Mike Rotenberg, a former venture capitalist known for hosting lavish parties, was found guilty today of 21 counts of defrauding investors.
This year you will To be remembered for many things. They may include the growing number of stars in the startup world who have subsequently been convicted of defrauding investors.
Nearly six months after Theranos founder Elizabeth Holmes Head to prison 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, Mike Rotenberg, a former bigwig in the startup world, was today… convicted On 21 charges, including bank fraud, false statements, four counts of money laundering, and 15 counts of wire fraud.
The ruling, handed down by a jury in Northern California, ends a 10-year journey for Rothenberg, who burst onto the Bay Area scene in 2013 as a 27-year-old with a $5 million fund and enough charm to convince TechCrunch that his one-man company was special enough to be worth… Coverage.
The Austin native was a compelling subject. A self-described former mathematics Olympian who attended Stanford University before earning an MBA from Harvard Business School, Rotenberg is said to have started a tutoring business and a real estate fund while still an undergraduate. He’s also logged time at Bain & Co., and appears to be positioning himself for a traditional career in finance or venture capital. Instead of going down that familiar path — where he was said to have been offered at least one role at a hedge fund — Rotenberg gained notoriety for striking out on his own instead, leaning heavily into a narrative of himself as a relentless hustler who could connect with others. The founders he wanted to fund.
Rothenberg also found increasingly innovative ways to bring widespread attention to his relatively small store, much of it centered on curating expensive products. Founders’ parties. In fact, one such gathering — an “annual” event held two years in a row at the stadium where the San Francisco Giants play — inspired an episode of the HBO show “Silicon Valley.”
It also raised questions, including in a story by Bloomberg that called him the “Party Animal of the Valley” while also noting that he wasn’t one.Completely clear“How Rotenberg was funding it all.” (Sources later told TechCrunch that after the Bloomberg article was published, Rotenberg sent two employees to SFO, and bought them plane tickets so they could buy copies on newsstands and keep them out of sight.)
He never recovered. In 2018, he was previously indicted by the Securities and Exchange Commission for allegedly overcharging investors to fund personal projects; Rotenberg settled in 2019 with the agency, which sought tens of millions of dollars in fines for the bounces (later upheld by a federal court ruling).
While he was still facing that mountain of civil penalties, the Justice Department charged Rotenberg with fraud six months later, which would later lead to today’s outcome.
What comes next could be worse. While Rotenberg will not be sentenced until March 1 of next year, in its 2019 press release about the action it took against Rotenberg, the Justice Department noted that each of its cables The fraud charges carry “a maximum statutory penalty of 20 years in prison, not more than three years of supervised release, and a $250,000 fine.” “Two counts of bank fraud” and “two false statements of bank charges each carry a maximum penalty of 30 years in prison, not more than five years of supervised release, and a $1 million fine,” she added. The money laundering charges, she continued, “carry a penalty of not more than ten years in prison, not more than three years of supervised release, and a fine of not more than twice the amount of criminally derived property involved in the transaction in question.”
Pictured above: A photo of Rothenberg Ventures during its heyday, with Rothenberg at the center.