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Friday, May 17, 2024 | Back issues
Courthouse News Service Courthouse News Service

No You Didn’t, USA Tells Former Pol

MANHATTAN (CN) - Craig L. Berkman, a former candidate for governor of Oregon, falsely claimed to have access to pre-IPO shares in Facebook and other tech companies, the United States says in a 4-count securities fraud complaint.

"Berkman, a former Oregon gubernatorial candidate who now lives in Florida, touted to investors that he had special access to scarce sources of pre-IPO stock in Facebook, LinkedIn, Groupon, and Zynga," the SEC said in a statement announcing its parallel complaint.

"Instead of purchasing shares on investors' behalf as promised, Berkman misused their investments to make Ponzi-like payments to earlier investors, fund personal expenses, and pay off claims against him in a bankruptcy case," the SEC said.

The SEC also charged attorney John B. Kern of Charleston, S.C., of participating in the fraud as legal counsel to some of Berkman's companies.

"When investors in Berkman's phony Facebook fund began questioning what happened to their money after Facebook's IPO occurred, Kern falsely assured them that their money was used to purchase pre-IPO Facebook stock being held for them by unnamed counterparties," the SEC said in its statement.

"Berkman blatantly capitalized on the market fervor preceding highly anticipated IPOs of Facebook and other social media companies to fleece investors whose cash flow he treated like an ATM to fund his own living expenses and pay court-ordered claims to victims of his past misdeeds," SEC Regional Director Andrew M. Calamari said.

Berkman raised at least $13.2 million in his scam, the SEC said.

The federal indictment charges his with two counts of wire fraud and two counts of securities fraud, for his entities Ventures Trust II and Face Off Acquisitions.

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