The Flying Colors Foundation (hereafter FCF) have been the subject of controversy over the last few days due to misleading claims of their goals and a lack of clarity to their operation that have caused many, myself included, to bring the entire organisation and their ability to function in to question. With these misleading claims and the amount of questions raised in regards to the organisation, this is completely understandable, and was the subject of my article, Is the Flying Colors Foundation a scam? — An Investigation. On Sunday, following on from this article I published regarding such issues, I received and published a statement from the group themselves which was also shared by FCF on Twitter. This attempted to tackle some of the questions raised by my article and some of the questions others had raised, and followed communication between myself and the foundation.
There are issues with this new statement however and further issues brought to light both from further research and the collection of certain pieces of evidence from people with prior contact with the organisation that bring to light damning indictments on how the company has and is being run, and bring in to question the business practices of the company.
I will mention that, as I have noted publicly in recent days, an interview had been planned with FCF. This had been scheduled for last night, but these plans were cancelled at the last minute. Discussions in this interview would have covered the points made in my article and reaction to the previous statement, and I would have also brought in questions that were related to some of the information.
With these things being said, it would be best to begin.
First of all I’d like to give a timeline of that outlines the complete history of FCF from the very beginning and foundation and the actions of the company from foundation to now, detailing the key events from then to now. By establishing this timeline in a way everyone can understand and collected all in one place, from that, discussing some of the later points I have should become easier. Some points will contradict the information provided by FCF in their statement and some of it will be new information collected since my previous article, and while I will not be embellishing on those points here, they will be explained throughout the article.
July 12th 2017 — Otaku Pin Club (hereafter OPC), a for-profit pin making company making anime-related pins and merchandise was filed for registration in California. At this point business operations started, and have continued to this day, though discussions for deals regarding the business occurred multiple months before this foundation and before documents were registered. The founder is Daniel Suh.
Beginning-to-mid-August 2017 — FCF is founded and initial actions are taken by the company to establish themselves. The founder is listed on documents filed later in November as Daniel Suh.
August 6th 2017 — Joey aka The Anime Man, releases a video about the top 100 anime as voted for by fans in Japan. Four days later, on August 10th, they make a video titled ‘I Need Your Help’, where they note that they’ve created a poll to ask the same of the Western audience as was asked with this video released on August 6th.
August 16th 2017 — As revealed in messages sent in a public Discord server, The Anime Man notes that a ‘data analyst’ will be helping with the review of the data collected within this Top 100 anime poll, which later transpires to have been FCF. This means that by this point The Anime Man was involved with FCF and their organisation.
Sometime in August 2017 — Gigguk also becomes involved with FCF, actually before The Anime Man and as the first affiliated influencer, as messages acquired note them saying they’ve been involved ‘since the beginning’, and the results video to The Anime Man’s top 100 anime poll credit Gigguk as introducing them to FCF at the 2:50 mark of the video. Direct communication with Gigguk also noted contact between themselves and FCF that came before involvement with The Anime Man and FCF.
September 2017 — Contact between various Japanese companies and FCF has occurred, which included a relationship with the Anime Dormitory Project that was made official, one which was seemingly confirmed via twitter on the 14th September. Between the time of the company being established at the beginning of August and going throughout August and September, contact was made and relationships established with all of the influencers listed in their press kit, except for akidearest.
September 24th 2017 — A meeting was had with an unknown party regarding the planned business strategy of the company, and the presentation used in the meeting was publicly released by FCF and can be found here. This establishes the connections with 5 of the 6 influencers, lists a team of 3 of the 6 listed employees on the press kit from March 2018 (there are issues with the number of total people involved that will be mentioned later) and lists a now-outdated plan to fund anime productions and create a new model for anime. It should be noted that even though this is no longer in the current plans of FCF, they had initially contacted influencers about this venture and mentioned these plans to them at this point of discussions. The following day an email sent from FCF to the party they met with confirms the meeting along with plans to help do things such as ‘establishing more revenue streams, working on a publication, or producing your own content’.
October 6th 2017 — The video announcing the results of the top 100 anime poll was released by The Anime Man on to YouTube was released, thanking FCF for their help in collaborating the data. FCF released this 12 page digital document on Issuu with details on the results.
