8 ms·

An employee who exposed Rothenberg Ventures to the SEC

112 points by jtraffic 9y ago

deleted 9y ago
[deleted]
tremon 9y ago
So, where's the blowback? I feel like half of the story is missing...
- mnw21cam 9y ago
  From the article: > Riordan is trying to start a company that improves email security. Partly, he says, that’s because blowing the whistle on Rothenberg dinged his career prospects. After once telling a job interviewer he was a whistleblower, he didn’t get a call back. Still, he says, the cost was worth it. “I knew that to some extent I would be damaging my career,” he says. “I was just so sure that it was the right thing to do.”
  - BoorishBears 9y ago
    Doesn't really explain how he knows the mention of being a whistleblower is the reason he wasn't called back.
    - frgtpsswrdlame 9y ago
      Of course not, companies let the hiring process be opaque for a reason. Common sense would tell us that blowing the whistle is not going to endear you to future employers.
      - BoorishBears 9y ago
        Really? Common sense tells me some types of companies will see it as a negative (what if he does it to us!), and others will see is as neutral (we asked why he left his last job, he answered, not the worst reason, not the best), and some will see it as a positive (someone willing to step up and put their neck on the line for what's right). Do I think there are a lot of companies in the first category? Yes (I also think there are a lot in the other two though). Do I think it's remotely reasonable to automatically assume every place that doesn't call you back after you mention being a whistleblower isn't calling back because you mentioned that? Not at all.
      - manigandham 9y ago
        As an employer, whistleblowers are not something to fear unless you have something to hide. What exactly is he going to expose if everything is legit? Better to have honest employees than those would do otherwise without question.
        frgtpsswrdlame 9y ago
        >As an employer, whistleblowers are not something to fear unless you have something to hide. We don't let that logic slide when it comes to individual privacy and I'm not sure we should for corporate privacy. Even a company completely on the up and up may have privacy concerns that deter them from hiring someone like this.
        manigandham 9y ago
        Illegal vs private is a different discussion. Some companies like transparency, some don't, and that's fine. Proper security protocols are probably a better model for that since everyone is naturally curious and info tends to spread at even the most secret of companies.
  - tremon 9y ago
    My point was that those events are positively minor, compared to what others have experienced. I think the term "blowback" is severely out of place here.
- coldcode 9y ago
  Did you talk to the government? Won't answer that question. You're fired. Of course the SEC is mostly a toothless worm so while he did the right thing, I doubt much will ever happen to the company or its founder.
  - winter_blue 9y ago
    The SEC is mostly a toothless worm? Really? Can you back that up with some examples of the SEC giving a free pass to companies that defraud investors?
    - coldcode 9y ago
      2008 how many company and bank CEOs were convicted of wrong doing?
pmorici 9y ago
Article doesn't really support the headline. The sole argument they provide that there was any "blowback" was that one time he brought it up in a job interview and didn't get a call back. Hardly enough to say your career prospects are some how wrecked because you exposed a blatant fraud.
- humanrebar 9y ago
  It also says he was allegedly fired when the SEC cooperation was discovered.
  - lightbyte 9y ago
    They are claiming he already gave notice he was leaving before then so they just accelerated the process.
    - vesinisa 9y ago
      That's exactly what I would claim if someone accused me of unlawful termination.
  - pmorici 9y ago
    Is getting fired from a fraudulent company really a net negative?
    - nickpsecurity 9y ago
      Even being associated with one is. Then, being a whistleblower is a major risk to HR since most will assume the person might publish just anything as opposed to worst stuff. He already claims to have been rejected for a job being a whistleblower but rejections happen for a lot of reasons.
- fullshark 9y ago
  It's a pretty thin piece. I'd like to read more.
tcbawo 9y ago
In all seriousness, isn't it best to secure your next position before going to the government or the investors? You have to assume that your job is over as you know it.
chiph 9y ago
> even renting out San Francisco’s AT&T Park Now I get the opening scene in Silicon Valley Season 2 Episode 1 where they're at the baseball stadium.
ghc 9y ago
Good for him. That's why we have whistleblower laws in the first place. Most of us have a lot to lose by doing the right thing: damaged job prospects may equate to a large future loss of earnings over your career. Still, history shows plenty of people have paid (and continue to pay) a far higher price than that.
