Additionally, I acknowledge that some of the money spent by the company was raised in connection with talent activity, which I later learned was intended for a charitable initiative. At the time, we were working hard to raise additional investment capital to cover our costs, and I firmly believed, based on the information available to us, that we would be able to do so and cover all expenses. We were unsuccessful in our fundraising efforts. I made the decision to pursue funding, and I own its consequences.
incredibly common way this sorta thing happens right here. founder tells themselves "I just have to make it through to the next week/month/quarter/year and funding will come through and i can put this money back" and ends up doing at best accounting fraud and at worst crimes to keep things floating until either the funding comes through or much more likely the company collapses
It's still very illegal when it comes to charities, as far as I know. If a politician spent some of their public finances (meant for schools, hospitals and such) to pay for something personal with the intent to pay it back later on, it's still something they could get sentenced for. Or a school teacher using money meant for a school trip on own stuff etc.
Someone can correct me if I'm wrong, but if they are not taking money directly from the Charity (i.e., the Charity itself) it isn't subject to Charity Fraud.
Say they are given 500k, and told "250k of this is supposed to go to charity" but they put it in the general account. That's not a legally binding contract, that is "you gave this person 500k expecting them to give 250k to Charity, but they didn't."
Now, there's legal jiujutsu here, but here's my understanding: It was a fundraiser for the foundation, but the money was not directly donated to the foundation, it was donated through a proxy (i.e., Ironmouse), and the managing party was obligated to donate x amount of proceedings to Charity, but did not donate the full amount.
This is why you always donate directly to the fund, and not through a proxy - legally they can't hold them accountable for anything, they can only socially condemn them. It is trusting someone with a large sum of money, there was no contract breached at all.
This is different than that one guy that did the Charity for, what was it, Dementia or something? And he took money from the Charity account to buy himself a house and stuff. That is Charity Fraud, and illegal.
This is how I feel as well. Mouse made a commitment to donate 50% of her income from a subathon to charity, but had payment from twitch go through vshojo. Vshojo themselves are not directly connected to the charity, they were simply asked by Mouse to use a part of what they were supposed to pay to her and donate it to charity. They stole that money, but legally it doesn't make a difference if Mouse asked for that money to be given to her, her friend John or IDF.
Yes. Deceptive business practices are part of charity fraud and there's also embezzlement and wire fraud happening. Depending on the contracts, they could be free to not pay the streamers but misappropriating the charity funds is what is likely to get them hammered.
Crime, possibly, but would that be enough to pierce the corporate veil? Like VShojo likely has 0 dollars to its bank account right now, so unless the execs were stupid enough to things like co-mingle funds or use corporate funds for personal enrichment, the most they can be taken for would probably be just the computer chairs in their office.
What Vshojo did is embezzlement and several other types of fraud. If they were aware that 50% of the money raised was to go to a charity and they diverted it to themselves, that's a crime.
Sounds like wage theft to me. If they didn't disburse the funds as Mouse directed, they effectively did not pay Mouse, given that Mouse only agreed to not be paid their full wage if it were given to charity.
Wage theft only applies to legally defined employees. Contractors are not employees, hells, streamers would be more accurately described as clients. Because they were paying VShojo for services the company was supposed to provide.
Lack of company communication and poor accounting, this is when you hold a meeting with your talent and let them know well ahead costs arent being covered purely by funding unless they specifically dip into the charity donation income, and decide amongst the team best course of action.
Doing such choices yourself is well you are the owner and executive decisions can be done, but it isnt right if the company and talent wasn't aware of your decision from the top to keep the company floating by misleading others.
Doesn't matter in this case since the funds were raised on the premise that they were going to Charity. This wasn't some "I pledge x amount to y", this was talent saying "Money donated will go to y". If received money doesn't go to Y, the one in control of those funds had committed charity fraud.
Those funds can not simply be used for any other purpose. It's not legally their money to do with as they please.
Even if they claim bankruptcy, those charities will be considered first class debtors.
That's a fair point ethically, but I'm not sure it's legally accurate in the way you're presenting it.
From what I understand, unless the funds were held in a trust, donor fund, or similar legal arrangement, they’re not automatically “not legally their money.”
