The Securities and Exchange Commission today charged Craig Berkman, 71, a former Oregon gubernatorial candidate who now lives in Florida, and his lawyer, with operating an investment scam peddling pre-IPO shares in Facebook, LinkedIn, Groupon, and Zynga.

An SEC investigation, which led to the cease-and-desist proceedings started today, found that between October 2010 and September 2012, Berkman fraudulently raised at least $13.2 million from approximately 120 investors by selling membership interests in limited liability companies that he controlled.

According to the SEC filing, Berkman represented to investors that he had special access to pre-IPO stock in high-tech companies that were about to go public. Instead of purchasing shares on investors’ behalf as promised, Berkman misused their investments in Ponzi–scheme fashion, including approximately $5.43 million to satisfy a bankruptcy judgment against him and another $4.8 million to investors who had invested either in this pre-IPO scheme or in other schemes. Berkman also used approximately $1.6 million to fund his own personal expenses, including large cash withdrawals and dining and travel expenses.

Also charged in the case is John B. Kern, 49, of Charleston, S.C., a lawyer and general counsel to Berkman’s companies who aided and abeted the fraud by making “certain material misstatements to investors that he knew or recklessly disregarded were false and misleading,” the SEC charged.

Berkman, who FORBES included in a 2009 “Venture Rogues Gallery,” has a history of prior securities law violations as far back as 2001. In June 2008, an Oregon jury found Berkman liable in a private action for breach of fiduciary duty, conversion of investor funds, and misrepresentation to investors, among other things. The court entered a $28 million judgment against him.

The latest case is reminiscent of one the SEC brought last Fall against John A. Mattera. It too, involved fraudulent offerings of pre-IPO shares in Facebook, Groupon and LinkedIn. (See my post, “SEC Sues Mattera, Others In Alleged Investment Scam.”) He also had a history of a previous SEC enforcement action.

http://www.forbes.com/sites/deborahljac ... ment-scam/

Craig Berkman


From Wikipedia, the free encyclopedia


Jump to: navigation, search


Craig Berkman (born about 1943) is a longtime venture capitalist and was an influential Republican politician in the U.S. state of Oregon. He was known as a major donor in national Republican circles. He chaired the Oregon Republican Party in the early 1990s, opposing the far right Oregon Citizens Alliance. He ran for chairman of the Republican National Committee in 1993 and for Governor of Oregon in 1996, losing the former race to Haley Barbour and the latter to Denny Smith in the primary election.[1]

He was arrested in March 2013 at his Odessa, Florida home, on charges of selling pre-IPO shares of Facebook.[2]

[edit] References

1.^ Mapes, Jeff (May 30, 2008). "The ever-charming Craig Berkman". The Oregonian.
2.^ Kish, Matthew (March 19, 2013). "Craig Berkman arrested over sales of pre-IPO Facebook shares". Portland Business Journal.