The article about GOP donor Craig Berkman referred to a lawsuit against him by former investors as a civil fraud case. Although the complaint alleged that Berkman "was engaging in fraud, or potentially illegal acts, or other inappropriate transactions," it did not include a separate cause of action for fraud against Berkman. Claims against Berkman included breach of fiduciary duty, negligence, breach of contract, and breach of good faith and fair dealing.
Big GOP Donor Faced Trouble Back Home
Wednesday, July 23, 2008
On the day Republican Sen. John McCain surged to victory in Florida's presidential primary, a group of supporters gathered at the elegant Tampa Club for a luncheon held by Gov. Charlie Crist and Sen. Mel Martinez.
Mingling with some of the state's business and political elite that January day was a Florida newcomer, an Oregon venture capitalist named Craig Berkman. Unbeknown to the guests, Berkman's life was crashing around him.
For two years, Berkman had been battling his investment partners after admitting that he had lent himself $5 million of their money without telling them. A civil fraud case against him was about to go to trial.
Berkman continued to raise money for McCain. He and his wife have donated $50,000 to Republican candidates and party committees this election cycle, including a $28,500 check to the Republican National Committee's Victory Fund on May 29 to support McCain's bid. Berkman's political generosity has angered his former investors, who prevailed in court but have not seen a penny of the $28 million in civil damages that a jury awarded them.
This week, the McCain campaign said that it has given Berkman's donations to charity and that it will ask the Republican National Committee to do the same.
The failure to earlier identify Berkman as a risk reveals a recurring blind spot for presidential campaigns, which in their zeal to raise cash sometimes overlook evidence about potentially embarrassing donors. McCain spokesman Brian Rogers said that Berkman's problems were overlooked by a "skeleton staff" that "was obviously focused on winning primaries."
"When we learned of the jury verdict earlier this month, the campaign donated Mr. Berkman's contribution to the American Red Cross for Midwest flood relief and recovery," Rogers said in an e-mail.
Still, the jilted investors in Berkman's path said they found it disturbing that political leaders eagerly took donations from a man they knew so little about.
"He used political donations and the doors those opened to build a web like a spider," said Jordan Schnitzer, the head of an Oregon investment firm who says Berkman duped him. "Someone should ask John McCain, 'With all these folks in your campaign, you couldn't put his name into Google?' "
Berkman has maintained that he intended to pay back the money he borrowed, and he chalked up his firm's $75 million in losses to risky investments gone bad. No criminal charges have been brought against him. He did not respond to repeated messages, and his lawyer, Paul B. George, declined to comment.
Berkman's saga began decades ago, when he stumbled in a GOP race for state treasurer after being accused of inflating a résumé. Oregon newspapers recounted how Berkman turned from aspiring politician to entrepreneur. When his ventures paid off, he poured that money back into politics. In 1988, he joined the Republican Party's "Team 100" by making a $100,000 contribution to the Bush-Quayle presidential campaign.
In the mid-1990s, Berkman became Oregon's GOP chairman. After a failed bid in the party's gubernatorial primary, he returned to finding investors for funds that he said would exploit "significant opportunities" in the health-care industry.