State files first consumer suit concerning crowd funding

Staff writerMay 1, 2014 

Sometimes, Kickstarter delivers a kick in the pants.

Washington State Attorney General Bob Ferguson on Thursday filed the first consumer protection lawsuit in the nation involving crowd funding.

The lawsuit alleges Edward J. Polchlepek III, otherwise known as Ed Nash, and his company, Altius Management, operated the Asylum Playing Cards crowd-funding campaign in 2012 through Kickstarter.

Using the online service, consumers who backed the proposed project made a financial pledge in exchange for an agreed upon product or “reward” the project was legally required to deliver.

Neither Polchlepek, Nash nor Altius seem to have delivered, although 810 backers donated $25,146 to the successful campaign. At least 31 donors were from Washington.

Crowd funding is a way for people to secure financing for their initiatives directly from a large pool of backers who generally provide small amounts of financial support, according to the attorney general’s office.

Crowd-funding campaigns benefit a broad range of initiatives from movie-making to high-tech gadgets to charitable giving. Several South Sound projects, including movie theaters, have received Kickstarter funds.

In this case, consumers pledged funds in exchange for decks of playing cards featuring a retro-horror theme and other similar items. The lawsuit alleges Polchlepek and Altius took consumers’ money and failed to deliver the promised playing cards and other rewards.

A call to Altius headquarters in Tennessee was not returned Thursday.

“Consumers need to be aware that crowd funding is not without risk,” Ferguson said. “This lawsuit sends a clear message to people seeking the public’s money: Washington state will not tolerate crowd-funding theft. The Attorney General’s Office will hold those accountable who don’t play by the rules.”

The lawsuit alleges that project backers were promised the playing cards and other rewards with an estimated delivery date of December 2012. To date, the project has not been completed and none of the backers has received any of the promised items or any refunds.

Additionally, according to the suit, the company has not communicated with its backers since July 2013.

The complaint seeks restitution for consumers; as much as $2,000 per violation of the Consumer Protection Act in civil penalties; and reimbursement of the state’s costs and attorneys’ fees for bringing the suit.

A copy of the complaint filed Thursday can be found at www.atg.wa.gov/uploadedFiles/AsylumComplaint%202014-05-01.pdf.

C.R. Roberts: 253-597-8535 c.r.roberts@thenewstribune.com

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