http://www.atg.wa.gov/news/news-release ... shady-deal

"King County Superior Court Commissioner Henry Judson ordered Edward J. Polchlopek III, otherwise known as Ed Nash, and his company, Altius Management, to pay $54,851 as a result of the 2012 “Asylum Playing Cards” Kickstarter campaign."

This is wonderful news! As it sets precedence for other governments and courts to hammer down on campaigns that don't deliver. Crowdfunding is supposed to enable creative freedom. Not freedom to steal people's money with timetables of "some Tuesday in the future" The effect hopefully will be less outright attempts to rip people off. Less willingness to set deadlines they KNOW they can't meet. And more trust in crowdfunding in general.

A great quote from the page.

“Washington state will not tolerate crowdfunding theft,” said Ferguson. “If you accept money from consumers, and don’t follow through on your obligations, my office will hold you accountable.”

It also opens the way to legal attacks on people like Josh who have found that their anticipated delivery dates are... optimistic at best.

This is a double edged sword.
Not all crowdfunding can succeed. As much of it is promising stuff that doesn't exist yet.
Where do we draw the line? Where will the courts draw the line?

Good on them. I hope they'll differentiate between people who are legitimately trying to finish the job and those who really don't care.

I'll be watching this topic closely.

Silverware wrote:It also opens the way to legal attacks on people like Josh who have found that their anticipated delivery dates are... optimistic at best.

This is a double edged sword.
Not all crowdfunding can succeed. As much of it is promising stuff that doesn't exist yet.
Where do we draw the line? Where will the courts draw the line?

From what I can tell. In this case the company updates on the project slowed to a crawl and then stopped completely years ago. As opposed to Josh who seems to be completely okay with very distance updates on progress but can't be said to have stopped for years. And he has given backers who want out refunds.

This is not about the Josh's who only harm their reputation with their actions. This is about outright fraud campaigns that are designed from early on to take money KNOWING they can't deliver. Or set stupidly low goals just to get started so they can sell out to bigger companies without the pesky loan. These frauds had crowdfunding on the ropes.

If Josh or folks like him continue to give out refunds I highly doubt any government will care.

I was reading this story earlier today at Gamasutra.

I thought about posting it here, but decided not to. Now that it's here, though, a couple of notes:

1. Although the complaint was brought in Washington state, the targeted company was headquartered in Tennessee.

2. The court approved the Washington state Attorney General Office's request to impose a civil penalty of $1000 for every person in Washington state who backed the Kickstarter project. That comes to a punitive cost (beyond the legal fees and trivial assessed restitution cost) of $31,000 dollars.

3. The Washington state AGO explicitly encouraged this Kickstarter's backers from other states to go to court: "Affected consumers from other states are encouraged to file a complaint with their state attorney general to seek restitution." If they take him up on that, the total legal and punishment costs may be far higher.

4. Here's what the Washington state AG said in his press release today: "Washington state will not tolerate crowdfunding theft. If you accept money from consumers, and don't follow through on your obligations, my office will hold you accountable." There is a LOT of threat implicit in that statement.

I am with Silverware on this one. Even in cases when fraud is likely to have been perpetrated an overwhelming preponderance of evidence should be required. If legal action becomes an accepted response by dissatisfied supporters, nuisance suits will flood crowfunding.

I suspect that outright fraud is actually rather rare. The high failure rate of crowdfunded (video game) projects is due less to malfeasance and injurious intentions than misjudgement and, at times, ineptitude by would-be developers.

As a final point, supporters need to treat crowdfunding campaigns less as a preorder system and more as a mechanism for backing projects and developers that appeal to their sensibilities with the full realization that the barriers to the success of either are significant indeed.

Well, we knew something was going to have to be said legally at some point or another. This ruling is a bit more threatening indeed than what I would have expected for a first precedent, and I'm a bit scared to see that it was all (seemingly) based on existing legislation. Crowdfunding is a totally different model from existing market models, and it really does need specific legislation at some point. Anyway, I get both sides of the argument. If what Abh said is true (I haven't had the time yet to go through the full story on their campaign / failure to deliver) and the company really just stopped trying, then that does seem like grounds for legal action.