October 23rd 2017 — FCF was further mentioned by Digibro in his video ’THERE IS TOO MUCH ANIME’, which gave them more of a public presence. While FCF in the remaining months before the census kept relatively quiet, there was some behind the scenes discussions, meetings and interviews that took place.
October 28th 2017 — An interview took place between multiple members of the Anime Youtube community as well as interested parties. These were between Francisco Lee and Daniel Suh from FCF and Joe from Pause and Select, Rido (@ridojiri), RogerSmith2004 and Kenji (@KenjiEngiSubs).
End of October 2017 — Meetings were taking place in Japan with Japanese companies, these meetings conducted with a female member of the board of directors, an entity separated from the team of 6 listed as being involved with the business on press information.
Beginning of November 2017 — A meeting was held regarding data between FCF and a Japanese company who would in the future be releasing a product and were interested in data from FCF. While I am aware of the company involved, I will not be sharing this information. This meeting was brought up in the aforementioned phone call.
November 16th 2017 — The company was officially registered on this date.
January 2018 — The company officially received their Public Charity status from the IRS.
March 1st 2018 — Public silence has been in effect between the publication of the Anime Poll and a tweet on this date noting a 15th March launch date for the Anime Census 2018. The site was also relaunched in to its current iteration on this date.
March 15th 2018 — The Anime Census launches.
March 23rd 2018 — My article critiquing FCF was released.
March 25th 2018 — FCF responded to this article with a statement.
Ok so with that, everyone reading this is up to date on the state of FCF, OPC, and the timeline of events and when certain things happened. I hinted with the release of the statement on twitter and next to the statement that I had a few issues with some of the things being said, so I’ll be mixing my critique of this with the new information provided to me.
The Employment Issue
First of all is the issue of involvement. This was something I brought up as a red flag at the beginning of my first article, due to the varying numbers of people being listed as employed or affiliated with the company. During the presentation in September 2017, we note 3 listed employees, these being Daniel Suh, Francisco Lee and Brian Li. As of the launch of the company in March 2018, we have 6 listed employees, the new names employed in the interim months being Patrick Stanley, Daniel Lee and Sydney Poniewaz. I made a note of the reference to Ian Condry in the Press Kit suggesting to a more substantial staffing situation than was being admitted by FCF, and in the statement they provided they noted that there are currently 7 people involved with FCF. In fact, their statement was quite explicit on this fact.
Aside from our influencer partners, there are six of us involved with Flying Colors Foundation. Ian Condry serves as an advisor and does not engage in the day to day operations. Including Ian Condry, we have a total of 7 people affiliated with FCF.
There is a slight issue with this statement, however.
The Number of People They Claim are Involved with FCF is False
There are many more than the 7 people publicly stated to be involved, and FCF have been deceptive on this matter.
As things currently stand, there is at least 1 other person involved in a serious capacity that has not been referred to on any documentation, that being the role of Esther Kwon. The services she provides for the company are as follows:
- Conduct outreach research by developing a contact information database
- Design and manage a campus outreach program to promote state-wide to universities in California
- Develop start-up business skills by reaching out to potential company influencers and transcribing video conference calls
She has been involved in some of the communication with potential partners of FCF and on various management activities for the foundation. This was something queried when the discussions took place at October where it was also commented on that the intern was unpaid, which, while this does match up with their comments of no one being paid for work with FCF as of yet, there are questions to be raised on this issue, from a legal standpoint.
There are federal laws that govern FCF that they would need to follow in regards to any interns that the company had that were unpaid, in order to justify the lack of pay being given to them. The full federal requirements for an unpaid internship to be deemed legal can be found here. To summarise these laws, an unpaid internship is legal as long as the intern understands they will not be paid, provides educational material that benefits the intern, it links with their formal educational program, respects academic commitments and is limited to the period of time that it is beneficial to the intern. The work must also compliment, not displace, a paid employees workload and there must be no guarantee of paid work at the end of the internship.
