Shark Tank blog kickstarter fraud

4/16/2015 Kickstarter Fraud - Shark Tank Blog

http://sharktankblog.com/kickstarter-fraud/ 1/5

Kickstarter FraudApril 10, 2015 by Rob Merlino Leave a Comment

Kickstarter fraud is a growing problem, and it’s something any small business trying to raise money

on crowdfunding sites should be concerned about. Kickstarter is “becoming the best way to get on

Shark Tank. They’re recruiting heavily from Kickstarter and if you have a successful campaign, they

want you on the show.” Those are Caleb Light’s words. He’s part of Power Pot, the company Mark

Cuban invested in during season five. Cuban gave Power Pot $250,000 for 12% equity, plus 3%

‘advisory shares’ (shares Power Pot had already set aside), and a seat on the Board of Directors.

Obviously, partnering with Mark Cuban is a big deal for any business, but without a successful

Kickstarter campaign, Power Pot might never have had an opportunity to pitch in the Tank.

There are many other Shark Tank successes that originated on Kickstarter: Freaker, Urbio, Lumi,

iPooch, Naja, and many more. The reason Shark Tank producers like companies with successful

Kickstarter campaigns is there’s already proof of concept. If a group of consumers are willing to

part with their hard-earned money before a product is even made, it must have appeal. There are

far more Kickstarter successes beyond those appearing on Shark Tank; it’s become a viable way for

businesses to raise seed capital from channels previously unavailable to them.

The JOBS Act promises to make Kickstarter and other crowdfunding sites even more viable for

small businesses. Under the act, businesses would be able to sell equity in their business to

individual investors. On the surface, it appears like a good law. More access to capital for small

business has to be a good thing, right? If that’s the case, why hasn’t the equity segment of the law

passed yet? The answer is an all too familiar refrain:

“We hear that the rules have been written by the staff and are just sitting in the in-box

of the commissioners,” says Sara Hanks, a former SEC attorney who is now chief

executive of CrowdCheck, which plans to provide due diligence on companies raising

money through crowdfunding. (from Bloomberg Business Week)

Washington bureaucrats sitting on policy decisions shouldn’t come as a surprise to anyone, but the

Email:

Name:

Search this website… Search

Weekly PrizesShark Tank DealsExclusive Updates

Subscribe to SharkTankBlog

Dinosaur Print Leggings

$19Shop now

Cool Muscle Print Leggings

$19Shop now

Letter Print Leggings

$29Shop now

thekewlshop.com

Shark Tank Products Shark Tank Shark Bios Get on Shark Tank About Us Contact Us Financing Contests Entrepreneur Training

HOME SHARK TANK EPISODES BLOG SHARK TANK INTERVIEWS THE SHARK TANK HANG PRODUCTS

Venture Capitalist Data10,000+ Startup Investor Profiles. RecentDeals, Track Records & More



article in Bloomberg Business Week alleges fraud (at least securities fraud) hasn’t materialized in

crowdfunding platforms. That’s looking at crowdfunding through rose-colored glasses. Fraud exists,

but nobody seems to want to tackle the problem, including, in some cases, the crowdfunding

platforms themselves. Organizations like Crowdfund Insider, a “leading news and information web

site covering the emerging global industry of alternative finance including crowdfunding and peer-

to-peer lending,” are actively investigating fraud, but what about businesses that are Kickstarter

fraud victims?

What, besides shutting down fraudulent campaigns, can be done to protect people. There is

legislation that protects backers, but does it have “teeth?” The answer is, it depends who you ask

for help.

Kickstarter Fraud Victim Speaks Out, nobody listens

I had the opportunity to speak with a victim of a Kickstarter fraud. Dawn Sole, president

of Creatively Convenient, LLC, created a patented, 4-in-1 multifunctional beauty tool called Pluck N’

File which she sought to get crowdfunding for. A little over a year ago, Dawn submitted a campaign

to Kickstarter to raise funds for Pluck N’ File. Kickstarter turned down the campaign, so a year later,

Dawn set up a campaign on Indie GoGo to raise funds. What happened next was a big shock.

