Former Oregon gubernatorial candidate Craig Berkman pleaded guilty on Tuesday to defrauding investors by persuading them he could use their money to buy shares of Facebook before the company’s May 2012 initial public offering.
Berkman, a Republican who ran for governor in 1994, admitted he told investors he had access to scarce pre-IPO shares of Facebook as well as LinkedIn, Groupon and Zynga.
Instead, Berkman used investors’ money to make payments to earlier investors – a classic Ponzi scheme – and to pay personal expenses, including $6 million in a personal bankruptcy case…
Berkman pleaded guilty to one charge of securities fraud and one charge of wire fraud. Each carries a maximum sentence of 20 years in prison.
“I deeply regret my actions,” a weeping Berkman, wearing beige jail scrubs, said at the hearing on Tuesday. “I’ve devastated my family.” He apologized to his investors, saying some of them were “dear, dear friends…”
Berkman had long been active in Oregon politics and served for a time as the head of the state’s Republican Party. He lost in the Republican primary for governor in 1994. He explored a bid for governor in 2002…
Berkman’s guilty plea culminates what the U.S. Securities and Exchange Commission had called a “recidivist history.”
In 2001, the Oregon Division of Finance and Securities issued a cease-and-desist order and a $50,000 fine against Berkman for offering and selling convertible promissory notes without a brokerage license, according to the SEC.
In 2008, an Oregon jury found Berkman liable in a private action for breach of fiduciary duty, conversion of investor funds, and misrepresentation to investors, related to his involvement with a firm called Synectic Ventures.
Folks invested money with this crook without checking up on his reputation? No one noticed his criminal history? Not even those “dear, dear friends” that he screwed?
There are significant differences between gullibility and accepting something at face value. As gamblers say – “you trust your friends but you cut the cards!”