Wall Street Executive Arrested For Stealing $25 Million From Charitable Foundation

A 39-year-old partner in PJT Partners’ Park Hill Group unit who used to work for Blackstone has been arrested for orchestrating a $25 million investment fraud, mostly by soliciting funds from a charitable foundation for fake deals that he claimed to be conducting between his employer and a private equity fund.

Andrew Caspersen, a graduate of Princeton University and Harvard Law School, worked in the so-called secondary advisory team at Park Hill, brokering deals between investors in private equity funds. He is the son of the late Finn M. W. Caspersen, a prominent philanthropist and heir to the Beneficial Corporation fortune who committed suicide in 2009 while he was suffering from cancer and reportedly under investigation for tax evasion.

Federal prosecutors claimed on Monday that Caspersen wrongfully got his hands on $24.6 million that belonged to a charity affiliated with a New York hedge fund ostensibly to invest in a secured loan to an investment firm, but instead Caspersen used a portion of the money to trade options in his own account.

Caspersen also obtained another $400,000 from an employee of the hedge fund affiliated with the charity. Caspersen lost most of the money through his options trading, prosecutors say. The account to which the charity and hedge fund employee transferred the $25 million recently only had $40,000 in it, federal prosecutors say.

“Caspersen simply took control of the funds for his personal use,” the Securities & Exchange Commission said in a complaint it filed against him. Caspersen’s $25 million fraud occurred between July 2015 and March 2016, federal prosecutors claim. He is also accused of trying to solicit another $70 million from the charitable foundation he bilked and a separate New York private equity firm, apparently after his initial trading with the stolen funds ended with losses.

“To advance his $95 million fraud scheme, Caspersen allegedly put on a shameful charade – creating fake email addresses, setting up misleading domain names, and inventing fictional financiers,” said Preet Bharara, the U.S. Attorney in Manhattan, in a statement. “When confronted by a suspicious client who had invested $25 million, Caspersen had no good answers.” Bharara has charged Caspersen with securities and wire fraud.

In a statement, PJT Partners said that it had reported Caspersen’s scam to federal prosecutors in Manhattan the moment the firm learned about it. PJT Partners has fired Caspersen for cause. Federal prosecutors claim that Caspersen wired $8 million of the stolen funds to a PJT Partners account in an attempt to cover up for $8 million he had transferred for his own use from PJT Partners, his employer.

PJT Partners is a new firm being led by investment banker Paul Taubman, created last year with the October spinout of two businesses from private equity giant Blackstone Group—its financial advisory services group and Park Hill Group. Caspersen has worked with Park Hill since early 2013 and his investment fraud is alleged to have started while Park Hill was part of Blackstone.

According to the SEC’s complaint filed in Manhattan’s federal court, Caspersen offered investors in his bogus deals promissory notes issued by Irving Place III SPV, a shell entity that Caspersen created and claimed secured the loan with $900 million of assets. Caspersen’s fictitious shell sounded awfully like Irving Place Capital Partners III SPV, which the SEC describes as a legitimate private equity fund that is not associated in any way with Caspersen, but it was client of Park Hill, which was helping it raise money at the time of Casperson’s alleged bogus dealings.

source: forbes.com by Nathan Vardi

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