Former Oregon gubernatorial candidate admits bilking more than 120 investors out of $13.2 million with promises of an early shot at the highly coveted pre-IPO shares.
A former Oregon gubernatorial candidate has pleaded guilty in a $13 million securities scam to sell pre-IPO shares of Facebook before the social network went public.
Craig Berkman, a Florida financier who ran for governor in 1994, pleaded guilty Tuesday in U.S. District Court in Manhattan to one count each of securities fraud and wire fraud, each of which carries a maximum sentence of 20 years in prison.
Prosecutors said Berkman, 71, bilked more than 120 investors out of $13.2 million with promises of an early shot at the highly coveted shares. He also admitted falsely telling investors that he had access to shares of other tech companies, including LinkedIn, Groupon, and Zynga.
Berkman, who was arrested in March after a Securities and Exchange Commission investigation, used the proceeds from Ponzi-like scheme to pay off debts and fund personal expenses, including $6 million in a personal bankruptcy case, prosecutors said.
"Through various misrepresentations, Craig Berkman enticed investors with highly coveted investment opportunities, and then swindled them out of millions of dollars, using much of it for his personal benefit," U.S. Attorney Preet Bharara said in a statement after the plea was announced.
Berkman agreed to forfeit the $13.2 million the scheme produced as part of the plea agreement with prosecutors.
"I deeply regret my actions," a weeping Berkman told U.S. Magistrate Judge Kevin Nathaniel Fox, according to Reuters. "I devastated my family. I apologize to them and to the investors, some of whom were dear friends. I'm very, very sorry."
Berkman is scheduled to be sentenced October 1 by Fox.