- colmvp 9y ago
  Yup. Whistleblowers are severely disadvantaged. The Theranos whistleblower has had to endure about 400k in legal fees. I also recall reading a story about two police officers (can't remember the city) who tried to reveal corruption in their department, only to be vilified by superiors/fellow officers, have their career trajectory torpedoed, and see people who treated them like garbage eventually elevated in various forms of government. And of course, there's Snowden who basically had to flee the country to reveal his findings, lest he suffer the consequences of prosecutorial abuse of the Espionage Act in the United States.
  - smcl 9y ago
    For the Police whisleblower I'm not sure if it's the same one, but Adrian Schoolcraft's[1] case was pretty awful. He was mostly documenting relatively mundane (but still nasty) things like being given targets for the amount of littering, jaywalking, open-container etc arrests by the superior officers. However things took a bit of a weird turn, and he ended up with some recordings of the Police harrassing him at his home (including them basically abducting him under false mental health issues, and destroying what they thought was the only mic recording them doing so) are pretty awful - This American Life did a piece on this [2]. [1] = https://www.nytimes.com/2015/09/30/nyregion/officer-who-disclosed-police-misconduct-settles-suit.html?_r=0 https://www.nytimes.com/2015/09/30/nyregion/officer-who-disc... [2] = https://www.thisamericanlife.org/radio-archives/episode/414/right-to-remain-silent https://www.thisamericanlife.org/radio-archives/episode/414/...
  - cavanasm 9y ago
    That's Chicago based. They were actually secretly working for CPD Internal Affairs, and their CO (who knew of their side work for IA, but not who the subject of the investigation was) leaked it to everyone, which made it nearly impossible for them to actually investigate the particular officer who was suspected of being a local drug kingpin / murderer (convicted much later of a small fraction of the stuff he's alleged to have done). The Intercept ran one of their big series on it. It's definitely an interesting read, but it's lengthy. https://theintercept.com/series/code-of-silence/ https://theintercept.com/series/code-of-silence/
crusso 9y ago
"That was February 2016. By July, Riordan says, he’d downloaded emails, financial reports, and other records from the network that he says showed the company’s namesake, Chief Executive Officer Mike Rothenberg, was using investor money to fund other projects he owned" That's kind of troubling, depending upon the details. If I hire someone and he starts fishing around on the servers that he has access to, looking to put together a case, that could easily be a violation of trust. I could maybe even see if the SEC had contacted him and asked him for information as an informant in something ongoing. But Riordan initiated this - and it wasn't like the Uber example where Susan Fowler was exposing company culture information that was more public in the first place. Granted, Rothenberg looks pretty dirty and I have personal experience with a CEO diverting company funds and priorities away from the supposed corporate mission. It's no fun and I have sympathy for stopping him. If I hire someone to do some server work, I want him to do the job I'm paying for - not spend my money trying to build a case against me.
- ivraatiems 9y ago
  Why are you assuming he was "fishing around?" He suspected illegal activity, found evidence, and reported it. I don't care how much you're paying me; if I see you punch a guy in the break room, I'm calling the police. This is more like that than it is an employee shirking his duties.
  - crusso 9y ago
    It wasn't punching a guy in the break room. If he was working on the web server or something like that but turned up email and financial records, there was digging involved.
- GrumpyNl 9y ago
  With those ethics, you would be a great soldier.
  - joshdotsmith 9y ago
    I'm sorry, what?
endorphone 9y ago
This article didn't do this person any favors. Hired for web development, they go trawling through the network finding any insufficiently secured material they can access to appease their sense of justice (and have since used various emails of other people's for media discussions to bolster their case, while ironically talking about email security -- ala "defend against me"). Then they continue working while acting as an agent of the government. Or such is what I take from this article. As good as it seems that the company and "frat" brothers (always a wonderful word in these articles to prejudice the reader) were brought down, does this article give anyone any comfort about hiring this person? To make it even worse (regarding the "side with criminals" nonsense), thus far nothing criminal has even been demonstrated. For instance a core contention is that they used management fees for separate investments. There is nothing illegal about that. Investors are partners of specific funds, and management fees are the fees and profit to the management company for running that fund. It just sounds like a shitty company shittily run, but running around exposing various emails that were arguably criminally accessed just smells really stinky.
- jackmott 9y ago
  Yes, I would hire him, and not you.
- BEEdwards 9y ago
  Just to be clear, in this case your siding with the criminals?
  - JoeAltmaier 9y ago
    Against the hypocrite isn't at all the same thing, as 'for the criminals'. Its that 'you're with me or against me' thinking that plagues the internet lately.
    - frgtpsswrdlame 9y ago
      Where's the hypocrisy?
  - 9y ago
dmschulman 9y ago
Interesting timing, I had just finished reading this Backchannel article regarding Rothenberg Ventures from September: https://backchannel.com/mike-rothenbergs-vc-firm-was-young-splashy-and-loaded-with-cash-now-it-s-all-come-crashing-down-e76fa076c7c5#.gz51k7nld https://backchannel.com/mike-rothenbergs-vc-firm-was-young-s... Just an excerpt, an example of what I'd imagine some of the unwise personal projects regard: "Most troublesome are questions about how Rothenberg managed investors’ money. Specifically, in 2015 he founded a virtual reality production company called River Studios to create virtual reality videos for the likes of Coldplay and Björk, funding it with $5 million from Rothenberg Ventures. Many investors say they did not know — nor was it disclosed in annual reports — that he was founding and funding his own business with their dollars, despite the fact that the investment was roughly 50 times the size of the seed investments the firm normally makes."
- endorphone 9y ago
  I'm taking a beating in another comment (it's one of those ridiculous discussions where everyone can demonstrate how righteous they are), but I listened to the podcast and the argument was that the management company (e.g. not the actual funds) used management fees to pay for their own investments. Ala the frat bros owned A. A had funds B, C, and D. Investers are LPs of B, C and D. Management fees flowed from B, C and D to A, where it was used for nonsensical stuff. There's nothing at all illegal about that. If a fund has a 10% of holdings management fee, the fund has zero obligation or "fiduciary duty" to the charged fund holders in how they use that money. They can use it on a mountain of blow, or a room of strippers. Or they can invest in dubious investments. Whatever. If investors don't like the returns relative to the management fees, they redeem. This whole story is very offputting. The individual is talking about various completely uncriminal emails that he read in podcasts, itself arguably criminal and with profound civil liability. And that's the hero of the story? Eh.
  - jartelt 9y ago
    Well, if the management company didn't use any of the fees to pay employees, credit card companies, other vendors, etc. and instead used the fees to buy a "mountain of blow", I think that qualifies as an issue.
aphextron 9y ago
I have to say this isn't surprising from my personal experience with Rothenberg. I attended their "Founders Field Day" event last year and it was the most surreal, over the top, "Silicon Valley" thing I have ever witnessed. They must not be in too hot of water though, as they're holding another puppy petting/VR party in the city this Friday.
- obiefernandez 9y ago
  Mike Rothenberg is one of the executive producers of Silicon Valley!!
kazinator 9y ago
If I found out that someone I know (friend, family member, ...) were being deceived by the company, I'd pass the info on to that person (not the government). Otherwise, none of my business. Of course, unless I'm in a position where I'm legally required, like an officer of the company, or accountant or whatever. As someone just doing in-house development or IT work or whatever, no way. The litmus test for whistling is: is it my business to know this information? And if so, do I face penalties or a jail time if I don't report it? That guy shouldn't even have been reading those e-mails, which were not for his eyes. Of course someone might not want to hire him; he sticks his nose where it doesn't belong. Suppose the company hadn't done anything wrong? Will he reveal in future interviews, "I was an almost-whistleblower at my former employer; working a simple web developer, I got into private executive memos that weren't CC'd to me and luckily found no evidence of wrongdoing".
- deleted 9y ago
  [deleted]
- antihero 9y ago
  I think you've kind of missed the point of ethics entirely.
  - deleted 9y ago
    [deleted]
  - kazinator 9y ago
    Reading confidential e-mails is unethical, full stop. Unethical actions which uncover crime are still unethical. That is why we have warrants, and wiretap laws and all that; how information is obtained matters. "Any way to nail a criminal" is end-justifies-the-means questionable ethics.
kwisatzh 9y ago
I don't see anything coming out of this or the earlier exposes. They seem to be doing fine, and will continue to thrive. Viva Tech-Bros!

112 points by jtraffic 9y ago

deleted 9y ago

[deleted]

tremon 9y ago

So, where's the blowback? I feel like half of the story is missing...

mnw21cam 9y ago
From the article: > Riordan is trying to start a company that improves email security. Partly, he says, that’s because blowing the whistle on Rothenberg dinged his career prospects. After once telling a job interviewer he was a whistleblower, he didn’t get a call back. Still, he says, the cost was worth it. “I knew that to some extent I would be damaging my career,” he says. “I was just so sure that it was the right thing to do.”
- BoorishBears 9y ago
  Doesn't really explain how he knows the mention of being a whistleblower is the reason he wasn't called back.
  - frgtpsswrdlame 9y ago
    Of course not, companies let the hiring process be opaque for a reason. Common sense would tell us that blowing the whistle is not going to endear you to future employers.
    - BoorishBears 9y ago
      Really? Common sense tells me some types of companies will see it as a negative (what if he does it to us!), and others will see is as neutral (we asked why he left his last job, he answered, not the worst reason, not the best), and some will see it as a positive (someone willing to step up and put their neck on the line for what's right). Do I think there are a lot of companies in the first category? Yes (I also think there are a lot in the other two though). Do I think it's remotely reasonable to automatically assume every place that doesn't call you back after you mention being a whistleblower isn't calling back because you mentioned that? Not at all.
    - manigandham 9y ago
      As an employer, whistleblowers are not something to fear unless you have something to hide. What exactly is he going to expose if everything is legit? Better to have honest employees than those would do otherwise without question.
      - frgtpsswrdlame 9y ago
        >As an employer, whistleblowers are not something to fear unless you have something to hide. We don't let that logic slide when it comes to individual privacy and I'm not sure we should for corporate privacy. Even a company completely on the up and up may have privacy concerns that deter them from hiring someone like this.
        manigandham 9y ago
        Illegal vs private is a different discussion. Some companies like transparency, some don't, and that's fine. Proper security protocols are probably a better model for that since everyone is naturally curious and info tends to spread at even the most secret of companies.
- tremon 9y ago
  My point was that those events are positively minor, compared to what others have experienced. I think the term "blowback" is severely out of place here.
coldcode 9y ago
Did you talk to the government? Won't answer that question. You're fired. Of course the SEC is mostly a toothless worm so while he did the right thing, I doubt much will ever happen to the company or its founder.
- winter_blue 9y ago
  The SEC is mostly a toothless worm? Really? Can you back that up with some examples of the SEC giving a free pass to companies that defraud investors?
  - coldcode 9y ago
    2008 how many company and bank CEOs were convicted of wrong doing?

pmorici 9y ago

Article doesn't really support the headline. The sole argument they provide that there was any "blowback" was that one time he brought it up in a job interview and didn't get a call back. Hardly enough to say your career prospects are some how wrecked because you exposed a blatant fraud.

humanrebar 9y ago
It also says he was allegedly fired when the SEC cooperation was discovered.
- lightbyte 9y ago
  They are claiming he already gave notice he was leaving before then so they just accelerated the process.
  - vesinisa 9y ago
    That's exactly what I would claim if someone accused me of unlawful termination.
- pmorici 9y ago
  Is getting fired from a fraudulent company really a net negative?
  - nickpsecurity 9y ago
    Even being associated with one is. Then, being a whistleblower is a major risk to HR since most will assume the person might publish just anything as opposed to worst stuff. He already claims to have been rejected for a job being a whistleblower but rejections happen for a lot of reasons.
fullshark 9y ago
It's a pretty thin piece. I'd like to read more.

tcbawo 9y ago

In all seriousness, isn't it best to secure your next position before going to the government or the investors? You have to assume that your job is over as you know it.

chiph 9y ago

> even renting out San Francisco’s AT&T Park Now I get the opening scene in Silicon Valley Season 2 Episode 1 where they're at the baseball stadium.

ghc 9y ago

Good for him. That's why we have whistleblower laws in the first place. Most of us have a lot to lose by doing the right thing: damaged job prospects may equate to a large future loss of earnings over your career. Still, history shows plenty of people have paid (and continue to pay) a far higher price than that.

