What started off as an interview request ended up uncovering what could have been one of the bigger frauds to ever happen on Kickstarter.
On Thursday, Jason Cooper and Jay Armitage—filmmakers behind Kickstarted, an in-the-works documentary about the culture around the popular crowdfunding platform—published a post entitled "How We Uncovered Biggest Fraud in Kickstarter History." The lengthy blog entry explains in great detail how they inadvertently foiled the plans of a company called Magnus Fun, Inc. to defrauding Kickstarter backers of more than $120,000.
It all started a few weeks back when Cooper and Armitage reached out to Magnus Fun, Inc. in hopes of landing an interview for their film. The company's project of making and selling jerky from 100 percent Japanese, beer-fed Kobe beef was on the verge of exponentially surpassing its initial goal of $2,374.
After a several email exchanges, however, the filmmakers' suspicions began. For starters, when they asked someone from Magnus Fun, Inc. to respond to some questions via webcam, the latter responded by offering to submit footage of a supposed taste test recorded by a student filmmaker named Aaron Gerber.
These misgivings were further magnified by the fact that the people behind Magnus Fun, Inc. updated their Kickstarter page claiming that they were going to be featured in the documentary, something the filmmakers had never promised them.
The announcement resulted in multiple backers reaching out to Cooper and Armitage to verify if they had personally met anyone from Magnus Fun, Inc. Backers told the filmmakers that Magnus Fun wasn't providing sufficient project updates and that they had yet to disclose any concrete information on who they were. Even more red flags went up when questions about the origin of the Kobe beef—which is heavily regulated and tracked by the Japanese government—went unanswered.
The Kickstarted team soon discovered that the email address used to register Magnus Fun, Inc.'s website—firstname.lastname@example.org—was also used for the registration of Uhadme.com. A cached version of UHadMe.com has a contact page in which the site's owner is listed as Stanley Owens. Coincidentally, an individual by the name of Stanley Owens repeatedly attacked anyone who questioned the legitimacy of Magnus Fun Inc. on the project's comment section.
But what about the alleged taste tests that took place at events like South By Southwest or the Ink & Iron Festival? Those didn't happen either. Cooper and Armitage combed through various social networks, searching for confirmation that anyone had tasted the supposed jerky. They found nothing. The duo also contacted the organizers of the Ink & Iron Festival and discovered that Magnus Fun, Inc. was never a registered vendor.
The final headshot took place when Aaron Gerber, the student filmmaker who had supposedly filmed the initial footage to be used in the documentary, came forward. In an email exchange, Gerber told the Kickstarted team that he was approached by a man named Todd Scott. Scott paid Gerber $40 to record him reading from a script. At no point during the filming session was there any jerky involved. Once finished, Scott took the footage—filmed on a memory card—and disappeared.
All of these findings were more than enough evidence for Kickstarter to take action against Magnus Fun, Inc.'s project. With hours to go, the crowdfunding company suspended Kobe Red, saving 3,252 people from being defrauded of $120,309.
The incident is a great story of how two filmmakers followed the paper trail and exposed what would have been the second biggest scam to happen on Kickstarter—the biggest is Zioneyez, which successfully scammed backers of $344,000 in 2012.'
It's also yet another example of how the popular crowdfunding platform is ripe for scamming and how little Kickstarter has done to implement safeguards that would prevent fraudulent schemes like this one.
Photo via Magnus Fun, Inc./Kickstarter