Lawsuit Against Stratasys Claims MakerBot Knew Of Faulty Smart Extruders, Misled Investors

Late last year 3DPrint.com received anonymous information from a MakerBot employee upset about the way in which the company had been handling problems involving their Smart Extruder. The anonymous employee, whose anger was sparked by a special meeting in April of last year, provided us information as a way to reach out to the general public.

“This meeting took place Sunday 4/13/14 and was an attempt to understand the problems plaguing the project,” our source stated at the time. “But the bottom line is that [the] product shipped in spite of the known hardware problems. It makes me sick to know we did this to customers. Even I could not get [the extruders] to work. Another great example of corporate greed winning out over great products.”

According to our source at the time, the return rate of the Smart Extruduers were a dismal 80% when they initially shipped. Although, since that time, the company has in fact made several improvements to their extruders, which has drastically reduced this return rate, shareholders of Stratasys, the parent company of MakerBot are not happy campers. In fact, they want the company and officers to pay for, not only misleading their customers, but also misleading their shareholders by knowingly putting a faulty product into the marketplace.

Through a class action lawsuit, filed on July 1, investors who believe they had purchased the stock after shares had been “artificially inflated during the Class Period,” are looking to cover at least some of their financial losses. In the suit, the plaintiffs name Stratasys (NASDAQ: SSYS) along with their CEO David Reis, CFO and COO Erez Simha, and MakerBot’s former CEO’s Bre Pettis and Jennifer Lawton as defendants. While there has been talk about a class action suit since early February, little was known that the plaintiffs would bring the Smart Extruder fiasco into the mix.

“Following the meeting, the MakerBot employee walked into the meeting room and found a diagram on a whiteboard describing a multitude of serious problems related to the Smart Extruders, which remained on the whiteboard for days… As evidenced by photos of the whiteboard, which were obtained by 3DPrint.com,” claims the lawsuit.

 

In fact, we were provided images of this particular whiteboard, many of which we did post at the time of the initial article. We agreed to remove the images from the story once CEO at the time, Jenny Lawton, decided to officially respond with comments of her own on the situation. As the lawsuit claims, the images appeared to show that employees may have been working on issues involving the smart extruder, pointing to the fact that MakerBot was aware of the situation.  At the same time though, the entire story of what went on behind the scenes at MakerBot isn’t fully known.

Those who purchased the supposedly faulty products, are not included as plaintiffs in this suit.  Investors believe, however, that the Smart Extruder mess was covered up by the company from both themselves and customers alike. The suit claims that a former 3D printing specialist at the company, during the the time of the Smart Extruder fiasco, witnessed both Pettis and Lawton telling investors who were visiting one of the company’s ‘Botfarms” that the objects which were inside of numerous printers had just completed printing.  This specialist debates this, saying that those machines might not have even been in working order, and the products inside may have been printed days ago on other machines.

These are all allegations which will need to be proven in the court of law. It’s clear that MakerBot is trying to move forward, away from their past. Many of those responsible for the actions being questioned here are no longer with the company, but ultimately Stratasys will be held responsible should these allegations prove true. The complete 116-page lawsuit along with numerous images that we first published late last year can be found here (courtesy of Adafruit).

Are you a Stratasys investor? Do you believe the company mislead investors? Let us know your thoughts in the Stratasys Class Action forum thread on 3DPB.com.