You might have noticed that TechHive has dialed way back on the number of crowd-funding campaigns that it covers. The ones we do report on must be especially noteworthy and credible. After this reporter saw a working protoype of the FitNatic Nourish—a countertop device that analyzes personal data and spits out powdered supplement blends tailored to your lifestyle—my editor decided it met that standard.

Earlier today, FitNatic cofounder and CEO Stephen Lamarre announced on Indiegogo that after “a thorough investigation to reveal the facts and decipher all of the lies,” FitNatic was “severing ties” with team members Aldo Beqiraj and Jesse Caruso, postponing its Indiegogo campaign, and issuing immediate refunds to everyone who had contributed.

Wha’ happened?

Two weeks after FitNatic’s Indiegogo campaign went live, a Reddit thread popped up questioning the integrity of FitNatic co-founders Aldo Beqiraj and Stephen Lamarre. The thread lists five recent crowdfunding campaigns that Beqiraj and Lamarre have been associated with—all of which were successfully funded, but thus far have failed to deliver any products.

'[Beqiraj's] plan was to get the project overfunded and then deliver as cheaply as possible.'

The most notable of these campaigns is for Bringrr, a car charger that alerts you (via low-energy Bluetooth tags) if you’re missing important items, such as your phone or your wallet. In early 2014, Bringrr, which was started by Beqiraj, brought in more than $150,000 in two separate campaigns (one on Kickstarter and one on Indiegogo), but it has yet to deliver any products or rewards to its backers. Beqiraj, in the meantime, was ousted as CEO in October 2014.

The working protoype of the FitNatic Nourish uses this very large color touch-screen for its user interface.Too good to be true for a $500 supplement dispenser?

Other unfinished projects associated with Beqiraj and Lamarre are Grab a Bite, which was successfully funded on Indiegogo for $10,134 in August 2013 (Beqiraj’s LinkedIn page lists him as CEO and Founder of that company); SmartWallet, which was successfully funded on Kickstarter for $36,237 in September 2014 and then on Indiegogo for $11,568 in January 2015; Jookbox, which was successfully funded on Kickstarter for $40,542 in November 2014 and then on Indiegogo for $17,321 in February 215; and SkyTag, which was successfully funded on Indiegogo for $37,735 in July 2015. So far, it looks as though none of these campaigns have yielded any products for their backers.

Was FitNatic scamming crowd-funders?

Even projects with celebrity backers and working prototypes can fail to deliver, thanks to manufacturing problems, mismanagement of funds, or overly ambitious goals. But there might be more than that to the FitNatic story.

I spoke with someone who says they worked at a high level on several of Beqiraj’s and Lamarre’s failed projects. This source, who asked to remain anonymous, said that Beqiraj and Lamarre did plan to deliver products when they initially created their campaigns, but that they did not necessarily tell their backers the whole truth.

“For Bringrr, none of the work [Beqiraj] told people he was doing from scratch was actually from scratch,” my source said in a phone call. “He was buying parts on Alibaba and repurposing them—his plan was to get the project overfunded and then deliver as cheaply as possible.”

Bringrr, a car charger with disc-like tracking tags, has been in development since December 2013. Its backers are getting antsy.

When asked if Beqiraj and Lamarre were running a high-level scam, my source said “not exactly;” they didn’t start the campaigns simply to get money and then abscond with the funds. But they were better at talking big than getting down to business.

“[Beqiraj] was more interested in having a cool startup than getting work done,” my source said. “Lots of team building, partying, and drinking, but no work. The rest of us would come in every day, but he would only show up once in a while. I wanted to get the project finished, but he just wanted to feel like he was successful.” Beqiraj spent a lot of his backers’ money funding his own lavish lifestyle, according to my source, including a $9000/month penthouse apartment, a new Cadillac, and an all-expenses paid company trip to Bali for the Nourish launch.

If that’s true, it could spell legal trouble for Beqiraj. On June 11, the Federal Trade Commission took its first-ever action against a crowdfunding campaign, finding Erik Chevalier (creator of The Doom That Came to Atlantic City) guilty of deceptive representation and spending most of his backers’ money on rent, personal equipment, and licenses for a different project.

My source also mentioned that the impressive Nourish prototype I saw in Los Angeles cost more than $50,000 to build, with most of the funds coming from credit-card financing and funds from the founders’ previously funded campaigns.

When contacted for comment on this story earlier this week, a FitNatic representative responded with the vague statement: “FitNatic is currently investigating previous business histories and past performances surrounding the Reddit thread. We are in deep discussions with our legal team to resolve these issues in a timely manner. Update to follow Friday 8/21.” That update appears above.

FitNatic The FitNatic team celebrating on the island paradise of Bali.

