SEC Charges Securities Professional With Defrauding Institutional Investors

The U.S. Securities and Exchange Commission (SEC) recently charged a New York-based securities professional with defrauding two institutions he solicited to invest in a shell company he controlled. The shell company also had a name that was deceptively similar to that of a legitimate private equity fund.

According to the SEC, Andrew W.W. Caspersen, a New York City resident, solicited roughly $95 million from two institutional investors by offering promissory notes issued by Irving Place III SPV.

The agency alleges that Irving Place III SPV is a shell entity formed and controlled by Caspersen with no legitimate business operations, unlike the similarly named Irving Place Capital Partners III SPV, a legitimate private equity fund not associated in any way with Caspersen.

Andrew M. Calamari, director of the SEC’s New York Regional Office, commented:

As alleged, Caspersen engaged in a brazen fraud by raising money under false pretenses and simply stealing the funds. This action amply demonstrates that even sophisticated institutional investors are not immune to financial scams.

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The SEC also alleges that:

• Caspersen obtained a $25 million investment in November 2015 from an institutional investor by falsely representing that the investment would be secured by approximately $900 million of assets of Irving Place Capital Partners III SPV.
• Shortly after the investor wired its $25 million investment to Irving Place III SPV LLC’s bank account, Caspersen simply took control of the funds for his personal use.
• Using similar false and misleading statements, Caspersen later solicited an additional $20 million from the first investor and $50 million from a second, in both cases unsuccessfully.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York has announced criminal charges against Caspersen.