Man charged in Facebook shares fraud

LARRY NEUMEISTER
Last updated 15:37 20/03/2013

Relevant offers

World

Sue Finley, 80, was hired by Nasa in 1958 as a 'computer' Woman gets $8030 but fails in bid to sue Australian supermarket after slipping on a grape Kayak is letting travellers search for travel deals using emojis Uber CEO Travis Kalanick resigns under investor pressure George Clooney sells his tequila to Diageo for US$1 billion London fire: Luxury apartments acquired for displaced Grenfell tenants Aussie bankers drug colleague with valium and laxatives in attempt to discredit him Passengers set to pay as Uber introduces tipping and fees for keeping drivers waiting Bauer's Australia boss quits, replaced by New Zealand CEO, after Rebel Wilson defamation case Apple gives the iPad some love to halt its long slide

A Florida investment adviser was charged on Tuesday in an US$8 million ($9.7 million) securities fraud scheme that federal prosecutors say capitalised on enthusiasm for Facebook shares.

Craig L Berkman was arrested at his home in Odessa, Florida, and held after a court appearance in Tampa until a hearing on Thursday.

The 71-year-old businessman was charged with two counts each of securities fraud and wire fraud, accused of claiming to own Facebook shares before the company went public in May when he didn't directly own shares.

Prosecutors said he pocketed much of the US$8m he received from more than 50 investors. If convicted, he could face up to 80 years in prison.

US Attorney Preet Bharara said Berkman "seized on the interest in a highly coveted investment opportunity to swindle investors out of millions".

The Securities and Exchange Commission announced separate civil charges.

Prosecutors said Berkman, a one-time Oregon GOP gubernatorial candidate, falsely claimed to investors in December 2010 that he owned shares of Facebook.

The government said he used a private company he controlled called Ventures Trust II LLC to cheat investors, arranging for a lawyer as recently as August to write to investors that the fund was "not a Ponzi scheme" and that it still owned Facebook stock.

The claims caused investors to send about US$5.5m to various accounts controlled by Berkman, the government said.

Rather than use investor money to acquire shares of Facebook, he transferred the money to his personal account and misappropriated a substantial amount of it for his own benefit and the benefit of others, prosecutors said.

They added that he transferred several million dollars of investor funds to lawyers representing him in bankruptcy proceedings.

In a separate but related fraud, Berkman convinced at least 14 investors to send US$2.5m to a company, Face Off Acquisitions LLC, which he claimed held more than 1 million Facebook shares, prosecutors said.

The businessman's lawyers did not immediately return messages for comment.

Ad Feedback

- AP

Special offers

Featured Promotions

Sponsored Content