Earlier this week, a Florida-based investment advisor who was once a candidate for Governor in Oregon pleaded guilty to charges that he organized a securities fraud scheme. According to federal law enforcement officials, 71 year old Craig L. Berkman bilked potential investors out of $13.2 million by claiming he owned shares Facebook and other popular tech companies right before they went public.
By the terms of Berkman’s plea agreement, he will serve between eight and 10 years in federal prison on securities fraud and wire fraud charges. If he had gone to trial and had been convicted, he faced a maximum penalty of 40 years in prison.
Berkman was a Republican gubernatorial candidate in Oregon in 1994. At the time, he was a multimillionaire who had gained his fortune by buying and selling technology companies. According to his plea deal, in late 2010, he began telling potential investors that he owned shares in Facebook, Groupon, LinkedIn and other social media companies. He told investors that their money would be used to purchase shares in these companies before they went public.
Berkman admitted that he did not use the money he collected from investors to buy shares of Facebook as he had promised. Instead, he used roughly $6 million to pay off creditors in a bankruptcy proceeding and approximately $4.8 million to pay off early investors. He also used nearly $2 million for legal fees, travel and other personal expenses.
In addition to spending a decade in prison, Berkman must also pay $8.4 million in restitution.