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

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."

Comments

Who ?

[Anonymous Coward]

Another startup...

She needs some crowdfunding herself

[RobinH]

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.

Re:She needs some crowdfunding herself

[fluffernutter]

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

[mark-t]

So where's the hotels.com commercial?

Re:She needs some crowdfunding herself

[Midnight Thunder]

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:She needs some crowdfunding herself

[aaarrrgggh]

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 properly kept on the company books.

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.

But, in most states for a former employer to actually say something material to a new employer would be asking for trouble. The worst I ever said of a former employee was "they needed more time mentoring that we were capable of spending." I didn't say that the dipshit didn't put any energy into learning and the three man-years we spwasted on him made him the second worst hire we ever made...

Re:She needs some crowdfunding herself

[Anonymous Coward]

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

Re:She needs some crowdfunding herself

[Zumbs]

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.

Re:She needs some crowdfunding herself

[FatdogHaiku]

We generally say "Not eligible for re-hire", but I live in an At Will 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.

Re:She needs some crowdfunding herself

[Anonymous Coward]

Professional investors refused to fund any crowdfunded venture. That is why they had to resort to being crowdfunded.

Re: She needs some crowdfunding herself

[Anonymous Coward]

Uh... what?

Re:She needs some crowdfunding herself

[fahrbot-bot]

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.

Re: She needs some crowdfunding herself

[Luthair]

He's saying that people go to crowd funding when they can't attract traditional investment. I think there is a second group who realise they can avoid external control by not taking investors.

Re:She needs some crowdfunding herself

[PopeRatzo]

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. Instead of ripping one person off for a lot of money, you rip off a LOT of people for a LITTLE money. With the new Supreme Court decision weakening class action lawsuits, you can just flip the finger and walk away to start another "indie" company and do the whole thing over again.

Think of the thousands and thousands of games that have been crowdfunded. Now count the number of those games that have actually gotten full, successful releases. It's a relative handful. All the people who donated to all the other projects are just SOL.

Re: She needs some crowdfunding herself

[Anonymous Coward]

And a third group that does both

Re:She needs some crowdfunding herself

[RobinH]

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 items instead of said purpose then they're either committing a crime or at least liable.

Re: She needs some crowdfunding herself

[Anonymous Coward]

And they are as common as punctuation on your post.

Re:She needs some crowdfunding herself

[GrumpySteen]

That's not true. Professional investors provided $11 million in funding after the Skully's initial crowdfunding generated several million dollars in pre-sales.

Re:She needs some crowdfunding herself

[Midnight Thunder]

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 (frigging low life of a person), I need to accept that I was a little too trusting in where I put my bag and that I didn't factor in how I was facilitating the opportunity for a crime.

Re:WTF..??

[Anonymous Coward]

Hipster --

Muslim-style beard?? Check.

Thick **THICK** black 1940's-style glasses?? Check.

In Brooklyn?? Check.

Bicycle (or skateboard if you've over 30)?? Check.

Foul body odor, because deodorant is mainstream?? Check.

The other companies are just as bad

[Anonymous Coward]

At least the guys running Skully are entertaining.

Wait, this isn't about the Presidential election? My bad.

Re:WTF..??

[Anonymous Coward]

When you're the only one confused, maybe it's a sign that the problem is you. The only way it could be more explanatory is if it was

(Wild Abuse) Allegations Taint Helmet (a thing you wear on your head) Maker (someone who constructs (builds or assembles) things) Skully (the name of the company (organization of people (plural of person))) who used Indiegogo (a crowd-funding (collecting money from various people to achieve a goal, in return for specific rewards if said goal is achieved) website (a data file on the internet, typically in HTML (Hyper Text Markup Language) format (a specification (rules (instructions)) used to structure text (letters (lines and curves arranged in a particular way) grouped into words by punctuation (little dots and squiggles) and white space (empty space not containing letters or punctuation)) for presentation (display) by a computer (electronic device)))) to Raise Money (a medium of exchange with value agreed upon by all people participants in the exchange of goods or services)

I hope that helps (sarcasm) you.

Re:WTF..??

[hawguy]

Wild Abuse Allegations Taint Indiegogo Helmet Maker Skully

WTF kind of hipsterism is this?? I have no fucking idea what this means. It's completely incomprehensible.

Slashdot is located in the USA, so you have to expect articles to use English. If you have trouble reading English, check your local community college for remedial english classes and I'm sure you can get yourself up to a high school reading comprehension level.

This is why I don't consider crowd funding schemes

[Hasaf]

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:WTF..??

[Travis Mansbridge]

Oh, you're right. It's supposed to read "Wild! Abuse Allegations? 'Taint Indiegogo Helmet Maker, Skully!"

Erh... people? Could we wait for the verdict?

