Venture capitalist Mike Rothenberg and his firm are facing a lawsuit brought by the investor’s former chief of staff, who alleges Rothenberg engaged in a “systematic and clandestine scheme” to avoid paying wages to his employees. The plaintiff, Katie Fanelli, believes that there are others responsible, as well, so it’s possible the complaint will be amended. She and members of this class action suit are seeking an undisclosed amount in compensatory damages, back pay with interest, and attorney fees.
This is just the latest headache for Rothenberg, who has been embroiled in a scandal involving the operations of his firm and who is reportedly the subject of an investigation by the Securities and Exchange Commission (SEC).
Documents were filed with the Superior Court of California in the county of San Francisco on September 30. And it’s not just unpaid wages mentioned in the suit but also failure to indemnify employees for expenses and breaches regarding vested paid time off.
In the court filing, she believes Rothenberg may not bear sole responsibility, and states that there may be up to 50 additional defendants that could be added to the complaint at a later time. She alleges:
[Rothenberg Ventures Management Company’s] clandestine program of failing to pay its employees for all hours worked is, in part, carried out through its culture. Defendant gives employees work assignments. The employees perform the work and the Defendant severs and/or terminates their employment without compensating them for all hours worked by failing to provide them with their final pages to cover wages earned.
Founded in 2012, Rothenberg Ventures aimed to “build communities and solve problems.” It made investments in virtual reality, augmented reality, artificial intelligence, computer vision, machine learning, drones, robotics, space, autonomous vehicles, and more. Two years later, it created River Studios, a virtual reality accelerator. However, all of that soon came crumbling down, with key employees departing, allegations of embezzlement, and investigations by law enforcement.
According to her LinkedIn profile, Fanelli joined Rothenberg Ventures in July 2015 and departed more than a year later. By this time, the firm was imploding, with reports saying it “apparently ran out of operating money” and investors wondering whether Rothenberg had lost control of his business. Fanelli’s lawsuit isn’t the only one Rothenberg is facing, as his former finance director is also claiming that the VC failed to provide reimbursement for $109,000 in charges made on a personal American Express credit card.
Last month, Rothenberg Ventures rebranded itself to Frontier Tech Ventures, perhaps in an attempt to move past the turmoil. Rothenberg remains with the firm.
We’ve reached out to both parties for comment and will update if we hear back.
The court case is Katie Fanelli, et al. v Rothenberg Ventures Management Company, LLC.