Getting in on investments in a company like Facebook and LinkedIn before it goes public is a pretty hot opportunity, so much so that it appears one fund got a little too excited and tried to sell pre-IPO shares it didn’t actually have.

Reuters reports that Craig Berkman, a former candidate for governor in Oregon, has been arrested for allegedly running a Ponzi-like scheme that falsified documents to convince investors it had early investments in popular tech companies like Facebook, LinkedIn, Groupon and Zynga. A US attorney claimed Berkman had brought in more than $8 million from the plot.

Prosecutors charged him with two counts of securities fraud and two counts of wire fraud.  Meanwhile, a man who served as legal counsel for Berkman’s endeavors was charged separately.

The SEC was known to be probing the issue last year having issued subpoenas for records relating to the Ventures Trust fund that Berkman had helped manage. Attorneys claimed they had found evidence of a fraudulent letter stating that Ventures Trust had 500,000 pre-IPO shares of Facebook.

Berkman has run into financial trouble with earlier investments he managed. He admitted to taking money from funds after investors pushed him into involuntary bankruptcy to collect debts he owed them.

Tech companies can easily become hyped in the run-up to a public offering. Facebook, Groupon and Zynga have all struggled to live up to expectations for their respective stocks. LinkedIn, however, has performed well, climbing over 85% since it hit the market in 2011.

While the crimes Berkman is accused of committing dwarf the size of Bernie Madoff’s scheme, which is believed to have lost $18 billion of investors’ money, they still serve as a pointed reminder to do a thorough vet before joining in on these kinds of secondary market investments.