After a business meeting, Dawn decided to Google her name and company name. She found that

someone had copied her Indie GoGo campaign word for word and was successfully raising money

on Kickstarter. The company in question, an unnamed UK entity, set up a five day campaign and

raised a quick $25K, all with Dawn’s company information! The irony is, Kickstarter allowed the

fraudulent campaign after denying Dawn a year earlier.

Dawn got lawyers involved and Kickstarter pulled the campaign. In its place, they put a page with

the following statements on it:

Description ofcopyrighted material:The photographs andcopy are all owned byCreatively Convenient,LLC. The product isprotected by US PatentD718497. The trademarkPLUCK N FILE is ownedby CreativelyConvenient, LLC.

Description ofinfringing material:The images and copy are

infringing. In addition, the product itself infringes US Patent D718497. The use of thename is unfair competition.

Pulling the campaign was the right thing to do, but Dawn feels Kickstarter and government entities

created to protect people from fraud have done little more than give her lip service. Kickstarter

wouldn’t even acknowledge her, at least until her lawyer got involved. They never even said

whether the fraudulent campaign received it’s funds. “They swept it under the rug,” says Sole.

“Most of the ‘little guys’ out there simply back down because Kickstarter has deep pockets. You’d

think a five day campaign would at least send up a red flag.”

Dawn got no satisfaction from a slew of government agencies, either. “I sent out 38 packets of

information and only one person replied – a guy from FINRA was very sympathetic, but inquiries to

Shark Tank Products on Amazon

GET DROP STOP

► Mortgage Fraud► Money Laundering Fraud► Top Internet Fraud Scams



the SEC, Florida Attorney General, the US Patent Office, and a bunch of other agencies were

ignored. The thing is, Kickstarter is acting as a broker of sorts, they need to do their due diligence.

If somebody at Kickstarter simply googled ‘Pluck N’ File,’ they’d have seen the campaign on their

site was a complete fraud.”

The good news is Dawn’s Indie GoGo campaign raised over $18K, but even though the fraudulent

campaign was removed, Dawn feels her brand has suffered from the negativity associated with the

episode. “People who find the campaign on Kickstarter and see the infringement statement think

‘what did Dawn do wrong?’ It raises some negative feelings.”

Dawn’s not taking this lying down, either. “These people engaged in criminal activity. They

committed theft, wire fraud and possibly money laundering. I did all the right things. My product is

patented and trademarked, but the people in place to protect those things aren’t doing their job.

This is bigger than a hijacked campaign. I want to do the right thing and stop these scammers

before they do this to others.”

Dawn is not the only victim of duplicate campaigns, but she’s been more vocal than most (note:

NEVER piss off an Italian woman – especially one from New Jersey). Ken Lowrey and Robert Wilson

IV started a Kickstarter campaign for their comic called “Like a Virus” back in 2013. Wilson found a

complete duplicate on Indie GoGo a few days later. The campaign was pulled before it could raise a

lot of money (it had only received $10), so the damage was minimal. Wilson found out about the

fraud because he has a Google alert set for his name. Just like Sole, he found out about the fraud

himself – nothing resembling due diligence on the part of the crowdfunding site occurred.

Crowdfunding is Untested Water for Criminals

Criminals, con men, and scam artists have likely existed since humans started walking upright. In

the internet age, there are ample opportunities for ripping people off; crowdfunding is the new

“wild west” for criminals. There are ample opportunities for fraud, as the above examples illustrate.

One has to wonder how many duplicate, fraudulent campaigns have collected money and gone

unnoticed.

If I put on my larcenous hat, I can imagine all sorts of ways to exploit crowdfunding sites for

unsavory purposes (please don’t try this at home). Besides the aforementioned fraudulent

methods, suppose I wanted to launder half a million bucks from money I received illegally. I could

set up a crowdfunding campaign, donate funds from fake names using pre-paid credit cards, and

walk away with “clean” money. The implications of this behavior could be very broad reaching.