Personally I'm not worried about this ruling (remember, I'm in my office Monday through Friday from 8am-ish to 7pm-ish working on LT, whether or not you hear from me ), but in light of this I AM pushing up the urgency on my next KS update, just so it's clear to all that LT is very much alive. Temporally-speaking, KS ToS clearly states that project deadlines are 'best estimates,' NOT legal deadlines. Ideally they're good estimates. There will inevitably be cases like LT where the estimate is awful, but the product does eventually come out (hence fulfilling legal obligation).

I do hope we can get a clearer picture of crowdfunding legislation in the future, though. There's such a fine line between letting incapable (or worse, dishonest) people throw money away and giving capable (if a bit slow ) people a vote of confidence that ultimately leads to something that couldn't have happened through other avenues (i.e. VC funding).

Thanks for bringing it to attention though Abh, I think it's an interesting (if a bit touchy) subject to think about. Crowdfunding has been a legal mystery since the beginning...

EDIT : Also, I'll restrain myself from giving my thoughts on them having to pay punitive damages in addition to refunds. But I'll make it known that I'm restraining myself so that it'll still be clear what I think of that...

You should put aside two hours on a Friday to grab some beers (or alcoholic drink of your preference) get drunk and play LT at it's current state on live-stream.

That would keep everyone happy I would wager.
I know I would enjoy it immensely.

As for the legality of it all, we need to look at any legal contracts signed by the creators of the project around performance and deliverance.

It had to be a tough first precedent. Crowdfunding has been severely harmed by these fraud campaigns (There was one where the creator outright mocked backers because he had no fear of any justice. It would take a LOT of money to sue him) And the perception that once they have the money. There is zero incentive or legal obligation to deliver.

About the punitive damages. These judgements have to have teeth. The perception has to be there that a fraud can not only go back to square one. But be deep in the red for his actions. And it ends this crap about "oh sorryz we uh ran out of money so you are teh screwed lol bye!!!1"

I can only imagine how many good projects failed to complete their campaigns because of the amount of fear there is of crowdfunding right now. Even if most projects are simply massively delayed. There is still too much fear that they will never finish. This precedent helps people to say "That project is not going to benefit from ripping me off"

I want people to be held legally responsible in cases where clear fraud has been committed. What concerns me is when it isn't so clear yet very vocal or well known people seek legal resolution. Especially in the cases where work is clearly continuing on the project, yet the headway desired or outlined in the project definition hasn't been met (Which classifies as probably a good majority of them).

This is a fair ruling as I see it. However it needs to be taken with a grain of salt, as these cases become more common then you will find more and more solicitors/lawyers trying to use them to make names for themselves because the nature of the crowd funding there will almost always be unhappy people and if those people band together and present a case the context may not matter all that much when presented in a court of old judges that aren't really caught up on the trend of crowd funding and only have previous precedent and market law to fall back on. Clear fraud is where this needs to stay. If it is not clear then it should never get as far as court imo. That is one of those things that has become very shaky in the legal system across the board though, where it is up to the charged to prove that they are innocent, not the charger to prove their guilt. Guilty until proven innocent. Especially in the context of public cases, which crowd funding almost always is given the very nature of them.

TGS wrote:That is one of those things that has become very shaky in the legal system across the board though, where it is up to the charged to prove that they are innocent, not the charger to prove their guilt. Guilty until proven innocent. Especially in the context of public cases, which crowd funding almost always is given the very nature of them.

No, it should always be the other way around. Better to let five guilty people walk than to condemn one innocent person.


I think "project creator offered refunds" is a very good measuring stick. As far as I'm concerned, anyone which offers you your money back (and gives it back if you accept) if you're unhappy with the project cannot be considered fraudulent, because you are at no risk of losing your money.

I do think that announcing the lack of promised very important features without any prior warning six weeks before release and then refusing refunds on the basis that prior versions were available and used and/or the Kickstarter was backed before said important features were announced is fairly indicative of fraud, though.

DigitalDuck wrote: No, it should always be the other way around. Better to let five guilty people walk than to condemn one innocent person.

you know that TGS agrees with you?

Cornflakes_91 wrote:you know that TGS agrees with you?

Yeah, I was agreeing with him. No as in "that's not the way it should be".

Well, Josh is bloody awful at giving estimates concerning the milestones of LT but he is scrupulously honest when it comes to the money matters of the LT project.

Victor Tombs wrote:Well, Josh is bloody awful at giving estimates concerning the milestones of LT but he is scrupulously honest when it comes to the money matters of the LT project.