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Tech start-upper 'steals Kickstarter funds to build house'

Michelle Avenant
By Michelle Avenant, portals journalist.
Johannesburg, 13 May 2016
Peachy Printer's Rylan Grayston says he took this photograph of the house David Boe used stolen Kickstarter funds to build.
Peachy Printer's Rylan Grayston says he took this photograph of the house David Boe used stolen Kickstarter funds to build.

A Canadian 3D printer start-up has announced that one of its co-founders embezzled more than 324 000 Canadian dollars (about R3.8 million) of money raised via crowd-funding Web site Kickstarter, and used it to build himself a house.

In a nine-minute YouTube video posted by the start-up, Peachy Printer, on Tuesday, co-founder David Boe admits to misappropriating the company's funds.

According to Peachy Printer's Web site, now run by remaining co-founder Rylan Grayston, the business - which in September and October 2013 raised over 650 000 Canadian dollars from over 4 400 backers in a 30-day Kickstarter campaign - was not registered as a corporation and did not have a corporate bank account at the time these funds were accrued. As a result, the personal bank account of co-founder Boe was used to receive the funds, and Boe promised to hold the money in trust until the company's account had been set up.

Grayston writes that once the company's account had been created, its bank manager recommended that the money be moved into it "in smaller chunks to avoid having our funds tied up if something were to go wrong with the transfer".

Boe reportedly transferred enough money into the account to cover the start-up's initial operating expenses, but failed to deliver the remainder of the funds into the corporate account. "By March 5th [2014] - just five months after receiving the funds - he had spent every penny," writes Grayston.

Grayston claims that on making this discovery he was legally advised to pursue repayment from Boe rather than contacting the police, and adds that he didn't disclose the incident to backers immediately because "it would have started a war between me and David while he still had power in our company," and "ruined any chance of you [backers] getting your printer".

Yet after signing legal documents admitting guilt and agreeing to repay the money and distribute his Peachy Printer shares back into the company, Boe - who Grayston says used the misappropriated Kickstarter funds to cover construction costs on a house for himself - failed to uphold the repayment agreement, according to Grayston.

Grayston details alternative plans he made to cover the costs of delivering printers to the company's Kickstarter backers, such as seeking government funding and private investors, and why these plans failed.

He implies that he announced the details of Boe's theft only after he had exhausted all other options for attempting to deliver Peachy Printer's product regardless.

'Under investigation'

Boe told the BBC that the confession video in which he appeared was filmed "under duress", and that he was "not going to talk about [the allegations] right now".

Kickstarter has said that the matter is under legal investigation, and has offered to assist in this process.

Canadian police, who received Grayston's complaint in November 2015, say they are investigating the case pending further information.

Contingency plan

In an attempt to compensate the project's thousands of backers, Peachy Printer has published its source code, design files, and an instruction video for assembling the printer online, essentially rendering the tiny, low-cost 3D printer open source.

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