[Opportunist]

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:Erh... people? Could we wait for the verdict?

[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.

Re:Erh... people? Could we wait for the verdict?

[Opportunist]

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:Erh... people? Could we wait for the verdict?

[Kjella]

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 income tax fraud. Not sure what claims the customers would have though, there's no law against running a company into the ground with lavish expenses.

Re:Erh... people? Could we wait for the verdict?

[Shadow of Eternity]

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.

Re:Erh... people? Could we wait for the verdict?

[Opportunist]

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.

Re:Erh... people? Could we wait for the verdict?

[thegarbz]

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.

"Confidential"

[Tablizer]

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.

Re:WTF..??

[Calydor]

Goats?

Re:WTF..??

[Mr D from 63]

I don't think it is the allegations that are tainting them.

Re:This is why I don't consider crowd funding sche

[Anonymous Coward]

Crowdf unding is just giving money to the hype of a product, or its snakeoil salesmen.

and today's captcha is aspiring

Re:This is why I don't consider crowd funding sche

[mspohr]

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.

Not a good sign

[Provocateur]

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.

[hey!]

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.

Re: I'm actually surprised they fired her.

[BlytheBowman]

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 that he wasn't a Christian. When asked why he was a priest, he replied that it was just his job in order to make ends meet.

Re: I'm actually surprised they fired her.

[thebigmacd]

This actually happens in real life.
http://www.cbc.ca/news/canada/...

Re: I'm actually surprised they fired her.

[Anonymous Coward]

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 that he wasn't
a Christian. When asked why he was
a priest, he replied that it was just
his job in order to make ends meet.

This does not surprise me in the least. The CS church has had a history of being rather litigious and "backstabby" from the very beginning. Have a look at the wikipedia pages on Christian Science and it's founder Mary Baker Eddy. She had more lawsuits going on on a regular basis than Donald Trump does now.

Christian Science as a religion has been dwindling in numbers since the 1930s, probably primarily due to the fact that their practitioners don't tend to survive when they neglect their health the way they tend to do as a proclamation of their faith that god will heal them if they have perfect faith. Back in the 19th century being given the choice between risky surgery and just going into denial mode and praying was an easier decision then than it is now that medical science has become more routine for taking care of most preventable and routine health concerns, in this day and age Christian science is a health hazard to the community. At last estimate I have heard it said that there are something like 1200 practicing christian scientists worldwide. I think it is only a matter of time before the remaining diehards die of the flu or tuberculosis or measles or mumps. Mark Twain had a lot of very pointed writings about the religion and how whack they were. I have had friends who were closely involved with the Mother church in Boston and they turned out to be nothing short of a money grabbing cult.

I wonder what a CS family does when someone turns up with an incurable disease, either they go into denial and someone dies or they go into cover up mode and someone gets medical treatment and then lies about being miraculously healed, either way they are nothing short of being a fraud. Go figure, it is a religion though.. they have no place in modern society.

Re:I'm actually surprised they fired her.

[Anonymous Coward]

Wait, what? TFA is about a bookkeeper, not a manager. You just wanted to get this of your chest didn't you? Because the best way to compare the woman of TFA to your story, is to compare her to you.

Re:I'm actually surprised they fired her.

[Anonymous Coward]

He's not talking about the bookkeeper. He means to compare the COO to the people in charge of Skully.

Re:I'm actually surprised they fired her.

[hey!]

My point is this: when a sociopath lands on his feet he immediately sets to work getting his hooks into the important people there.

You know that saying you can't cheat an honest man? Well it depends on what you mean by "dishonest man"; if you include dishonesty to self, it's absolutely true.

Re:I'm actually surprised they fired her.

[hey!]

Wasn't so cool to live through.

Re:I'm actually surprised they fired her.

[Anonymous Coward]

When it comes to stories like this I'm torn. Who do you blame more? The CEO for being an arrogant A-hole, or the COO for being manipulative and incompetent.

I tend to come down pretty hard on the CEO, the real power. They have a fiduciary responsibility to protect their organizations from psychopaths and manipulators. When they fail to do that, indeed they promote them to positions of power and protect them from consequences, they fail their fiduciary responsibility. That is fundamental and disqualifies them from holding their position.

The organization has to fire the CEO first, then the COO.

And no, I don't accept limp excuses like "I wasn't informed as the CEO." It's your job to be informed you tool! And you have all the power and control to insist upon being informed. If you weren't informed, then once again you have failed your fiduciary responsibility and do not qualify to hold your position.

Re: I'm actually surprised they fired her.

[bestweasel]

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

Re:WTF..??

[Anonymous Coward]

I have four kids.

Chupacabra, where are you when we need you?

Re:WTF..??

