Federal prosecutors arrested and charged Andrew Caspersen, until recently a partner with advisory firm Park Hill, of attempting to defraud two institutional investors of more than $95 million, according to statements by the US Securities and Exchange Commission (SEC) and the Department of Justice (DOJ).
The SEC charged the 39-year-old New York-based professional of soliciting two institutions to invest in a shell company he controlled whose name was similar to that of a legitimate private equity fund.
He offered promissory notes issued by Irving Place III SPV to the investors, the identities of which were not disclosed in the statements. The shell entity was formed and controlled by Caspersen with no legitimate business operations, according to the SEC, which noted that a legitimate private equity fund called Irving Place Capital Partners III SPV is not associated in any way with Caspersen.
As a result of the scheme, Caspersen allegedly defrauded investors of $25 million.
“As alleged, Caspersen engaged in a brazen fraud by raising money under false pretences and simply stealing the funds,” Andrew Calamari, director of the SEC's New York regional office, said in a statement on Monday.
The SEC is seeking permanent injunction, return of the allegedly ill-gotten gains with interest and monetary penalties.
Simultaneously, Preet Bharara, the US attorney for the Southern District of New York, announced on Monday that the Department of Justice arrested and charged Caspersen with securities and wire fraud in connection with the scheme. The statement from the DOJ noted that Caspersen allegedly engaged in the fraud scheme from at least July 2015 through this month.
“Andrew Caspersen, a partner at a major financial advisory firm, allegedly scammed his clients into investing tens of millions in sham private equity investments,” said Bharara in a statement.
“To advance his $95 million fraud scheme, Caspersen allegedly put on a shameful charade, creating fake email addresses, setting up misleading domain names, and inventing fictional financiers. When confronted by a suspicious client who had invested $25 million, Caspersen had no good answers. He will now have to answer to federal securities and wire fraud charges.”
Caspersen is being presented before magistrate judge James Francis on Monday. He's charged with one count of securities fraud and one count of wire fraud. Each count carries a maximum term of 20 years in prison. The maximum fine on these counts is $5 million or twice the gross gain or loss from the offence.
Caspersen joined Park Hill in 2013 to focus on secondaries transactions, including GP-led transactions. Prior to joining Park Hill, he was an investment principal at Coller Capital where he was responsible for origination and execution of secondaries investments in the US.
“Since the inception of our firm, an unconditional principle of integrity has been a core value as we build a lasting franchise. Our commitment to clients begins and ends with honesty and transparency, and strict adherence to these values is the absolute cornerstone of our firm,” Park Hill said in an emailed statement.
“We were therefore stunned and outraged to learn of the fraudulent circumvention and violation of the firm's compliance policies and ethical standards by Andrew Caspersen, a member of the secondaries group at Park Hill since January 2013. Immediately upon learning of facts that suggested improper behavior, we commenced an internal investigation led by outside counsel, Paul, Weiss, and very quickly thereafter, brought the matter to the attention of the U.S. Attorney's Office in Manhattan. Since that time we have cooperated fully with law enforcement, and we will continue to do so.”
Park Hill has terminated Caspersen for cause, according to the firm. Caspersen, contacted via his LinkedIn account, did not respond to a request for comment.
Park Hill is part of PJT Partners, a financial advisory services firm that spun out of the Blackstone Group in the autumn.