Michael Rothenberg. Photo credit: Insider Images/Andrew Kelly, under Creative Commons license

The U.S. Department of Justice has announced an indictment of investor Michael Rothenberg, a once high-flying venture capitalist whose wings seemingly got clipped after the U.S. Securities and Exchanges Commission (SEC) accused him of misappropriating $19 million of investors’ funds. Rothenberg was slapped with more than $31 million in fines from the SEC as a result, but it appears authorities are still pushing for more, as the Justice Department has filed charges of fraud against him. The DoJ alleges Mike Rothenberg “orchestrated multiple schemes to defraud his victims”, victims, in this case, being investors in Rothenberg Ventures, the eponymous venture capital firm Rothenberg founded.

The Justice Department accuses Rothenberg of bank fraud and defrauding investors. As for bank fraud, it’s alleged that Rothenberg made false statements about his wealth to his bank while refinancing his home mortgage and obtaining a personal loan. As to allegedly defrauding investors, Rothenberg is accused of engaging in a scheme to defraud an investor with respect to a $2 million investment that was believed to be destined for River Studios, a virtual reality content production company that Rothenberg controlled. It’s alleged that Rothenberg diverted most of the $2 million towards non-company uses despite the investment being destined for company activities.

It’s also alleged that Rothenberg conspired in a scheme to defraud up to five separate investors who he compelled to wire a total of $1.35 million under the premise of buying shares of a privately-held software company. The indictment alleges Rothenberg diverted the money towards other purposes, with no stock in the said software company ever purchased.

Lastly, it’s alleged that Rothenberg took more fees than he was entitled to for managing his investors’ money and that he invested far less of the money he raised than as agreed by investors. The charges Rothenberg is facing carry potential penalties of a number of years in prison and more than a million dollars in fines.

Rothenberg appears to have been taken into custody but released on a $250,000 bond pending the outcome of the indictment. He’s scheduled to appear in court next on the 27th of August, 2020.