Case Overview

Defendant: Andrew W.W. Caspersen, Elite Financial Professional
Education: Princeton University, Harvard Law School
Family Background: Son of major philanthropist and Wall Street executive
Crime Period: October - November 2015 (2 months)
Primary Victim: Unnamed charity affiliated with New York hedge fund
Amount Stolen: $25 million from charity, $400,000 personal funds
Method: Fake $80 million loan investment opportunity
Charges: Securities fraud, wire fraud
Status: Convicted, sentenced to federal prison

The Elite Pedigree Advantage

Academic and Social Credentials

Educational Foundation:

  • Princeton University undergraduate degree
  • Harvard Law School legal training
  • Ivy League social connections
  • Elite Wall Street family background

Family Legacy:

  • Father: Finn Caspersen, major Wall Street executive
  • Family history of high-level finance and philanthropy
  • Connections to prestigious institutions and donors
  • Multi-generational wealth and influence

Leveraging Elite Status for Fraud

The Credibility Factor

Trust-Building Elements:

  1. Ivy League Credentials: Educational pedigree provided instant credibility
  2. Family Reputation: Father’s success and philanthropy created presumption of legitimacy
  3. Social Networks: Access to high-net-worth individuals and institutions
  4. Wall Street Connections: Professional relationships with major financial institutions

Exploitation of Trust:

  • Used family name and connections to gain access
  • Leveraged educational credentials to appear sophisticated
  • Exploited philanthropic community’s trust-based culture
  • Applied social pressure through elite social connections

Anatomy of the Charitable Fraud

The Fabricated Investment Opportunity

Initial Contact and Setup

October 2015: Email to New York hedge fund employee
False Proposition: $80 million loan investment opportunity
Claimed Personal Investment: Caspersen supposedly investing his own money
Promised Return: 15% guaranteed return for the charity

The Deception Structure

Fake Investment Details:

  • Non-existent loan fund requiring immediate capital
  • Fictional financial institution as counterparty
  • Fabricated documentation supporting investment thesis
  • False claims about Caspersen’s personal financial commitment

Professional Presentation:

  • Sophisticated financial terminology and structure
  • Detailed documentation mimicking legitimate investments
  • Professional communication style and urgency
  • References to established financial practices

Victim Profile and Vulnerability

The Targeted Charity

Organization Type: High-net-worth charity affiliated with hedge fund
Asset Size: Multi-million dollar charitable foundation
Management Structure: Hedge fund employee with investment authority
Decision-Making: Streamlined process for investment decisions

Critical Vulnerability Factors:

  1. Single Decision Maker: One person with authority to invest $25 million
  2. Trust-Based Culture: Charitable sector’s reliance on personal relationships
  3. Limited Due Diligence: Insufficient verification procedures for large investments
  4. Social Pressure: Caspersen’s elite status creating pressure to participate

The Criminal Execution

Fund Transfer and Misappropriation

November 2015 Transfers

From Charity: $24.6 million wired to Caspersen
Personal Investment: $400,000 from hedge fund employee
Total Fraud: $25 million in misappropriated funds

Immediate Misuse of Funds

Primary Destination: Caspersen’s personal brokerage account
Criminal Activity: Aggressive options trading with stolen funds
Pattern: High-risk speculation using victim money
Previous Theft Coverage: Funds used to conceal earlier criminal activity

Options Trading Losses

High-Risk Speculation

Trading Strategy: Aggressive options positions
Risk Level: Extremely high-risk speculation
Market Conditions: Volatile market environment
Result: Massive losses eliminating majority of stolen funds

Criminal Recklessness:

  • Used charity funds for personal gambling
  • No legitimate investment purpose
  • Disregard for charitable mission and beneficiaries
  • Pattern of using new theft to cover old theft

Investigation and Law Enforcement Response

SEC Securities Fraud Charges

Federal Securities Violations

Primary Charges:

  • Securities fraud for fake investment scheme
  • Wire fraud for electronic fund transfers
  • Investment advisor fraud for breach of fiduciary duty

Evidence Collection:

