AUSTIN, Texas — The State of Texas has filed a lawsuit against a backpack company after it reportedly used a crowdfunding scheme to deceive consumers, according to the office of Attorney General Ken Paxton's office.
The lawsuit filed by his office is seeking a permanent injunction preventing Douglas W. Monahan and his company, iBackPack of Texas, LLC, from participating in deceptive crowdfunding schemes in violation of the State of Texas' Deceptive Trade Practices Act.
A press release from Paxton's office states that, beginning in 2015, Monahan and his company raised more than $800,000 from consumers through four crowdfunding campaigns on Indiegogo.com and Kickstarter.com. It states that Monahan falsely led backers of the campaigns to believe their donations would be used to develop several products, including a state-of-the-art backpack called the iBackPack. However, Monahan failed to deliver on any of those promises and allegedly used all the funds for himself.
“While Kickstarter and other crowdfunding sites create exciting opportunities for entrepreneurship, they also provide new ways for scam artists to take advantage of consumers’ trust,” Attorney General Paxton said. “I’m pleased that the Consumer Protection Division of my office took action to shut down an unscrupulous individual whose crowdfunding projects produced nothing but self-enrichment.”
The company's campaign pages reportedly displayed a list of technological capabilities for the iBackPack, along with graphics of a supposed prototype. Those pages also featured the logos of several telecommunication companies, two federal agencies, and Apple and Android mobile operating systems, though Paxton's office says the company shows no evidence it had any legitimate ties to the entities.
The attorney general's lawsuit, which was filed in the state District Court in Travis County, seeks restitution for aggrieved consumers, civil penalties and attorney's fees. The Federal Trade Commission also filed suit against Monahan and his company on Monday.
This story will be updated once received once a statement is received from Monahan.
You can view the State of Texas' lawsuit here.
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