AG sues Kickstarter project that didn’t deliver
Washington’s attorney general, calling it “the first consumer-protection lawsuit in the nation involving crowdfunding,” sued a Tennessee firm that got $25,000 from backers but delivered nothing,
Seattle Times business reporter
Washington’s attorney general is taking consumer protection to the next frontier: crowdfunding.
The state’s top lawyer, Bob Ferguson, said Thursday his office has filed the first consumer-protection complaint in the U.S. to target a Kickstarter fraud.
The lawsuit alleges Edward Polchlopek III and his company, Nashville, Tenn-based Altius Management, in 2012 raised more than $25,000 from 810 people in order to print a deck of “retro-horror”-themed cards designed by a Serbian artist.
Among those backers were 31 living in Washington state, according to the suit, which was filed in King County Superior Court.
Altius’ fundraising campaign promised backers that in exchange they would receive playing cards and other freebies, such as poker chips, dice and “even a costume straitjacket,” the complaint alleges.
But two years later, the attorney general said, not a single backer has received what was promised, and no money was returned. The suit seeks restitution of the cash, as well as fines up to $2,000 per backer for violations of the Consumer Protection Act, meaning the total could top $1.6 million.
The move targets a relatively small fundraising effort. But it serves as a caveat emptor to potential donors amid the growing popularity of Kickstarter and other crowdfunding methods, which allow small businesses and individuals to raise cash from hundreds or thousands of backers to pursue a passion or a business project.
Some $28 million has gone to projects in Seattle since Kickstarter’s inception, the company said in March. A recent survey of local Kickstarter projects showed pleas that ranged from buying new seats for a movie theater to funding a sci-fi novel dubbed “The Non-Zombie Apocalypse.”
Kickstarter’s website says 3 million people contributed $480 million last year to thousands of projects. Those included classrooms being built from shipping containers, a human-powered helicopter and the visit of two rappers to North Korea.
“Consumers need to be aware that crowdfunding is not without risk,” Ferguson said in a statement. “This lawsuit sends a clear message to people seeking the public’s money: Washington state will not tolerate crowdfunding theft.”
Polchlopek, who according to the suit is also known as Ed Nash, didn’t return a call requesting comment. On his company website, he is described as an entertainment-business expert who began his career at age 9 after writing a letter to a radio station, a move that earned him a co-host spot.
Altius Management bills itself on its website as a “full-service entertainment and artist management firm” with a “world-class” management team.
A spokesman for Kickstarter said the company wants “every backer to have an amazing experience, and we’re frustrated when they don’t. We hope this process brings resolution and clarity to the backers of this project.”
Ángel González: 206-464-2250 or firstname.lastname@example.org. On Twitter: @gonzalezseattle