this kind of thing happens over and over in SV. the east coast equivalent is hedge fund managers who continue to blow up or just not produce, yet, always manage to raise new funds.
Is it though? Name some funds that have blown up and have continued to raise Capital again? I think you're confusing the two because I think they are drastically different, but that is just my opinion. As the saying goes,there's a sucker born every minute.=) Or as a troll would say, don't hate the player hate the game.