To fulfil the legal requirements of the unpaid internship laws, the internship would have to be relevant and work around the current degree taken. While the latter two points are met due to the lack of paid employment at FCF, and it is assumed they understand the lack of pay, questions do have to be raised as to whether the work involved in campus outreach that they’re involved with matches with these federal requirements, and whether, having been involved with the foundation for 7 months, the benefits of being involved with FCF have already been received and that the extended length of the internship therefore breaches federal requirements. There are further questions to be asked about the way the intern is referred to by FCF themselves within the October interview, interchanging it with a voluntary position similar to what they themselves are a part of despite the specific legal issues the title of intern implies.
While the employment is viewed as an internship and appears to officially be classified as such, they seem also to be unaware of exact internship laws, they refer to her employment under various terms including volunteer, which is separate in terms of responsibility and legal definition. When also noting the lack of awareness on whether they can grandfather IRS status in and what should be done in this regard, it is problematic. While separate, on top of this issue of internship there’s the claims that only 3 people are currently involved with FCF at this time, yet from the September presentation produced by FCF they not 3 employees, 1 of which does not refer to the intern, meaning Brian Li, the third name being mentioned in this presentation, is not being considered when citing this number. What does that mean Brian Li’s involvement with the company was at this point? And why, if this intern was as heavily involved as they claim, were they not referred to as a core member of the team at this or any point, or even given any public mention?
As a whole, questions would need to be raised as to whether the status of this unpaid intern does fulfil legal requirements.
Irrespective of this, however, it can clearly be seen that the current and continued involvement of Esther Kwon with FCF shows that the statement provided was false in their claims for the number of people who are involved with the company, just with the knowledge of this unpaid intern. It should be noted that questions extend further than just involving this intern, such as how many other people on top of these names are involved with the company.
So How Many People ARE Involved with FCF?
Trying to understand the exact structure of FCF and the nature of the work people involved with the company are partaking in is a question that is difficult to clearly answer. Within the press pack Ian Condry is listed as a member of the Board of Directors, a body of which the 6 named employees within this same press pack are not themselves a part of. The Board of Directors is a separate group of individuals who are advising and providing contacts to them in order to spearhead the aims of FCF. While there is no public list for a Board of Directors, and there are questions I still have as to whether my collected list of Directors is exhaustive, there are multiple new names with links to FCF.
Beth Kawasaki is one name provided in the interview as a member of the board of directors. She worked at Viz for 15 years and is mentioned as someone who was talking to clients in this context, suggesting that the board of directors are a group who are directly involved in the operations of FCF. Another would be Mutsumi Miyasaki, a former Vice President of Licensing at Viewster and previously involved with Global Communications and Events at Square Enix. A further academic referred to as Professor Earl, teaching entrepreneurship at USC Arts Centre, is mentioned by FCF. Alongside these three explicitly stated as members of the Board of Directors, there are also two more academics under the names of Courtney ‘Nuka’ Plante (a Postdoctoral Fellow at Iowa State University) and Professor Stephen Reysen (an Associate Professor at Texas A&M University-Commerce), who have both historically worked in academia researching fandom, the former also involved in considerable research regarding furries, brought up as having at least some involvement with FCF. An unnamed director was within Japan at the end of October regarding FCF conducting interviews, which may or may not be referring to Beth Kawasaki.
This creates a lot of new questions. Is this 6-name list of individuals who are involved as directors or interns with FCF an exhaustive list of everyone else involved with the group, or are here yet more names of individuals involved with FCF that haven’t been publicly shared. These individuals also appear to have varying degrees of involvement but at least some can be found to have significant roles in the company itself. Considering this point especially, why were these names not made public? Multiple of these individuals are conducting business in an official capacity for FCF yet they are listed as involved in other companies or within academia. More importantly, two of the individuals, Beth and Mutsumi, currently work at Lootcrate involved with things like brand and licensing. How much data are these individuals privy to? Even if the information is not directly shared with Lootcrate, if they have access to detailed statistical data through working with FCF, it is possibly they could implement it in to the decision process in their current job. It’s also once again important to note that it has not previously been public that these individuals are involved, despite the potential for conflicts of interest as has been noted by FCF themselves as being a potential issue.
