A Princeton University and Harvard Law graduate is accused of scheming to defraud investors of more than $95 million, inventing fictional financiers and creating fake email addresses to back up his story.
Andrew Caspersen, 39, was arrested at New York's LaGuardia Airport on Saturday, according to the Wall Street Journal, and appeared in Manhattan federal court on Monday, where a judge approved a $5 million bail and ordered him to undergo a psychological evaluation.
In a detailed complaint unsealed on Monday, the U.S. Attorney's Office accused Caspersen of securities and wire fraud. The Securities and Exchange Commission also filed civil charges against him.
Caspersen allegedly offered two institutional investors promissory notes issued by Irving Place III SPV LLC, a shell entity controlled by Caspersen with no legitimate business operations but with a similar name to the legitimate private equity fund Irving Place Capital Partners III SPV, the SEC said. The latter isn't associated with Caspersen in any way, the SEC said.
As a partner with the asset advisory firm Park Hill Group, Caspersen allegedly solicited investments in securities though he didn't have the authority from his employer to do so, according to the complaint. He allegedly told investors the money would be invested in a secured loan to an investment firm even though the security didn't exist and no investments were made. Instead, he allegedly converted the funds to his own use without the permission of the investors, including $24.6 million from a charitable foundation affiliated with a hedge fund and $400,000 from an employee of that hedge fund.
"Rather than invest his victims’ funds as promised, Caspersen used a portion of the $25 million to trade securities in his personal brokerage account, which funds he largely lost as a result of aggressive options trading," the U.S. Attorney's Office said in a statement.
Caspersen also tried, without success, to solicit another $20 million from the same foundation and $50 million from another private equity firm in New York, according to the statement from the U.S. Attorney's Office.
"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," U.S. Attorney for the Southern District of New York Preet Bharara said in a statement. "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.”
When an investor wanted to speak with one of Caspersen's fictitious financiers, Caspersen sent an email to the investor that also included a fake email address with a domain name that didn't match the firm from which it purportedly originated, according to the criminal complaint. The investor later learned no one with that financier's name worked at that firm, according to Bharara's statement.
Still, Caspersen planned a conference call between the investor and the fake financier, the complaint says. During the conference call, the investor spoke with an individual claiming to be the financier, a vice president at the New York office of a company, but refused to provide his telephone number to the investor.
The investor eventually asked for the $25 million to be returned. That money has yet to be given back, authorities said.
PJT Partners, which owns Park Hill Group, issued a statement yesterday saying that Caspersen had been terminated. The company added that it was "stunned and outraged" to learn about Caspersen's illegal activities.
"Immediately upon learning of facts that suggested improper behavior, we commenced an internal investigation led by outside counsel, Paul, Weiss, Rifkind, Wharton & Garrison, and very quickly thereafter, brought the matter to the attention of the U.S. Attorney’s Office in Manhattan," PJT Partners said in a statement. "Since that time we have cooperated fully with law enforcement, and we will continue to do so. We have terminated Mr. Caspersen for cause."
Caspersen, a New York City resident, is the son of the late Finn M.W. Caspersen Sr., who committed suicide in 2009 amid reports the IRS was investigating him for offshore tax evasion, the Wall Street Journal reported.
Caspersen's attorney didn't respond to ABC News' request for comment. Caspersen has not yet entered a plea to the charges against him.