Tech by VICE

Peachy Printer Blames Co-Owner for Building Mansion, But Funds Are Still Missing

A popular project crowdfunded on Indiegogo and Kickstarter is now collapsing, and no one is quite sure where the money went.

by Louise Matsakis
May 12 2016, 4:19pm

Grayston. Screencap: Peachy Printer/YouTube

Did the co-creator of a popular Kickstarter project use half the money raised from crowdfunding to build himself a mansion?

That's allegedly what happened with Peachy Printer, which raised $560,000 in US dollars on Kickstarter and Indiegogo in 2013 to deliver "the world's most affordable 3D printer."

According to the company's CEO Rylan Grayston, the Peachy Printer failed to deliver its unbelievably inexpensive $100 printer because the startup collapsed into a shocking embezzlement scheme.

Grayston released two videos and an extensive statement Tuesday in an attempt to explain how things went awry and apologize to backers.

"I am truly sorry that it has gone down this dark road," he wrote. "That being said, I am still determined to bring justice to this issue, and a satisfying end to my backers."

So what happened? According to Grayston, Peachy Printer co-owner David Boe stole about half of the more than $650,000 Canadian dollars raised through Kickstarter in order to build what appears to be a very nice house near Hudson Bay, a town in Saskatchewan, Canada.

The house Boe allegedly built with Peachy Printer money. Image: Rylan Grayston

To make matters worse, Grayston apparently knew that the funds were missing since 2014, but tried to keep the project alive, all the while hiding the fraud from his 5,078 backers. He never mentioned that anything was amiss in the dozens of development updates posted to the campaign pages over two years.

A particularly bizarre part of the situation is that Grayston convinced Boe to admit that he embezzled the funds in a reality-show style video, complete with creepy music.

"I'm not trying to deny it," Boe says in the footage. He told the BBC that the video was filmed "under duress." Motherboard attempted to reach Boe through his former company and through social media, but we have not received a response. We will update this story if we hear from him.

Boe was in charge of Peachy Printer's finances, which is why initially no one was aware that there was a cash flow problem, according to Grayston.

The crowdsourced money was initially funneled directly to Boe's personal account, because, as Grayston says in his statement, the company hadn't yet set up a corporate account when the campaigns originally began.

It's not entirely clear where all of that money was spent, despite the pie charts that Grayston created to try and make the startup's cash flow more transparent

Boe apparently felt bad about what he had done, and wanted to pay Peachy back. Grayston says that he did eventually repay $111,000 CAD in stolen funds, but he hasn't made a payment in over a year.

The most damning part of the whole Peachy Printer story is that when you look closely at the company's finances, the numbers don't seem to add up.

According to Grayston's own lengthy summary of what happened, posted on Peachy's website, after fees and returned payments, Boe initially received $587,000 CAD into his personal banking account from the Kickstarter campaign, around $320,000 CAD of which went towards building his personal home, by Grayston's calculations. In an interview with VICE News Canada, Grayston said that Boe still disputes exactly how much money he stole.

That leaves $267,000 CAD in Kickstarter funds for Peachy's operations. After realizing that Boe was embezzling the money when he kept coming up with excuses for why he couldn't transfer it to the company account, Grayston searched out other sources of income. He applied for and was awarded two separate government grants, totaling $225,000 CAD.

Combined with the $111,000 CAD that Boe paid back, this leaves Peachy with $603,000 CAD, more money than it started with before the embezzlement.

Of course, Peachy was spending money throughout its existence, and likely never had the full amount at one time, but the extra funds still create lots of questions.

When I asked Grayston over the phone about the numerous commenters who also noticed the seemingly large amount of extra funds his company received, he said gently that, "They [the commenters] probably don't understand how to run a hardware startup."

"We're not trying to hide the fact that we raised more funds afterwards," he continued, "But the story becomes impossibly complicated if we think about all the money we raised."

When asked about how the rest of the funds were spent, Grayston emphasized that running a hardware company is expensive, and clearly wanted to focus only on the cash that Boe stole. "The money in question is the Kickstarter funds," he said.

Grayston also admits in his statement to accepting a $50,000 loan from a family member, pushing Peachy's total funds to a whopping $653,000 CAD, after the stolen funds are taken into account.

It's not entirely clear where all of that money was spent, despite the pie charts that Grayston created to try and make the startup's cash flow more transparent.

There still seems to be $100,000 unaccounted for, which likely was spent in 2015 and 2016 (Grayston only outlined how Peachy's cash was spent up to 2014).

Grayston initially ignored the more than $74,000 CAD raised from backers in the Indiegogo campaign in his explanation of where Peachy's money disappeared to, but after lots of questions were raised about it, he now says that the funds from Indiegogo were sent to him and not Boe, and were used for legitimate expenses. The Kickstarter funds were the only crowdsourced cash sent to Boe, according to Grayston's statements.

Peachy's expenses, according to Grayston.

Even if one of its co-founders didn't try to bankroll a gigantic home with the company's funds, the reality is that the startup was still in trouble.

The Peachy Printer was touted as "the simplest laser resin printer ever." It was supposed to revolutionize the 3D printing industry.

Instead, like an increasing number of Kickstarter supported companies, the project ended up becoming a mismanaged fraud scheme, all at the expense of its thousands of backers. The project is no longer providing refunds.

In an email to VICE News Canada, Kickstarter spokesperson David Gallagher said "Anyone who abuses our system and the trust of our community exposes themselves to legal action. We're reaching out to the law enforcement officials who are already looking into this case, and will assist however we can."

"Anyone who abuses our system and the trust of our community exposes themselves to legal action."

The Saskatoon Police Service are also looking into the case, although they said in an email that they initially received a complaint last year, in November 2015. They are "still waiting for more information from the company's owners," according to their statement.

To this date, not one of the promised Peachy Printers has shipped, and it's not clear if they ever will. According to Grayston, the company made it to "nearly 70 percent completion on our first run of 600 printers before we halted operations."

"I'm wondering how we can share our new house in Canada," one backer wrote on the Kickstarter page.