Common Tread

Lawsuit accuses Skully co-founders of looting company

Aug 09, 2016

A lawsuit filed by a former bookkeeper at Skully helmets accuses the company co-founders of using "Skully corporate accounts as their personal 'piggy banks'" to rent an apartment, visit a strip club, rent a Lamborghini and buy two Dodge Vipers and four motorcycles, among other personal expenses. Skully raised nearly $2.4 million in an Indiegogo crowdfunding campaign, mostly from supporters who hoped to be among the first to get the company's high-tech helmets. It appears likely none of those investors will get their money back as the company has shut down. 

The lawsuit was filed in the Superior Court of California in San Francisco County by Isabelle Faithhauer. The lawsuit says she worked as an assistant to Skully co-founders Marcus and Mitchell Weller and was fired when she objected to fraudulent accounting practices.

In recent weeks, major investors in Skully ousted the Wellers from management and later shut down the company. An unsigned update posted by the company on Indiegogo on Friday says that helmets will not be shipped and the only recourse for consumers who supported the company through its crowdfunding campaign will be through bankruptcy proceedings. It's unlikely unsecured creditors like those who ordered helmets will get anything.

Skully AR-1
This was a prototype of the AR-1 helmet Skully promised it would produce. Image from Skully video.

According to the lawsuit, which seeks both compensation and punitive damages, Faithhauer was in charge of keeping the books at Skully and reported to the Weller brothers. The lawsuit lists numerous expenses she says were improper, including buying a Dodge Viper for Mitchell Weller and buying a replacement Viper after the first one was damaged in a crash; buying personal devices such as an iPhone, Apple Watch, GoPro camera and others; paying rent and cleaning for the Wellers' San Francisco apartments, as well as restaurant meals and grocery bills; personal travel to Florida and Hawaii; $2,345 for paintings; rental of a Lamborghini during a trip to Los Angeles; and other expenses she said were not proper business expenses.

The case is scheduled for a case management conference on Dec. 28. Attorneys for the Wellers are not yet on record.

Complete documents filed so far in the case can be accessed online at the court's website. The case number is 553270.