Fine Line Between Crowdfunding Fraud and Bad Business Judgment

Failed crowdfunding companies may come close to committing fraud.

Such is the story of Kanoa, the wireless earbud firm that displayed signs of failure at various stages, but no one person had all the facts to conclude that the company would never deliver on its promise.

The Mercury News summed it up: “The company missed deadline after deadline. Its manufacturer never had plans to make more than about two dozen of Kanoa’s high-tech wireless earphones — far fewer than customers had paid for. A contractor who helped design the earphones said the founder never let him test a working pair. And one of only two people known to finally get their hands on the headphones said they didn’t come close to working as advertised.”

Bad business judgment or criminal activity? Apparently, the California Attorney General is not pursuing the case and the entrepreneur just fled town.

About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at:
This entry was posted in accredited investor, balance, checkbook, Congress, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, fraud, Funding Portals, Investments, Jobs, Legislative Intent, SEC, technology, VC, Venture Capital and tagged , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.