The Unraveling of a Wall Street Scion

Andrew Caspersen lost millions feeding a compulsive trading habit, including money raised from friends, siblings and even his mother

By Serena Ng, Bradley Hope, Christopher M. Matthews and M. MatthewsRob Copeland

Andrew Caspersen has been accused of using investments from friends and family to bankroll a large fraud.

Andrew Caspersen has been accused of using investments from friends and family to bankroll a large fraud. Photo: Lucas Jackso

Andrew W.W. Caspersen was on the phone with an investor in the southwestern U.S. with what sounded like an enticing deal: Invest a few million dollars alongside sophisticated institutions—as well as Mr. Caspersen’s friends and family—and earn a 15% annual return with minimal risks.

The investor was intrigued, and Mr. Caspersen’s pristine pedigree added to the allure. He hailed from a wealthy, well-connected family and had years of experience working for top-tier financial institutions. In a few months, Mr. Caspersen gathered in tens of millions of dollars, including substantial funds from a charity backed by billionaire Louis Bacon, the founder of hedge fund Moore Capital Management.

Then, say authorities, the money vanished, lost into a black hole of bad stock-market bets. Mr. Caspersen, 39 years old, was charged last month with using the money to bankroll a large fraud. Among the alleged victims: college friends, his brothers and even his mother.

Mr. Caspersen was able to perpetrate his alleged fraud even though some investors suspected things seemed amiss. The scandal marks a stunning fall from grace for a man who seemed to have everything going for him, including a family name that was once synonymous with Wall Street privilege.

Some people who know Mr. Caspersen well now say they believe he was feeding an addiction, not to drugs or casino gambling, but to market speculation. To those close to him, it went beyond aggressive trading and became a compulsion that consumed a personal fortune that once stretched well into the eight figures.

In charges filed in late March, the Justice Department and Securities and Exchange Commission accused Mr. Caspersen of trying to solicit roughly $95 million for his alleged fraud. Authorities now suspect the magnitude of the alleged scam was considerably larger and could have started prior to 2015, according to people familiar with the matter.

The following account is based on interviews with people who know Mr. Caspersen and his family, people briefed on the investigations and people from whom Mr. Caspersen solicited money, as well as the charges filed against him and documents that he shared with prospective investors.

Mr. Caspersen hasn’t entered a plea to the federal charges or commented publicly since his March 26 arrest. His lawyer, Daniel Levy, declined to comment for this article. Mr. Caspersen is cooperating with the Manhattan U.S. attorney’s office, which filed the criminal charges, according to people briefed on the investigation. He has apologized to family members for losing the millions of dollars that they ponied up.
From privilege
Mr. Caspersen came from a privileged background. His father, Finn M.W. Caspersen, ran consumer-finance company Beneficial Corp. for nearly two decades, and he pocketed a fortune when it was sold for $8.6 billion in 1998. The family owned seaside estates in Rhode Island and Florida, and the elder Mr. Caspersen was a prominent philanthropist and contributor to Republican politicians.

Andrew Caspersen and his brothers attended elite private schools. At Groton, a boarding school in Massachusetts, friends remember him as a talented athlete in football and crew. “He was successful, did well in school and was very social,” a former classmate recalls.

Andrew Caspersen and family members at the Harvard Law School dedication of the Caspersen Student Center in 2012.
Andrew Caspersen and family members at the Harvard Law School dedication of the Caspersen Student Center in 2012. Photo: Martha Stewart

Mr. Caspersen went on to Princeton University, where he struck some classmates as reserved and enigmatic. He walked with a stiff gait and kept his pressed shirts neatly tucked in, but he also drove a beat-up, used car. He joined the Ivy Club, one of Princeton’s exclusive “eating clubs” where students take meals and fraternize.

In the late 1990s, Mr. Caspersen began dating Cat McRae, who had been a year behind him at Princeton and also was a member of the Ivy Club. By 2001, Ms. McRae’s friends thought the couple was preparing to get married.

But Ms. McRae, a research analyst, worked in New York City on the 93rd floor of the World Trade Center’s North Tower. She was killed in the Sept. 11, 2001, terrorist attacks. Mr. Caspersen eulogized her at a memorial service in Southampton, N.Y. He wept openly.

