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30-03-16, 19:51
http://www.businesstimes.com.sg/banking-finance/from-privileged-life-to-bail-on-fraud-charges
From privileged life to bail on fraud charges
Andrew Caspersen allegedly used a fraudulent investment vehicle and fake emails to dupe a hedge fund foundation to sink US$25m into a scheme to cheat investors
http://www.businesstimes.com.sg/sites/default/files/styles/article_img/public/image/2016/03/30/BT_20160330_DNFRAUD30_2192353.jpg?itok=U8oxfd2n
Andrew Caspersen leaving the US Federal Court in New York on Monday. His father, Finn Caspersen, killed himself in 2009. It later emerged that he was being investigated for tax offences.
PHOTO: REUTERS
Mar 30, 2016
New York
ANDREW Caspersen, a 39-year-old Wall Street executive, came from a life of privilege and opportunity: Groton, Princeton and then Harvard Law School, where the student centre is named after his family because of a generous gift from his father.
But the father had a secret that emerged only after he committed suicide in 2009: Finn M W Caspersen, a noted financier and philanthropist, was at the time being investigated by the federal authorities, suspected of hiding away tens of millions of dollars in a tax shelter. Now it appears that his son, a former Blackstone Group managing principal, may have had his own secret.
Andrew Caspersen was arrested at La Guardia Airport on Saturday evening. On Monday, federal prosecutors working for Preet Bharara, the US attorney for Manhattan, charged him in a criminal complaint with securities and wire fraud in what they called a "brazen" scheme to defraud investors - including a foundation affiliated with a major New York hedge fund - of up to US$95 million.
The Securities and Exchange Commission (SEC) filed parallel civil charges. The authorities contend the executive used a fraudulent investment vehicle and fake emails to dupe the unidentified hedge fund foundation to sink US$25 million into the scheme last autumn.
Up until last week, Caspersen was still trying to persuade other institutional investors to give him money. So persuasive was his pitch that an employee at the hedge fund firm also invested US$400,000 with Caspersen, who lives with his wife in a home they recently bought in Bronxville, New York.
But the authorities said he blew through most of that money by making a series of money-losing stock and options trades in his personal brokerage account.
Caspersen was a partner at the Park Hill Group, which specialises in raising money for private equity firms and hedge funds. The Manhattan firm fired Caspersen on Monday and promptly removed his profile from its website.
Until autumn, Park Hill was part of the sprawling empire of the private equity giant the Blackstone Group. It is now part of PJT Partners, the advisory firm that was spun out of Blackstone and is run by the investment banker Paul Taubman. PJT said in a statement it was "stunned and outraged" to learn of the allegations. The firm added that it was cooperating with the authorities.
The case highlights the broader issue of how much research and checking institutional investors actually do when making an investment, and how much of it comes down to personal connection and trust.
"This action amply demonstrates that even sophisticated institutional investors are not immune to financial scams," said Andrew Calamari, director of the New York office of the SEC, which brought a civil complaint against Caspersen.
It may also raise questions about the internal controls in place at Park Hill, given that the authorities say Caspersen's scheme went on for months before it was detected.
Shares of PJT Partners plunged nearly 11 per cent on news of the charges. Late on Monday, Block & Leviton, the securities litigation firm, said it was investigating whether PJT and its officers and directors violated federal securities laws. The firm represents large institutional investors.
PJT said it believed Caspersen acted on his own. After learning of potential improper behaviour, the firm conducted an internal investigation and reported the matter to federal prosecutors in Manhattan.
Caspersen grew up mainly in an exclusive suburb in western New Jersey before attending the Groton School in Massachusetts, one of the most expensive boarding schools in the country. He was a captain of the football team and he also rowed.
After graduating from Groton in 1995, he went to Princeton University where he met Catherine MacRae, the daughter of a founding partner of the law firm LeBoeuf, Lamb, Greene & MacRae, which later merged to form Dewey & LeBoeuf. The two dated for several years.
Ms MacRae, a research analyst at Fred Alger Management, was killed on Sept 11, 2001, when terrorists crashed two planes into the World Trade Center. She had worked in Fred Alger's offices on the 93rd floor of the north tower.
Together with Ms MacRae's family, Caspersen created a memorial fund to benefit education programmes for children from low-income families.
Caspersen's father, Finn, was a prominent philanthropist and the heir to the Beneficial Corp fortune. The elder Caspersen was chairman and chief executive of the consumer finance company for nearly two decades before selling the firm in 1998 for US$8.6 billion to Household International, which was later acquired by the London-based bank HSBC.