Criminal behavior, unfortunately, often precedes efforts to curtail it. The government may be

sitting on the crowdfunding policies because they’re still sorting out the details and are unsure how

to enforce the new, proposed laws. Victims like Sole may push the issue to the forefront via a more

direct route: the courts. She hasn’t ruled out litigation at this point and perhaps getting cases like

hers into the court system is a way to force some action by regulators and the crowdfunding

platforms. There’s nothing like a Federal case to make a company take notice. Dawn’s not sure if

she wants to take her case to court, but she says, “if I have to sue, I’ll do it to put a fire under their

butts.”

As Seen on Shark Tank

Teddy Needs ABath! The Best Wayto ...Teddy Needs aBath...

Scratch Free ScrubDaddyScrub DaddyNew $17.46Best $17.46

The Beer BuckleHolds A Bottle OrCa...BevBuckle, Inc.New $39.99Best $39.99

Fuzzi Bunz OneSize DiaperPackage 9...Fuzzi BunzBest $249.99

ICE CHIPS CandyVariety PackICE CHIPSNew $27.99Best $27.49

Privacy Information

As Seen on Shark Tank

► Fraud Scams ► Shark Tank ► Money Scams ► Money Ideas



Related Posts

Filed Under: Financing Tagged With: Dawn Sole, fraud, Kickstarter, pluck n file

About Rob Merlino

Real Estate Agent, Entrepreneur, auteur, raconteur. Rob Merlino is a blogger

and writer who enjoys the Shark Tank TV show and Hot Dogs. A father of five

who freelances in a variety of publications, Rob has a stable of websites

including Shark Tank Blog, Hot Dog Stories, Rob Merlino.com and more.

Rob can help you buy or sell real estate anywhere in the United States.

Italians Personal Loan Internet Phone Business Opportunities

Speak Your Mind

Name *

Email *

Website

Post Comment

Freaker Feet – Whoop! Quality + Cost +

Conscience = Bombas

SOCKS

Real Estate Crowdfunding

– Tycoon RE

Power Pot Update Alternative Financing –

Swim Zip

Shark Tank Losers –

Think Again

► Kickstarter ► Wire Fraud ► Fraud Scams ► Fraud Alert



Search this website… Search

SHARKTANKBLOG NOTICE:

Shark Tank Blog is independent of and not

affiliated or endorsed by ABC, Sony, the producers

or any other company associated with the

television show, Shark Tank.

Shark Tank Blog is an opinion blog. Views

expressed on this blog are solely owned by the

author individually and not that of Shark Tank

Blog or principles of Shark Tank Blog.

Shark Tank Blog on Google+

LATEST TWEETS

Sweetened Face Wipes – Neat Cheeks

http://t.co/RQIExiHrKV April 14, 2015 8:05 pm

@NateHolzapfel we gotta chat sometime. I

hear great stuff about you from @PluckNFile

and others! April 14, 2015 6:15 pm

Peat Moss Substitute – Pit Moss

http://t.co/coKAsx2vT6 April 14, 2015 6:12 pm

Electrical Connectors – Melni Connectors

http://t.co/bDLGiexuqP April 14, 2015 5:00 pm

https://twitter.com/SharkTankBlogr

RECENT COMMENTS

Rob Merlino on Mail Order Meat

Kathy starling on Episode 627

BRUCE. CARR on Hells Bells Helmets

Monica on Thank You for Subscribing to

SharkTankBlog

Sonia Kennedy on Ledge Pillow

June McWilliam on M3 Girl Designs Trademark

Lawsuits

Rob Merlino on The Last Lid Follow Up

Norma Harris on The Last Lid Follow Up

COPYRIGHT © 2015 · SHARKTANK BLOG · SITEMAP · PRIVACY POLICY · DISCLOSURE · COPYRIGHT NOTICE ·