Armed with diplomas from Princeton and Harvard Law School, Mr. Caspersen landed a job at Coller Capital, one of the biggest players in the obscure but growing world of trading stakes in private-equity funds. Over the next nine years, he rose to become a principal at the company, one of its higher ranks.

Tragedy struck again in 2009. Mr. Caspersen’s father, who was battling liver cancer, shot himself in the head with a revolver.

The younger Mr. Caspersen, meanwhile, connected with Christina Frank, a Princeton alumna who worked at beer maker Anheuser-Busch InBev BUD -1.93 % NV in New York. They got married and had two children.

In January 2013, Mr. Caspersen joined Park Hill Group, which at the time was part of private-equity giant Blackstone Group BX -2.50 % LP. He worked in a division known as the “secondaries” group, which helped persuade pension funds, hedge funds and other investors to buy stakes in private-equity funds.

As a partner at Park Hill, Mr. Caspersen collected millions of dollars in annual compensation.

A Caspersen family company also distributed large sums each year to Mr. Caspersen and his siblings.

Although he thrived at work and struck colleagues as strait-laced, Mr. Caspersen harbored a secret: He had developed what he would later describe to acquaintances as an unhealthy fixation on placing big wagers on the market. Among his instruments of choice were stock options, which allowed him to make high-stakes bets with limited capital.

Unbeknown to his family and close friends, Mr. Caspersen’s speculative trading had largely depleted his personal fortune by last summer—and put him on an even more self-destructive path.

At the time, Park Hill was marketing an investment vehicle called Irving Place Capital Partners III SPV. Investors in the fund included Mr. Caspersen’s former employer, Coller Capital. The transaction closed in July with $1.5 billion in capital.

That same month, Mr. Caspersen filed papers in Delaware to incorporate a shell company. Its name was Irving Place III SPV LLC. He opened a new bank account. Then, using Park Hill templates and letterhead, he started drawing up fictitious documents to use his Irving Place vehicle to attract money, according to the federal complaint and documents viewed by The Wall Street Journal.

Last fall, Mr. Caspersen reached out to friends, family members and professional contacts to invite them to invest. He told them that he had been involved in the prior Irving Place transaction and that this was a similar deal. He said the money was going to finance a $50 million credit line, secured by Irving Place’s assets, and that their investments would churn out a 15% annual interest rate.

Multiple investment firms kicked in money, wiring the funds to accounts Mr. Caspersen claimed in documents were at J.P. Morgan Chase JPM -2.53 % & Co. and Bank of America Corp. BAC -3.17 % 
A Princeton classmate, James McIntyre, who worked at hedge fund Moore Capital, took the bait.

Two weeks after Mr. Caspersen contacted him, telling him there was a short window to get into the deal, Mr. McIntyre arranged for the giant fund’s charitable arm to kick in $24.6 million.

Moore’s founder, Mr. Bacon, was informed. Mr. McIntyre, who didn’t respond to requests for comment, invested $400,000 of his own money, too.

One of Mr. Caspersen’s closest friends, Princeton alumnus William Krusen, threw in money.

So did at least two of Mr. Caspersen’s brothers and his mother Barbara. The family, under the impression that Mr. Caspersen was excelling at work, figured it was a safe investment and collectively put in a total of more than $3 million. Mr. Krusen didn’t respond to requests for comment.

“Imagine if your brother or your best friend approached asking for a relatively small investment into something he did every day,” said one acquaintance. “This is a guy who had established himself as a respected and sophisticated investor for more than 10 years at some of the most respected [private-equity] firms. Why wouldn’t you put your money in?”
Red flags
Not everyone was lured.

On two occasions, Mr. Caspersen tried to solicit money from private-equity firm KKR KKR -1.26 % & Co., people familiar with the matter say. The firm is the unnamed “Firm-5” listed in last week’s federal complaint against the Wall Street executive.

KKR, which was asked for as much as $50 million, decided against it, in part because Mr. Caspersen couldn’t answer detailed questions from the firm’s legal team.

