Mike Rothenberg had a pretty nasty 2016, and his 2017 does not appear to be shaping up too well either. Already facing trouble over allegedly fraudulent transactions within his investment firm Rothenberg Ventures and his virtual reality startup River Studios, the investor has now been sued by Transcend VR.
Rothernberg has been sued on counts of fraud, breach of contract and deceptive diversion of funds. Sound familiar? Transcend has alleged that it was convinced to invest $2 million in River Studios on the basis of a convertible promissory note. However, the company alleges that it was led to believe that Rothenberg had 100 percent equity in the company and that with its $2 million, it would be first non-founder to invest.
Transcend goes on to say that unknown to it, Rothenberg diverted $5 million into River Studios from other sources between 2014 and 2016. According to the company, those investors were thus given a beneficial ownership in River. What’s more, River LLC had apparently also agreed to pay back the principle of the loan with 5 percent interest. The condition attached with the repayment was that should River commit any act of bankruptcy, it would have to immediately repay the loan along with unpaid interest, on a priority basis.
That obviously did not happen. Rothenberg apparently sent a letter to the investors in which he said that River Studios was in severe difficulties and that according to him, equity investments were likely to disappear. While this would have been taken as the risk of doing business under other circumstances, Transcend alleges that Rothenberg had been using funds meant for the company as his personal money — going so far, so as to transfer the majority of the $2 million into his personal bank account upon the same day as it was wired to River.
Well, at least Mike Rothenberg wouldn’t be surprised. He has already been facing lawsuits of the sort from one quarter or the other of late, all the while pleading complete innocence. Transcend’s lawsuit adds another bullet to the list against the investor, which also includes counts of bank fraud, wire fraud and breach of duty.
Meanwhile, Mike has been making his name into all sorts of lists. As per Wikipedia:
In November 2016, Mike Rothenberg, along with Elizabeth Holmes of Theranos, was listed by Bloomberg BusinessWeek as a CEO under 40 having a “rough year.” In December 2016, Mike Rothenberg was listed by Forbes on its list of “The 12 Worst Career Crashes Of 2016” and by Business Insider on its list of the “22 biggest tech scandals of 2016.”
