Tampa investment manager accused of $8 million fraud - WFLA News Channel 8

Tampa investment manager accused of $8 million fraud

Posted: Updated:
Craig L. Berkman's house in Odessa Craig L. Berkman's house in Odessa

A Bay area investment manager who once ran for governor in Oregon is facing federal charges, accused of defrauding investors out of millions of dollars in an alleged scheme involving shares of Facebook.

Craig Berkman, 71, was arrested in Hillsborough County on Tuesday and faces wire and securities fraud charges.

Authorities with the U.S. Attorney's Office from the Southern District of New York and the U.S. Postal Inspection Service said Berkman took advantage of interest Facebook investment opportunities to get investors to turn over millions of dollars.

According to the complaint against him, Berkman allegedly claimed his company Ventures Trust II had access to share of Facebook before its initial public offering – which it did not – and investors sent him $5.5 million dollars.

The complaint says in 2012, Berkman created another company called Face Off, which was said to be designed to acquire an entity that already held more than 1 million pre-IPO Facebook shares. The Face Off operation raised $2.5 million, according to the complaint.

In total, authorities say Berkman received $8 million from the alleged investment scheme.

Berkman also faces a civil case from the Security and Exchange Commission, which claims Berkman told investors he had access to pre-IPO stock of not just Facebook, but also LinkedIn, Groupon and Zynga.

The SEC says Berkman used money raised from investors to pay earlier investors, pay off bankruptcy claims and pay for personal expenses.

Agents from the U.S. Postal Inspection Service were at Berkman's sprawling $2 million Odessa home in the hours after he was taken into custody.

Berkman appeared in front of a federal judge in Tampa on Tuesday afternoon, and told the court he could not afford to hire his own attorney. The public defender's office is handling his case.

Berkman will remain in custody until at least Thursday, when he will be back in court to discuss possible bond. Judge Thomas on Tuesday said that considering the money involved in the case, any bond amount would have to be "significant."

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