Charges Filed in Facebook I.P.O. Case
A former candidate for governor of Oregon was arrested in Florida on Tuesday and accused of defrauding investors who hoped to buy shares of Facebook before its initial public offering in 2012, federal authorities said.
The defendant, Craig L. Berkman, 71, falsely told investors he had access to scarce pre-I.P.O. shares of Facebook and other popular Internet companies like LinkedIn, Groupon and Zynga, the Securities and Exchange Commission said in a statement.
But instead of buying shares for investors, Mr. Berkman made “Ponzi-like†payments to earlier investors and financed personal expenses, according to the commission, which filed a civil case.
Mr. Berkman received at least $8 million from various schemes, according to Preet Bharara, the United States attorney in Manhattan, whose office filed criminal charges against him.
Mr. Berkman “blatantly capitalized on the market fervor preceding highly anticipated I.P.O.’s of Facebook and other social media companies to fleece investors whose cash flow he treated like an A.T.M.,†said Andrew Calamari, director of the S.E.C.’s New York office.
The United States attorney’s office charged Mr. Berkman with two counts of securities fraud and two counts of wire fraud.
Mr. Berkman lost in the Republican primary for governor in 1994 and explored a bid for governor in the 2002 race, according to The Oregonian newspaper.
A version of this article appeared in print on March 20, 2013, on page B4 of the New York edition with the headline: Charges Filed In Facebook I.P.O. Case.