David Haase, a former employee of the beleaguered San Francisco-based firm Rothenberg Ventures Management Co. (RVM), is suing the firm and its founder, Mike Rothenberg, saying he was asked to run up more than $100,000 in business expenses on an American Express account at the direction of Rothenberg and never repaid.
In his lawsuit, filed last week in San Francisco, Haase says he joined Rothenberg Ventures in April of this year and tasked with “providing various services of a Chief Financial Office for RVM” while also doing work on behalf of the company’s affiliated businesses, including its four-year-old venture arm, Rothenberg Ventures, and its small but growing virtual reality production house, River Studios, founded in May 2015.
Haase says in his suit that in May, he opened the account with Rothenberg’s approval “for the purpose of acting as a credit line for the day-to-day expenses incurred by RVM.” These included business expenses charged by Rothenberg’s “numerous administrative assistants at his direct request.” Part of those expenses included payroll, according to our sources.
As of the suit’s filing, Haase’s account was overdue in the amount of $109,352.20 and, according to his suit, Rothenberg has “wrongfully and capriciously refused to pay” that debt, leaving Haase to deal with the charge, as well as the accruing interest on the amount. The suit says that Rothenberg “disavowed any responsibility on the part of RVM” despite having previously paid expenses charged to the card to the tune of $140,000.
Haase’s charges don’t end there. In a claim that may be of even greater interest to those following the case, Haase also says that Rothenberg co-mingled the accounts of Rothenberg Ventures and River Studios.
Whether this could prove problematic for Rothenberg isn’t yet clear; even LPs seem confused about how much of River Studios they own and how distinctly it was managed from Rothenberg Ventures. But Haase’s suit goes so far as to allege Rothenberg of treating “such accounts as personal accounts, to such an extent that such business entities were in fact his alter ego.”
We’ve reached out to Rothenberg, Haase, and Haase’s attorney, Patrick Terry of the law practice Counsel Force, for comment. None has responded thus far.
While one might wonder why Haase would open an American Express card in his own name on behalf of RVM — particularly given that he’d joined the firm just one month earlier — sources suggest Haase has long known Rothenberg through mutual friends at Stanford, where Rothenberg was nabbing his undergraduate and M.S. degrees while Haase was working toward his M.B.A. (Rothenberg left Stanford in 2007; Haase graduated in 2008.)
Haase, who left the firm this summer, is far from alone in moving on. As we reported in mid-August, Rothenberg Ventures has experienced a mass exodus in recent months and is answering questions from the SEC after a lower-level employee alerted the agency to what this person reported as wire fraud and breach of fiduciary duty.
A source says the employee was subsequently fired and is now suing the firm for retaliation.
All SEC investigations are conducted privately. An inquiry does not mean that the agency will file a case in federal court or bring an administrative action.
Former employees say the firm’s biggest asset — Rothenberg — also became its biggest handicap over time as he spent lavishly on marketing the firm to prospective investors. Among the firm’s pricey outlays: buying tickets to the Golden Globes, co-sponsoring actor Chace Crawford’s 30th birthday party in West Hollywood, and spending unsparingly to executive produce a video for Coldplay. The firm also paid handsomely for season tickets to Golden State Warriors games, as well as converted a 1930’s bungalow in Austin into a swanky tech hub during this year’s South by Southwest Festival.
According to SEC filings, Rothenberg Ventures raised roughly $47 million across four funds and employed roughly 60 people at its peak, some of whom were working for the firm on a contract basis.
Despite RVM’s aggressive spending, including on River Studios, Rothenberg Ventures appears to have some valuable stakes, including an early position in the point-of-sale firm Revel Systems, which is reportedly in talks with IBM about an acquisition. (We understand this deal will close unless Rothenberg’s involvement derails it.)
Haas is seeking full restitution, as well as an injunction to prohibit RVM from “continuing to engage in the unfair business practices” outlined in his suit.
Correction: This article originally stated that Rothenberg Ventures also holds a stake in Unity Technologies, a widely used development platform used to create interactive 2D, 3D, VR and AR experiences that has gone on to raise $200 million from investors. Unity has informed us that the firm is not a shareholder.
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