Florida-based fund manager and former Oregon gubernatorial candidate Craig Berkman pleaded guilty Tuesday to defrauding investors by promising them access to nonexistent Facebook shares prior to the social network’s initial public offering in May 2012, Reuters reported.
The 1994 Republican gubernatorial candidate pleaded guilty to one charge of securities fraud and one charge of wire fraud, according to Reuters, and each carries a maximum sentence of 20 years in prison. U.S. Magistrate Judge Kevin Nathaniel Fox set sentencing for Oct. 1.
According to Reuters, Berkman orchestrated a classic Ponzi scheme, promising investors access to pre-IPO shares of Facebook, LinkedIn, Groupon, and Zynga, and instead using the funds he obtained to pay earlier investors and for personal expenses, including $6 million toward a personal bankruptcy case.
Berkman — who agreed to forfeit $13.2 million he raised from more than 120 investors as part of a plea deal said at Tuesday’s hearing that some of his investors were “dear, dear friends,” Reuters reported, and he added:
I deeply regret my actions. I’ve devastated my family. I’m very, very sorry.
Berkman blatantly capitalized on the market fervor preceding highly anticipated IPOs of Facebook and other social media companies to fleece investors whose cash flow he treated like an ATM to fund his own living expenses and pay court-ordered claims to victims of his past misdeeds.
Readers: What sentence does Berkman deserve?
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