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Stealing from Peter to Pay Paul

Posted on March 31, 2016March 31, 2016 by Doug Cornelius
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I generally think of fraudsters in two buckets. Some are trying to take the money and run. Some are using the ill-gotten money to cover up a prior loss, hoping to earn it all back. I think most ponzi schemes fall into the later category. A splashy fraud case this week highlighted this second type.

money

Andrew W.W. Caspersen had a pedigree of wealth. He graduated from Princeton University and Harvard Law School. He was a partner at a major financial advisory firm. He could do no wrong.

But according to the SEC and DOJ something did go wrong. He lost money. He was so desperate to cover up the losses he pitched a falsified investment in a legitimate private equity firm to institutional investors. He got one investor to put in $25 million.

According to the complaints, the scheme fell apart when that investor was contemplating putting in more money. The investor did some diligence, found the email addresses to be slightly different and phone numbers were incorrect. The DOJ alleges that Caspersen posed as executive at the private equity firm to answer questions from the investor and created a fake website and email addresses.

According to the complaint, Caspersen appears to have been using the money to cover an earlier loss and take a risky investment bets that did not pay off. The $25 million dwindled down to $40,000.

According to the Wall Street Journal, Caspersen was arrested Saturday evening at New York’s LaGuardia Airport. It’s not clear if he was merely heading out of town for business or vacation.

Or if he was turning into the first type of fraudster and making a run for it.

Sources:

  • SEC complaint
  • Criminal Complaint
  • Securities Professional Charged With Defrauding Institutional Investors
  • Financial Services Firm Partner Arrested And Charged In Manhattan Federal Court With $95 Million Scheme To Defraud Investors
  • SEC Alleges LLC Names Were “Deceptively Similar”, But What Would The California SOS Do? by Keith P. Bishop in California Corporate & Securities Law blog
  • A Son of Wall Street Privilege Faces Fraud Charges By CHRISTOPHER M. MATTHEWS, MATT JARZEMSKY and RYAN DEZEMBER

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