Andrew Caspersen (Park Hill Group)
In March we shared with you the unfortunate tale of Andrew Caspersen, the Harvard Law School graduate turned Wall Street executive turned accused fraudster. Federal authorities now allege that he sought to defraud investors of a cool $150 million — much more than the $95 million claimed in the original criminal complaint.
Caspersen stands accused of trying to defraud friends, family, and even a charitable foundation — but some of the worst damage he did to himself. Here’s the New York Times account of his recent court appearance, where he pleaded not guilty to charges of securities and wire fraud:
Over the last decade, Mr. Caspersen squandered more than $20 million of his own money, including a family inheritance, [lawyer Paul] Shechtman said, adding that Mr. Caspersen and his wife, Christina, were essentially broke and were selling their multimillion-dollar Bronxville, N.Y., home.
(Sounds like a possible property for Lawyerly Lairs; drop us a line if you come across the listing.)
The story gets worse. Here is what Caspersen reportedly did with the money obtained through the alleged fraud (emphasis added):
Mr. Caspersen’s trading strategy was not particularly sophisticated. He almost exclusively traded one-week put options betting on a decline in the Standard & Poor’s 500-stock index. What was remarkable was the bold nature of the bets, in which Mr. Caspersen would instruct his broker to trade all the cash available in his account each week, his lawyer said.
As recently as Feb. 11, Mr. Caspersen had $112.8 million in a brokerage account and could have easily paid back the $38.5 million he had owed family and friends. Instead, the very next trading day he ordered his broker, at an unnamed Wall Street firm, to place a new round of all-in bets that the market would fall that week.
As stocks rose earlier this year and the market turned against him, Mr. Caspersen lost all the money in what the government described as aggressive bearish options trades. By March 9, his account had dwindled to $3.35 million.
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A few weeks later, on March 26, he got arrested by federal law enforcement.
Such a huge, reckless bet sounds consistent with the compulsive gambling addiction that Caspersen’s lawyer, Paul Shechtman, claims his client suffers from. It’s the stock-market equivalent of when you’re down a lot at the craps table, tell yourself “what the hell,” and put all your remaining money in the field. It’s a dumb bet, but it satisfies the compulsive gambler’s need for “action.”
We noted previously that Caspersen and the feds have been in negotiations to resolve the case. According to the Times, Caspersen is expected to plead guilty at a July 7 hearing.
Here’s a fact we failed to mention in our prior profile of Andrew Caspersen: he once worked at Dewey & LeBoeuf, summering at predecessor firm Dewey Ballantine in 2001. The Dewey defendants have managed to avoid prison (so far), but whether the Dewey Curse puts Caspersen behind bars remains to be seen.
Andrew Caspersen, Charged in $40 Million Fraud, Had Gambling Addiction, Lawyer Says [DealBook / New York Times]
Earlier: High-Flying Harvard Law Grad Charged With $95 Million Fraud Scheme
David Lat is the founder and managing editor of Above the Law and the author of Supreme Ambitions: A Novel. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook, and you can reach him by email at [email protected].