Crowdfunding or crowdfrauding?

By Leslie Parker, CFE, CPA

Fraud Spotlight: Analyses of lesser-known frauds

Red Ferrari. Designer clothes. Steve Tan appeared to be living the American Dream. In less than two months in the summer of 2013, Tan had raised more than $1.5 million in a crowdfunding campaign on the popular website, Indiegogo, to produce a new smartwatch. However, this apparent overnight success ended in a debacle when more than 11,000 investors lost thousands of dollars.

According to PCWorld (Kreyos smartwatch: We're not a scam, just a trainwreck, by Jared Newman), Tan's Kreyos Meteor smartwatch was supposed to be waterproof with voice and gesture control, and a seven-day battery. He said it would monitor the wearer's heart rate and sleep cycles and would seamlessly connect to mobile devices.

However, a year after the crowdfunding campaign, according to the PCWorld article, many investors hadn't received their watches and those who did found numerous problems. Then Tan, in a post on the Medium site, The Rise and Fall of Kreyos, claimed his manufacturing partner perpetrated an "intricate conspiracy" against Kreyos and said it had pocketed close to $1 million of the raised funds. He said the company now didn't have any remaining money for repairs or refunds. But investors saw photos of Tan on social media climbing into that Ferrari and posing with filled designer shopping bags. (Tan claims a friend owned that Ferrari and the shopping bags belonged to his friends' wives.) Naïve incompetence? Or crowdfunding becomes crowdfrauding?


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By Anonymous
I am a victim of crowdfunding fraud from they are using delaying tacticts to release my funds, no email contacts These are the key people in the network. My Campaign ended on 31st January 2020 and they are claiming that Pay Pal is still investigating donations todate which is not logical comprehendable since I had 16 notations only 1. Agbanzoume Kossi T Desire - Network Director. Togolese. 2. Jean-Marc Kouevidjin - CTO and head of core product chez MIVASOCIAL THE BEST AFRICAN SOCIAL PLATFORM Director International Operations Company Name BM&Co Dates EmployedDec 2010 – Present Employment Duration9 yrs 3 mos LocationLome,Togo - Paris,France - Bordeaux,France - Atlanta,US Manages Import/Export Transactions and Strategic Partnerships in Fine Wine Distribution and Food Products towards the African Continent. 1. Sherif Mensah, Director of the Mivasocial Network in Togo. Togolese. Please advice I can give details Through My Whattsapp number 254721879141
By Thomas_46
Leslie ~ nice article on a topic that not many people really know many facts about. I suspect that misuse of crowdfunding opportunities will almost certainly provide additional future challenges for some of us as CFEs.
By Scott_McKeen
Leslie, great article on an often overlooked topic. I expect that we'll see continued growth in crowdfunding- along with growing fraudulent behavior unfortunately.