Make us your home page
Instagram

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

Odessa adviser accused of Facebook stock fraud

Craig L. Berkman once ran for governor of Oregon.

Craig L. Berkman once ran for governor of Oregon.

ODESSA — An Odessa investment adviser who lost a $28 million lawsuit and embarrassed Republicans with donations amid the scandal now faces another accusation: that he bilked investors out of $8 million by hyping their enthusiasm for Facebook.

Craig L. Berkman, 71, a venture capitalist who once ran for governor of Oregon, was arrested at his home in an exclusive Odessa community and held after a court appearance in Tampa until a hearing Thursday.

The businessman was charged Tuesday with two counts each of securities fraud and wire fraud — accused of claiming to own Facebook shares before the company even went public in May.

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

Berkman "seized on the interest in a highly coveted investment opportunity to swindle investors out of millions," said U.S. Attorney Preet Bharara in New York, where the investigation is based.

The Securities and Exchange Commission announced separate civil charges.

Prosecutors said Berkman falsely claimed to investors in December 2010 that he owned shares of Menlo Park, Calif.-based Facebook Inc.

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

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

But rather than use the investor money to actually 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 persuaded at least 14 investors to send $2.5 million 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 to the Associated Press for comment.

Before Berkman moved to Odessa in 2006, legal woes and high-profile politics made headlines in Oregon where he unsuccessfully ran for governor in 1994 and once chaired the state's Republican Party.

At the time, more than 50 investors in three Berkman-run venture capital funds sued him for fraud and breach of contract and fiduciary duty.

Their suit accused him of taking money for himself and directing money to companies in which he had financial interests.

Berkman blamed bad timing for the losses. "They were funds that were raised at the beginning of the end of the dot com era," he said in 2006.

But a jury saw it differently, awarding investors $28 million.

Elections records show Berkman contributed at least $70,000 to political candidates and organizations since 1999 — including $5,000 to the Republican Party of Florida in 2002, $2,000 to U.S. Rep. Katherine Harris from Longboat Key in 2004 and $2,100 to U.S. Rep. Gus Bilirakis from Tarpon Springs in 2006.

He was listed as one of a dozen hosts for a luncheon honoring U.S. Sen. John McCain at the Tampa Club on Jan. 29, 2008, the day of Florida's presidential primary.

Because of the legal troubles Berkman faced at the time, the McCain presidential campaign donated $4,600 in contributions from Berkman to the American Red Cross.

The Republican Party of Florida donated Berkman's $15,000 contribution to Derrick Brooks Charities.

The Bilirakis campaign donated $2,100 to Operation Helping Hand.

Information from the Associated Press was used in this report.

Odessa adviser accused of Facebook stock fraud 03/19/13 [Last modified: Wednesday, March 20, 2013 12:05am]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Forecast: Hot, humid and mostly dry conditions prevail for St. Pete Pride weekend

    Weather

    The threat of any lingering effects from Tropical Storm Cindy have passed, leaving behind a relatively dry — but hot and humid — St. Pete Pride weekend.

    Tampa Bay's 7-day forecast [WTSP]
  2. Florida Insiders: The state parties are dying; 'I heard someone long for the leadership of Jim Greer'

    Blogs

    For all the attention on Florida Democratic Chairman Stephen Bittel's bone headed gaffe this week, the diminished state of the once mighty Florida GOP today compared to even a few years ago is arguably more striking than the condition of the long-suffering Florida Democratic Party. A decade ago, no one would have …

    Florida Insider Poll
  3. Florida Democrats surging with grassroots enthusiasm, but 2018 reality is grim

    State Roundup

    After Donald Trump's election, so many people started showing up at monthly Pinellas County Democratic Party meetings, the group had to start forking out more money for a bigger room.

    Former Vice President Joe Biden addresses Florida Democrats at the Leadership Blue Gala on June 17 in Hollywood, Fla. (Photo by Carol Porter)
  4. Will new laws protect condo owners from apartment conversions and rogue associations?

    Real Estate

    Danny Di Nicolantonio has lived in St. Petersburg's Calais Village Condominums for 33 years. Annoyed at times by the actions, or inaction, of the condo board and property managers, he has complained to the state agency that is supposed to investigate.

    That has left him even more annoyed.

    A bill passed by the Florida Legislature would affect places like The Slade in Tampa's Channelside district, where cCondominium owners have battled a plan to convert homes into apartments.
[Times file photo]
  5. Walmart opens first Pinellas County in-house training academy

    Retail

    Seminole — It had all the hallmarks of a typical graduation: robe-clad graduates marching in to Pomp and Circumstance, friends and family packed together under a sweltering tent and a lineup of speakers encouraging the graduates to take charge of their future.

    New Walmart Academy graduates are congratulated Thursday morning by associates during a graduation ceremony at the Walmart store, 10237 Bay Pines Boulevard, St. Petersburg. The Walmart location is one of the company's training academies where managers complete a one week retail course. David Shultz and Richard Sheehan, both from St. Petersburg, get high fives from the crowd.
[SCOTT KEELER   |   Times]