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consent decree promising not to violate securities laws. And Evans’s criminal past caused a major Zero.net investor to pull back $20 million it had pledged, leaving the firm with a negative net worth. More than twenty complaints were filed with the SEC about Evans affiliates, and the agency was still reported to be investigating two years later. Following its custom, the SEC declined to comment on Evans.

While much of the Internet boom can be characterized by an alarming lack of research by private and public investors into the companies they backed, including Napster, the Andy Evans case shows why due diligence is supposed to work the other way as well. Especially in the early stages of a company’s life, entrepreneurs have a responsibility to check out their backers and act accordingly. It was too late for Shawn to do so with his uncle. But it wasn’t too late to do that with Evans. If Ritter had been less accidentally candid, Napster might have wound up a piece of Evans’s then-growing empire of penny stocks and alleged massive self-dealing.

EVANS’S INTEREST, HOWEVER, DID LEAD to Napster finally sealing a deal with its first real outside investor, a man who would be crucial to its destiny. That investor, Yosi Amram, sat in on the talks at Zero.net at the invitation of his old acquaintance, John Fanning. Amram saw that Evans was willing to invest even though Fanning was a problem. And Amram decided that if someone of Evans’s apparent pedigree was willing to take a risk, he might do so as well. “I could see it was going to take off. I liked the idea, and it was getting some traction,” Amram said. What he did not do was do anything approaching the due diligence put in by Draper Atlantic and Grosfeld and Lilienthal. He didn’t even read Seth Greenstein’s legal memorandum. Instead, he recalled, Fanning described it to him, and he spoke to a lawyer on the phone, though he didn’t recall which one. “I made a quick decision,” Amram said.

More accurately, Amram made a quick decision that reversed his earlier, more thoughtful one. He said no at first because he didn’t trust Fanning with his money. “I was very reluctant,” Amram said. He had one hundred thousand reasons to be skeptical—that’s how many dollars he had plowed into Chess.net. By mid-1999, Amram knew he wasn’t going to be getting any of them back.

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