That's an excellent point. This could be an elaborate long-con watering hole attack.
2. Suckers see that as social proof, and assume other investors have done their due diligence
3. They invest
4. The money disappears in suspicious circumstances.
Did Craig ever get anything? (Other than a whole lot of trouble.) I don't remember if people figured out what his original motive was.
Ah, think of it like this: you behave much differently when you talk to someone you think has loads of money and might be interested in investing in your ideas. That means they're in a position to start making some very interesting connections that they otherwise wouldn't have access to.
The VC model works via reputation. When you take away reputation, you're left with questions like "Should we spend time trying to convince this person to give us money? Will they want unreasonable terms? How long will the process take? What if they string us along but never actually sign a check (which is what happens most of the time anyway)?"
All that said, this is wild speculation. But your comment was a neat prompt for speculation.