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How We Uncovered the Biggest Fraud in Kickstarter History

By Jason Cooper, Jay Armitage and team “Kickstarted”

A couple of weeks ago, we reached out to the project creators behind Kobe Red, a company that was raising funds to make 100% Japanese beer fed Kobe beef jerky. Their product sounded delicious and we were intrigued to hear more about their crowdfunding story for our documentary film, Kickstarted.  We thought these guys would make for a great interview. Plus, their project had massively exceeded it’s modest $2,374 goal, eventually reaching over $120,000 in pledges from 3,000 backers. However, after emailing back and forth with these guys, we started to get very suspicious about the legitimacy of Kobe Red. We decided to look more deeply into their operations and as a result helped to uncover what would have been the biggest fraud in Kickstarter’s history.

 

First a quick overview of the Kobe Red Beef Jerky scandal:

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The truth about fraud and crowdfunding

Most people new to crowdfunding assume that it's rife with fraud and scams. It makes some sense: people are giving money for projects that usually don't exist yet.

 

However, in practice there have been relatively few frauds on Kickstarter, IndieGoGo, RocketHub or any of the other major crowdfunding platforms. It's a testament to the effort these platforms put into project approval and oversight. In addition, the crowd also usually stops fraud before it gets too far. Our collective wisdom, more often than not, is enough to spot scams. We alert each other and then alert the community managers. It's a great system that we feel will keep crowdfunding fairly safe moving forward.


Still it's important to be diligent before backing a project. Here are a few questions you might want to ask yourself:

 

  • Do the project creators have a history in this space?

  • Does their goal seem reasonable for what they are attempting?

  • Is it clear that these project creators are who they say they are? Are they in the video and do they have social media connected to the page?

  • Do they respond to comments and questions?

 

 

It really only takes a little common sense. In the end, it's safer to wait something out if you don't feel it can be trusted. Or simply send them a note to clarify an issues you have. Most creators will take the time to respond.

Our first message to Magnus Fun, Inc., the creators of Kobe Red, was a simple interview request. We wanted to talk about their project as we’d done with dozens of other creators in the last few months.

We messaged back and forth for a couple of weeks, but nothing materialized. So instead, we’d asked them to answer a few questions via webcam for a video project we were putting together. Instead of doing that, the messaged us a few days later claiming to have shot something themselves at a recent taste test they held in Long Beach. They were going to edit the footage and send it to us to review.

 

It's important to clarify that we hadn’t seen the footage at all, and still haven't. We also had not in anyway agreed to use the footage or even to put Kobe Red in our film.

 

However, immediately after sending us that last message they made an update on the Kobe Red Kickstarter project page.  They said they had just enlisted a student filmmaker to record their latest taste test event and that the footage would be in our documentary. Again, this was misleading, as we had never promised any such thing. Additionally, many of their backers saw this post and assumed that we had actually filmed the Magnus team ourselves. We hadn’t, and had nothing to do with it. 

 

Soon after, we got a number of messages from Kobe Red backers asking us to verify whether or not Kobe Red was real and if we'd actually met them. It turns out the project creators already raised numerous red flags with their suspicious updates and lack of clear information.  People were becoming concerned about this project, despite the $120,000 that had been pledged to it. As a result, we started a full-scale investigation of Kobe Red and the creators behind. Here is shortened rundown of some of the indicators of fraud we discovered over those next 24 hours:

 

 

Of those Kobe Red defenders, Stanley Owens was the most vocal. He trolled anyone that even slightly questioned this project. So we looked him up and that’s when things got really interesting…

 

You see Magnus Fun, Inc, which as far as we can tell is not a California registered company, has a website. It’s crappy, but it’s there nonetheless. The email address used to register the site, magnustimes@gmail.com, was also used to register another site, Uhadme.com. That site is down, but we found a cached version on which there was a contact page. It included the owner's name and address: a Mr. Stanley Owens of Clark St in Chicago.  After more research, it was clear that this Stanley Owens was the same Stanley Owens attacking people on the Kobe Red comment board. Of course, he never admitted having anything to do with the project, despite being the person to register the Magnus Fun web site.

 

When we looked up the information for the Amazon account associated with Magnus Fun, Inc. The name on that account is Desjon Allen.  Mr. Allen had used the same Clark St. address as Mr. Owens. At this point, it became very clear that if this wasn’t an outright scam, it was at least a major misrepresentation. These people were cahoots and working together to fool backers on Kickstarter.

 

From there we went even further. The Magnus Fun team (which could expand well beyond Desjon Allen and Stanley Owens) claims to have conducted taste tests on a number of occasions including at SXSW in March, in Boston on May 26th and in Long Beach this past June 8th at the Ink & Iron Festival. There is no social media or search evidence that these guys were ever passing out free jerky. I suppose that’s a coincidence we could have ignored (although if someone is passing out free samples of the ‘best jerky in the world,’ you’d think at least one person would tweet about it). However, we looked deeper and called the operators of the Ink & Iron Festival. Kobe Red was not on the premises on June 8th or on any other day during the festival. They would have had to register as a vendor –and they didn’t.  It’s also very unlikely that they would have been able to pass out the jerky in the parking lot or secretly in the event. There were over 60 security guards on staff looking for such issues. More interesting from our end is that this is the event Magnus Fun claimed to have filmed when making the video to send to us. Evidently that never happened. 

 

More on the reported video the shot:  the student filmmaker they alleged to have hired, Aaron Gerber, didn't seem to exist. That is until a few hours ago when someone named Aaron Gerber contacted us via Kickstarter. He refused to confirm his identity, so I can't say whether or not he is who is says he is. Still, he told us that he was hired to film a man named Todd Scott. This man had paid him $40 to film him and mentioned that it was about beef jerky. He also claimed that Mr. Scott brought his own memory card and that he doesn't have any of the footage. We are dubious about all of these facts and are looking into them in more detail.

 

There are dozens of other smaller inconsistencies and fishy elements. However, at this point it's clear that Kobe Red Beef Jerky was the biggest outright scam in Kickstarter history. As we began to post some of these details this morning (ed. note: June 13th), the team at Kickstarter entered the picture. They suspended with less than an hour to spare, thanks to the ongoing message board discussion and suspicions of ourselves and other backers. Magnus Fun, your good times are over. 

 

Thankfully, these guys were stopped before any money changed hands. It's a credit to Kickstarter and the collective power of the crowd to identify fraud. It's great to see the crowdfunding system protect itself and stop fraud before it starts. We can't expect Kickstarter, or any platform, to catch every would be scammer, and this is a good example of how the community works to back them up.

We’re not done with this story. We will be following up on a number of leads we have related to the Magnus Fun people and reporting more on this story as it develops. However, we can't do it without your help.  We’ve been documenting crowdfunding stories good and bad for our upcoming film, "Kickstarted."  Our film and digital content will share the personal stories of the crowdfunding revolution.  Please consider backing us on Kickstarter so that we can finish reporting on this story and bring you a great film to capture this incredible moment in history.