Former Oregon gubernatorial candidate Craig Berkman pleaded guilty on Tuesday to defrauding investors by persuading them he could use their money to buy shares of Facebook Inc before the company's May 2012 initial public offering.
Berkman, a Republican who ran for governor in 1994, admitted he told investors he had access to scarce pre-IPO shares of Facebook as well as LinkedIn Corp, Groupon Inc, and Zynga Inc.
Instead, Berkman used investors' money to make payments to earlier investors — a classic Ponzi scheme — and to pay personal expenses, including $6 million in a personal bankruptcy case, Assistant U.S. Attorney John O'Donnell said at a hearing in federal court in New York.
Berkman pleaded guilty to one charge of securities fraud and one charge of wire fraud. Each carries a maximum sentence of 20 years in prison.
"I deeply regret my actions," a weeping Berkman, wearing beige jail scrubs, said at the hearing on Tuesday. "I've devastated my family." He apologized to his investors, saying some of them were "dear, dear friends."
"I'm very, very sorry," he said.
U.S. Magistrate Judge Kevin Nathaniel Fox set sentencing for October 1.
As part of a plea deal, Berkman agreed to forfeit $13.2 million he raised from more than 120 investors.
Berkman had long been active 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. He explored a bid for governor in 2002, according to the newspaper The Oregonian.
Berkman was arrested in March at his home in Odessa, Florida.
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