Crowd funding is inherently risky

When you buy into a Kickstarter or Indiegogo campaign, you’re not buying a product—you’re not even pre-ordering it. You’re investing in a person or in a team, and hoping you’ll see a return on your investment. Crowd-funding on Kickstarter is an all-or-nothing affair. The creator establishes a financial goal and pledged funds are released from escrow only if that goal is met or exceeded.

That provides crowd-funders with a measure of protection: If not enough backers have as much faith in a project as you do, your pledge will be refunded at the end of the campaign. Indiegogo campaigns can work that way, too; or they can be set up as “flexible funding” campaigns. Under those rules, the team sponsoring the campaigns gets all the pledged funds whether or not they meet their goal.

But here’s a sobering fact: An entrepreneur—especially a first timer—is far more likely to fail than to succeed. Even well-established companies sometimes announce new products that they never manage to deliver: It’s called vaporware. The difference is that those companies don’t usually ask consumers to fund product development (although that’s changing).

FitNatic’s founders may have some open campaigns to their name, but they’re certainly not the first entrepreneurs to have successfully funded crowd-funding campaigns and then failed to deliver. Here are five other campaigns that were wildly successful at raising money, but not nearly as successful when it came to delivery.

Clang Don't let the participation of celebrities cloud your judgment. Neal Stephenson is a brilliant author, but his game-development project burned through more than $500,000 in crowd-sourced capital before it vaporized.

Clang

Celebrity cachet is no guarantee that a crowd-funding campaign will end up delivering a product. Clang was a sword-fighting adventure game conceived by award-winning American science-fiction author Neal Stephenson (Snowcrash, The Diamond Age,and most recently Seveneves ). In July 2012, Stephenson’s concept raised $526,125 and managed to produce a prototype game that was “technically innovative” but “not very fun to play,” according to Stephenson. In September 2014, Stephenson confirmed in a final update that the project was officially dead.

Yogventures

In May 2012, a group of YouTubers (“The Yogscast”), and their friends from Winterkewl Games created a Kickstarter project for Yogventures, an open-world sandbox multiplayer video game that piqued the interest of 13,647 backers who pledged $567,665 (more than twice the $250,000 goal). They released a beta version of the game on August 7, 2013, but a year later Winterkewl updated the Kickstarter page to announce that the partnership had dissolved and Winterkewl would no longer be working on the project. Meanwhile, the Yogscast updated backers via email with an apology, a confirmation that the project was dead, and a peace offering: access to TUG, a successfully-funded Kickstarter game that did deliver.

myIDkey Recognition from prominent organizations, such as these CES Innovation Awards, are no guarantee of success, either.

myIDkey

In March 2013, 3,927 backers pledged $473,333 to fund myIDkey: a neat little fingerprint-reading, voice-activated thumb drive that stored passwords and log-in information. myIDkey seemed like an excellent investment: Not only did Arkami, the tech company behind the gadget, have a working prototype, but that working prototype won three CES Innovations awards at CES 2013. On top of that, the company managed to raise another $3 million in capital from investors, so all signs should have pointed to a success. But after several redesigns and an investor syndicate that couldn’t agree on financing terms, myIDkey has yet to ship to more than a handful of backers.

Smarty Ring

In early 2014, the creators of Smarty Ring—a ‘smart’ ring that delivers notifications to your finger and doubles as a remote control for your smartphone—successfully overfunded their project not once, but twice. In December 2013, the Smarty Ring Indiegogo campaign raised $297,999 (745 percent of their $40,000 goal), and in March 2014, their second Indiegogo campaign raised $102,171 (20,434 percent of their $500 goal). But the project ran into some technical difficulties (something about short-circuiting LEDs), and their latest update states that backers should receive rings in a “couple of months.” Of course, that update was posted 8 months ago, and backers have yet to receive anything.

Kreyos

The Kreyos smartwatch is perhaps the most impressive Indiegogo failure to date. This campaign for a waterproof, voice- and gesture-controlled smartwatch with 7-day battery life, raised more than $1.5 million in August 2013, only to crash and burn a year later. Kreyos’ CEO insists that the project was not a scam, but rather a concept from a team with no smartwatch expertise that ran into manufacturing problems. While some of Kreyos’ backers have received their smartwatches, these watches have proved to be not at all what the campaign claimed (they’re not waterproof, they don’t have epic battery life, and many of the features are useless).

Should you participate in crowd-funding campaigns?

One of the great things about crowd funding is that it can remove one of the biggest obstacles to innovation: Convincing a few people who control great gobs of capital that a new product is worth making. Sometimes the wisdom of the crowd is smarter than the most successful venture capitalist.

But there will be plenty of times when it's not. Our advice: Approach a crowd-funding campaign the same way you would any other investment. Do your due diligence, and if you're convinced that it's a great idea, contribute only as much as you can afford to lose.