Mike Rothenberg, a former VC known for hosting lavish parties, was convicted today on 21 counts of defrauding investors
This year will be remembered for many things. Among them may be the growing number of stars in the startup world who are later convicted of defrauding investors.
About six months after Theranos founder Elizabeth Holmes going to jail for four counts of wire fraud, and just two weeks after Sam Bankman-Fried was found guilty of seven counts of wire fraud and conspiracy for his role in the collapse of his crypto exchange, another former high-flier in the startup world, Mike Rothenberg, today convicted on 21 counts, including bank fraud, false statements, four counts of money laundering, and 15 counts of wire fraud.
The verdict, handed down by a jury in Northern California, ends a 10-year journey for Rothenberg, who burst onto the Bay Area scene in 2013 at the age of 27 with a $5 million fund and substantial charm to convince TechCrunch that he is someone. the company is special enough to merit coverage.
The Austin native is a fascinating subject. A self-described former Olympian in mathematics who attended Stanford before earning an MBA from Harvard Business School, Rothenberg reportedly started a tutoring business and a real estate fund while still an undergrad. . He also logged time at Bain & Co., seemingly setting himself up for a traditional career in finance or venture capital. Instead of going down that old road — he was reportedly even offered a role at a hedge fund — Rothenberg has earned respect for himself, and he’s relied on a narrative about himself as relentless. that hustler who has ties to the founders he wants to fund.
Rothenberg also found very inventive ways to attract widespread attention to his relatively small store, many of them centered around expensive organizing. parties for builders. In fact, 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 raises questions, including a Bloomberg story that called him “the beast of the Valley party” while also observing that it’s not “perfectly clear” how Rothenberg funds all this. (Sources later told TechCrunch that after the Bloomberg piece was published, Rothenberg sent two employees to SFO, bought them plane tickets so they could buy newsstand copies and not see them.)
He never recovered. In 2018, he was previously sued by the SEC for overcharging investors to fund personal projects; Rothenberg settled in 2019 with the agency, seeking tens of millions of dollars in disgorgement penalties (this was later upheld in a federal court ruling).
While still facing a mountain of civil penalties, six months later, the DOJ separately brought charges against Rothenberg, which would later lead to the current outcome.
But what happened next could be worse. While Rothenberg will not be sentenced until March 1 next year, in a 2019 press release about its action against Rothenberg, the DOJ noted that each of its wire. Fraud charges carry “maximum statutory penalties of up to 20 years in prison, not to exceed three years of supervised release, and a $250,000 fine.” It added that the “two bank fraud charges” and “two false statements in a bank charges each carry a maximum of 30 years in prison, not more than five years of supervised release, and a $1,000,000 fine.” Money laundering charges, it continued, “carry a prison sentence of not more than ten years, not more than three years of supervised release, and a fine not more than twice the value of the criminally derived property that involved in the transaction at issue.”
Pictured above: a picture of Rothenberg Ventures in its heyday, with Rothenberg in the center.