A Saskatchewan start-up that became a Cinderella story for crowdsourcing is now caught in up in a six-figure fraud investigation after accusing one of its owners of embezzling money to build his home.
Peachy Printer Inc. co-owner Rylan Grayston, from Yorkton, alleges the company’s former financial manager and other co-owner David Boe used $324,716.01 from a 2013 Kickstarter campaign to build his house.
The company, created by Rinnovated, pledged to create the world’s first $100 3D printer. The Kickstarter campaign raised $651,091 from 4,420 backers in 30 days while another $74,167 was raised through Indiegogo, according to the company’s website.
When the company started, Grayston’s role was in product development and technical team management, while David took care of business administration and financial management.
In the Kickstarter post, Grayston said Peachy Printer Inc. wasn’t established until November 2013 – three weeks after the Kickstarter campaign ended. Until that time, the co-owners were equal shareholders in a company that didn’t yet have a corporate bank account to receive funds. The company used Boe’s personal bank account to house the crowdsourced money until they could create a corporate account.
The trouble, according to a lengthy post on the company site, started when much of the money in Boe’s care never ended up in the corporate account. Only $200,000 was transferred shortly after the account opened.
I thought no one should ever have to know. I made a mistake. I apologize.
Grayston admits he didn’t see red flags at first; Boe was often busy, working in northern Alberta as a heavy duty mechanic, according to the post.
It all came to head when Boe allegedly didn’t transfer over the remainder of the money; Grayston said he asked for and received Boe’s resignation before confronting him on the alleged theft. He said he learned the money had been used to build Boe’s home.
Grayston recorded phone conversations and filmed a confession from Boe, both of which were released this week, more than a year after the alleged embezzlement happened.
In an interview with the BBC, Boe said he made the confessions “under duress.”
“So if I was to put a serial number on the dollars that came in from the Kickstarter, they got spent on supplies for the house?” Grayston is heard asking on tape of a recorded phone call with Boe.
“Yes exactly. That’s exactly what happened,” a man purported to be Boe responds.
The online post said Boe said he would repay the money, with the condition the matter remain private.
“I thought no one should ever have to know. I made a mistake. I apologize,” Boe said in the video.
CKOM News’ attempts to reach Boe were unsuccessful, but in an interview with the BBC, he said the video confession was made “under duress”.
“My response is that I chuckle,” Grayston said in an interview Wednesday. “David had chosen to do that. We didn’t force him to do that in any way.”
Grayston said he chose to keep the issue secret from his backers and the public for a year and a half because he was still receiving payments from Boe.
“It didn’t make sense to blow this whole thing open and ruin any chance of (backers) getting their printer,” he said.
When Boe defaulted on payments in October 2015, Grayston said his legal council told him to notify Saskatoon police.
“The Saskatoon Police Service (SPS) received a complaint in November 2015 regarding the theft of crowdsourced funds from a 3D printer company,” SPS said in a statement to CKOM News Wednesday. “Since then, detectives from our Economic Crime Section have conducted some preliminary investigation; however they are still waiting for more information from the company’s owners. Once they receive that information the Crown Prosecutor will be consulted to determine if this is a criminal case, or if it should proceed through civil litigation.”
Since releasing the information Tuesday, the company’s Kickstarter page has received a slew of comments, expressing both support and outrage over the allegations and the company’s actions.
“If they think what I am putting forward is fraudulent, I would encourage them to contact the police about that,” Grayston said. “I’m very confident that after an investigation, I think you’ll find the information I’m putting forward is true.”
Others have resigned themselves to the idea that the crowdfunding site is a high-risk game.
Kickstarter addressed the matter in a statement to CKOM News.
“Anyone who abuses our system and the trust of our community exposes themselves to legal action. We’re reaching out to the law enforcement officials who are already looking into this case, and will assist however we can.”
Right now, the company is at a standstill. Grayston said they have printers to ship, but no money to do it with and he isn’t sure what they are going to do in the near future.