Financier charged in fake pre-IPO Facebook sales

Mar 19, 2013
Screens display the start of trading in Facebook shares at the NASDAQ stock exchange on Times Square in New York, on May 18, 2012. A Florida investment adviser was charged Tuesday with selling $8 million of fake Facebook shares ahead of the social network's highly anticipated public offering, officials said.

A Florida investment adviser was charged Tuesday with selling $8 million of fake Facebook shares ahead of the social network's highly anticipating public offering, officials said.

The Justice Department said Craig Berkman, 71, was arrested on two separate securities fraud schemes involving Facebook shares.

Berkman received a total of at least $8 million from these schemes, most of which he "misappropriated for his own benefit," a Justice Department statement said.

He was arrested at his home in Odessa, Florida, and was to face the charges in federal court in Tampa.

"As alleged, Craig Berkman seized on the interest in a highly coveted investment opportunity to swindle investors out of millions," US Attorney Preet Bharara said.

According to officials, Berkman said his Ventures Trust II LLC falsely claimed to own shares in Facebook as early as 2010, more than a year before its IPO.

discovered the fraud when they tried to redeem their shares in 2012, officials said.

Berkman was charged with two counts of and two counts of wire fraud. If convicted, he faces a maximum sentence of 20 years in prison on each of the four counts in the complaint and fines in the millions of dollars.

The case is not related to questions about the underwriting or valuation of the Facebook last year. The shares slid from an of $38, losing more than half their value, before recovering some of the losses.

Explore further: BlackBerry courts iPhone users with cash

add to favorites email to friend print save as pdf

Related Stories

US regulators bust pre-IPO tech stock scam

Nov 17, 2011

A Florida man was arrested on Thursday for running a scam in which he allegedly offered private shares in Internet firms such as Facebook and Groupon ahead of their going public, officials said.

Morgan Stanley fined $5 mn over Facebook IPO

Dec 17, 2012

Morgan Stanley agreed Monday to pay a $5 million fine to settle charges that it improperly handled crucial information on Facebook's earnings ahead of the company's disastrous IPO.

Facebook sells $6.6 million in shares to fund

Jun 28, 2011

Facebook has sold about $6.6 million worth of its shares to the investment fund GSV Capital Corp. as the company is believed to be preparing for an initial public offering next year.

Facebook investors to cash out more shares

May 16, 2012

(AP) -- Insiders and early Facebook investors will be unloading more of their shares in the initial public offering, the company said Wednesday, as they take advantage of investor demand.

Lawsuits pile up over Facebook flotation

May 23, 2012

Facebook and its underwriters came under broad legal attack Wednesday as lawyers and investors filed lawsuits over Facebook's controversy-marred initial public offering.

Recommended for you

Netflix sues Yahoo CIO for alleged kickbacks

3 hours ago

Netflix is suing a former company vice president who is now chief information officer at Yahoo, accusing him of receiving money from vendors he hired to work with the video streaming company.

BlackBerry courts iPhone users with cash

23 hours ago

Canadian smartphone maker BlackBerry is wooing Apple customers with a cash offer for trade-ins of iPhones for its new square-screened, keyboard-equipped Passport.

HP earnings show continued struggle

23 hours ago

Venerable tech giant Hewlett-Packard has been struggling for three years to turn its business around. Its latest earnings show it still has more work ahead.

Apple market value hits $700 bn

Nov 25, 2014

A rise in Apple shares Tuesday pushed the market value of the trend-setting US tech icon above $700 billion, becoming the first company to hit that milestone.

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.