There was a series of events involved in discovering the raffle thefts. I don't think I have all the facts (there were some offline communications between some donors, some charities, and the Colorado authorities), but here's what I do know.

• A pair of raffles were run with the proceeds to be split between an orphanage in Russia and the Sloan Kettering charity. The Sloan Kettering money was in honor of Dave Fabrikant's late father (died of cancer). Dave is the president of Ascend Acoustics, and he encouraged friends and family to contribute. A friend happened to call Sloan Kettering some time after the raffles and found that no money had been delivered. When confronted about it via email, Mark produced a check for $3,000. The other $3,750 was never delivered. This took many months to leak into the forums.
• A set of raffles were held to benefit the dying friend of a forum member. When the friend died months after the raffles ended, Mark had still not delivered any of the funds. The forum member was generally quiet about it, partly because he was so upset, but word did creep out.
• A series of at least four raffles was held to benefit a family on AV123's forum because their daughter had diabetes and other medical problems that had produced significant medical bills. These raffles raised around $35,000. At last report, perhaps $2,000 or $3,000 of the funds collected directly by Mark had been delivered to the family. Some money went directly from a single donor to the family. Eventually, the father started posting about the lack of funds.

All that information started surfacing at least a year ago, and that's when Mark admitted to "underfunding" two raffles. That's all he would say. Later, reports surfaced that Ballet Nouveau Colorado (the ballet company where Mark's granddaughter dances, and beneficiary of three raffles) had not received all of its money, including the money raised by the original raffle in 2004. That's about all anybody knew prior to the indictment, though, at which point the scope of the theft appeared to be even worse than it had seemed initially. Starting some time last fall (possibly earlier, I don't know all the details), the Colorado Attorney General started working with police in Longmont and with several of the charities to build a criminal case against Mark. That's what led to February's indictment.