colmvp 9y ago
Yup. Whistleblowers are severely disadvantaged. The Theranos whistleblower has had to endure about 400k in legal fees. I also recall reading a story about two police officers (can't remember the city) who tried to reveal corruption in their department, only to be vilified by superiors/fellow officers, have their career trajectory torpedoed, and see people who treated them like garbage eventually elevated in various forms of government. And of course, there's Snowden who basically had to flee the country to reveal his findings, lest he suffer the consequences of prosecutorial abuse of the Espionage Act in the United States.
- smcl 9y ago
  For the Police whisleblower I'm not sure if it's the same one, but Adrian Schoolcraft's[1] case was pretty awful. He was mostly documenting relatively mundane (but still nasty) things like being given targets for the amount of littering, jaywalking, open-container etc arrests by the superior officers. However things took a bit of a weird turn, and he ended up with some recordings of the Police harrassing him at his home (including them basically abducting him under false mental health issues, and destroying what they thought was the only mic recording them doing so) are pretty awful - This American Life did a piece on this [2]. [1] = https://www.nytimes.com/2015/09/30/nyregion/officer-who-disclosed-police-misconduct-settles-suit.html?_r=0 https://www.nytimes.com/2015/09/30/nyregion/officer-who-disc... [2] = https://www.thisamericanlife.org/radio-archives/episode/414/right-to-remain-silent https://www.thisamericanlife.org/radio-archives/episode/414/...
- cavanasm 9y ago
  That's Chicago based. They were actually secretly working for CPD Internal Affairs, and their CO (who knew of their side work for IA, but not who the subject of the investigation was) leaked it to everyone, which made it nearly impossible for them to actually investigate the particular officer who was suspected of being a local drug kingpin / murderer (convicted much later of a small fraction of the stuff he's alleged to have done). The Intercept ran one of their big series on it. It's definitely an interesting read, but it's lengthy. https://theintercept.com/series/code-of-silence/ https://theintercept.com/series/code-of-silence/

crusso 9y ago

"That was February 2016. By July, Riordan says, he’d downloaded emails, financial reports, and other records from the network that he says showed the company’s namesake, Chief Executive Officer Mike Rothenberg, was using investor money to fund other projects he owned" That's kind of troubling, depending upon the details. If I hire someone and he starts fishing around on the servers that he has access to, looking to put together a case, that could easily be a violation of trust. I could maybe even see if the SEC had contacted him and asked him for information as an informant in something ongoing. But Riordan initiated this - and it wasn't like the Uber example where Susan Fowler was exposing company culture information that was more public in the first place. Granted, Rothenberg looks pretty dirty and I have personal experience with a CEO diverting company funds and priorities away from the supposed corporate mission. It's no fun and I have sympathy for stopping him. If I hire someone to do some server work, I want him to do the job I'm paying for - not spend my money trying to build a case against me.

ivraatiems 9y ago
Why are you assuming he was "fishing around?" He suspected illegal activity, found evidence, and reported it. I don't care how much you're paying me; if I see you punch a guy in the break room, I'm calling the police. This is more like that than it is an employee shirking his duties.
- crusso 9y ago
  It wasn't punching a guy in the break room. If he was working on the web server or something like that but turned up email and financial records, there was digging involved.
GrumpyNl 9y ago
With those ethics, you would be a great soldier.
- joshdotsmith 9y ago
  I'm sorry, what?

endorphone 9y ago

This article didn't do this person any favors. Hired for web development, they go trawling through the network finding any insufficiently secured material they can access to appease their sense of justice (and have since used various emails of other people's for media discussions to bolster their case, while ironically talking about email security -- ala "defend against me"). Then they continue working while acting as an agent of the government. Or such is what I take from this article. As good as it seems that the company and "frat" brothers (always a wonderful word in these articles to prejudice the reader) were brought down, does this article give anyone any comfort about hiring this person? To make it even worse (regarding the "side with criminals" nonsense), thus far nothing criminal has even been demonstrated. For instance a core contention is that they used management fees for separate investments. There is nothing illegal about that. Investors are partners of specific funds, and management fees are the fees and profit to the management company for running that fund. It just sounds like a shitty company shittily run, but running around exposing various emails that were arguably criminally accessed just smells really stinky.

