A Florida investment fund advisor was sentenced to six years in prison for masterminding a $13 million investment scheme that defrauded 120 people, said the U.S. Attorney for the Southern District of New York.
Craig L. Berkman, 71, broke down Monday in U.S. District Court in New York City at his sentencing, apologized to his victims and said he would spend the rest of his life after he gets out of jail paying them back, according to the Portland (Oregon) Press Herald.
Berkman told the court, “I panicked, compromising my integrity and principles” because of an earlier bankruptcy. Berkman was a Republican gubernatorial candidate in Oregon in 1994 before relocating to Odessa, Fla.
He pled guilty in June to wire fraud and securities fraud for selling interests in a series of companies he controlled. He falsely told investors his companies owned or would soon acquire pre-initial public offering shares in Facebook, Groupon, LinkedIn and Zynga. He told investors his companies could offer them investments in the technology firms before they went public.
The companies Berkman controlled included Face-Off Acquisitions, LLC; Assensus Capital, LLC; and several LLCs with variations of the words “Ventures Trust” in the names, the U.S. Attorney says.
In addition to the prison sentence, he was ordered to forfeit $13,239,006, representing the proceeds of the fraud that took place from 2010 until March of this year.
“For several years, Craig Berkman repeatedly lured investors with the false promise of benefiting from his companies’ ownership of pre-IPO stock, all the while draining their money into his own pockets in a fraud that was part Ponzi scheme and part plain old theft,” Manhattan U.S. Attorney Preet Bharara says.
Berkman used the money in part to pay off creditors from a personal bankruptcy. Some of the money was used for other personal expenses and some to pay off early investors.