About 8 years ago an investor in my first company was defrauded by a con artist. This led me on a crazy 4 year chase which resulted in the discovery of a series of pump and dump stock frauds worth over $1 billion (think Enron, divided into smaller pieces) and possible ties to terrorism. This was a result of class action lawsuits, SEC investigations etc. None of which resulted in any type of jail time, and one of the individuals lives nicely in a 20 bedroom mansion in Barbados.

The sad part about all of this, was that I notified the SEC on multiple occasions with physical proof that people were defrauding the government and individuals. The SEC's responsibility wasn't "to handle foreign citizens." Homeland Security "didn't handle securities cases." The IRS needed the person's Social Security Number, name and address. When someone moves from one state to another, the states stop communicating on any type of prosecution.

The whole process was a fascinating/scary insight into how easy it is to commit fraud in the United States.

So as a word to the wise for first time entrepreneurs, don't be afraid to ask investors, VCs or others where their money comes from.