SEC-USAO Charge Former Fund Principal With Fraud

A former managing principal of Blackstone Group, and a partner at Park Hill Group which raises capital for private equity, was charged by the SEC and Manhattan U.S. Attorney’s Office with 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. SEC v. Caspersen, Civil Action No. 16-cv-2249 (S.D.N.Y. Filed March 29, 2016).

Andrew Caspersen has been a managing principal at his firm, a registered broker dealer, since 2013. In 2015 he formed Irving Place III SPV and established a bank account for the firm. 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.

In 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.

The SEC’s complaint alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b). The case is pending. See Lit. Rel. No. 23505 (March 29, 2016). The criminal complaint alleges securities and wire fraud.

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