Skully smart helmet firm founders smacked with fraud lawsuit

The case alleges cash was spent on strippers and sports cars, rather than software.

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When Skully hit the crowdfunding scene, the company's idea for a smart motorcycle helmet, which implemented a 180-degree blindspot camera and augmented-reality display for additional road awareness, lit up investor interest.

Skully

The Skully smart motorcycle helmet firm has closed its doors, and now a lawsuit brought against the company may shed some light on what happened.

In what may be a prime example of egos destroying what could have been a superb business, Skully formally closed last week -- but a new lawsuit alleges that if money had not been used fraudulently, Skully could have had a very different fate.

According to the complaint (.PDF), filed in San Francisco by former employee Isabelle Faithhauer, the company's founders spent Kickstarter funds on everything from rent and moving expenses to restaurant meals and groceries, including a $13,000 Mai Tai, a Lamborghini rental during holidays, and $2,000 for a strip club.

The former accountant called the company a "sham" and alleged that corporate rules were ignored in favor of luxury goods for the founders, including expensive gadgets, motorcycles, and apartment rental for family members recorded as "corporate housing".

In addition, among the alleged fraudulent expenses were a payout of $80,000 to an unnamed cofounder (recorded as an official business trip to China), a first-class flight to Hawaii, thousands of dollars on paintings, and a limo rental, all of which Faithhauer claimed she was made to record as legitimate business expenses, but they were little more than examples of Skully acting as a "personal piggy bank" for founders Marcus and Mitchell Weller.

After complaining about the operation, the former bookkeeper was allegedly demoted and then eventually given the sack.

When Skully hit the crowdfunding scene, the company's idea for a smart motorcycle helmet, which implemented a 180-degree blindspot camera and augmented-reality display for additional road awareness, lit up investor interest. The company was able to raise almost $2.5 million through the Indiegogo crowdfunding platform, and by the time Skully closed, almost $15 million in investment had been secured through both crowdfunding and venture capital.

However, Skully officially ceased operations this month after the company's board kicked out the co-founders. The startup plans to file a Chapter 7 bankruptcy case within the next few weeks.

As a result, no refunds will be issued and no helmets shipped. Customers who pre-ordered the $1,450 helmet should receive notice from bankruptcy court and will need to file a claim. However, Skully says all assets are now held by creditors and the firm does not know if "there will be any distribution amounts available to unsecured creditors".

"Our team is devastated and deeply saddened that our valued partners, vendors, employees, and customers have been negatively affected by what has transpired," Skully said in a closing statement. "We realize there are many unanswered questions and that this is a very upsetting situation. We are truly sorry."

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