Wall Street Scion Andrew Caspersen Pleads Guilty to Fraud

Updated on
  • Ex-banker blames gambling addiction for scamming friends
  • Louis Bacon’s charitable foundation lost $25 million

Andrew Caspersen admitted to scamming friends, family and a charitable foundation out of millions of dollars, telling a judge it was all due to a gambling habit that spiraled out of control.

Caspersen’s victims, including the foundation of billionaire Louis Bacon, lost $38.5 million, according to prosecutors. Paul J. Taubman’s PJT Partners Inc. fired Caspersen, 39, after disclosing the fraud to the government.

Caspersen pleaded guilty Wednesday to securities fraud and wire fraud. He told U.S. District Judge Jed Rakoff that he tricked people into giving him money for investments he claimed would return 15 to 20 percent interest.

"There was no real investment opportunity," said Caspersen, who frequently choked up as he read through a prepared statement. "It was just a way for me to get money to feed a gambling addiction that was all-consuming at the time."

Caspersen agreed with prosecutors that federal sentencing guidelines call for him to get a prison sentence of more than 12 1/2 years. Rakoff, who will sentence Caspersen Nov. 2, has frequently criticized the guidelines and said at the plea hearing that they "border on the irrational."

Dramatic Fall

The plea marks a dramatic fall for the son of Finn M.W. Caspersen, the financier and philanthropist who ran Beneficial Corp. then sold it for almost $9 billion. Andrew attended Princeton University, and Harvard Law School’s student center is named after his family. He started gambling in law school, losing tens of millions of dollars, his lawyer Paul Shechtman said last month.

Caspersen gambled away almost $113 million on stock-option trades over a four-week period this year, Shechtman said earlier. He then defrauded investors out of $38.5 million and tried to solicit another $110 million, including $20 million from Bacon’s foundation and $50 million from a private equity firm, prosecutors said. One of his victims was the family of his late fiancee, who died in the 2001 terrorist attacks on the World Trade Center, Shechtman said.

“This is not a story of Wall Street greed,” Shechtman said in a June 14 interview. “This is the story of a person who had a serious mental health problem untreated until his arrest.”

Ponzi-like Fraud

To carry out his Ponzi-like fraud, Caspersen created fake e-mail addresses, set up misleading domain names and invented fictional financiers, the U.S. said.

Caspersen worked for Coller Capital for about a decade before moving in 2013 to PJT’s Park Hill Group, then a part of private equity giant Blackstone Group LP. Park Hill, which helps raise capital for hedge funds, private equity firms and secondary funds, was spun off by Blackstone in October and is now owned by PJT.

The Moore Charitable Foundation, which seeks to preserve and protect natural resources, said Caspersen lied about an investment related to the publicly announced restructuring of a private equity fund. Caspersen promised annual returns of 15 percent, authorities said. The foundation said it notified the general counsel at PJT, who then alerted Manhattan U.S. Attorney Preet Bharara.

From late 2014, Caspersen “conducted a number of unauthorized and unlawful transactions outside the scope of his employment with Park Hill,” PJT said in a regulatory filing. He acted alone, and his victims weren’t PJT clients, the firm said.

Airport Arrest

Caspersen was taken into custody March 26 at New York’s LaGuardia Airport as he returned from a family vacation in Florida. He appeared in court two days later on charges of wire fraud and securities fraud. A judge released him on a $5 million bail and directed him to undergo alcohol testing and treatment as well as a mental-health evaluation and counseling. 

Soon after his arrest, his lawyer said Caspersen was hospitalized in a secure unit at New York Hospital. His bail terms were modified, and he posted $1.5 million in cash and his Manhattan apartment. 

The case is U.S. v. Caspersen, 16-mj-2011, U.S. District Court, Southern District of New York (Manhattan).

— With assistance by David Voreacos

(Updates with Caspersen’s remarks in third paragraph.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE