Federal regulators are alleging that a Charleston lawyer made misleading statements on behalf of a client who was offering investors access to shares of Facebook and other social media firms before their hotly anticipated initial public offerings.
The Securities and Exchange Commission today said that John B. Kern, 49, made the statements while representing some of Craig Berkman’s companies.
The commission said Berkman, who is being accused of fraud, masqueraded as “a sophisticated fund manager who defrauded investors” seeking coveted pre-IPO shares of Facebook. LinkedIn, Groupon and Zynga. He raised more than $13 million from about 120 investors.
“When investors in Berkman’s phony Facebook fund began questioning what happened to their money after Facebook’s IPO occurred, Kern falsely assured them that their money was used to purchase pre-IPO Facebook stock being held for them by unnamed counterparties,” the commission said in a statement.
Reached by phone today, Kern said he’s been advised by his lawyer not to comment on the case.
Berkman, 71, is a former Oregon gubernatorial candidate who now lives in Florida, the agency said. “Instead of purchasing shares on investors’ behalf as promised, Berkman misused their investments to make Ponzi-like payments to earlier investors, fund personal expenses, and pay off claims against him in a bankruptcy case,” the commission said.
See upcoming editions of The Post and Courier for more details.