Three men who claimed to have privileged access to shares of Facebook prior to its initial public offering (IPO) in 2012, have been arrested for allegedly cheating an investor out of $6.7m.
According to the US Attorney for the District of New Jersey, the defendants are Eliyahu Weinstein, Alex Schleider and Aaron Muschel.
US Attorney Paul Fishman said in a statement that the defendants took advantage of the buzz around the Facebook IPO in order to fleece unsuspecting investors.
"Shamelessly, Eliyahu Weinstein allegedly committed these crimes while under federal indictment for another investment scheme, even using stolen money to pay his legal fees," Fishman said.
The court documents reveal that the accused offered investors the chance to acquire large blocks of Facebook shares. The offer was reportedly attractive because large blocks of the shares were very difficult to acquire, and they were anticipated to rise in value during the IPO.
Additionally, the conspirators are said to not have used any of the cash to acquire Facebook shares, while they have stolen them and benefited by transferring them through various accounts.
The US government is asking for the seizure and forfeiture of all funds that are illegally obtained by the three accused.
The social networking company went public on May 17, 2012, starting around $38 and mounting to $45 on the first day of trading, while finally grounding out to about $18.