In 2008, Finn Caspersen pledged US$30 million to Harvard Law. A year later, he killed himself at age 67 with a single gunshot to the head. About 800 people attended his funeral ceremony in Morristown, New Jersey.
Caspersen was known to be battling kidney cancer when he killed himself. But soon after his death, it emerged that his name had surfaced in the federal government's crackdown on overseas banks that were helping wealthy American citizens shelter money to avoid paying taxes.
Finn Caspersen was an active supporter of New Jersey Republicans such as former governor Tom Kean. Caspersen was also well known in equestrian circles and was said to have competed with Prince Philip, the husband of Queen Elizabeth, in Windsor, England.
Andrew Caspersen's scheme, the federal authorities say, began last summer and ended only a few weeks ago. It is not clear why the executive, who arguably was successful and wealthy in his own right, may have needed the money.
Still, last summer Caspersen, who had previously lived on the Upper East Side of Manhattan, set up a shell company called Irving Place III SPV LLC that he soon began seeking to raise money from institutional investors, the authorities said.
The shell company was similar to the name of a legitimate investment vehicle that Park Hill was raising money for at the time called Irving Place Capital Partners III SPV. Irving Place Capital was originally a private equity fund of Bear Stearns, the Wall Street firm that imploded in 2008.
Caspersen, who previously worked for Coller Capital, a fund that buys private equity fund assets, never told prospective investors the shell company was controlled completely by him, the authorities said. Caspersen made up email accounts and invented employees and even went as far as to create a fake domain name to further the scheme, they said.
The scheme began to fall apart this month when the foundation affiliated with the hedge fund asked for its US$25 million to be returned on March 11, the authorities said.
A few days later, on March 14, Park Hill first learned that Caspersen was raising money for his own investment vehicle when an unidentified firm complained about it. Park Hill then hired lawyers from Paul, Weiss, Rifkind, Wharton & Garrison, including litigation partner Aidan Synnott, to conduct an internal investigation. The law firm notified federal prosecutors of its findings the next day.
By March 18, the authorities said the account where the hedge fund's foundation had wired its US$25 million had a balance of roughly US$40,000.
Caspersen was released on Monday after he posted a US$5 million bond co-signed by three people and secured by two residences.
As part of his bail package, the judge required him to seek treatment related to substance abuse. NYT
From privileged life to bail on fraud charges
Andrew Caspersen allegedly used a fraudulent investment vehicle and fake emails to dupe a hedge fund foundation to sink US$25m into a scheme to cheat investors
http://www.businesstimes.com.sg/sites/default/files/styles/article_img/public/image/2016/03/30/BT_20160330_DNFRAUD30_2192353.jpg?itok=U8oxfd2n
Andrew Caspersen leaving the US Federal Court in New York on Monday. His father, Finn Caspersen, killed himself in 2009. It later emerged that he was being investigated for tax offences.
PHOTO: REUTERS
Mar 30, 2016
New York
ANDREW Caspersen, a 39-year-old Wall Street executive, came from a life of privilege and opportunity: Groton, Princeton and then Harvard Law School, where the student centre is named after his family because of a generous gift from his father.
But the father had a secret that emerged only after he committed suicide in 2009: Finn M W Caspersen, a noted financier and philanthropist, was at the time being investigated by the federal authorities, suspected of hiding away tens of millions of dollars in a tax shelter. Now it appears that his son, a former Blackstone Group managing principal, may have had his own secret.
Andrew Caspersen was arrested at La Guardia Airport on Saturday evening. On Monday, federal prosecutors working for Preet Bharara, the US attorney for Manhattan, charged him in a criminal complaint with securities and wire fraud in what they called a "brazen" scheme to defraud investors - including a foundation affiliated with a major New York hedge fund - of up to US$95 million.
The Securities and Exchange Commission (SEC) filed parallel civil charges. The authorities contend the executive used a fraudulent investment vehicle and fake emails to dupe the unidentified hedge fund foundation to sink US$25 million into the scheme last autumn.
Up until last week, Caspersen was still trying to persuade other institutional investors to give him money. So persuasive was his pitch that an employee at the hedge fund firm also invested US$400,000 with Caspersen, who lives with his wife in a home they recently bought in Bronxville, New York.
But the authorities said he blew through most of that money by making a series of money-losing stock and options trades in his personal brokerage account.
Caspersen was a partner at the Park Hill Group, which specialises in raising money for private equity firms and hedge funds. The Manhattan firm fired Caspersen on Monday and promptly removed his profile from its website.
