OAKLAND – Michael Brent Rothenberg, a former San Francisco venture capitalist once described in Bloomberg as “Silicon Valley’s Party Animal,” was convicted today of wire fraud, money laundering, bank fraud, and making false statements to a bank by a federal jury, announced Criminal Division Chief Thomas C. Colthurst, Federal Bureau of Investigation Special Agent in Charge Robert Tripp, and Acting Special Agent in Charge of Internal Revenue Service- Criminal Investigation Mark Silva. The guilty verdicts followed a seven-week jury trial before the Hon. Jon S. Tigar, U.S. District Judge. All told, the evidence introduced at trial established that Rothenberg’s schemes resulted in approximately $18.8 million in missing money.
The jury found that Rothenberg, 39, committed wire fraud with respect to a number of investments from investors in two of the venture capital funds that he managed in 2015 and 2016. In addition, the jury found that Rothenberg committed wire fraud in February 2016 with respect to a $2 million investment made in a company he owned named Bend Reality LLC (which did business as River Studios), and that he thereafter committed money laundering by transferring a large portion of those proceeds through various bank accounts. Finally, the jury found the defendant guilty of committing bank fraud and making false statements to a bank in relation to a line of credit that Rothenberg obtained for his venture capital management company from Silicon Valley Bank in late 2015.
Evidence at trial showed that Rothenberg founded a venture capital management company, Rothenberg Ventures Management Company, LLC (“RVMC”), that he used between 2012 and 2018 to raise and manage four annual venture capital funds. The purpose of the funds was to invest in Silicon Valley start-up companies, and particularly companies in the field of virtual reality technologies. The evidence also showed that in approximately 2015, Rothenberg founded River Studios for the purpose of producing content to be used in virtual reality headsets. The evidence presented at trial showed that, throughout 2015 and 2016, Rothenberg told his employees, fund investors, and the investor into River Studios that River Studios had been “self-funded” by him and that no venture capital funds had been used to fund the operations of that company. The evidence showed, however, that Rothenberg misappropriated a large amount of venture capital fund money to pay for River Studios’ operations during that period. In addition to using venture capital funds to pay for River Studios’ operations, the evidence also showed that Rothenberg routinely took excess fees from the venture capital funds that he managed throughout 2015 and 2016 and that investors’ funds were routinely used for purposes other than as represented to fund investors, such as to pay for RVMC’s operating expenses and to secure a line of credit taken out from Silicon Valley Bank by RVMC in late 2015.