactly what is in the text… I could go into the legal analysis, but it’s really a fundamental thing of telling people what your intentions are. So if your intentions are that… look, I’m an entrepreneur, this is a risky venture for me, I’m seeing whats going to happen and I want to reward you for believing in me in some way by sending you the final product if I am successful, but here’s what’s going to happen if I’m not successful, or I’m going to do my best and I can’t make any promises… something like that would be fuzzy in terms of what you’re actually getting, but it would be honest.

(http://www.crowdfundinsider.com/2013/01/8590-kickstarter-lawsuit-neil-singh/)

I don't know the actual specific rulings of the court case, I assume simply that he was ordered to pay the refunds and that - in combination with other debts - forced him into bankruptcy.

Personally, I think anyone who isn't an idiot (and I don't think Singh is an idiot) can and should understand the difference between buying something in a shop or making a pre-order and participating in crowd funding. You can do everything 100% right in a KS, manufacture some items to 80% completion, then find you have no money because a critical vendor rose their price on something or something else outside your control caused the manufacturing price to complete. The only way you can guarantee that the project can provide the product or a refund is by making them have the money available to match the capital. At which point it's pointless to even have crowdfunding in its current form, they'd be just as well off having a site that simply collects pre-order vouchers with tiny cash pledges. I don't think anyone wants that. And trying to get KS or an insurer to be liable seems totally unrealistic. I just don't see how this can happen without the buyers assuming at least some risk.

A crowdfunding site has to make it clear that a project may not succeed and if that happens some of the money may be gone. KS almost sort of implies this by at least having a risks and challenges section now. But they still say you should try to get full refunds from the projects and do everything they can to get out of any responsibility.

The more I think about it, the more I don't like Kickstarter (the site, not crowdfunding in general) and I'm now worried that they could cause significant damage to the concept while still coming out of it with millions before people completely lose faith in it. The level to which they refuse to address these problems, doing nothing more than trying to cover their own asses, is appalling on its own. But on top of that they do a lot of things to encourage clueless people to take on more than they can handle. I've backed a few KS projects and they've seem to gone okay so far (although I don't even really care that much about any of them), but I think this is it for me. I'm going to save my pledges for other crowdfunding sites that are at least trying to move in a better direction.

I've said some of this before, but here's some other random ideas I think could help in crowdfunding in case anyone cares (I doubt it ;p)

1) Have a site which is for nothing but manufacturing of tangible goods (that have an appreciable BOM cost), and keep it out of places like KS. KS started with artistic projects which are more like contract employment for a creative task, and I think the rules are very different for these kinds of projects - and they haven't realized this at all. This would also mean it's no place for projects trying to raise less than some minimum that's at least in the thousands of dollars.

2) Cap the pledges at the project goal (and of course by extension that means ending the fund period and disburse funds when that amount is reached). It seems like everyone involved - KS, the project creators, the backers - has a problem understanding that going well beyond your asking amount makes things harder, not easier. It totally changes the economy of scale you were prepared for. And it really annoys me when I see people say "you only asked for X but got 3X and still couldn't do it?!" They really don't get it (and Neil Singh was doing this...). The thing that really gets me here is KS adamantly defends this practice but frankly I think they're just doing it to get as much money as possible.

3) Disallow or at the very least stop encouraging having all these extra items for pledge goals. They add a lot of unnecessary risk, complication, and distraction. Limit pledges to things that naturally come out of the goal.

4) Require a detailed project plan including specific estimations of all expenditures, and make this available to backers. This document will have to be reviewed and approved.

5) Instead of handing the money to the project when things are done, keep it in an account overseen by the crowdfunding site. All withdrawals from this account will have to be approved based on how they correlate with the project plan. New expenditures will require revising the project plan, which will require review by the crowdfunding site and will be sent out to backers. The account as well as a log of transactions would be kept publicly available to all backers. If possible, it'd actually be best for billing to be made straight from this account instead of being withdrawn to the project owner first.

6) If the project fails - which could happen automatically if communication ceases or milestone dates slip by too much - the crowdfunding site will cut off the project from the account and provide refunds based on what remains.

7) For the review process(es), have an upfront cost of a few hundred dollars or so for the project, to help make sure people are serious. I know the point is to enable people with good ideas and no money of their own but maybe sticking with people who aren't so financially dysfunctional that they can't come up with some small amount first would be for the best.

8) Provide some level of legal services - at least some kind of counsel - for projects that go under.

And then there are a bunch of other ideas about requiring drawings/BOMs/schematics/quotes/etc to be able to go forward with a large scale manufacturing project.

If anyone knows of crowdfunding sites that implement or are interested in implementing any of these things I'd be very interested in knowing. Or if they do other things I'm not aware of. I know Crowd Supply does cater more to manufacturers and has some services that help here, but I'm not sure what they do to lower risk of poor management and helping set realistic expectations among backers.

 

[vcoleiro1]

^ I remember reading about the Hanfree case way back, my understanding is that since people had backed and put down money in expectation for something in return as per what was noted in the backer levels, that it was basically the same as entering into a contract of sale.  The same way I should say, that the ICP2 backer levels constitute a contract of sale. That doesn't mean that if the company or individual goes bankrupt that they still need to pay a full refund. It's no different if you ordered from a shop and the shop went bankrupt or close to, you'd in that case expect to get whatever you could from them - possibly nothing if the shop went totally bankrupt.   In essense its no different with KS.   KS also make it very clear that a backer must get what he paid for, or a refund.  You will see this proved again with the washington case when it gets determined , no doubt what so ever.

