[ by Melanie Gretchen ]

Facebook's impending IPO provided fertile ground for one inventive entrepreneur.    A former Oregon governor candidate made at least $8 million before he was arrested in Florida on Tuesday, on charges of defrauding investors who hoped to buy shares of Facebook before its initial public offering in 2012.

Federal and Civil Findings and Allegations. Craig Berkman, 71, was arrested in Florida on Tuesday, for having told investors he had access to scarce pre-IPO shares of Facebook and other popular Internet companies like LinkedIn, Groupon and Zynga.  In fact, he used their funds to pay earlier investors and financed personal expenses, according to the Commission's civil case.

Double Trouble. For his part, Preet Bharara, the United States attorney in Manhattan has leveled criminal charges against Berkman, who faces 2 counts of securities fraud and 2 counts of wire fraud.  After Berkman lost in the an primary for governor in 1994, he sought out the position of governor in 2002, The Oregonian newspaper reported.  Apparently, things are getting worse and not better for the would-be governor.

Mr. Berkman "blatantly capitalized on the market fervor preceding highly anticipated I.P.O.’s of Facebook and other social media companies to fleece investors whose cash flow he treated like an A.T.M." -- Andrew Calamari, director of the S.E.C.’s New York office.

For further details, go to [NY Times, 3/20/13].

To contact Melanie Gretchen: melanie@compliance-insights.com.