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One more former Silicon Valley darling is convicted of investor fraud


Mike Rothenberg, a former VC identified for internet hosting lavish events, was convicted right this moment on 21 counts for defrauding traders

This yr will be remembered for lots of issues. Amongst them might be the rising variety of stars within the startup world who had been later convicted for defrauding traders. 

Roughly six months after Theranos founder Elizabeth Holmes headed to jail for 4 counts of wire fraud, and simply two weeks after Sam Bankman-Fried was discovered responsible on seven counts of fraud and conspiracy for his function within the collapse of his crypto trade, one other former high-flier within the startup world, Mike Rothenberg, was right this moment convicted on 21 counts, together with financial institution fraud, false statements, 4 counts of cash laundering, and 15 counts of wire fraud.

The decision, delivered by a jury in Northern California, bookends a 10-year-long journey for Rothenberg, who burst onto the Bay Space scene in 2013 at age 27 with a $5 million fund and sufficient appeal to influence TechCrunch that his one-man agency was particular sufficient to benefit protection.

The Austin native was a compelling topic. A self-described former math Olympian who attended Stanford earlier than getting an MBA from Harvard Enterprise Faculty, Rothenberg reportedly began each a tutoring enterprise and an actual property fund whereas nonetheless an undergrad. He additionally logged time at Bain & Co., seemingly setting himself up for a standard profession in finance or enterprise capital. As a substitute of trodding that well-worn path — he was reportedly provided at the very least one function at a hedge fund —  Rothenberg earned kudos for putting out on his personal as an alternative, and he leaned closely right into a narrative about himself as a relentless hustler who might relate to the founders he wished to fund.

Rothenberg additionally discovered more and more ingenious methods to draw widespread consideration to his comparatively small store, a lot of them centered on organizing costly events for founders. Certainly, one in every of these gatherings – an “annual” occasion held two years in a row on the ballpark the place the San Francisco Giants play – impressed an episode of the HBO present “Silicon Valley.”

It additionally raised questions, together with in a narrative by Bloomberg that dubbed him “the Valley’s social gathering animal” whereas additionally observing that it wasn’t “solely clear” how Rothenberg was funding all of it. (TechCrunch was later instructed by sources that after the Bloomberg piece was revealed, Rothenberg despatched two staff to SFO, buying them airline tickets so they may purchase up its newsstand copies and preserve them out of view.)

He by no means recovered. In 2018, he was previously charged by the SEC for overcharging traders to fund private initiatives; Rothenberg settled in 2019 with the company, which sought tens of thousands and thousands of {dollars} in disgorgement penalties (these had been later backed up by a federal court docket ruling).

Whereas nonetheless going through that mountain of civil penalties, Rothenberg was charged with fraud six months later by the DOJ, which might later result in right this moment’s consequence.

What comes subsequent might be worse. Whereas Rothenberg gained’t be sentenced till March 1 of subsequent yr, in its 2019 press launch about its motion in opposition to Rothenberg,  the DOJ famous that every of its wire fraud prices carries “most statutory penalties of as much as 20 years in jail, no more than three years supervised launch, and a $250,000 tremendous.” It added that “two financial institution fraud prices” and “two false assertion to a financial institution prices every carry a most of 30 years in jail, no more than 5 years supervised launch, and a $1,000,000 tremendous.” The cash laundering prices, it continued, “carry a penalty of imprisonment of no more than ten years, no more than three years of supervised launch, and a tremendous of no more than twice the quantity of the criminally derived property concerned within the transaction at situation.”

Pictured above: an image of Rothenberg Ventures throughout its heyday, with Rothenberg at heart.



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