Lily Robotics Raided by Police, May Substantiate Rumors of Fraud
BY Alan Perlman1 February 2017
Recently we wrote about Lily Robotics closing the day before the San Francisco District Attorney filed a lawsuit against them. Now there is news that Lily Robotics has been raided for a possible criminal investigation.
The original lawsuit filed by the San Francisco DA alleges Lily Robotics committed fraud by promoting a video that was actually shot with DJI and GoPro products, but claimed to be shot using Lily’s semi-autonomous drone. The video helped drum up $34 million in pre-sales, and generated huge buzz in the drone industry (also leading us to add Lily to our list of 70 Drone Companies to Watch last year), so the claim is a big one if in fact people were misled into pre-purchasing something that didn’t exist.
Here is the video (which has over 12 million views on YouTube):
Now the allegations made in the DA’s lawsuit seem like they may be further substantiated, with breaking news that Lily Robotics has been raided by the police to gather evidence for a potential criminal investigation.
The San Francisco police have not issued any details about the raid, and will not even confirm that it took place. We can only speculate that, if fraud was intentionally committed, there may be further evidence stored on computers and elsewhere at Lily Robotics that the police would like to investigate.
One point on which a criminal investigation could hinge is whether there were funds used inappropriately, or embezzled—it’s important to note that in addition to the $34 million of pre-sales, Lily had also raised over $14 million in startup funds, so if any of those funds are missing that could be another piece of this puzzle.
The San Francisco DA’s case against Lily was a consumer-protection civil suit, which could go after Lily’s assets but would not end up with anyone facing jail time. If a criminal investigation is launched as a result of evidence found in this raid, Lily personnel may in fact be facing charges that could put them behind bars.
Lily Robotics, which had managed to collect $34 million in pre-sales, sent out an email on Wednesday, January 11 announcing that they were closing shop and issuing refunds due to a cashflow problem. Basically, according to their email, they didn’t have the funds to actually build the drones that had been ordered by about 60,000 people.
The very next day, Thursday, January 12, the San Francisco DA filed his lawsuit. As we’ve written, the timing was incredibly suspicious, and led us to believe that Lily might actually be closing because they were being sued.
Part of the story was that an email had been discovered in which Lily’s CEO, Antoine Balaresque, wrote to the filmmaker who made the contentious promotional video:
“I am worried that a lens geek could study our images up close and detect the unique Gopro lens footprint. But I am just speculating here: I don’t know much about lenses but I think we should be extremely careful if we decide to lie publicly.”
According to an unnamed source for Forbes, the company who made the promotional video, CMI Productions, still has not been paid in full for its work.
Regarding refunds and whether they have actually started to be issued, the news is that users from North America, Europe, Asia and elsewhere have said they have received their reimbursements (this is according to a survey of 2,000 Lily customers conducted by Forbes on Facebook)
We’ll keep you posted as this story continues to unfold. We can only imagine that, if the raid surfaced anything, criminal charges will be the next step for San Francisco authorities.