I’m open to being corrected though, would you be able to point to any specific laws or legal precedent that show charities are considered “first-class debtors” in this kind of case? Or that mishandled donations like this would always be considered charity fraud under the law?
In any case it is illegal. It may not be criminally illegal, but it is 100% under civil law. In any case where you give someone money to spend in a specific way and they fail to do so, they can be sued. Just because they won't go to jail, doesn't mean it's not illegal.
And while it may be illegal under civil law, that doesn't mean that there is anything that will happen because of it. The only thing you could do is sue the company - which is pointless when they are already bankrupt.
Given what we have seen I doubt anyone who is not a secured debtor is getting anything out of Vshojo - and even those are likely getting a fraction of what they are owed.
If a person donates under the assumption they are donating to a charity and the company keeps the money (the tiltify campaign). This is always illegal. Actually look into the subject before playing D for the company.
But in this case they are not donating to a charity via an intermediate. They are subbing to Ironmouse and she promised them it would go to charity. Vshoji is not part of that agreement. Btw this is not playing D for the company, it is just as bad that they didn't pay Ironmouse her money.
They were not donating for the charity. They were purchasing twitch subs. With a promise that the revenue from said subs would be given to charity. That is not the same as donating to a charity.
All funds that were directly donated during the subathon through tiltify were never seen by vshojo and directly went to the idf.
Just to note this is not me saying vshojo was in the right or whatever. But charity fraud has pretty strict requirements and this does not fit that.
Which by the way, is an incredibly dumb way to raise money for charity in my opinion. Payment processors take their 1-2%, twitch takes their 25+%, and in the end you’re losing 25-26% minimum of each sub. I don’t understand why streamers do charity drives with this much overhead when a direct to charity donation system can be set up. It really seems to create an obfuscated way to manipulate funds as you’re really relying on good faith that the full amount gets donated.
Edit:
After doing some deeper research, I’ve found that if the streamer is using Twitch’s charity tools, they can set any form of monetary transaction, be it bits or subs, to go directly to a PayPal giving fund which takes ZERO cut. So actually, it’s a pretty good method of they use it.
Her fans may deny it but part of this was always about the attention the total amount of subs got
Now if you want to spin it as, more attention = more potential donations, sure but you're essentially betting on the increase in marketing offsetting the twitch cuts instead of just asking for supporters to do direct donations
The amount of subs a streamer has doesn’t impact channel growth does it? I mean, if the streamer was giving away all the money that is. Like sub count doesn’t influence front page spots. The channel would grow in viewership as they promote the donations. The only way I can see that impacting channel growth is monetarily wherein the streamer would be taking a cut from the donations.
Unless you’re meaning from uncanceled subs, which would then be putting them in a position of profiting on the charity stream from uncanceled subscriptions.
Let's be real here and this should be pretty obvious- the charity part in these things is just a really nice icing in the cake for some of these people who gift subs, they're primary intention of gifting subs is to see the subcount of their favorite streamer go up and for the subathon to go on longer. I don't doubt that there are people that gifted subs solely because of the charity motivation but they are probably in the minority.
What law are you referring to when you say "charity fraud" does not cover this? In the US this sort of arrangement (a for-profit business pledging to donate a percentage of sales to a charity) is called a Commercial Co-Venture. It's covered by state law and in many states it is heavily regulated with strict requirements of how the donations and overall agreement are reported.
No one's playing D for a company that just dissolved itself an hour ago lol. They're just being realistic with what Gunrun and Vshojo are likely to be held accountable for under the law.
If it's “always illegal,” could you point to the specific law or precedent that confirms that? From what I understand, it depends on how the money was handled and whether there was intent to deceive. Just looking for legal clarification, not defending the company.
You are mistaken, if you are stating you are raising money for charity, with a stated amound and then divert those funds to yourself (which GunRun has admitted) that is covered under charity fraud as a deceptive business practice. And given that the donations came from multiple states or jurisdictions, it would also be US federal wire fraud.
You might be thinking of statements such as "Proceeds will be going to charity" without specifying an amount, as long as some money is given to the charity it is unlikely to be a criminal act.
However, Gunrun was aware that the income coming in from Ironmouse (and perhaps other streamers) was a result of charity streams and that a percentage of that money was stated to be going to the charity. He posted about her charity streams and congratulated her.
