Prominent Silicon Valley VR venture star convicted of investor fraud and money laundering

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wire fraud, money laundering, bank fraud and making false statements to banks

(XR Navigation Network November 18, 2023) Michael Rothenberg was once a rising star in the Silicon Valley venture capital world, but a U.S. San Francisco court recently found him guilty of 21 counts, including wire fraud, money laundering, bank fraud and collaborating with banks. Crime of false statement.

It is worth mentioning that the fraud committed by Rosenberg involved River Studios, a VR content production company he founded. according toU.S. Department of Justice, Rosenberg falsely claimed that he provided funding for River Studios, but in fact, he misappropriated a large amount of investor funds from the venture capital fund Rothenberg Ventures to support the company in question.

In 2013, 27-year-old Rosenberg burst onto the Bay Area scene with $5 million. A self-described Math Olympian who attended Stanford University before earning an MBA from Harvard Business School, he reportedly had a stint at the prestigious strategy consulting firm Bain & Company and landed a position at at least one hedge fund.

随着Meta在2014年收购Oculus, Rosenberg, who had already made some achievements in the venture capital world, began to set his sights on this field, investing in companies includingMicrosoftAcquiredAltspaceVRA number of AR/VR startups including.

The U.S. Department of Justice stated: “Evidence at trial showed that Rosenberg founded a venture capital management company, Rothenberg Ventures management company, LLC (“RVMC”), and used the company to raise and manage four investments between 2012 and 2018. An annual venture capital fund. The purpose of said fund is to invest in Silicon Valley startups, particularly in the field of virtual reality technology."

However, Rosenberg misappropriated large amounts of investors' funds. "The U.S. Department of Justice further wrote: "The evidence also shows that Rosenberg frequently received additional fees from the venture capital funds he managed during 2015 and 2016, and investors' funds were often used for purposes other than investment, such as to pay RVMC’s operating expenses and, in late 2015, receive a line of credit that RVMC obtained from Silicon Valley Bank. "

As for “purposes other than investing,” this seems to include seeking substantial financial benefits for oneself and supporting one’s own extravagant lifestyle. According to reports, Rosenberg himself likes to party very much, and Bloomberg even stated in the report that he is "Silicon Valley's party animal."

Not only that, Rosenberg established a VR content production company called River Studios in his own name and claimed that he himself provided the funding. according toU.S. Department of Justice, Rosenberg falsely claimed that he provided funding for River Studios, but in fact, he misappropriated a large amount of investor funds from the venture capital fund Rothenberg Ventures to support the company in question.

The DOJ said: “In approximately 2015, Rosenberg formed River Studios for the purpose of producing content for virtual reality headsets. Trial evidence showed that during 2015 and 2016, Rosenberg told him employees, fund investors and investors in River Studios. The operating funds of River Studios came from his 'self-raised' and no venture capital funds were used to fund the company's operations. But there is evidence that during this period, Rosen Berg misappropriated significant amounts of venture capital funds to pay for River Studios' operating expenses."

The press release further stated: "In addition to defrauding investors in two venture capital funds he managed, the jury also found Rosenberg defrauded an investor when he invested $2 million in River Studios in February 2016. Trial The evidence in the case shows that Rosenberg falsely told investors that he owned 'self-funded' River Studios and falsely told investors that its investments would be used for a specific purpose, when in fact Rosenberg knew that investors A significant portion of the investment was to be used to repay funds he had embezzled from two venture capital funds he managed in late 2015. The evidence suggests that, among other transactions, these repayments constituted money laundering."

In a recent trial, the US San Francisco Court found him guilty of 21 counts, including wire fraud, money laundering, bank fraud and making false statements to banks.

Rosenberg will be sentenced on March 1, 2024, and faces up to 30 years in prison for the most serious fraud charges.