The Saskatoon founder of a 3D printer startup that raised more than $725,000 through crowdfunding says his company is out of money, and accused his former business partner of using more than $320,000 of the funding to build himself a house.
Peachy Printer's CEO and founder Rylan Grayston said he can no longer afford to proceed with his plans to ship 3D printers to his backers.
Grayston is accusing his former business partner, David Boe, of misappropriating funds that he used to build a house in Hudson Bay, Sask.
In a YouTube video released Tuesday, a man purporting to be Boe admits to misusing Kickstarter funds. Boe recently told the BBC, however, that the video was made "under duress."
In 2013, Rinnovated Design promised to deliver do-it-yourself 3D printer kits to its crowdfunding backers, in exchange for $100 contributions.
Rylan Grayston, CEO & Founder of Peachy Printers 20:41
The initial goal of raising $50,000 was quickly surpassed, with more than $725,000 being raised on Kickstarter and Indiegogo from backers around the world.
Crowdfunding allegedly misdirected
Grayston alleged the crowdfunding accounts were linked directly to Boe's personal chequing account. He claimed Boe took $324,716 earmarked for their company, Rinnovated Design, and spent it building a house.
The two men incorporated the business and set up a separate corporate account for Peachy Printer a month after the crowdfunding began.
Rylan Grayston shows the plastic parts used to build a 3D Peachy Printer. He said his company wants to ship the printers to its backers, but his former business partner has not delivered more than $200,000 of money raised on Kickstarter. (CBC)
"He made up a whole bunch of excuses as to why the money wasn't arriving into the corporate account," said Grayston. "A year into it, I was finally getting angry and just demanding that he send the money."
Boe appears to acknowledge the allegation in the YouTube video.
"I thought no one should ever have to know. It was — I made a mistake. I apologize and I'm trying to make it right and yeah, no one else, this is all my own doing," a man claiming to be Boe said in the video, speaking to Grayston.
"I would like to apologize to them, what I did was wrong. It has no bearing on what Peachy Printer company is. It's my decision and mine alone. It's hard, you know you lose a lot. I've lost a lot of trust over this, friendship. It's a bad situation I've put myself in."
Neither Boe nor his lawyer have responded to CBC's requests for comment. Boe told the BBC, however, that the video was filmed under duress.
Peachy Printer published the video on Tuesday, but Grayston said it was recorded on Dec. 10, 2014.
Co-founder resigned
Grayston claims that when he discovered the missing money, he gradually started to remove his partner's responsibilities as Peachy's financial manager. Boe resigned and sold Grayston his shares for $50. Grayston said the two men agreed on a repayment plan, and $111,000 was eventually repaid.
An additional $209,000 is still owing, Grayston said. The two men have not spoken in a year.
Boe worked as a heavy-duty mechanic in Fort McMurray, Alta., and was often away from Saskatchewan for lengthy periods of time, Grayston said.
"He owned half of Peachy Printer, and he was the one who set up the Kickstarter account," said Grayston, who admitted he was "naïve" and strapped for cash, when he turned to internet backers for help.
"Even if we had set things up quite a bit differently, Dave still had the power to take the money out of our corporate account," Grayston said.
Theft complaint filed
Grayston started laying off Peachy's eight employees last year, and has now moved the 3D printer company's operations into a basement suite.
Six months ago, Grayston filed a theft complaint with police in Saskatoon. Officers say they are investigating, but require more information from Peachy Printer before they can determine whether a criminal offence has occurred.
Meanwhile, backers are left without the printers they paid for.
"We have struggled to find another way to ship, even without this money. We've gone for government grants, we've talked to investors," said Grayston. "It is really disheartening to be sitting in this room full of parts and just not have the money to ship them out."
"It's horrible."
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