CRIMINAL CAPITALI$M
‘Silicon Valley’s Party Animal’ Convicted on Fraud and Money Laundering ChargesA federal jury found his schemes resulted in approximately $18.8 million in 'missing money'
Published 11/18/23
The 39-year-old Michael Rothenberg was known for extravagant parties and his mixing of business and pleasure as spoofed in HBO’s “Silicon Valley.”LinkedIn
Aformer San Francisco venture capitalist dubbed “Silicon Valley’s Party Animal” was convicted earlier this week on several charges, including wire and bank fraud, and money laundering.
Michael Rothenberg, 39, known for extravagant parties and his mixing of business and pleasure as spoofed in HBO's Silicon Valley, was convicted by a federal jury of committing wire and bank fraud totaling nearly $19 million in “missing money,” according to the U.S. Department of Justice.
Rothenberg committed wire fraud with millions of dollars of investments into his venture capital funds, and later committed money laundering by transferring those funds through several bank accounts, the jury found.
He was also found to have defrauded Silicon Valley Bank, which was acquired by First Citizens Bank in March after its collapse, deceptively obtaining a $4 million line of credit to pay back a shortfall at one of his funds.
He founded Rothenberg Ventures Management in 2012, a venture capital management company, which for six years managed his four venture capital funds aimed at investing in Silicon Valley start-ups, specifically in virtual reality technologies. In 2015, however, Rothenberg started his own company, River Studios, to produce content used in virtual reality headsets.
While he told employees and investors that the studio had been “self-funded” and that no venture capital funds were used to get the company off the ground, Rothenberg used venture capital fund money to pay for the studio’s operations, according to evidence at the trial.
A 2015 Bloomberg report, which first gave Rothenberg the "party animal" title, described the lavish culture at the then three-year-old firm, including hot-air balloons rides on wine tours of Napa Valley, visits to San Francisco's Samovar Tea Lounge and free seats to Giants and Golden State Warriors games in Rothenberg’s luxury boxes
Aformer San Francisco venture capitalist dubbed “Silicon Valley’s Party Animal” was convicted earlier this week on several charges, including wire and bank fraud, and money laundering.
Michael Rothenberg, 39, known for extravagant parties and his mixing of business and pleasure as spoofed in HBO's Silicon Valley, was convicted by a federal jury of committing wire and bank fraud totaling nearly $19 million in “missing money,” according to the U.S. Department of Justice.
Rothenberg committed wire fraud with millions of dollars of investments into his venture capital funds, and later committed money laundering by transferring those funds through several bank accounts, the jury found.
He was also found to have defrauded Silicon Valley Bank, which was acquired by First Citizens Bank in March after its collapse, deceptively obtaining a $4 million line of credit to pay back a shortfall at one of his funds.
He founded Rothenberg Ventures Management in 2012, a venture capital management company, which for six years managed his four venture capital funds aimed at investing in Silicon Valley start-ups, specifically in virtual reality technologies. In 2015, however, Rothenberg started his own company, River Studios, to produce content used in virtual reality headsets.
While he told employees and investors that the studio had been “self-funded” and that no venture capital funds were used to get the company off the ground, Rothenberg used venture capital fund money to pay for the studio’s operations, according to evidence at the trial.
A 2015 Bloomberg report, which first gave Rothenberg the "party animal" title, described the lavish culture at the then three-year-old firm, including hot-air balloons rides on wine tours of Napa Valley, visits to San Francisco's Samovar Tea Lounge and free seats to Giants and Golden State Warriors games in Rothenberg’s luxury boxes
In 2018, Rothenberg settled civil charges with the Securities and Exchange Commission and agreed to a five-year ban from the brokerage and investment advisory business, without admitting or denying the charges. The SEC said Rothenberg and his firm misappropriated millions of dollars in funds, including an estimated $7 million of excess fees, over three years.
Rothenberg allegedly used the funds to finance a racing car and crew and threw private parties and events at high-end resorts, among other extravagant expenses, using the misappropriated funds, according to the SEC complaint.
Rothenberg’s sentencing is scheduled for March 1 and he remains out of custody on pre-trial bail. He could face a maximum of 60 years in prison and about $1.5 million in fines across all charges.
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