jackmott 9y ago
Yes, I would hire him, and not you.
BEEdwards 9y ago
Just to be clear, in this case your siding with the criminals?
- JoeAltmaier 9y ago
  Against the hypocrite isn't at all the same thing, as 'for the criminals'. Its that 'you're with me or against me' thinking that plagues the internet lately.
  - frgtpsswrdlame 9y ago
    Where's the hypocrisy?
- 9y ago

dmschulman 9y ago

Interesting timing, I had just finished reading this Backchannel article regarding Rothenberg Ventures from September: https://backchannel.com/mike-rothenbergs-vc-firm-was-young-splashy-and-loaded-with-cash-now-it-s-all-come-crashing-down-e76fa076c7c5#.gz51k7nld https://backchannel.com/mike-rothenbergs-vc-firm-was-young-s... Just an excerpt, an example of what I'd imagine some of the unwise personal projects regard: "Most troublesome are questions about how Rothenberg managed investors’ money. Specifically, in 2015 he founded a virtual reality production company called River Studios to create virtual reality videos for the likes of Coldplay and Björk, funding it with $5 million from Rothenberg Ventures. Many investors say they did not know — nor was it disclosed in annual reports — that he was founding and funding his own business with their dollars, despite the fact that the investment was roughly 50 times the size of the seed investments the firm normally makes."

endorphone 9y ago
I'm taking a beating in another comment (it's one of those ridiculous discussions where everyone can demonstrate how righteous they are), but I listened to the podcast and the argument was that the management company (e.g. not the actual funds) used management fees to pay for their own investments. Ala the frat bros owned A. A had funds B, C, and D. Investers are LPs of B, C and D. Management fees flowed from B, C and D to A, where it was used for nonsensical stuff. There's nothing at all illegal about that. If a fund has a 10% of holdings management fee, the fund has zero obligation or "fiduciary duty" to the charged fund holders in how they use that money. They can use it on a mountain of blow, or a room of strippers. Or they can invest in dubious investments. Whatever. If investors don't like the returns relative to the management fees, they redeem. This whole story is very offputting. The individual is talking about various completely uncriminal emails that he read in podcasts, itself arguably criminal and with profound civil liability. And that's the hero of the story? Eh.
- jartelt 9y ago
  Well, if the management company didn't use any of the fees to pay employees, credit card companies, other vendors, etc. and instead used the fees to buy a "mountain of blow", I think that qualifies as an issue.

aphextron 9y ago

I have to say this isn't surprising from my personal experience with Rothenberg. I attended their "Founders Field Day" event last year and it was the most surreal, over the top, "Silicon Valley" thing I have ever witnessed. They must not be in too hot of water though, as they're holding another puppy petting/VR party in the city this Friday.

obiefernandez 9y ago
Mike Rothenberg is one of the executive producers of Silicon Valley!!

kazinator 9y ago

If I found out that someone I know (friend, family member, ...) were being deceived by the company, I'd pass the info on to that person (not the government). Otherwise, none of my business. Of course, unless I'm in a position where I'm legally required, like an officer of the company, or accountant or whatever. As someone just doing in-house development or IT work or whatever, no way. The litmus test for whistling is: is it my business to know this information? And if so, do I face penalties or a jail time if I don't report it? That guy shouldn't even have been reading those e-mails, which were not for his eyes. Of course someone might not want to hire him; he sticks his nose where it doesn't belong. Suppose the company hadn't done anything wrong? Will he reveal in future interviews, "I was an almost-whistleblower at my former employer; working a simple web developer, I got into private executive memos that weren't CC'd to me and luckily found no evidence of wrongdoing".

deleted 9y ago
[deleted]
antihero 9y ago
I think you've kind of missed the point of ethics entirely.
- deleted 9y ago
  [deleted]
- kazinator 9y ago
  Reading confidential e-mails is unethical, full stop. Unethical actions which uncover crime are still unethical. That is why we have warrants, and wiretap laws and all that; how information is obtained matters. "Any way to nail a criminal" is end-justifies-the-means questionable ethics.

kwisatzh 9y ago

I don't see anything coming out of this or the earlier exposes. They seem to be doing fine, and will continue to thrive. Viva Tech-Bros!