There is nothing stopping a KS project having backer levels that ask for a pledge , and make it clear that they will if the project is successful give you something in return if they see fit and under no obligation to do so.  ie no legal obligation.  KS Projects can and do this now.  This all boils down to what the backer level says . The problem is, without some kind of legal obligation to provide something, the KS project would fail to get enough backers.  Having backer levels that promise something (And fall under the contract of sale legal obligation) is the cornerstone for getting a KS project funded.  Imagine if the ICP2 backer level said this:  Donate $100 and if the project is successfull, we may provide you with an ICP2 - bear in mind we are under no obligation to do so, and may decide not to at our discretion. ie your pledge should be seen as a donation.  Would you back it?

Also, Craig may have said he has no more cash to complete the project, that's true, but he has never said the cash he got ran out - nor can you definately get that from anything his said. The point I made is that he has never accounted for the cash he obtained. For example, where did the case mold creation cash go?, that should have been a substantial chunk of cash, yet from all the updates, he never said it was made.

From KS own pages for project creators:

"Is a creator legally obligated to fulfill the promises of their project?


Yes. Kickstarter's Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill. (This is what creators see before they launch.) This information can serve as a basis for legal recourse if a creator doesn't fulfill their promises. We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill."

 

[ekianjo]

Also, Craig may have said he has no more cash to complete the project, that's true, but the point I made is that he has never accounted for the cash he obtained. For example, where did the case mold creation cash go?, that should have been a substantial chunk of cash, yet from all the updates, the case mold was never made.

Yeha, that's the question Exophase keeps avoiding, it seems: 

 I think if he had something resembling a legitimate excuse for where the money went we would have been hearing that too, especially if he can spin it to shift the blame on others, but we aren't hearing it so I agree he probably misused a lot of the money. But if it's gone it's gone.

Well if you are a backer you are entitled to know where the money went, and what it was spent on. Plus we don't know for sure if it's gone, unless you trust Craig for everything he says - despite all his previous "fake truth" statements on the boards.

If anyone knows of crowdfunding sites that implement or are interested in implementing any of these things I'd be very interested in knowing.

Not sure if it meets what you are looking for, but there;s this one for hardware hobbyists:

http://www.wired.com/2014/05/tindie-says-forget-kickstarter/ 

here's a quote: 

"Petrone ran a brief experiment with crowdfunding on Tindie, but now positions the site as a sort of anti-Kickstarter. It’s notoriously hard to predict costs and set prices correctly on Kickstarter because none of the items up for sale have not been fully developed. On Tindie, you can only sell what you have in hand. “The types of companies we’re trying to help are trying to grow the old fashioned way — by saying: ‘Here’s this idea. I’ve built ten or twenty or five,’” Petrone explains. “They get them out there, people buy them, and they go through that process again. If there’s demand, they’ll scale that up.”

 

[Exophase]

I haven't avoided any question ekianjo, I've speculated on what I think he may have done with the money and I totally realize there's a bunch of money that's unaccounted for. The way you're talking to me you'd think I was part of iCP2. I really don't like it, please don't do it again.

 

[ekianjo]

The way you're talking to me you'd think I was part of iCP2. I really don't like it, please don't do it again.

I was not insinuating you are part of ICP2.  

 

[Wrath Of Khan]

Craigs never gonna be held accountable unless his books are opened.

Ed and link are not likely to bother trying either as it would cost more than its worth.

It's game-over imo. I was a backer for 10 icp2's. Craig lied and had no respect for other peoples money, or for the fact that so many people believed in, and trusted him.

The amount of support he got on this forum should have convinced him that people still held him in some regard. You might imagine he would respect or honour that support but nope, go figure.

The money is gone as far as I am concerned. If any money is refunded to me then great.

Imo only Craig can answer the questions being asked here and he is skulking in a corner somewhere.

The End.

 

[sswam]

Without any doubt Craig misused a large chunk of the money, thinking he had raised more than enough to complete the project.

The original "prototype" wasn't functional at all, and the original timelines were bullshit, that was clear at the time.

He promised transparency, to document the process, and was totally not transparent at all.

There was some bad luck, but it was not just bad luck.

He should take responsibility, talk to the backers, and pay back this money - even if it takes him 10 or 20 years.

 

[ekianjo]

There was some bad luck, but it was not just bad luck.

Hey Dredd, I remember you were a hard defender of Craig back in the days, glad to see how much your position has changed since then. This being said, we'll probably never know what actually occurred, and where the money went. 

 

[sswam]

I still like him and don't agree with demonizing him.  But, I reckon he should pay this debt.

 

[Klumpen]

Without any doubt Craig misused a large chunk of the money, thinking he had raised more than enough to complete the project.

The original "prototype" wasn't functional at all, and the original timelines were bullshit, that was clear at the time.

He promised transparency, to document the process, and was totally not transparent at all.

There was some bad luck, but it was not just bad luck.

He should take responsibility, talk to the backers, and pay back this money - even if it takes him 10 or 20 years.

Glad you finally came to your senses.

He should pay ED for the GHz units too btw.

 

[ramboky]

Without any doubt Craig misused a large chunk of the money, thinking he had raised more than enough to complete the project.

The original "prototype" wasn't functional at all, and the original timelines were bullshit, that was clear at the time.

He promised transparency, to document the process, and was totally not transparent at all.

There was some bad luck, but it was not just bad luck.

He should take responsibility, talk to the backers, and pay back this money - even if it takes him 10 or 20 years.

After abusing and insulting me and others repeatedly for making this call many months ago, you now claim it was "clear at the time". You're a real class act.

I still like him and don't agree with demonizing him.  But, I reckon he should pay this debt.

Craig is a liar and a thief who will happily let others take the fall for his own dishonesty. That's not demonizing him, that's calling a spade a spade. Whether you like him or not really makes no difference, he'd screw you just as fast as he'd screw anyone else. And of course he should pay his debt or face repercussions. If he doesn't he's just going to do it all again a third time.