I was kind of wondering when this would happen. For a very small investment you could mockup a slick iPhone gadget, make 10x your initial request of $100k and then take the money and run. Aside from the morality of it, I don't think there are many legal obstacles to this, especially if you made it seem like you were making a "good faith" effort up until you disappeared with the cash.

Perhaps Kickstarter could insist that projects account for their spending on the project? e.g. if you've raised $100k, you'd better be able to show that you spent that $100k in ways that are related to the project, and not on a shiny new car. This would form part of the contract between project & funders and could open the way to lawsuits if the project couldn't demonstrate reasonable use of the cash.

The mere threat of future legal problems would (hopefully) keep Kickstarters more honest, and would reassure funders, making them more likely to fund more stuff.

Are failed startup founders also stealing millions of VC money? KS is a risk-investment, not a preorder webshop.

But startup founders are accountable to the VCs. They have to provide updates and let the VCs know what it is they've been doing with the money. If the KS project fails, it fails. But to not provide some sort of update to backers is a serious problem.

Yes, this was my main point here. It's difficult to get that across without writing an entire article for context, and now that ycombinator mods have edited the title its even less clear.

The founders of this project did little more than sign on once in a while to say "its not ready yet, but should be ready soon". Now they've disappeared and there's no accountability for all that money. As an investor, I would at least like to learn from this experience and see where it went wrong and what could have done better. Instead the only lesson I can take away from this is don't trust strangers on the internet.

It's always sad when scam artists are rewarded.