To add to the confusion surrounding exactly how many people are involved in the company, the roles that people are listed as doing for the people that we know of are not entirely accurate. As noted within the October 28th interview and supported by my own personal conversations with FCF, the social media and PR channels of the company are not being managed in the way that would be expected based on the materials they’ve publicly released. On things such as the press kit for FCF, Sydney Poniewaz was listed as a Public Relations Director, yet based on discussions they’ve mostly handled work behind the scenes and haven’t handled public relations, nor have they actually been involved in any discussions I have personally had with FCF. As of March 26th, the press kit has been updated to list her role as simply a volunteer. This brings in to question the exact roles of the individuals involved and what their jobs are within FCF, whether the roles that the public are aware of each individual having are actually accurate when trying to discuss the responsibilities that they actually have within the company.
How is the Data That is Collected by FCF Handled?
Next I would like to discuss the nature of the data collection and the privacy laws that are being breached by FCF in the collection and handling of this data. Before I do so I’d like to redirect attention to the previous statements made by FCF regarding their handling of data.
The term ‘partners’ refers to any registered organizations or agencies that we collaborate with for research projects. Partners may be commercial entities, government agencies, or other non-profit organizations. To be contacted by our partners, participants in our surveys must actively provide consent. We neither share nor sell contact information to non-partners.
If participants do not opt-in for email contact, only survey responses will be shared with partners. We are selective about which responses we share and with whom. Since our surveys are anonymous, we do not collect or share personal identifiable information. Survey participation is voluntary and we do not distribute responses that may pose privacy issues.
They also noted:
FCF is committed to protecting the integrity and privacy of any survey responses we collect from anonymous participants. We are also extremely careful to comply with HIPAA regulations and general data privacy best practices.
Lastly, unlike commercial companies and other data collection companies, our non-profit organization does not track, collect, or keep any online data about participants apart from their voluntary responses to our surveys. FCF does not track IP addresses or any information that could be tied with personal identities. We operate out of consent and respect for privacy.
There are a few issues to be had here.
When it comes to HIPAA, FCF have noted that this mental health information will not be shared outside of FCF and will be used only statistically. If any identifying information is removed from the data provided to them when making this statistical analysis, this should be something that they are able to comply with providing the information collected about mental health is also stored safely. They claim it would not be shared outside of FCF.
A wider issue comes in regards to the claim that they don’t ‘track, collect, or keep any online data about participants apart from their voluntary responses to our surveys’ and that they don’t track an individuals IP address, and unfortunately this is not the case.
Furthermore, and more worrying, is the laws that as a company FCF are supposed to comply with yet are breaking.
All in all, despite claims by FCF that they are protecting consumers personal data, they are in violation of multiple federal and state-level legislation governing how they collect consumer data and also contradict themselves on what sort of data is collected.
How does Otaku Pin Club (OPC) link in to the FCF story?
Well, as the timeline at the beginning of this article states, OPC was founded as a company mere weeks before FCF was started in August. However, it seems activities with OPC were ongoing for a while prior to the registration as a company in July last year, as while I can not give specifics on this, discussions had been taking place with Gigguk for their collaboration with OPC and this was finalised before the registration of the company.
According to discussions I held with Gigguk after he agreed to answer questions with me regarding his involvement with FCF, he noted that:
‘The official collaboration with OPC happened when FCF was still up in the air, and was still just informal discussion between everyone… when the final direction the organization would take was cemented… any commitments from the OPC collab, or any conversations period regarding it were gone on my end, and OPC was never a topic again.
There was never ever intent to link FCF and OPC and certainly ANY conversations I had with them separated the two entities completely. What they were trying to achieve with FCF had nothing to do with their venture with OPC as far as I could tell, and none of my motivations for FCF were linked to OPC’
Based on this, discussions between OPC and Gigguk took place separately to discussions of FCF. However, it is true that during this period, including the period the survey with the Anime Man was being conducted and compiled, both Daniel Suh and Francisco Lee were involved with both OPC and FCF, handling activities regarding both ventures at the same time, handling data that would be beneficial to both companies.
