Peachy Printer – Theft of Kickstarter Raised Funds | Hacker News Reader

Peachy Printer – Theft of Kickstarter Raised Funds

peachyprinter.com

46 pointsLVB18 comments

What kind of a knucklehead: --takes in ~$600k before a corporation is formed? --puts it into the account of a diesel mechanic, with no financial background? --relies on the mechanic's "assurance" that he will hold the money "in trust"? --when the theft is found fails to make a police report? --fails to immediately sue to seize the house paid for with the stolen money? And what kind of idiot: --makes a Youtube video in which he admits to stealing the money? Are the Crown prosecutors in Saskatchewan all on extended vacations? Assuming that lawyers in Saskatchewan are half-brain dead--the only possible explanation here--the lawsuit to seize the house should have been filed the day after the thieving mechanic failed to make a scheduled restitution payment. This is the problem with Kickstarter: vast funds are given to amateurs who are clueless when it comes to how to run a company.

>> vast funds are given to amateurs who are clueless when it comes to how to run a company.

I wonder - in the same way that are services that simplify everything else about making and selling products - would something like an affordable/scalable company creation platform would be possible to build ?

You mean, like Atlas? https://stripe.com/atlas

Here's the problem with Atlas: --While a US bank account is key; there are major KYC issues here. --For $500 you get 1. a corporation 2. a bank account 3. a Stripe merchant account.

Since you might pay $500 for a corporation alone; this is a good bundle.

--You get "access" to PwC (Price Waterhouse Coopers) and Orrick, a local law firm.

If you have the telephone number of these two entities you already have "access." What "access" otherwise means isn't clear. If PwC are going to provide bespoke accounting and start-up legal service at a rate discounted through Stripe, you're not getting much of a bargain.

I'd be more confident if they laid out exactly what accounting and legal services Atlas is going to broker. After all, for start-ups none of this stuff is rocket science--it's all forms and software. But other than tax preparation, do you also get PwC's consulting services? And if so, how much? And will these services be discounted too? Who is the partner in charge? What are the lines of communication among start-up=>Atlas=>PwC? PwC will surely represent start-up's competitors--will they agree to Chinese Wall their services?

Finally, I won't address ethical issues here (attorneys referral service, conflicts of interest, etc.) because it seems that these haven't gotten Atlas' attention. There will be push-back, which they may or may not be able to resist.

> vast funds are given to amateurs who are clueless when it comes to how to run a company

sounds like a good number of VC funded startups.

These people don't understand how construction mortgages work. Homeowners don't just magically get any amount of money from them; homeowners don't actually get any money from them at all. An escrow firm makes payments for contractors' and suppliers' verified invoices, directly to the contractors and suppliers. There isn't money left over for homeowners, because the point of a construction mortgage is that homeowners aren't paying for anything. The bank is paying, and it keeps close track of how much it pays, because banks intend to be repaid.

This diesel mechanic had admitted to stealing money; why would anyone (especially a lawyer?!) have believed his goofy theory for how he'd pay back the theft? If he had a construction mortgage, then that paid for the new house.

Where did the money really go? Most likely to the casino. This pattern of obfuscation and denial seems typical of problem gamblers. Perhaps it's fitting that the money had originally been gambled on the possibility that some random collection of dudes could create a new 3D printer, and the diesel mechanic just re-gambled it, in a sense.

[yes I'm bitter, but fortunately I'm just a little over $100 bitter]

He may have used the stolen funds to get a smaller mortgage, thinking it would speed things up (as was mentioned in the video). None the less it's all too fishy. Why wait a year hoping to get the funds and not sue right a way for embezzlement, sell the house pay the bank and the rest of the cash will be returned to the company. He did return 110k from somewhere so at least more than that would be returned to the company......

Yeah, if one pays for construction out of one's bank account then the construction loan will be smaller.

That doesn't explain how checks sent to contractors and suppliers would have helped the diesel mechanic pay back his theft from Peachy. I'm not going to watch any more videos from this pack of pranksters, but the explanation in TFA is: "As stated in the repayment agreement, the plan was that as David reached each stage of his build, he would payout a percentage the draw to Peachy Printer." He would never see that money! How on earth could a licensed attorney have come up with such a mess? "We agree to pretend that banks are as stupid as we are, and we encourage the diesel mechanic to attempt to defraud them as he has us." Maybe Rylan can sue his "attorney" for malpractice, right after he sues his "investor" for theft.

Is there a way to tell if the crime has indeed been reported to the Saskatoon City police? This is the only outside source of the entire affair that could verify any part of this story. Everyone else is either Rylan or David's lawyer (assuming they ever had one), Rylan's family members or the two founders, Rylan and David themselves.

     I had high hopes that any one of these plans would be successful,
     and I didn’t publicize this situation out of fear that doing so
     would have jeopardized our chances to fix the problem.

could also be read as "It took me a long time to come up with a consistent story that masks my role in stealing backers money"

Transferring 550K to a personal account was maybe a slightly stupid thing to do.

It's totally possible that $20k would have been safe, but everyone's virtue has some price, and half a million would be too much temptation for lots of people.

I don't recall David the diesel mechanic ever being introduced in the videos as "the guy into whose personal account we'll transfer your money". That would have raised some questions, I think. Did Rylan not have a bank account? Why wasn't obtaining a bank account his first priority after raising this much money?

Indeed. They could have hold off receiving the money until a proper company can be formed. Although David was the CFO so he could have easily embezzled the money even in a corporate account.

I feel bad for Rylan (not the one who stole), and the backers.

For me Kickstarter, and its peers, have become a wellspring of lessons in what NOT to do when starting a business.

Is there any arena of starting businesses that not a wellspring of negative lessons?

At least one difference with group funding is much higher visibility than any other I can think of.

You feel bad for the guy who most likely stole all the money and plays you like a flute?

Crowdfunding sites are a Great lesson on how to get fast money from suckers and never have to pay it back.

Easily avoidable and now a tough spot to be in, but this is the best example of transparency I've seen for when a Kickstarter "fails" – and to get his cofounder's admission of guilt on video? Wow.

Utterly bizarre that they've spent the time putting together this polished video admitting to the criminal fraud of one of the business partners...with sad piano music and motion graphics!? No-one looks remotely good or free of suspicion in this.

This Ryan guy stays pretty calm considering the circumstances.

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