AG Paxton’s Office Files Lawsuit Against Operator of Crowdfunding Scheme

AUSTIN – Attorney General Ken Paxton today announced that the Consumer Protection Division of his office filed a lawsuit 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’s Deceptive Trade Practices Act.

Starting in 2015, Monahan and his company raised more than $800,000 from consumers through four crowdfunding campaigns on Indiegogo.com and Kickstarter.com. Monahan falsely led backers to believe their money would be used to develop several products, including a state-of-the-art backpack called the iBackPack. But Monahan failed to deliver on any of his promises, and instead used much of 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.”

Monahan used his company’s campaign web pages to display a laundry list of tech capabilities for the iBackPack, along with graphics of a supposed prototype. The campaign pages also featured the logos of several telecommunication companies, two federal agencies, and Apple and Android mobile operating systems, though there is no evidence that Monahan or his company had any legitimate ties to the entities.

The attorney general’s lawsuit – which was filed in state District Court in Travis County – seeks restitution for aggrieved consumers, civil penalties, and attorneys’ fees. The Federal Trade Commission today also filed suit against Monahan and iBackPack of Texas, LLC.

Crowdfunding typically involves individuals and businesses raising money for a project or venture from numerous individuals, usually via the internet. In many cases, consumers are enticed to make payments in exchange for the promise that they will receive the product once it’s manufactured.

Texans who believe they are victims of a scam can file an online complaint with the attorney general’s office at https://www.texasattorneygeneral.gov/consumer-protection/file-consumer-complaint.

View a copy of the lawsuit here.