Big GOP Donor Faced Trouble Back Home

Venture capitalist Craig Berkman co-hosted a fundraiser for John McCain.

In a prospectus for Synectic Ventures, he listed fund advisers that included George Herbert Walker III, a first cousin of former president George H.W. Bush; and retired Gen. Merrill A. McPeak, a former Air Force chief of staff who now advises Democratic presidential candidate Barack Obama.

Walker said from his vacation home in Kennebunkport, Maine, that he "never endorsed Mr. Berkman's investment fund or advised him that he could use my name."

McPeak said he had given permission for the use of his name but later regretted his involvement with Berkman, whom he met at a Vietnam War memorial dedication in the mid-1990s.

"He pushed and pushed, and finally I made a small investment," McPeak said. "He asked me to join the board of one of his companies, but it rapidly failed and has been downhill ever since."

Berkman repeatedly referenced his political connections as a means of luring investors. Earlier this year, under cross-examination, Berkman was asked by a lawyer if he led an investor "to believe that you were a person of significant wealth and connections."

"Didn't you, in fact, invite [investor] Brian Stewart to join the Bush family for a weekend at the Bush ranch in Texas?" the lawyer asked. "Yes," Berkman conceded.

The investor, Patrick L. Sizemore, founder of Strategic Wealth Management in Mercer Island, Wash., said that in 1999 Berkman invited him to fly with him on a private jet for a lunch with George W. Bush, who was running for president.

"He told me I could have my picture taken with the future president," Sizemore said. "That wasn't my style. But it was his. If you knew Craig, he had pictures of himself with everybody on the wall."

Berkman's investors alleged in their lawsuit that his profile was an illusion. When he began his business, the suit says, he had little money and continually borrowed to maintain his lifestyle. The 141-page complaint against Berkman describes complex transactions that it says were an attempt to conceal the misappropriation of money.

The story of the alleged scam crashed into view in January 2006, when the Willamette Week in Portland, Ore., wrote that Berkman admitted "in a sometimes tearful two-and-a-half hour interview" that he lent himself $5 million of investors' money without their knowledge.

"The loans and my failure to disclose them fully and in a timely manner gives the appearance of wrongdoing, and I deeply regret that," Berkman told the newspaper.

By then, the lawsuit had been filed. It did not stop Berkman from releasing a new confidential prospectus for an investment whose purported "advisers" included Mark White, a former Texas governor, and Pete Wilson, a former senator and governor from California. White could not be reached to comment, and Wilson did not return calls.