An investment adviser pleaded guilty Tuesday in a US$13 million (HK$100.8 million) securities fraud scheme that prosecutors say capitalised on enthusiasm for shares of Facebook and other Internet companies about to go public.
Craig Berkman, 71, entered the plea to securities fraud and wire fraud in US District Court in Manhattan, agreeing to serve between eight and 10 years in prison, according to the terms of a written agreement between Berkman and prosecutors. Otherwise, he would have faced up to 40 years in prison.
Berkman, a one-time Oregon Republican gubernatorial candidate, admitted that he falsely claimed to investors in December 2010 that he owned shares of Facebook, Groupon and LinkedIn, among other companies.
Prosecutors say he pocketed much of the US$13.2 million he received from more than 120 investors during the scheme, which stretched from 2010 until his March this year arrest. The government says he transferred the investors’ money into his personal account rather than using it to acquire shares of Facebook.
They said he used about US$6 million to pay off creditors in his personal bankruptcy, another US$4.8 million to pay off earlier investors and spent another US$1.6 million on legal fees, travel and other personal expenses, including cash withdrawals.
“Through various misrepresentations, Craig Berkman enticed investors with highly coveted investment opportunities, and then swindled them out of millions of dollars, using much of it for his personal benefit,” US Attorney Preet Bharara said in a release after the plea before a federal magistrate judge.
At a sentencing scheduled for Oct. 1, Berkman also will face restitution of US$8.4 million and must forfeit US$13.2 million, according to his agreement with the government.