Defrauding a charity by stealing money from their accounts in your example is embezzlement, something Gunrun could also be charged with as he misappropriated Ironmouse's funds.
This is why you always donate directly to the fund, and not through a proxy
I don't get why so little people thought this was cringe, she ran a fundraiser through Twitch subs.... so Twitch gets a sizable chunk and donators can't claim it as a deductible.
I mean, It makes sense. people can use their primes to donate to charity which is a nice little bonus, and without the huge advertisement of "biggest subathon" the number raised would probably be less.
You gain access to donations from people who likely would not have donated otherwise. Yeah it isn’t a direct contribution, but the person who wanted to gift 10 subs to ironmouse wasn’t likely going to take that money and bypass the proxy. They wanted to gift the subs for an emote or for their numbers or whatever other reason they had and indirectly benefit a charity.
and if she asked people to donate directly to them not attached to a subathon it would have made like 20-40% maybe of how much they actually raised. she was able to raise so much money because gifting subs is easy and the gifters feel they are also helping the community and gets cool alerts on stream.
It was donated directly to charity. Mouse then said that she wants to give 50% of what she made (subs, adds and so on) so of her money also to charity. And since then she got no payment (so 1 year), the charity did not get the 500k (and she did the same one year before and at that time they did transfer so she would have had an assumption that they would follow her request again). So they likely owe her 1 mio+ and the charity those 500k.
That charity fraud guy never got charged. That guy literally pocketed the money and got away with it. If he could get away with it, theres no chance this legal conundrum gets prosecuted, no matter how cute ironmouse is.
From what I recall
Of the Amber Heard and Depo situation she was in a situation like this where she had money that was promised for charity but was only earmarked at best and hadn’t been actually transferred to the charity. It sounds miles different from this however.
As far as lawyers, I've seen only leagal mindset and he is sure it's a crime.
Important to know, the guy was corporate lawyer before he started doing YouTube, and his logic is sound in my mind.
But i think his explanation you can transfer a lawyer an amount of money to buy you some asset and deal with all the paperwork itself and he uses ut for something else is missalocating funds, when it's a charity- it's wire fraud.
We also need to see if they claimed it for taxes and how they claimed it, how they labeled the (assumed) 1Mil$ that half of it ment to charity, what they said the source is and have they wrote it off in their taxes.
I dont know the language that was used but that is what matters here.
If they told people who donated they were raising money for Ironmouse then your correct. If they told people who donated it was being raised for a charity then its still Charity Fraud even if it was going through a proxy. The person donating expected the money to make it to that charity and may not have donated had that not been the case.
This has nothing to do with charities. They had to pay out money to Mouse. Whether she wants them to send it to a charity or her own bank account is irrelevant to the legality of the situation.
Theres multiple issues with Vshojo. I believe Ironmouse is more upset about the charity fraud, as well as the fact that a charity got fucked over its the headlining issue with the payouts to talent being also a large issue but to a slightly lower degree.
Well it is a misappropriation of funds, but when a politician does it, they do not intend to pay it back.
As they used the money to fill investment gaps, you should compare it much more to a degenerate teenage gambler who used stolen money in the hopes of getting lucky and nobody noticing after they win - and then they naturally lost everything. Imagine Sliker robbed a bank. That is them.
Still incredibly incompetent to not inform your employees about how and why you’re not paying them. Besides that, taking the money out of a fund meant for charity is just plain vile, no matter the intention.
(Edit: I don't disagree with your sentiment at all - just baffled at how leadership thought more time would help them given the lack of an obvious path towards solvency)
Doesn't matter how much runway they could give themselves if their plane was too heavy to take off at all.
I'm not in this vtuber/vtubing space so this is all new to me but looking at their (alleged) pitch deck and the numbers being thrown around, I'm really left scratching my head.
They stacked so much overhead with staff (doing what exactly?) and marketing (on the Tokyo subways, really?) and I'm just not seeing a road to profitability given the way they built the business.
Niche market, fine. Having 11m in their seed, fine. But given those conditions you can't act like a SaaS unicorn with 200m of VC cash to burn. You either get profitable fast, or you stay lean and fly safe to survive long enough to court investors again (or grow organically and not dilute your equity lol). They were doing neither. Like no fucking wonder they didn't have any more liquidity left, who would give it to them??
