There are plenty of horror stories. While our legal system here in Australia seems to ignore even the most blatant illegal funding schemes there have been occasions when law enforcement has shown an interest - as Robert MacLeod of Starlight films found out when he was sentenced to seven years jail for raising finance for his film projects without a proper prospectus. (The fact he spent that money on himself might not have helped things)
Even the guy who tried to raise money for the film 'Jack the Director' by cold-calling people and inviting them to an investment seminar might have even gotten away with it if he hadn't made the mistake of cold calling the former director of consumer protection at ASIC !
So I thought I'd do a bit of digging to find out more.