Since then, according to the statement from FCF, they note to have divested from OPC due to conflicts of interest. However, this is not entirely the case, as even if they are not involved in the business management side of the company they are still involved in a community aspect. As of 26th March 2018, both Daniel Suh and Francisco Lee both remain administrators of a community Discord server officially attached to OPC, running this community server despite claiming to no longer be involved.
How Have FCF Represented Themselves to Japanese Studios and the Anime Industry at Large?
This is where I personally have major issues with how the company is managed and the intentions of the group going forwards. During the interview on October 28th, questions were brought up regarding the status of the company at this time, and through this communication, details on what sort of links the company was planning to forge with Japanese animation companies and the anime industry and what sort of services they would provide using data collected as part of FCF was discussed. This included the possibility of selling analysis of data to Japanese companies.
First of all, there is the sort of actions that FCF want to take using the data collected from surveys they conduct, as was mentioned and queried while discussing funding for the company as a whole. The plans for future funding could come from multiple avenues, in their view. First off all could be through a donation drive to receive money from members of the anime community if they found the service valuable, and as mentioned in their statement this is corroborated by plans to start a Patreon. Secondly, referred to within the interview, would be that they could charge Japanese industry companies or governments or anyone interested in the data for more in depth analysis of collected data to look at particular trends or to ask specific questions regarding topics they were interested in, to gather trends that they could use to inform decisions that they were making.
This second point brings up a lot of questions and it’s a major source of concern for the nature of the non-profit and their true intentions. In many ways, the service being offered by FCF in this circumstance is very similar to that that would be offered by a for-profit data analysis firms. In this instance, the market research would be survey’s such as the anime census, and the plans to charge companies for specific insights in to the data being the product provided.
The advantages to operating as a non-profit, especially as a public charity as FCF are listed as in their IRS filings, is tax exemptions. They can provide this market research service to Japanese clients while being registered as a non-profit and therefore face reduced tax burdens when conducting business.
There’s also extra problems that occur as this sort of intensive data analysis to be sold to companies has simply not been publicly disclosed, so people providing data to them are unaware that such data analysis would be taking place.
This becomes especially more problematic when considering further the implications of what was said in the interview that took place in October. At this point, attempts to collaborate with some Japanese clients had begun, including with an unnamed Japanese company they were planning to meet with. The contact that FCF had at this time, who was representing the company to Japanese clients, was not representing the company as an NPO. At this same time, while trying to bring on board influencers and to talk with the public, they were representing themselves as an NPO. The way they were publicly representing themselves, and the ways in which they were trying to push themselves to the general public, were fundamentally different.
Now I should at this point state that with the company’s official NPO status in place that they are now a registered non-profit, and that the way the company referred to themselves with Japanese clients has likely changed. This doesn’t change the overlying issue with what this suggests. These plans for the management of the business seem to betray the ideals of working for the Western anime community by providing data on them to Japanese companies to inform decisions they’re thinking of taking, with the actions taken running a fine line on whether the company is acting with a non-profit status to avoid taxation while running a business that, aside from claims of donating profits to charity which as I mentioned in my first article has legality issues in and of itself, is ran similarly to a for-profit company conducting similar ventures. They also started business relationships with clients in Japan while denoting their operations as being an exciting new business venture that these companies can involve themselves in, which is a vastly different message than what FCF have tried to portray to the public. The communications between the Japanese companies and FCF betray the public message of the NPO.
What About the Influencers?
There are a few things that need to be considered when discussing influencers in relation to FCF.
First of all it would be best to discuss how FCF pitched themselves to other influencers as they were brought on board. While some details of this were made public by FCF in the powerpoint presentation from September 2017, this being the ability for influencers to have a stake in the future of anime, there is more to this. I want to bring this up because it is in my view the most egregious act by FCF that I am discussing, because it is a case of them deliberately misleading people on the actions taken by FCF and directly contradicts statements that have been provided by FCF to explain their actions. I have permission to share this as a named source, so I will notify now that this information comes from one of the influencers themselves, Digibro.
