Has anyone ever whisteblowed to VCs about founders?

Seed stage startup. Have a situation where founders are divided in their time spent between their existing family business and the new startup that was funded by VCs. There was barely anything happening here, minimum R&D budget for maturing our product. Engineers hands are tied, they can barely make a prototype and test. Oh there’s even more. All departments including HR do not have a budget. All cash is under a lock and key by the founders. Oh wait, there’s even more! The founders are married. And they wear too many hats, they even call themselves with multiple role names on paper. For eg, one person is both a CEO and CTO. But barely does anything for one of the role hat he’s chosen to wear. -_-

Seriously, how are VCs comfortable with this? Wouldn’t there be a conflict of interest? How do VCs even do their due diligence and ensure that the money is spent rightly on maturing the product and the success of the startup?