Why the $150 million drop from March to June? In part, RockYou founders Lance Tokuda and Jia Shen can blame Facebook's spam-killing redesign, which will eliminate some of the tools RockYou used to increase the popularity of its widgets. But our source takes a shot at Tokuda and Shen, too. He tells us:

The reason the round took so much time was because the valuation expectation was inflated. They had unrealistic expectations and "team" really matters when you raise capital.

Not that that's so unfair of a shot, considering Tokuda and Shen's lawsuit-wracked history.

Social media advertising revenues across the Internet totaled only $600 million in 2007. Webwide ad revenues generated $18 billion. Social media gets such a small piece because ad buyers consider its inventory market-saturated junk at worst and too difficult of an ad buy at best. Not even Google's figured the trick out yet on MySpace. Nobody told DCM cofounder and general partner David Chao, who "believes that RockYou will be the catalyst of this new global ecosystem that delivers next-generation advertisements through its innovative advertising network and social applications," according to the press release. (Photo by califrayray)

The IRS has stepped up efforts to crack down on unpaid payroll taxes in recent years. This form of fraud hurts both employees, who may be on the hook for monies withheld from their paychecks but never sent to the government, as well as taxpayers. The IRS can press charges against not just the company but top officials as well; the corporate veil, a legal concept which protects officers and directors from the actions of a corporation, does not apply here, I'm told.

That likely explains why Red Herring reported last year that half its board members had quit. David Chao, the cofounder of VC firm Doll Capital Management, still serves on the board, according to his online biography. Is his reputation worth a continued association with the Herring? Vieux can be charming and persuasive. Perhaps he kept Chao and other board members in the dark.

If the IRS investigation concludes that the Herring didn't pay its taxes, its directors have an unpleasant choice: Confess to complicity in the fraud, or admit that they were among the many Vieux has duped. Embarrassing as it would be, I'd suggest they go with the latter. They'd have plenty of company.

So you know Dixon Doll? He invested in Bram [Cohen]'s BitTorrent business. Anyway, a Texas law firm is putting together a huge patent infringement case that will likely screw up the company's plans. Two - three months is the timeframe.

Nothing else about this story has come together yet, so don't go picking sides just yet. But if you know more of the story, tell tips@valleywag.com.