$50 million of venture capital down the drain. A fraudulent set of books, going back to 2004. How did this happen? Entellium, a Seattle-based software company, saw CEO Paul Johnston and CFO Parrish Jones resign, days before the two were charged with wire fraud. What no one has explained: How on earth were the two executives able to get away with overstating the company's revenues to investors by a factor of four?Ignition Partners, which put in $19 million of the $50 million in venture capital, is playing dumb, insisting it never would have invested had it known the company's true financial condition. But Entellium, which started in Malaysia in 2000, was trouble from the start. It went through a period, after the popping of the bubble, when employees went unpaid. Since then, it attracted investments from Ignition and others, including Intel Capital, West River Capital, Sigma Ventures, and Mavcap, a Malaysian venture fund. Are we to believe that all of these investors committed their limited partners' money without a thorough audit? Silicon Valley Bank, a tipster tells us, loaned Entellium millions of dollars and acted as the company's bank. It examined the company's books quarterly for the past three years — part of the normal loan-review process — and surely was aware of how much money was flowing into its accounts — or rather, not flowing in. Montgomery Securities and Cascadia Capital helped Entellium raise money. Were they, too, deceived as to the company's financial condition when they presented venture capitalists with its numbers? It is possible that Johnston and Jones are very clever fellows. But a scenario where they simply got away with defrauding every financial institution they dealt with beggars belief. The alternative scenario: That at least some of Entellium's backers were aware of the fraud, and invested in the hope that it would become someone else's problem soon enough.