In a breaking voice, former Wall Street executive Andrew W.W. Caspersen admitted he bilked millions of dollars from relatives, 
friends and his former employer in a Ponzi-like scheme, all to feed a powerful gambling urge.
As a result, the 39-year-old former Park Hill Group partner faces the likelihood of more than a decade in prison, along with fines and restitution his defense attorney said he lacks the means to pay.
“I told family members and friends that a private equity firm had given me an allocation in a practically riskless debt instrument,” Caspersen said as he pleaded guilty to securities fraud and wire fraud before U.S. District Court Judge Jed Rakoff. “There was no real investment opportunity; it was just a way for me to get money to feed a gambling addition that was all consuming at the time.”
“The people I harmed were people I cared for the most,” added Caspersen. “I could not be more sorry or ashamed for my crimes.”
Under federal sentencing guidelines, the disgraced executive could face up to 40 years in prison and tens of millions of dollars in fines and restitution. However, federal prosecutors and Caspersen’s defense lawyer stipulated to an agreement that could subject him to roughly 12 1/2 years to 15 1/2 years behind bars.
The stipulation also calls for Caspersen to forfeit nearly $45.2 million, including proceeds from the sale of a six-bedroom family home in Bronxville, N.Y., an upscale New York City suburb, and rights to a co-operative apartment on Manhattan’s Upper East Side.
The sentencing decision lies with Rakoff, who said he was “not particularly affected by guideline calculations,” and declared his view that they “border on the irrational.” The judge scheduled a Nov. 2 sentencing date.
Caspersen’s decision to withdraw an earlier not-guilty plea and admit his crimes marked the latest development in the downfall of a businessman who grew up in a wealthy family and graduated from Princeton University and Harvard University’s law school before following in his father’s footsteps to a career in the financial world.
Manhattan U.S. Attorney Preet Bharara said in a statement that plea change “closes a sad chapter in a tale of deception and betrayal.”
“Parlaying his privileged background, Caspersen concocted a wild fraud scheme that involved made-up private equity ventures, fake email addresses, and fictional financiers. Through a litany of lies, Caspersen took millions from unwitting investors, including some of his own family and friends,” said Bharara.
A criminal complaint filed in March alleged that Caspersen carried out the alleged scheme from July 2015 through March 2016 after leaving Park Hill Group, a global advisory and placement agent that has raised more than $260 billion for private equity firms, real estate funds, and hedge funds. He allegedly schemed to bilk investors of nearly $150 million, according to a subsequent criminal information federal prosecutors filed in June.
The father of two allegedly claimed investors’ funds would be used to make secured loans to private equity funds, and would earn a 15% to 20% annual rate of return.
In all, Caspersen allegedly received approximately $38.5 million from more than 10 individuals and entities. The investors included a nearly $25 million stake from a charity backed by Moore Capital founder Louis Bacon.
Instead of investing the funds as promised, Caspersen used the money for personal options trades based on the performance of the Standard & Poor’s 500 Index, the criminal information charged. He also used money from the investors to repay more than $8 million he’d previously diverted from the Park Hill Group, also for gambling.
As of Feb. 11, one of Caspersen’s brokerage accounts held roughly $112.8 million in cash, which a prosecution filing said “would have been more than sufficient” for him to repay all of his investors. By March 9, however, his losing options trades allegedly had lost approximately $108.2 million of the money in the trading account.
The prosecution filing also alleged that Caspersen used some investors’ funds to make periodic interest payments to earlier investors, one hallmark of a Ponzi scheme.
Caspersen’s father, Finn M.W. Caspersen, was a respected financier who for decades ran consumer-finance company Beneficial Corp. He committed suicide in 2009 while battling cancer.
Federal investigators suspected the elder Caspersen was among the wealthy Americans who kept funds and income in secret offshore accounts in a bid to avoid U.S. taxes, The New York Times reported in 2009.
The younger Caspersen battles personal problems of his own. He told Rakoff he was hospitalized for approximately 16 days, primarily for mental health treatment, after he was arrested and charged in March. Caspersen said he’s currently undergoing psychiatric and drug treatment for the gambling addiction, depression and mental health issues.
After a court hearing in June, defense attorney Paul Shechtman told reporters Caspersen had “pathological gambling problem,” The Wall Street Journal reported. After Wednesday’s hearing, Shechtman called his client’s downfall “very sad.”