Mr. Caspersen, center, with his wife, Christina, in New York last month.
Mr. Caspersen, center, with his wife, Christina, in New York last month. Photo: REUTERS

The investor in the southwestern U.S., whose midsize firm had recently worked with Mr. Caspersen’s employer on a similar transaction, asked for more information. Mr. Caspersen emailed documents that were marked “confidential” and bore the logos of Park Hill and mentioned that Coller Capital was involved. In late October, though, a friend of the investor called the founder of Coller Capital, Jeremy Coller, and mentioned the possible deal. Mr. Coller said that he only knew of the original Irving Place transaction. He wasn’t aware of a newer deal.

“That was a big red flag,” the investor said. He decided not to move forward.

A Coller spokeswoman said the firm’s “first knowledge” of the alleged scheme “was in late March 2016.”

Despite that setback, Mr. Caspersen received tens of millions of dollars from other sources. He plowed some of the money he received from Moore Capital into options contracts based on the S&P 500 index, according to the criminal complaint. The trades amounted to a $17 million bet that the market would go up, traders say.

But the market went down. Mr. Caspersen lost about $14.5 million on the trades, prosecutors say.

If Mr. Caspersen was stressed, he didn’t show it. At a dinner last October at a Harvard event in Cambridge, Mass., he seemed his normal self, low-key and buttoned-up.

In early March, Mr. Caspersen approached Moore Capital’s Mr. McIntyre about making another $20 million investment. Mr. McIntyre by then was getting nervous. He asked to speak to a person at Coller Capital whom Mr. Caspersen had told him was involved in the deal, according to the criminal complaint and people briefed on the investigation. Mr. Caspersen
sent Mr. McIntyre an email arranging a conference call with that purported person at a Coller Capital email address.

Mr. McIntyre later realized that the email address’s domain name had been registered only minutes after he had requested to speak with the Coller employee.

That is “strange,” Mr. Caspersen told Mr. McIntyre after he noted the sequence, the criminal complaint says.

Mr. McIntyre told Mr. Caspersen the foundation wanted its $25 million back. And Moore Capital contacted Park Hill executives.

On the morning of March 16, Park Hill enlisted a law firm, Paul Weiss Rifkind Wharton & Garrison LLP, to investigate. By that evening, Paul Weiss had uncovered Mr. Caspersen’s alleged scheme.

Lawyers promptly informed the Manhattan U.S. attorney’s office.

Prosecutors and SEC officials rushed to pull together criminal and civil complaints against Mr. Caspersen. While they knew they hadn’t conducted a comprehensive investigation, they worried that he was still trying to enlist new investors and might be embezzling funds from Park Hill. The complaints primarily focused on Mr. Caspersen’s interactions with Moore, without identifying the firm by name.

On Saturday, March 26, Mr. Caspersen and his wife and two young children flew into New York’s LaGuardia Airport, returning from a vacation in Florida. When the family entered the airport terminal, a team of federal agents intercepted Mr. Caspersen and placed him under arrest. He said little to challenge the agents and quickly acquiesced to the arrest. His wife Christina appeared to be in a state of shock as her husband was escorted away.

Mr. Caspersen was held in jail over the weekend. He was released the following Monday after posting a $5 million bond. Under his bail conditions, he was required to seek psychiatric evaluation.

Park Hill, now owned by PJT Partners Inc., PJT -1.71 % a boutique investment bank spun out from Blackstone, fired Mr. Caspersen, saying it was “stunned and outraged” by his alleged misconduct.

That night, Christina took her husband from their home in Bronxville, N.Y., a New York City suburb, and checked him into a Manhattan hospital. He has since been released.

His friends and family felt betrayed, shocked, embarrassed and sad. “He has had a lot of tragedy in his life, but we’re all stunned by what’s happened,” said a friend from Princeton.

“We would never have guessed it would come to this.”

Lawyers for other investors who were approached by Mr. Caspersen have contacted the Manhattan U.S. attorney’s office since the charges were filed. A spokesman for the office declined to comment.

Prosecutors suspect Mr. Caspersen may have taken in tens of millions of dollars more than they have stated publicly, but they have yet to determine the full scope of the alleged fraud.

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