A former venture capitalist known as Silicon Valley's 'party animal' has been convicted in a $19 million fraud case

Michael Rothenberg Courtesy of Michael Rothenberg

• Michael Rothenberg became known for his rapid rise to success with his VC firm, Rothenberg Ventures.
• But this week he became yet another Silicon Valley star to be convicted of fraud. 
• Rothenberg faces a lengthy prison sentence and hefty fines.

A once high-flying Silicon Valley venture capitalist, whose partying lifestyle inspired an HBO show, has been convicted of committing fraud amounting to $18.8 million.

Michael Rothenberg, 39, was found guilty by a federal jury in California of “wire fraud, money laundering, bank fraud, and making false statements to a bank,” according to a press release issued by the US Attorney’s Office for the Northern District of California.

Rothenberg first rose to prominence in 2013 after raising $5 million for his venture capital management fund, Rothenberg Ventures, aged just 27. Attracting attention for his lavish spending and love of partying, he was dubbed “the Valley’s party animal” by Bloomberg.

Clients of Rothenbergs Ventures were lavished with gifts such as free tickets to Golden State Warriors and San Francisco Giants games and hot-air balloon wine tours of Napa Valley, Bloomberg reported.

The company would also shell out on tickets to the Golden Globes and helping to sponsor actor Chace Crawford’s 30th birthday party in Hollywood, TechCrunch reported in 2016.

Rothenberg’s biggest event, called Founder Field Day, saw the firm book out AT&T Park in San Francisco. The event amassed tech founders and the VC firm’s portfolio companies for a day of networking.

But the event, which saw masseuses on site and inspired the HBO drama “Silicon Valley,” was rather more extravagant than mere networking, with founders getting the chance to swing at home plate, an after-party show performed by Taboo from the Black Eyed Peas, and rescue puppies for attendees to cuddle up to, Vox reported.

But in 2016, Rothenberg Ventures collapsed after admitting to investors it was being investigated by the Securities and Exchange Commission (SEC). It had more than $50 million in assets under management, Wired reported at the time.

The company eventually ran out of operating funds, and all its employees except its lawyer were put on unpaid leave, per Wired.

Questions were rife about how Rothenberg had used his fund’s money, and many investors said they were unaware that he was shifting large amounts of venture capital fund money to his own virtual-reality-production company, River Studios, which worked on virtual-reality videos for the likes of Coldplay.

In 2018, the SEC alleged that Rothenberg had misappropriated “fund and fund investor money,” and created “the false appearance that the money was used for legitimate fund expenses or investments or had otherwise been paid back.”

Rothenberg was also convicted of defrauding the now-defunct Silicon Valley Bank in 2015 after he was alleged to have made false statements “in relation to a line of credit” for his VC management company.

He will be sentenced in March and faces a lengthy jail term and hefty fine.

According to the US Attorney’s press release, the maximum sentences for each count of the charges of bank fraud and making a false statement to a bank are “30 years of imprisonment and a fine of $1,000,000.”

The maximum sentence for the counts of wire fraud is “20 years of imprisonment and a fine of $250,000,” while he could also face a 10-year sentence and $250,000 fines for the counts of money laundering.