Until autumn, Park Hill was part of the sprawling empire of the private equity giant the Blackstone Group. It is now part of PJT Partners, the advisory firm that was spun out of Blackstone and is run by the investment banker Paul Taubman. PJT said in a statement it was "stunned and outraged" to learn of the allegations. The firm added that it was cooperating with the authorities.
The case highlights the broader issue of how much research and checking institutional investors actually do when making an investment, and how much of it comes down to personal connection and trust.
"This action amply demonstrates that even sophisticated institutional investors are not immune to financial scams," said Andrew Calamari, director of the New York office of the SEC, which brought a civil complaint against Caspersen.
It may also raise questions about the internal controls in place at Park Hill, given that the authorities say Caspersen's scheme went on for months before it was detected.
Shares of PJT Partners plunged nearly 11 per cent on news of the charges. Late on Monday, Block & Leviton, the securities litigation firm, said it was investigating whether PJT and its officers and directors violated federal securities laws. The firm represents large institutional investors.
PJT said it believed Caspersen acted on his own. After learning of potential improper behaviour, the firm conducted an internal investigation and reported the matter to federal prosecutors in Manhattan.
Caspersen grew up mainly in an exclusive suburb in western New Jersey before attending the Groton School in Massachusetts, one of the most expensive boarding schools in the country. He was a captain of the football team and he also rowed.
After graduating from Groton in 1995, he went to Princeton University where he met Catherine MacRae, the daughter of a founding partner of the law firm LeBoeuf, Lamb, Greene & MacRae, which later merged to form Dewey & LeBoeuf. The two dated for several years.
Ms MacRae, a research analyst at Fred Alger Management, was killed on Sept 11, 2001, when terrorists crashed two planes into the World Trade Center. She had worked in Fred Alger's offices on the 93rd floor of the north tower.
Together with Ms MacRae's family, Caspersen created a memorial fund to benefit education programmes for children from low-income families.
Caspersen's father, Finn, was a prominent philanthropist and the heir to the Beneficial Corp fortune. The elder Caspersen was chairman and chief executive of the consumer finance company for nearly two decades before selling the firm in 1998 for US$8.6 billion to Household International, which was later acquired by the London-based bank HSBC.
In 2008, Finn Caspersen pledged US$30 million to Harvard Law. A year later, he killed himself at age 67 with a single gunshot to the head. About 800 people attended his funeral ceremony in Morristown, New Jersey.
Caspersen was known to be battling kidney cancer when he killed himself. But soon after his death, it emerged that his name had surfaced in the federal government's crackdown on overseas banks that were helping wealthy American citizens shelter money to avoid paying taxes.
Finn Caspersen was an active supporter of New Jersey Republicans such as former governor Tom Kean. Caspersen was also well known in equestrian circles and was said to have competed with Prince Philip, the husband of Queen Elizabeth, in Windsor, England.
Andrew Caspersen's scheme, the federal authorities say, began last summer and ended only a few weeks ago. It is not clear why the executive, who arguably was successful and wealthy in his own right, may have needed the money.
Still, last summer Caspersen, who had previously lived on the Upper East Side of Manhattan, set up a shell company called Irving Place III SPV LLC that he soon began seeking to raise money from institutional investors, the authorities said.
The shell company was similar to the name of a legitimate investment vehicle that Park Hill was raising money for at the time called Irving Place Capital Partners III SPV. Irving Place Capital was originally a private equity fund of Bear Stearns, the Wall Street firm that imploded in 2008.
Caspersen, who previously worked for Coller Capital, a fund that buys private equity fund assets, never told prospective investors the shell company was controlled completely by him, the authorities said. Caspersen made up email accounts and invented employees and even went as far as to create a fake domain name to further the scheme, they said.
The scheme began to fall apart this month when the foundation affiliated with the hedge fund asked for its US$25 million to be returned on March 11, the authorities said.
A few days later, on March 14, Park Hill first learned that Caspersen was raising money for his own investment vehicle when an unidentified firm complained about it. Park Hill then hired lawyers from Paul, Weiss, Rifkind, Wharton & Garrison, including litigation partner Aidan Synnott, to conduct an internal investigation. The law firm notified federal prosecutors of its findings the next day.
By March 18, the authorities said the account where the hedge fund's foundation had wired its US$25 million had a balance of roughly US$40,000.
Caspersen was released on Monday after he posted a US$5 million bond co-signed by three people and secured by two residences.
As part of his bail package, the judge required him to seek treatment related to substance abuse. NYT