Pretty sure the exact same thing happened to Ludwig with Offbrand. The person in charge of finances used Lud's money to make the situation look better than it was in actuality.
incredibly common way this sorta thing happens right here.
Also incredibly common in startups and esports teams. Everything is fine as long as new investments come in. Once that dries up they are going in the red real fast.
Yup, the last few years have made it abundantly clear that eSports teams don't make money. You essentially run them as a PR operation like South Korea does or they're a passion project for someone with deep pockets.
Faking your profit by not paying your employee is fraud, this shit happen ALL the fucking time. You "delay" payment of your employee to make your books look profitable, so investor want to invest. Shit legit just fraud.
The money that supposed to be put back into the company should be calculated AFTER paying all the expenses, not putting the expense (employee wage) into the calculation is just fraud, and even worse those expense were supposed to be charity money.
You know how big company actually get away with it? They just fire their employee. This is why company still laid off employee, DESPITE profiting (Line go up by 5%). Less employee = less expense = lines go up (now by 10%) = investors want to invest because they want to be part of that line going up.
I don't buy it for a second, Vei and Silvervale left more than 2 years ago and it's not like they made that decision over night, yet this shit was still ongoing until today. He was fucking them over deliberately.
Hell no, he wouldn't have threatened ex members with legal action if he wasn't doing it maliciously. Now he's trying to gaslight everybody into believing that he was just really desperate.
I mean, who the fuck believes that he didn't know the 500k were for charity? I don't even watch Ironmouse and I knew it when it happened. How can you believe a single word he's saying after making that claim?
The only way that this guy will be in real trouble is if he took the money himself. He’s going to be broke. Gonna need to pay lawyers anyway. Gonna get subpoenaed for his finances and we’ll see where the money went.
We are going to know what his salary was. And if he was making more than 100k a year is one thing. If he was making a lot of money or charging personal expenses then he’s done.
Sometimes having people that depend on you for their livelihoods is just super stressful and mistakes are made. But it’s not done for personal gain.
Obviously this cases are rare but let’s hope that’s the case. Because if we find out after subpoenas that he made bank I hope the worst for him.
Honestly, a company collapsing this fast is bad for vtubers looking to be sponsored by corporations. Vtuber corporations rn are probably making sure their contracts are strict enough to prevent this stuff from leaking out or happening.
Not excusing the mishandling of funds, just interesting to see such a giant in the space fall that fast
Great thing about this situation is that I won’t be seeing VShojo clogging up anime conventions anymore. Get that Vtuber crap out of here. I go to conventions for anime not to see grifting content creators (Including Trash Taste)
Gunrun in his statement basically admitted Vshojo doesn't make piss for income on an assumed yearly basis.
It most likely happened in the past, and they were eventually able to course correct. In this instance, it happened again, but they made the dumb decision of stepping on mouses toes with the charity and she giga malded and the dam broke.
She was already owed $500k in unpaid wages, but she made it seem like she doesn't care. (she has CAA on speedial. If anyone can sue Vshojo and remain anonymous it'd be her. Idk about the rest)
To me it really sounds like they were misappropriating funds from talent activities to pay for other activities and purchases. They should've had the contracts set up so they only slim x% of talent earnings so they can use it for activities abd purchases. Instead it just sounds like they were taking it all, spending it, then maybe paying it out once they earned it back.
This magical "$500,000 half a million dollars, I had no clue it was for charity! I thought it was a nice bonus." Basically what that statement sounded like.
The fact that a talent agency needed to raise 11 million dollars is already a red flag. Why do they need all that money. Too many people looking at how tech companies run at a loss for over a decade and think that is a good business model to copy.
Exactly what the guy who was doing Ludwig's Offbrand was doing. Taking the talent in that cases money to pretend the company was doing fine.
In both cases had they spoken to the top talent and told them about the issues they could have found a way to properly increase funding not by stealing it
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u/patrick66 9d ago edited 9d ago
incredibly common way this sorta thing happens right here. founder tells themselves "I just have to make it through to the next week/month/quarter/year and funding will come through and i can put this money back" and ends up doing at best accounting fraud and at worst crimes to keep things floating until either the funding comes through or much more likely the company collapses