Financial Executive Sentenced to Four Years in Prison

Former financial executive Andrew Caspersen was sentenced to serve four years in prison after defrauding investors of over $38 million followed by three years of supervised release. Restitution will be determined by the court at a later date. U.S. v. Caspersen, No. 16-cr-0414 (S.D.N.Y.); see also SEC v. Caspersen, Civil Action No. 16-cv-2249 (S.D.N.Y. Filed March 29, 2016).

Mr. Caspersen, a former managing principal of Blackstone Group, and a partner at Park Hill Group which raises capital for private equity, previously pleaded guilty to one count of securities fraud and one count of wire fraud. The charges are based on claims that he raised millions of dollars using a shell company named to sound like a well known hedge fund. The SEC filed a parallel action.

Andrew Caspersen had been a managing principal at his firm, a registered broker dealer, since 2013, according to the facts detailed in papers from each case. Beginning in 2014, and continuing until his arrest in March 2016, Mr. Caspersen solicited investors to invest in what he clamed would be secure loans made to private equity firms. In fact none of the money was invested. Rather, he misappropriated the funds. Much of the investor money was lost trading options while other portions were used to pay earlier investors.

In 2015 he formed Irving Place III SPV and established a bank account for the firm, according to the SEC. The name of his firm closely resembled that of a well established hedge fund, Irving Place Capital Partners III SPV. Mr. Caspersen’s firm had no assets, unlike Irving Place Capital Partners.

October 2015 Mr. Caspersen obtained a $25 million investment from a non-profit charitable affiliate of an investment limited partnership. To secure the investment he offered a promissory note that paid 15% annual interest on a quarterly basis. The note was redeemable in 90 days. It was secured by Irving Place III SPV and its supposed assets. The investor wired the funds to the bank account of the entity. Mr. Caspersen took control of the money and diverted it to his personal use.

In March 2016 Mr. Caspersen solicited an additional $20 million investment from the same investor. He also approached a second investor, seeking a $50 million investment. Essentially the same misrepresentations used to obtain the first investment were employed. The first investor had become suspicious and requested that the note be redeemed. Neither investor furnished any money to Mr. Caspersen or his investment vehicle.

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