As I have noted a few times by this point, the foundation of FCF occurred in the beginning of August and discussions with influencers began around this time. Digibro has noted that they have spoken to them roughly 5 or 6 times since Crunchyroll Expo, a convention held on August 25th-27th, which is where they first got in to contact with FCF and learnt of their venture.
What’s the Issue? He was paid.
In multiple statements and public addresses regarding FCF and their actions, one consistent point given by the foundation is that they are a completely voluntary organisation. The people working for the venture, including the intern that I discussed before, are unpaid. They claimed that despite the initial presentation from September 2017 which offered financial incentives and the ability to invest in the future of anime, that these plans had been cancelled. Crucially, they stated that:
‘We… have not paid, or offered to pay, influencers any monetary benefits for their involvement.’
Yet here, we have noted in no uncertain terms, stated by Digibro himself, that he received $100 for the first consultation that he had with FCF. Not only that, they were under the impression that all influencers were paid for their initial discussions. While this latter point they are unable to verify, they are confirming that they received a $100 payment from FCF for meeting with them to discuss the proposals behind their non-profit.
With a monetary transaction occurring between Digibro and FCF for their initial meeting (they note no payments were given for later meetings), the claims that no monetary incentives were given to influencers for their involvement is compromised by the fact that Digibro had been paid for the initial discussions that took place between himself and the company. At the same time, what it further illustrates is that while interns were unpaid, the work of influencers was paid for, at least at first.
So Considering All This, Where Does it Leave Us?
Well, let’s review everything I’ve discussed in this article. Alongside this, I would like to add the issues regarding the potential for their plans to donate profits to Anime for Humanity, Animator Dormitory Project and Hyun’s Dojo, especially in regards to the latter, being a for profit company, potentially breaking the regulations that govern non-profits regarding the use of funds only for the non-profit’s purpose that I brought up in my first article.
- FCF have lied about the number of employed individuals, with at least 6 further people who were previously not publicly known to be involved with the foundation confirmed to be involved. This list may not be exhaustive and there may be more people who are involved in at least some capacity with FCF as well
- Of these 6 individuals, one is an unpaid intern, with questions remaining on whether her being an unpaid intern is breaking federal laws regarding unpaid interns
- The roles listed for individuals within the company may not be the actual roles of individuals within the company, with Daniel Suh and Francisco Lee being the ones jointly managing social media while the then-Public Relations Director was not.
- They have claimed to have divested themselves from a for-profit venture they were involved in, Otaku Pin Club, but there are still questions as to when this divestment took place. Also, for all they claim to have divested, they still seem to be involved in some capacity, acting as admins for the official Discord community for OPC
- The company have misrepresented themselves, at least during initial meetings, to Japanese clients, failing to mention they were an NPO and promoting themselves as a regular company. This was at the same time as trying to recruit the involvement of influencers leveraging on an NPO status they had not yet received at this time
- The nature of the service being conducted by FCF, and the way the data is being utilised by FCF for Japanese clients and the business relations that they have discussed with Japanese companies would be things expected of a for-profit market research firm, not a non-profit representing fan interest.
- Influencers, at least in Digibro’s case but possibly in more cases as well, were paid for initial consultations with FCF, $100 in Digi’s case
- Alongside all these issues, many things they have stated either in their initial ‘full disclosure’ tweets or in their later long-form statement in response to my first article, have been contradicted by themselves, by the evidence that has presented itself and by people directly involved in the process. FCF have been proven to consistently lie to avoid sharing difficult information that may paint a negative outlook on the nature of the organisation that they are running.
Consider what FCF are asking you to do. They’re asking you to provide them with information, including emails and mental health information, they’re asking you to allow them to contact you for further opportunities, they’re claiming to be a voice for the western anime community, they’re claiming to have the ability to change everything. They ask for trust. ‘We can change the anime industry’, ‘We can increase Western representation in the anime discussion and increase the chances of seeing more anime that caters for a Western audience’
Yet they are failing to prove that they have the potential or the ability to do so while also being littered with legal issues and issues of management and regarding their business practices.
Is this the voice of the Western anime community? With all of these legal issues, management issues, an inability to tell the truth to the fans they’re supposed to represent, is this the voice of the Western anime community?