The second-most successful Indiegogo crowdfunding campaign in history is headed to court.
Entrepreneur Storm Sondors and his Sondors E-Bike have been sued by Agency 2.0, the PR firm that mounted the crowdfunding campaign.
The effort began with the aim of gaining investment in an affordable electric bicycle and raising $75,000. When the campaign ended, Sondors and Agency 2.0 had raised almost $5.5 million -- largely by peddling pre-sales of the E-Bike.
But Agency 2.0 has filed a Los Angeles Superior Court complaint alleging fraud, breach of contract, misrepresentation and more. Its chief operating officer said the agency hasn’t received any of its share of the money raised.
“Storm knows what he owes us, but he refuses to pay,” said Agency 2.0 COO Jonathan Chaupin.
The suit alleges that Sondors and his e-bike company wrote bad checks totaling $160,000, and failed to share any of the $524,000 Agency 2.0 claims it is due.
Agency 2.0, in the complaint, is asking to be paid “no less than $444,713.000 plus interest.”
Sondors, the complaint says, has already received as much as $3.4 million from Indiegogo, but refused to pay commissions due to Agency 2.0. Checks written in the amounts of $20,000, $50,000 and $90,000 all bounced, the suit says.
Sondors, reached by email in China, where he said he was overseeing construction of the electric bicycles, said his fundraising partners have been paid all that is due them, so far, and will be paid their fair share of the crowdfunding money at the appropriate time.
“Agency 2.0 has been paid (checks cleared) approximately $190,000 to date,” Sondors wrote. “The total amount due to Agency 2.0 has yet to be determined as the final accounting of and funding from the campaign has yet to be completed.”
Sondors, who in a Los Angeles Times profile discussed his struggles with a version of autism known as Asperger’s syndrome, said he hoped to “seek a reasonable resolution to the matter.”
Chaupin said Agency 2.0 would like nothing better, but wants its money.
To date, Chaupin said, Sondors has reimbursed Agency 2.0 $180,000 or $190,000 in marketing costs that were paid out of Agency 2.0 funds. But he has not paid his fundraising partners any of their share of the money raised in the Indiegogo campaign, Chaupin contended.
Chaupin said the experience is going to force his agency to rethink crowdfunding partnerships.
“In any business, there are people who won’t pay their fees,” he said. “We’re going to have to take more precautions in the future.”
Indiegogo, which typically collects a 4% fee for hosting a crowdfunding campaign, and dispenses the collected funds using a PayPal account, is not named in the suit.
An Indiegogo representative confirmed that more than $500,000 has already been disbursed to Sondors’ PayPal account but said it does not referee disagreements between fundraisers.
“This dispute between a campaigner and a third-party service provider has nothing to do with Indiegogo,” a company spokesperson said.
The Latvian-born Sondors, a former toy business tycoon, said he hit upon the idea of an electric bicycle while recovering from a sports injury. He saw a friend riding an electric-powered two-wheeler, and was dismayed to learn it cost $4,000. He decided to try to build an affordable e-bike, he said.
At the start of the Indiegogo campaign, that’s what he was selling. Future deliveries of the bicycles were promised to investors who were willing to pay $499 -- for an electric beach cruiser that, after the campaign, would cost $1,299 plus $200 shipping. For later investors, the price went up to $599. (Similar bikes often cost $2,500 or more.)
During the campaign, the company claimed, more than 6,000 units were sold. (Chaupin said that number has since risen to 10,000.) A total of $5.49 million has been raised.
Sondors has since left America for the Chinese city of Shenzhen. At the time of the campaign’s closing he said the first units would begin shipping in May. No bikes have been delivered to customers so far, a Sondors spokesperson said.
Chaupin said he hopes Sondors is being sincere when he says all his time and money are going into the production of the bicycles.
“We believe in Storm and we believe in his bicycle,” he said. “We have family and friends who bought bikes. People in our office bought bikes. But when are we going to get paid?”