While it would not surprise me that money earned has probably been spent on things other than pure game development, such as CitizenCon, merchandise, shiny offices etc., that does sound libellous. I think they are frauds but I wouldn't suggest they have committed fraud.
To funnel money out of a company, specially a LLC, you don't have to commit fraud.
Let's say Person X and Person S pay themselves each a million dollars annually. (I made the numbers up just to get my point across)
That would be 12 million dollars for both of them for the last 6 years.
Rumors has it that Erin makes 250.000 UK Pounds a year, that's 1.5 million pounds for the last 6 years.
Next example:
Let's say Person X sells a mocap studio to his brother for 500.000 $ and later that brother sells the same mocap studio for 2 millions to Foundry 42, the Brother earns 1.5 million dollars.
Lets's say Person X sells the SC/SQ42 IP rights to CIG for 2 million dollars, Person X (we all know who I mean) makes 2 million dollars.
Let's say Person X sells his company to another company, let's say he sells CIG to XYZ Inc., Cayman Islands (which is part of an conglomerate of, let's say 20 shell companies) for 2 million dollars, Person X earns 2 millions.
That way you could have taken out 19 million dollars during the last 6 years and it would have been totally legal.
You could also put some nice Hollywood Accounting in and it would make you even more tha a metric sh*tload of money.
You can funnel millions out of a company and you don't even come near to fraud territory.
It has been done a thousand times before, nothing really new that is.