A US Republican politician has been arrested and charged with using the Facebook IPO as a Ponzi scam.
According to an announcement from the US Securities and Exchange Commission, Berkman made "Ponzi-like" payments to earlier investors and funded personal expenses, including costs in a bankruptcy case.
US attorney Preet Bharara in Manhattan said that Berkman collected more than $8 million from various schemes by capitalising on the market obsession with Facebook's IPO. He used their gullibility like an ATM to fund his own living expenses and pay court-ordered claims to victims of his past misdeeds.
Berkman was arrested at his home in Odessa, Florida, and appeared briefly before a federal magistrate in Tampa. The Manhattan US Attorney's Office charged Berkman with two counts of securities fraud and two counts of wire fraud. Each count carries a maximum of 20 years in prison.
In one scam more than 50 investors sent $4.6 million into a bank account controlled by a Berkman entity called Ventures Trust II. Berkman told investors the funds would be used to buy pre-IPO shares of Facebook, but instead the "vast majority" was transferred to other accounts Berkman controlled for his own personal benefit.
According to Oregon Live, Berkman is a big name in Oregon politics and served for a time as the head of the state's Republican Party. He lost in the Republican primary for governor in 1994, and he explored a bid for governor in the 2002 race.