Scammed by a Skip Tracer?

Hello.

I am trying to keep it brief and guard privileged information to all parties.

Some investors got involved with a 'subject' who needed add'l funding for his business production. Though 'subject' paid returns for a few months, he did not admit significant losses after a certain period of time, and made off with investors principle and interest.
Our due diligence secured 'subjects' ID, location, contracts etc, and provided them to a skip tracer (ST) to confirm 'suspect's' where abouts and make contact on our behalf. ST's fee was $1000 to start the search, and another $1,000 once enough information to "locate" the 'Subject' was available/confirmed.
Based on the information we gave him, ST confirmed 'subject' was located at the same address, but never was able to make contact, nor did he ever produce any of his work product. We were invoiced and paid the second portion of ST's fee on good faith he would vigorously work to 'locate' and make contact with the 'subject'.
However, it is now the investors' position that ST never did locate 'subject'. Therefore, a request for a refund of the second portion of ST's was sent to ST. response
ST refused. An email of "demand" for a refund was sent to ST, indicating the investors did not feel ST did his job nor earned his fee, and were willing to take legal action to recover his fees AND the lost investments (damages).

We are interested in opinions and comments related to the 'filing a Complaint'. Our question, is our position strong enough to take this action, and is it likely we would prevail?
If so, then we are interested in locating an attorney in the region where ST lives, to serve him a complaint.

Thanks to anyone taking the time to consider and post.

Thanks for your time and attention. I look forward to your response.