Mike Rothenberg, former VC known for throwing lavish parties, was convicted today on 21 counts of defrauding investors
This year it will to remember about many things. Among them could be the growing number of stars in the startup world who were later convicted of defrauding investors.
About six months after Theranos founder Elizabeth Holmes headed to jail on 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 cryptocurrency exchange, another former startup powerhouse, Mike Rothenberg, was today doomed 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, caps a 10-year journey for Rothenberg, who burst onto the Bay Area scene in 2013 at age 27 with a $5 million fund and enough charm to convince TechCrunch that his sole proprietorship was special enough to merit coverage.
The Austin native was a fascinating subject. A self-proclaimed former math Olympian who attended Stanford before getting an MBA from Harvard Business School, Rothenberg reportedly started both a tutoring business and a real estate fund while still an undergraduate. He also did time at Bain & Co., ostensibly preparing himself for a traditional career in finance or venture capital. Instead of treading that well-worn path—he was reportedly offered at least one role at a hedge fund—Rothenberg took credit for striking out on his own and leaning heavily into a relatable narrative of himself as a relentless fighter. with the founders he wanted to finance.
Rothenberg also found increasingly inventive ways to attract widespread attention to his relatively small shop, many of which focused on organizing accurate party for founders. Indeed, one of those gatherings — an “annual” event held two years in a row at the park where the San Francisco Giants play — inspired an episode of the HBO show “Silicon Valley.”
He also raised questions, including a Bloomberg story that called him “the Valley’s party animal” while also noting that he wasn’t “completely clearHow Rothenberg financed it all. (TechCrunch was later told by sources that after the Bloomberg article was published, Rothenberg sent two employees to the SFO, buying them plane tickets so they could buy copies of the stand and keep them out of view.)
He never recovered. In 2018, he was previously accused by the Securities and Exchange Commission of overcharging investors to finance personal projects. Rothenberg settled in 2019 with the agency, which sought tens of millions of dollars in disclosure penalties (these were later upheld by a federal court ruling).
While still facing this mountain of civil penalties, Rothenberg was charged with fraud six months later by the DOJ, which would later lead to today’s outcome.
What comes next could be worse. While Rothenberg will not be sentenced until March 1 of next year, in a 2019 press release about its action against Rothenberg, the DOJ noted that every wire The fraud charges carry “maximum statutory penalties of up to 20 years in prison, not more than three years of supervised release, and a $250,000 fine.” He added that “two counts of bank fraud” and “two counts of making false statements on bank charges carry a maximum sentence of 30 years in prison, no more than five years of supervised release and a $1,000,000 fine.” Money laundering charges, he continued, “carry a prison sentence of not more than ten years, not more than three years of supervised release, and a fine not to exceed twice the amount of the criminal property involved in the transaction at issue.”
Pictured above: An image of Rothenberg Ventures during its heyday, with Rothenberg in the center.