[Anonymous Coward]

Get with the times, grandpa.

Re:This is why I don't consider crowd funding sche

[PolygamousRanchKid]

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.

PMITA prison

[BlytheBowman]

Meet your new cell mate. His name e is Bubba

Re:This is why I don't consider crowd funding sche

[Immerman]

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.

Re:WTF..??

[hawguy]

I don't think it is the allegations that are tainting them.

Then what is it? Indiegogo projects frequently. With this one there are allegations that funds were spent improperly, but no proof... So isn't it the allegations that are tainting them?

Re:This is why I don't consider crowd funding sche

[Anonymous Coward]

There is no such thing as pre-purchasing a product without being entitled to the product OR a refund. Promising a product and not delivering it is literally (and obviously) fraud, it's in fact one of the most common forms of fraud anywhere.

while this is the american way

[Anonymous Coward]

an augmented reality bicycle helmet is badly needed for riding in south georgia.

Re:while this is the american way

[PopeRatzo]

an augmented reality bicycle helmet is badly needed for riding in south georgia.

Especially if it has a Grindr-like app for helping you to hookup with your cousins.

Counterpoint

[SuperKendall]

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" - but if everyone does that nothing interesting gets made.

I would also argue that funding a crowd-sourced project very much is an investment - it's just that the return is not monetary, it's support for and idea or a person that you think deserves it, the return is to see an idea really take off or a person you like thrive.

Re: Counterpoint

[Anonymous Coward]

Ok, but there should definitely be at least some form of contacting involved that promises the business will not spend your donation on themselves or give it away.

Re: Counterpoint

[Anonymous Coward]

Contracting

It's no secret

[JustAnotherOldGuy]

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.

Re:WTF..??

[JustAnotherOldGuy]

Wild Abuse Allegations Taint Indiegogo Helmet Maker Skully

WTF kind of hipsterism is this?? I have no fucking idea what this means. It's completely incomprehensible.

Wild: crazy, weird, unpredictable
Abuse: someone got their feelings hurt or wallet bruised
Allegations: he said that she said that they said...
Taint: the part between the butthole and the fun bits.
Indiegogo: some kind of gluten-free hipster shit candy bar or energy drink
Helmet Maker: a guy that makes helmets, maybe (??) This is the only one I'm pretty certain of
Skully: the chick on the X-Files, "I want to believe", "The truth is out there", etc.

Re:WTF..??

[JustAnotherOldGuy]

You forgot the flannel shirt, knit watch cap (optional) and a propensity for drinking Pabst while lugging around a record player. Yes, an actual record player like Grandpaw had.

Re:WTF..??

[Mr D from 63]

I'd say they tainted themselves by behaving in a manner that resulted in allegations. There certainly is evidence about how they are not delivering.

Re: WTF..??

[Anonymous Coward]

Why would I want an Indigogo helmet for my taint? /me confused

Re: WTF..??

[brasselv]

whoever downmodded this, deserves to be wished a pimple in a very embarrassing place .

Re:This is why I don't consider crowd funding sche

[Megol]

But that's not what we are talking about. Well, at least us sane adults aren't.

Crowdfunding isn't an investment. It isn't purchasing something. The promise is that the project will try to deliver whatever it is about. Intentionally not delivering is of course fraud and wasting money on unrelated things instead of trying to deliver is too.

Re: WTF..??

[freeze128]

I think there is an Indiegogo campaign for that.

Re:This is why I don't consider crowd funding sche

[GrumpySteen]

There is no such thing as pre-purchasing a product without being entitled to the product OR a refund.

You don't understand how bankruptcy works. When a company goes bankrupt, they cannot offer refunds to one group of creditors (customers who pre-purchased) while not paying other creditors. The court decides how all assets are divided up. Customers who pre-purchased should be able to get something back eventually, but it's very doubtful that they'll get anywhere near what they paid.

Did she visit Epcot?

[Anonymous Coward]

...she took a pre-approved vacation to Disneyland...
Did she visit Epcot?

The evil guys looked like they spent their money in things that would 'compensate' a bad bussiness, I guess.
It looks like they felt loosers , perhaps because today, those helmets would not justify spending so much money in them...
Is there anybody that could estimate how much should this helmet be worth today?

Re:WTF..??

[Zaelath]

I think it's supposed to read, "Wild abuse allegations taint Indiegogo funded, motorcycle helmet maker, Skully"

Unless they make Indiegogo helmets?

Aren't bad references illegal?

[Anonymous Coward]

"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."

Last I checked, a negative reference, even if truthful, is illegal. Isn't this grounds for lawsuits against both companies?

Re:Aren't bad references illegal?

[Coren22]

I don't think it is illegal, but it is grounds for a civil lawsuit that she is very likely to win...against both companies.