Venture capitalist Michel Rothenberg has agreed to be barred from being an investment advisor for five years for misappropriating millions of dollars from the funds he operated, according to a complaint filed by the Securities and Exchange Commission.
Rothenberg, 34, a resident of San Francisco, misappropriated more than $20 million by using funds intended for investments or charging excess fees, the SEC complaint, filed Monday in federal District Court in San Francisco, said. The money was supposedly intended for start-up virtual reality and technology companies.
The investments were made through Rothenberg Ventures Management Company and other entities owned by Rothenberg and involved 200 people who invested $64 million.
In addition to using the money to fund other business entities he owned, Rothenberg used some of the funds to pay for his lavish lifestyle and expensive parties, the complaint said.
During the scheme, which lasted from at least 2013 to the present, Rothenberg comingled investments that should have been kept separate and changed his fee structures several times, the SEC said. He also tried to hide his activities from investors, the SEC said.
At one point in 2014, he was warned by the finance director of his enterprise that his expenses were outpacing his income, but instead of cutting back on expense, the SEC said he maintained and sometimes accelerated spending on himself and his business entities.
In agreeing to the settlement, Rothenberg did not admit or deny the charges. The SEC is asking the court to set punitive damages and to require disgorgement of ill-gotten gains.