I think this situation was a legitimate one, but the guy was using the funds inappropriately rather than in developing the product. It's a slippery slope, and as he gained momentum things just got worse.
I said some things about the scammers in Nigeria in another comment; it must be terrible for those who get duped, losing money is bad at the best of times but when one doesn't have very much it's much worse. People in Australia, and other countries, lose money to Nigerian scammers on a daily basis.
That's so sad. I don't know how these guys pull it off, really. It's something I cannot wrap my head around. I can't begin to imagine what they say and how they say things to get off so easily. It's scary to think of. I hope they get caught and karma catch up with them. They have no excuse... Everyone is feeling it too but it's never an excuse to rob others of their hard earned cash. It's disheartening.