Restitution for Washington backers, civil penalties

SEATTLE — Attorney General Bob Ferguson today announced the successful conclusion of the first enforcement action in the nation against a crowdfunded project that didn’t follow through on its promise to backers.

King County Superior Court Commissioner Henry Judson ordered Edward J. Polchlopek III, otherwise known as Ed Nash, and his company, Altius Management, to pay $54,851 as a result of the 2012 “Asylum Playing Cards” Kickstarter campaign.

The court ordered a total of $668 in restitution for the 31 Washington state backers, $31,000 in civil penalties for violating the state Consumer Protection Act ($1,000 per violation), and $23,183 to cover the costs and fees involved in bringing the case.

“Washington state will not tolerate crowdfunding theft,” said Ferguson. “If you accept money from consumers, and don’t follow through on your obligations, my office will hold you accountable.”

Crowdfunding can be a positive way to secure financing for initiatives directly from a diverse pool of backers who generally provide small amounts of financial support. Crowdfunding campaigns have supported a broad range of initiatives from movie-making to high-tech gadgets to charitable giving.

In 2012, the Asylum Playing Cards campaign raised $25,146 from 810 backers, including 31 from Washington state. Polchlopek claimed his company would print and market a deck of cards and other items featuring artwork created by a Serbian artist.

Project backers were promised the playing cards and other rewards with an estimated delivery date of December 2012. The project was not completed and none of the backers received any of the promised items or any refunds. Additionally, the company has not communicated with its backers since July 2013.

Kickstarter’s terms of use make clear that companies are legally obligated to fulfill the promised rewards or provide consumer refunds. On the website it states: “When a project is successfully funded, the creator must complete the project and fulfill each reward. Once a creator has done so, they’ve satisfied their obligation to their backers.”

The Attorney General’s Office filed its first-of-its-kind lawsuit April 30, 2014.

The AGO filed this lawsuit on behalf of Washington state consumers under the state Consumer Protection Act. Affected consumers from other states are encouraged to file a complaint with their state attorney general to seek restitution.

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The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Attorney General Bob Ferguson is working hard to protect consumers and seniors against fraud, keep our communities safe, protect our environment and stand up for our veterans. Visit www.atg.wa.gov to learn more.

Contact:

Peter Lavallee, Communications Director, (360) 586-0725; PeterL@atg.wa.gov