[jzellis]

I'm gonna agree with qikInNdOutReply here: you work for a laundromat. If this has happened multiple times, it's entirely possible that all of the VCs involved are aware of it, and are in fact getting their money's worth. :-)

Here's my advice to you, and I'm not going to say IANAL because you don't need to be a lawyer to know this: you are working for shady people. If it is, as seems likely, a laundering front, the very last thing you want to do is "go to the investors", unless you really enjoy the feeling and weight of a custom pair of concrete shoes.

I would find another gig ASAP, and then and only then would I sit down and have a serious think about how much I cared about seeing these people get punished for what they're doing. Because the only people you should probably be going to are the SEC, and that would probably turn into a criminal case, and then you'd be getting the very strict attention of whomever set this up. And those people are probably not tech bros.

Up to you, man, but I would seriously suggest you consider this possibility.

[tengwar2]

The whole point of a laundry is to get money out that has an apparently legitimate source. That isn't happening here.

[bombcar]

That’s one kind of laundry. Another is “how can I funnel millions to my friends and still get a tax deduction”.

[cosmodisk]

I think the correct term is 'syphon'. In my country we had this famous startup raising tens of millions with a product that existed only on paper. Suddenly tons of people employed with salaries triple of what's reasonably expected, tons of marketing fluff and very little substance. It looked almost identical to what OP described. Fast forward a couple of years, they still seem to be doing something but I bet owners did extract a few cool millions out of it.

[weare138]

Exactly. This seems like it might be some type of tax shelter scheme.

[ncmncm]

The investors are adults who are expected to be able to look out for themselves. VCs, doubly so.

There are probably way more crooked VCs than crooked startups, by volume of money skimmed. Giving investment money to a crooked VC is even dumber than to a crooked startup. I.e., they deserve to be milked. They may cease to invest, after some time.