Yet another former Silicon Valley darling is convicted of investor fraud
Mike Rothenberg, a former VC known for throwing lavish parties, was found guilty today of 21 counts of defrauding investors.
This year will be we remember a lot of things. Among them could be the growing number of stars of the startup world who were later convicted of defrauding investors.
About six months after Theranos founder Elizabeth Holmes headed to prison for four counts of wire fraud, and only two weeks after Sam Bankman-Fried was guilty For seven counts of fraud and conspiracy for his role in the collapse of his crypto exchange, another former startup world high-flyer, Mike Rothenberg, was sentenced today sentenced on 21 counts, including bank fraud, making false statements, four counts of money laundering and 15 counts of wire fraud.
The verdict, handed down by a Northern California jury, ends a 10-year journey for Rothenberg, who burst onto the Bay Area scene in 2013 at age 27 with a $5 million fund. dollars and enough charm to persuade TechCrunch that its one-man company was special enough to merit coverage.
The Austin native was a compelling subject. A former math Olympian who attended Stanford before earning an MBA from Harvard Business School, Rothenberg reportedly started both a tutoring business and a real estate fund while still a student. He also worked at Bain & Co., apparently preparing for a traditional career in finance or venture capital. Instead of following that well-worn path — he was reportedly offered at least one role at a hedge fund — Rothenberg won kudos for striking out on his own, and he leaned heavily into a narrative portraying him as a cutthroat hustler who could identify with the founders he wanted to fund.
Rothenberg also found increasingly inventive ways to draw attention to his relatively small shop, many of which centered on organizing expensive projects. celebrations for the founders. Indeed, one of these gatherings – an “annual” event held two years in a row at the ballpark where the San Francisco Giants play – inspired an episode of the HBO show “Silicon Valley.”
It also raised questions, most notably in a Bloomberg article that called him “the Valley party boy” while observing that he was not “completely clear» how Rothenberg financed all this. (TechCrunch was later said by sources that after the Bloomberg article was published, Rothenberg sent two employees to the SFO to buy plane tickets for them so they could buy his copies on newsstands and keep them out of sight.)
He never recovered. In 2018, he was formerly accused by the SEC for overcharging investors to finance personal projects; Rothenberg ruler in 2019 with the agency, which was looking tens of millions of dollars in restitution penalties (these were later saved by a decision of the Federal Court).
While still facing a mountain of civil penalties, Rothenberg was charged with fraud six months later by the DOJ, which later led to today’s outcome.
What happens next could be worse. Even though Rothenberg will not be sentenced until March 1 of next year, in its 2019 press release regarding its action against Rothenberg, the DOJ noted that each of his sons fraud charges carry “maximum statutory penalties of up to 20 years in prison, not more than three years of supervised release, and a fine of $250,000.” He added that “two counts of bank fraud” and “two false bank statements each carry a maximum of 30 years in prison, no more than five years of supervised release and a fine of $1,000,000.” Money laundering charges, it continues, “are punishable by a prison sentence of not more than ten years, not more than three years of supervised release and a fine of not more than twice the amount of criminal property involved in the problem transaction.”
Pictured above: A photo of Rothenberg Ventures in its heyday, with Rothenberg at the center.
