A former Oregon gubernatorial candidate was arrested on Tuesday for his alleged role in defrauding investors who had hoped to buy shares of Facebook Inc. before its initial public offering in May 2012, federal authorities said.

Craig Berkman, 71, falsely told investors he had access to scarce pre-IPO shares of Facebook and other social media companies such as LinkedIn Corp., Groupon Inc. and Zynga Inc., the U.S. Securities and Exchange Commission said in a statement.

But instead of buying shares for investors as promised, Mr. Berkman made "Ponzi-like" payments to earlier investors and funded personal expenses, including costs in a bankruptcy case, according to the SEC, which filed a civil case.

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The defendant received at least $8-million from various schemes, according to U.S. Attorney Preet Bharara in Manhattan, which filed criminal charges against Mr. Berkman.

"[Mr.] Berkman blatantly capitalized on the market fervour preceding highly anticipated IPOs of Facebook and other social media companies to fleece investors, whose cash flow he treated like an ATM to fund his own living expenses and pay court-ordered claims to victims of his past misdeeds," said Andrew Calamari, director of the SEC's New York office.

Mr. Berkman was arrested at his home in Odessa, Fla., and was expected to appear in a Tampa, Fla. federal court on Tuesday.

The Manhattan U.S. Attorney's Office charged Mr. 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 allegation, more than 50 investors sent $4.6-million into a bank account controlled by a Berkman entity called Ventures Trust II, according to the complaint filed by the Manhattan U.S. Attorney's Office.

Mr. 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 that he controlled for his own personal benefit, according to the complaint.

Mr. Berkman has long been active in Oregon politics and served for a time as the head of the state's Republican Party, according to press accounts. He lost in the Republican primary for governor in 1994, and he explored a bid for governor in the 2002 race, according to The Oregonian.

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The SEC's order details what the agency called a "recidivist history" for Mr. Berkman.

The Oregon Division of Finance and Securities issued a cease-and-desist order and a $50,000 fine against Mr. Berkman in 2001 for offering and selling convertible promissory notes without a brokerage licence, according to the SEC statement.

In 2008, an Oregon jury found Mr. Berkman liable in a private action for breach of fiduciary duty, conversion of investor funds and misrepresentation to investors related to his involvement with a purported venture capital firm, according to the SEC.

Mr. Berkman reached a settlement with the firm, called Synectic Ventures, after it filed an involuntary Chapter 7 bankruptcy petition against him in 2009 for debts he didn't pay related an earlier judgment against him for $28-million, according to the SEC.

Rather than use his own money to pay the claims, Mr. Berkman spent more than $5.4-million from investors in his pre-IPO offerings to make payments in the bankruptcy settlement, according to the SEC.

The SEC brought a separate case against John Kern of Charleston, S.C., whom it said took part in the fraud as legal counsel to some of Mr. Berkman's companies.

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Marc Blackman, a lawyer for Mr. Berkman, was not immediately available for comment.

It was not immediately clear whether Mr. Kern has hired a lawyer for his defence. Mr. Kern was not immediately available for comment.