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| Craig Berkman |
A former aspiring politician was arrested and charged with fraud related charges after deceiving investors ahead of the Facebook IPO, according to a statement by the U.S. Attorney’s office in New York City.
The former candidate for governor of Oregon, was arrested Tuesday for his alleged role in defrauding investors waiting to buy shares of Facebook Inc before its IPO in May 2012, the federal authorities said.
Craig Berkman, 71, falsely told investors that he had access to facebook shares before it went public. He also claimed to have access to other social media companies like LinkedIn Corp., Groupon Inc. and Zynga Inc., the Securities and Exchange Commission of the Unite States, said in a statement.
But instead of buying shares for investors as promised, Berkman made Ponzi-like payments to earlier investors and funded personal expenses, including costs of a bankruptcy case, according to the SEC, which filed a civil lawsuit against Berkman.
The defendant received at least $8 million from various schemes, according to U.S. Attorney Preet Bharara in Manhattan, who filed a criminal complaint against Berkman.
Berkman was arrested at his home in Odessa, Florida, and appeared briefly before a federal judge in Tampa, Florida. A bail hearing was set for Thursday in Tampa.
The Manhattan U.S. Attorney's Office charged Berkman with two counts of securities fraud and two counts of wire fraud. Each charge carries a maximum penalty of 20 years in prison.