Allegedly Fraudulent Investment Banker Charged For Stealing $25 Million

Caspersen is accused of scheming to defraud investors out of more than $95 million.

Andrew Caspersen, a banker accused of stealing $25 million, seemed to have it all. Scion of a family that built and sold a finance company for billions, Caspersen was until Monday a managing director at PJT Partners Inc. earning over $3 million a year, helping private-equity funds restructure.

Caspersen is now out of work having been charged with what federal prosecutors have described as a brazen fraud. According to the Manhattan U.S. attorney’s office, Caspersen invented a fake “credit facility” that promised high returns and duped a hedge-fund manager into wiring him millions last year, most of it from a charitable foundation. Instead, he gambled it away betting on stock options in just four weeks. All in all, Caspersen is accused of scheming to defraud investors of more than $95 million.

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Caspersen’s case raises questions as to how PJT, an advisory firm that combined with the mergers and restructuring businesses of private-equity giant Blackstone Group LP last year, failed to notice what he was doing, and why someone in his position would allegedly run a scam that was highly likely to be discovered. As a result, PJT’s stock plunged as much as 25 percent before recovering to close down 11 percent at $23.66.

Defense lawyer Dan Levy, arguing against the prosecutors’ request for $20 million bail, said that “his money was all gone and that losses have eviscerated any assets”.

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Assistant U.S. Attorney Christine Magdo disagreed, commenting: “He had created fake identities and used the identities of real individuals. He stole from his own employer and now he says he has no assets. We wonder why would he tell the truth now, when he’s lied all along?”

Caspersen was released from custody on a $5 million bond. According to his prosecutors, the fraud’s roots go back to July. A month earlier, Park Hill helped private-equity firm Irving Place Capital raise $500 million to restructure a fund from 2006 and Caspersen is alleged to have worked on that assignment. 

What the investor didn’t know was that the account receiving the money, Irving Place III SPV LLC, was actually controlled by Caspersen and had nothing to do with the Irving Place firm. According to prosecutors, PJT did not authorize Caspersen to raise the funds and had absolutely no knowledge of Caspersen’s scheme.

Caspersen’s scheme lasted for about six months and lost most of the money in November trading short-term options on the Standard & Poor’s 500 Index. Then in March, he informed his investor that an opportunity had come up for the foundation to put in another $20 million. Caspersen used his family as a lure, saying they were investing $5 million. He is at present awaiting his trial in court.

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