The Federal Trade Commission has sued the creator of iBackPack for allegedly using funds raised via crowdfunding for personal purposes, FTC writes. Douglas Monahan raised more than $800,000 through various crowdfunding campaigns for tech products he never delivered to his customers.
Instead of developing a high-tech backpack, Monahan allegedly used a large portion of the funds for himself, including “making bitcoin purchases and ATM withdrawals and paying off personal credit cards,” according to the FTC complaint. Monahan also purportedly used the funds to promote subsequent crowdfunding campaigns.
“If you raise money by crowdfunding, you don’t have to guarantee that your idea will work,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “But you do have to use the money to work on your idea—or expect to hear from the FTC.”
Originally, Monahan promised to develop an iBackPack, a backpack incorporating batteries for charging mobile devices, cables and a Bluetooth speaker. He conducted two Kickstarter campaigns for the backpack, as well as Indiegogo campaigns for other products. He then claimed some of the products were “on their way here” or were “done/finished/shipped over with.”