Former Wall Street Executive Pleads Guilty to $38 Million Fraud

Andrew Caspersen's addiction caused him to lose $123 million by compulsively speculating on put options in the S&P 500 index.

Andrew Caspersen, a former Wall Street executive, has pleaded guilty to charges that he defrauded investors out of more than $38 million in a Ponzi-like scheme, blaming his conduct on a gambling addiction that he was unable to control.

Securities and Wire Fraud

Caspersen, a Princeton University and Harvard Law School graduate, was emotional in court as he admitted to cheating numerous people, mostly family and friends, through what he referred to as a “simple” fraud.

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“It was just a means for me to get money to feed a gambling addiction that was all consuming at the time,” Caspersen said as he pleaded guilty in a court in Manhattan to securities fraud and wire fraud.

Explaining why he was guilty of securities fraud, Caspersen told the court that between November 2014 and March 2016, he had “defrauded numerous people out of more than $38 million”.

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On the second criminal count of wire fraud, Caspersen said that between July and November of 2015, he had defrauded his employer, Park Hill Group, out of “more than $8 million by inducing two firms that owed Park Hill money to send it to an account that I controlled.”

Prosecutors said Caspersen had tried to defraud over a dozen investors by claiming he would use their funds to make loans to private equity firms. In court, Caspersen said he told friends and family that a private equity firm had given him an allocation in a “practically riskless debt instrument” and then offered them a chance to invest with him.

Prison Sentence

Instead, prosecutors said he used the $38 million he raised to make options trades, to pay earlier investors, and to replace over $8 million he had misappropriated from Park Hill Group, which Caspersen said he also used for gambling.

Caspersen, who said he also gambled away $20 million of his own money, in court apologised in court saying: “I could not be more sorry or ashamed for my crimes.”

Caspersen’s crimes could send him to prison for a decade or more when he is sentenced on 2 November.

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