The Kickstarter for the board game The Doom That Came to Atlantic City is infamous for being one of the first high-profile failures of the nascent crowd-funding scene. In July of 2013, the project’s lead, Erik Chevalier announced that he was ceasing development on the game, refunding everyone’s money, and closing up shop. Only a few people received refunds. As it turned out, Chevalier spent most of the money on personal bills including rent and moving expenses. Cryptozoic Entertainment swooped in and rescued the project, eventually producing and selling the finished game, but Chevalier never answered for his misrepresentations.
The Federal Trade Commission, in its first-ever case involving crowd-funding, has announced a legal settlement with Erik Chevalier. Although the $111,793.71 judgment is suspended due to Chevalier’s “inability to pay” the settlement represents a precedent that crowd-funding businesses will have to consider carefully. Kickstarters once carried virtually no legal risk to the creators, but that’s now changed. The sheriff has come to town.