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Former Oregon governor candidate arrested over Facebook IPO fraud
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Candidate
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| Contributor | RBH |
| Last Edited | RBH Mar 21, 2013 10:00pm |
| Category | News |
| News Date | Mar 20, 2013 09:00pm |
| Description | Craig Berkman, a former Oregon gubernatorial candidate, has been charged after fraudulently convincing investors to buy non-existent pre-IPO shares of Facebook and other social media companies.
Announced by the Securities and Exchange Commission (SEC), an investigation by the organization's Enforcement Division found that the 71 year-old told investors that he had access to pre-IPO stock in Facebook, LinkedIn, Groupon, and Zynga. Instead of purchasing stock before official IPOs, Berkman allegedly "misused" their investments by making "Ponzi-like" payments to earlier investors, used the money for personal expenses, and paid off charges laid against him in a bankruptcy case.
Questions were raised after investors began to ask what happened to their funds after Facebook's 2012 IPO took place. Alleged accomplice and lawyer John B.Kern then assured them the stock was being held by unnamed counterparties, but this wasn't enough to quell investor concerns.
Federal authorities say that Berkman managed to raise at least $13.2 million from 120 investors over social media IPOs, and also included a scheme where the financier falsely told investors that money would be used to fund various large-scale technology ventures. |
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