- Michael Rothenberg gained renown for his swift success with his VC firm, Rothenberg Ventures.
- However, he has now become another standout figure in Silicon Valley convicted of deceit.
- Rothenberg is facing an extensive prison term and a significant penalty.
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An erstwhile high-flying Silicon Valley investor, whose flamboyant lifestyle inspired an HBO program, has been found guilty of a $18.8 million deception.
Michael Rothenberg, 39, was convicted by a federal jury in California for “wire fraud, money laundering, bank fraud, and making false statements to a bank,” as per a press release from the U.S. Attorney’s Office for the Northern District of America. California.
Rothenberg initially gained fame in 2013 after securing $5 million for his venture capital management fund, Rothenberg Ventures, at the young age of 27. Attracting attention for his lavish spending and fondness for socializing, he was labeled as “Valley’s Socialite” by Bloomberg.
Bloomberg reports that Rothenberg Ventures’ clients were provided with gifts such as complimentary tickets to Golden State Warriors and San Francisco Giants games, as well as a hot-air balloon wine tour of Napa Valley.
TechCrunch stated in 2016 that the company also assisted in sponsoring Golden Globes tickets and actor Chace Crawford’s 30th birthday celebration in Hollywood.
For Rothenberg’s grandest occasion, named Founders Field Day, the company reserved AT&T Park in San Francisco. The event brought together tech founders and the VC firm’s portfolio companies for a day of networking.
However, the event, which included on-site masseuses and served as the inspiration for the HBO drama “Silicon Valley,” was more indulgent than just a networking opportunity. Attendees were able to have a go at home plate, presented by Black Eyed Taboo. Following the event, there was an after-party with entertainment provided for attendees to interact with peas and rescue puppies, as per Vox.
But Rothenberg Ventures collapsed in 2016 after confessing to investors that it was under investigation by the Securities and Exchange Commission (SEC). Wired reported at the time that it had over $50 million in assets under management.
As reported by Wired, the company eventually ran out of operational funds and placed all its employees except for its attorney on unpaid leave.
There were inquiries into how Rothenberg utilized his fund’s finances, as numerous investors said they were unaware that he was diverting substantial amounts of venture capital fund money to his virtual-reality-production company, transferring them to River Studios, which was involved in virtual-reality videos. For those who appreciate Coldplay.
In 2018, the SEC accused Rothenberg of misappropriating “funds and fund investors’ money” and “falsely claiming that the money was used for legitimate fund expenses or investments or was otherwise reimbursed.”
Rothenberg was also found guilty of deceiving the now-defunct Silicon Valley Bank in 2015, when he was charged with making false statements “in connection with a line of credit” for his VC management company.
He will be given a sentence in March and faces an extensive prison term and substantial fines.
According to the U.S. Attorney’s press release, the maximum penalty for each charge of bank fraud and making false statements to a bank is “30 years’ imprisonment and a $1,000,000 fine.”
The maximum punishment for wire fraud is “20 years’ imprisonment and a fine of $250,000”, while for money laundering he faces up to 10 years’ imprisonment and a fine of $250,000.