Kickstarter campaign fined & ordered to pay back donors

Crowdfunding is all the rage these days. Artists and activists hawk cool ideas on websites like Kickstarter and Indiegogo, promising to build the next great thing. For a small investment you can help make it happen, they promise, and get great perqs as well. 

Crowdfunding may be a lucrative market, but it's also largely unregulated. Investors have little recourse if their money simply disappears. 

Until now. 

Altius Management has been fined $54,851 US in civil penalties, restitution, and legal fees over the Kickstarter campaign it launched in 2012. The case was brought forward by the Washington State Attorney General. 

He took the money from the backers and he ran.- Assistant Attorney General Dan Davies

​Altius claimed on its campaign page that it was working with a Serbian artist named Milan C. to design a custom set of playing cards. The campaign was managed, it said, by "entertainment industry veteran Ed Nash." It raised $25,146 US from 810 backers, who were told they would receive a set of playing cards. Larger investors would also receive multiple sets and similarly designed poker chips.

But Assistant Attorney General Dan Davies says Nash - real name Edward Polchlopek III - never followed through. "He took the money from the backers and he ran. He never paid the artist who initiated the artwork. Nor did he provide anything to the consumers."

Davies tells As It Happens host Carol Off that investors only started receiving cards very recently, after the court decision. And most still haven't received anything. 

"Crowdfunding is a rapidly increasing area for funding various projects. It's a great source for innovation, for having new charity systems. But it's also a new area that's not highly regulated."

Davies says he expects other jurisdictions to take a similarly hard line with crowdfunding fraudsters, but he says Washington State will not be targeting legitimate campaigns, even if they are unable to complete their projects.