Former Oregon GOP chairman Craig Berkman pleads guilty to fraud charges

Kari Chisholm

Little more than three months after his arrest, Craig Berkman - who was an influential chairman of the Oregon Republican Party and a 2002 candidate for Governor - has pleaded guilty to securities fraud and wire fraud charges in federal court.

Berkman is looking at 40 years in prison and millions in fines. He's already agreed to turn over more than $13 million in ill-gotten funds. Weeping, according to Bloomberg News, he said, "I devastated my family. I apologize to them and to the investors, some of whom were dear friends. I’m very, very sorry."

What did he do, exactly?

From the statement from the US Attorney in New York:

The ways in which BERKMAN carried out his scheme often varied with each of the LLCs. In one instance, BERKMAN represented to investors that various Ventures Trust LLCs held large quantities of pre-IPO shares of Facebook, Groupon, LinkedIn, and Zynga. In fact, the Ventures Trust LLCs held no shares of Groupon, LinkedIn, or Zynga, and held only a small, indirect interest in pre-IPO Facebook shares. In another example, BERKMAN falsely told investors with Face-Off Acquisitions, LLC that their money would be used to purchase an existing special purpose vehicle, which already held a significant stake in Facebook. BERKMAN also misrepresented to Assensus Capital Investors, LLC investors that he would use their money to fund various start-ups, including technology, medical device, and energy companies, and that the investors’ funds would be partially secured by interests in pre-IPO Facebook stock. In fact, BERKMAN misappropriated most, if not all, of the investors’ money for his own use and benefit.

Ultimately, BERKMAN raised at least approximately $13.2 million in funds from more than 120 different investors, which he used for various unauthorized purposes. BERKMAN used approximately $6 million in stolen investor funds to pay off creditors in his personal bankruptcy, and in doing so, he misrepresented the source of those funds to the Bankruptcy Court. BERKMAN also used approximately $4.8 million of new investor money to pay off earlier investors, and spent approximately $1.6 million on legal fees, travel, other personal expenses, and in cash withdrawals, among other things.

There's more from Reuters, the Portland Business Journal and the Oregonian.

By Kari Chisholm June 26, 2013