AR Startup Skully Facing Lawsuit Alleging Fraud
Motorcycle helmet makers raised $2.45M in crowdfunding; now being sued by former bookkeeper.

📰 UPDATE 📰 Since we first published this story, Skully has been hit with a second lawsuit. This time from Flextronics, the manufacturer making the high-tech motorcycle helmets. It says Skully owes them more than $1 million. Read more about that story here.

Skully, a San Francisco startup that aimed to create an augmented reality motorcycle helmet with 180-degree vision, is facing a lawsuit alleging poor employee practices and “fraudulent” use of funds on last-minute plane tickets and strip clubs.

Former Skully executive assistant Isabelle Faithhauer, who undertook bookkeeping duties for Skully, said in the lawsuit that the two co-founders “intermingled personal funds with corporate funds and used the corporation as a tool to pay their personal expenses.”

These expenses included:

  • Personal groceries and restaurant bills
  • Lamborghini rental
  • Trips to Bermuda and then to Hawaii on 24 hours’ notice
  • $2,000 on a Déjà Vu strip club

The allegations stand out, even in a culture that celebrates zip lines over pools as a channel for coding creativity. If they’re true, Skully would be an egregious example of startup culture going awry after raising huge interest and funding; another being the rise and sudden decline of Zenefits.

The lawsuit also claims that Faithhauer was not paid due overtime, that one of the founders called her autistic son a “dog,” and that she was fired after taking one week’s approved vacation.

Skully received $2.45 million in crowdfunding from IndieGogo and $11.5 million in Series A funding from Intel and Walden Riverwood Ventures.

Skully now plans to file for Chapter 7 bankruptcy, according to CNN Money. Co-founder Marcus Weller said: “We plan to vigorously defend ourselves against these claims. We strongly believe we will be vindicated in the end.”

A full copy of the lawsuit is available on Scribd.com.

 

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