May 18, 2016

Peachy Printer Funds Stolen to Build a House

Peachy Printer discloses that funds raised on Kickstarter had been misappropriated by their financial manager to build a house.

UPDATE 12/5: Some fresh developments in this story, including a denial by David Boe and the release of the Peachy Printer files to GitHub. Click here to jump to the latest.

UPDATE 18/5: And the hits keep on coming. Grayston (finally) shows a video of a Peachy Printer printing something, and the Financial and Consumer Affairs Authority has opened an investigation. Make with the clicky.

Shockwaves are rippling through Kickstarter with the revelation that funding for the Peachy Printer has been stolen by the co-owner and financial manager of the company, David Boe.

After more than a year of delays and apologetic updates, the scale of the problem has been fully disclosed by Peachy Printer CEO Rylan Grayston, his account of events supported by audio recordings, financial statements, and video interviews. You can read them here and here.

Moreover, backers affected by the issue have been encouraged to contact the Saskatoon police department to file a report, as the Canadian authorities gather evidence on the full extent of what has transpired.

The most shocking accusation is that Boe has used the funds to build a new house. Grayston has posted a picture of this house to the Kickstarter update.

Peachy Printer’s Critical Flaw

The train of events begins on 20 September 2013, when Grayston and Boe launched a Kickstarter campaign for the Peachy Printer, designated as “The World’s First $100 3D Printer”.  The campaign was a runaway success, raising $651,091 from 4,420 backers in just 30 days.

Boe’s role in the company was Business Administration & Financial Management, while Grayston handled Product Development & Technical Team Management. Critically, Peachy Printer was not established as a company until 6 November 2013, weeks after the campaign ended. In the interim between the completion of the campaign and the setup of the company — and with it a corporate bank account — the funds raised were deposited into the personal bank account of Boe.

According to Grayston, his partner promised to hold the Kickstarter funds in trust until the company account had been created. After the company account was in place, their bank manager recommended that they move the money in smaller chunks to avoid having their funds tied up if something were to go wrong with the transfer. Boe then transferred $200,000 to cover initial operating expenses.

The remainder of the funds were never transferred to the corporate account. By 5 March 2014, Boe had spent every penny. Over $324,716.01 of funds had been stolen.

Why Didn’t They Come Clean Sooner?

Grayston states that once the extent of the deception was discovered, rather than go to the authorities he worked with his lawyers to work out a repayment plan to salvage the company and avoid total collapse. He also confronted his former partner and obtained signed and recorded admissions of guilt.

Unfortunately, those repayments did not materialize, leaving Grayston with no option but to blow the whistle. You can comb through the full timeline and documentation on the site, and it’s fascinating reading. Embedded below is a pie chart of how much money Peachy Printer *did* spend, and it’s a fraction of the funds that were raised. He said:

“Many of you may think I should’ve done things differently, and maybe you’re right… It’s easy to criticize after all the cards have been played. However one thing is for certain, my intentions were always in the right place: Delivering a good product to you.”

The reaction of the backers to this news has been angry, to say the least. There is also some skepticism, as to why Peachy Printer didn’t reveal what was happening sooner, instead of disingenuous statements about laser certification holding up final shipment.

“I’m shocked and can’t believe this,” says Richard Horne in the comments. “Why are you doing pie charts in a video to show people how much of the money was stolen! This company was dead the very second he stole the money. Saying it’s still alive and you are going to try to fix things is not what needs to happen now.”

UPDATE 12/5: Boe denies Wrongdoing, Peachy Printer files released to GitHub

David Boe has told the BBC that his confession was “filmed under duress”, and disputes Grayston’s account of events.

The taped confession, which was incorporated into the video released yesterday, had been filmed in 2014.

“I made a mistake, I apologise and I am trying to make it right,” Boe said in the video. “Everyone knows it’s wrong and I’m not trying to deny it.”

But when the BBC reached out to Boe for comment, he said he wasn’t aware that Grayston had released the footage and other documents.

Boe confirmed he had appeared in the video, but declined to comment about whether he had actually taken money.

“That was taken under duress, extreme duress, at that date,” he said. “They actually told me exactly what they wanted said in that. I’m not going to talk about right now.”

A spokesperson for Kickstarter, David Gallagher, has issued a statement on the affair. “Anyone who abuses our system and the trust of our community exposes themselves to legal action,” he said. “We’re reaching out to the law enforcement officials who are already looking into this case, and will assist however we can.”

Grayston, meanwhile, has posted a further update to the Peachy Printer Kickstarter page, clarifying his position and why it took so long for these issues to come to light. There’s also the rather farcical detail that the policeman initially assigned the case went on to retire several months later.

“After finding out, I immediately sought legal counsel and followed their advice to pursue repayment. After losing faith that David would repay in time, I found new legal counsel. I then received different advice – go to the police – and that’s what I did. We reached out to the police in October of 2015.

Unfortunately, the sergeant that was initially assigned the case retired just a couple months afterwards.  This resulted in a sizeable delay in progress due to the turn over process.”

It all adds up to a catalog of errors and bad decisions that made the problem worse. Whilst it looks increasingly unlikely that the Peachy Printer will ever ship, Grayston has finally fulfilled one of the earliest pledges he made for the Peachy Printer, and has made the project open source by sharing the source code and design files to GitHub.

It’s scant consolation for those backers who are out of pocket, but now they have the blueprints to build their own Peachy Printer if they so choose.

UPDATE 12/5: Video of Peachy in action, Canadian Consumer Affairs Authority Step In

There are yet more twists and turns in the Peachy Printer saga. Their financial manager building a house with Kickstarter funds may well turn out to be the least of it.

First, Grayston has now uploaded a full, uncut video of the Peachy Printer actually printing something. This is a big deal, because up to this point, backers have never seen it in action. The only evidence were pictures of sample prints, and marketing shots of the printer.

The results, it has to be said, are deeply underwhelming. In a darkened workspace, Grayston is tinkering with a contraption that looks like it was made with a sawed off soda bottle, sticky backed plastic, and a deep fryer spoon. Held together with hope.

In a situation where the company’s integrity is in question, they are years into production, and they were well funded, you’d think they’d have something more sophisticated to show. Here’s the video:

Further comes the disclosure that Kickstarter wasn’t the only place where Peachy went crowdfunding. They also raised money on Indiegogo, and continued to raise funds outside those platforms after both campaigns closed. In total, the company raised $1,150,000 dollars.

Based on what we already know, Boe’s misdemeanors only account for $324,716.01 of stolen funds. So what happened to the other two thirds of a million? Research and development, is the official answer. Building a 3D printer to retail for less than $100 bucks turned out to be much more difficult than the company anticipated.

Grayston goes to say:

I did not intend to shy away from the fact that we’ve raised a lot more money. Rather, I felt that it would simplify an already complex story if I just focused on the Kickstarter funds. That is the pool of money that the theft occurred within, so I focused on that while telling the story.

Fair enough, but it’s starting to look like the stolen funds are only one thread of greater financial mismanagement. Which kind of makes sense, in a loopy way, when you’ve just sacked your financial manager for embezzling funds.

Finally, the announcement that the Canadian Financial and Consumer Affairs Authority has begun conducting an investigation. We wonder what else will come to light, once they’ve begun poring through the company files…

License: The text of "Peachy Printer Funds Stolen to Build a House" by All3DP is licensed under a Creative Commons Attribution 4.0 International License.

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