A former partner at a unit of boutique investment bank
PJT Partners Inc has been arrested on charges that he stole $25 million from
investors and tried to fraudulently obtain $70 million more, U.S. prosecutors
said on Monday.
Andrew Caspersen, who had worked at PJT's Park Hill
Group since 2013, was named in a criminal complaint filed in federal court in
Manhattan, charging him with securities fraud and wire fraud.
Prosecutors said Caspersen, 39, sought $24.6 million
from a charitable foundation affiliated with a New York hedge fund along with
$400,000 from one of the fund's employees, saying he would invest it in a
secured loan to a private equity fund.
Instead, Caspersen used the money for personal options
trading, losing $14.5 million in the process, authorities said. Other funds
went to cover up unauthorized wire transfers at his company, the complaint
said.
The fraud, which involved creating fake email
addresses and a misleading domain name, began in July and continued through
this month, when he sought $20 million more from the foundation and $50 million
from a private equity firm, prosecutors said
During this time he worked at Park Hill, which he
joined in 2013. The advisory firm was spun out of private equity group Blackstone
Group LP in October. It is now part of PJT Partners, founded by veteran
dealmaker Paul Taubman.
Shares in PJT closed down 10.62 percent on Monday,
after dropping as much as 24.3 percent to a record low earlier in the day on
news of the charges.
"Looking at it from the outside, it looks like it
was just a bad apple as opposed to some kind of a systemic problem," said
Jeffery Harte, an equity analyst at Sandler O'Neill + Partners LP. "But I
suspect people will ask how do we know this won't happen again."
PJT said it was "stunned and outraged" by
Caspersen's actions and said it fired him. Both it and Blackstone said they
were cooperating with authorities.
Caspersen was arrested on Saturday and released on a
$5 million bond following a court hearing on Monday, where a prosecutor argued
that his wealth should require bail to be set even higher, at $20 million.
A graduate of a Princeton University and Harvard Law
School, Caspersen is the son of Finn M.W. Caspersen, the former chairman of
consumer finance company Beneficial Corp, which Household International Inc
bought in 1998.
The elder Caspersen committed suicide in 2009 amid an
Internal Revenue Service investigation. In court, Assistant U.S. Attorney
Cristine Magdo said his net worth once was $1 billion.
Magdo referred to that wealth along with stolen funds
that continue to be unaccounted for in arguing Caspersen could pose a flight
risk. But Daniel Levy, his lawyer, played down those claims and said his father
died in debt.
"There's no secret pot of money Mr. Caspersen has
access to and can tap into," he said.
Caspersen, who Levy described as "a daily alcohol
user," was ordered by U.S. Magistrate Judge James Francis to seek mental
health treatment in light of what Levy referred vaguely to as recent
"thoughts." Levy declined comment outside of court.
(Reporting by Nate Raymond in New York; Editing by Dan
Grebler and Andrew Hay)
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