  • Email communications with false investment claims
  • Banking records showing fund transfers and misuse
  • Trading records documenting speculative losses
  • Documentation proving non-existence of claimed investment

Justice Department Prosecution

Criminal Penalties

Federal Sentencing:

  • Significant federal prison term
  • Restitution orders for victim compensation
  • Asset forfeiture of remaining recoverable funds
  • Professional license revocations

Deterrent Effect:

  • High-profile prosecution sending message to elite community
  • Demonstration that privilege doesn’t protect from prosecution
  • Warning to charitable sector about due diligence importance

Charitable Sector Vulnerabilities Exposed

Systemic Weaknesses in Charitable Governance

Decision-Making Concentration

Single Point of Failure:

  • One person with authority over $25 million investment
  • Lack of board oversight for major financial decisions
  • No independent verification of investment opportunities
  • Insufficient checks and balances in investment process

Due Diligence Gaps

Verification Failures:

  1. Credential Assumption: Ivy League education assumed to guarantee honesty
  2. Relationship Reliance: Personal connections substituted for professional verification
  3. Documentation Gaps: Insufficient independent verification of investment details
  4. Regulatory Bypass: Lack of SEC registration verification for investment advisor

Trust-Based Culture Exploitation

Charitable Community Characteristics

Cultural Factors:

  • High level of interpersonal trust
  • Relationship-based decision making
  • Assumption of shared values and integrity
  • Limited adversarial thinking about potential fraud

Exploitation Mechanisms:

  • Fraudsters leverage charitable community’s trusting nature
  • Elite credentials create presumption of trustworthiness
  • Social connections pressure quick decision-making
  • Charitable mission focus reduces security consciousness

Red Flags and Warning Signs

Investment Opportunity Red Flags

Structural Warning Signs

Immediate Concerns:

  1. Unsolicited Opportunity: No pre-existing relationship or introduction
  2. Time Pressure: Urgent timeline for major investment decision
  3. Guaranteed Returns: 15% return promise with minimal risk disclosure
  4. Unverified Counterparty: No independent verification of investment partner

Due Diligence Red Flags

Missing Verifications:

  1. SEC Registration: No verification of investment advisor registration
  2. Independent References: No third-party verification of claims
  3. Financial Statements: No review of Caspersen’s actual financial capacity
  4. Investment Documentation: Insufficient legal review of investment structure

Protection Strategies for Charities

Enhanced Governance Measures

Board Oversight Requirements:

  • Multiple approval levels for large investments
  • Independent investment committee review
  • Professional due diligence requirements
  • Mandatory waiting periods for major decisions

Verification Protocols:

  • SEC registration confirmation for all investment advisors
  • Independent legal review of investment documentation
  • Third-party reference checks for investment opportunities
  • Financial background verification of investment partners

Broader Implications and Reforms

Charitable Sector Response

Governance Improvements

Enhanced Oversight:

  • Strengthened board investment committees
  • Independent investment advisor requirements
  • Mandatory due diligence procedures
  • Professional investment policy adoption

Education Initiatives:

  • Fraud awareness training for charitable boards
  • Investment due diligence education programs
  • Elite fraud case study integration
  • Professional development for charitable investment management

Regulatory Considerations

Potential Regulatory Enhancements

Oversight Improvements:

  • Enhanced reporting requirements for large charitable investments
  • Mandatory fraud prevention training for charitable boards
  • Strengthened penalties for investment fraud targeting charities
  • Improved coordination between SEC and state charity regulators

Recovery Efforts and Victim Impact

Asset Recovery Challenges

Recovery Limitations

Lost Funds:

  • Majority of funds lost through options trading
  • Caspersen’s personal assets insufficient for full restitution
  • Limited insurance coverage for investment fraud
  • Time delay reducing recovery prospects

Available Recovery Sources:

  • Caspersen’s remaining personal assets
  • Professional liability insurance where applicable
  • Potential hedge fund liability for employee actions
  • Criminal restitution orders

Impact on Charitable Mission

Organizational Consequences

Direct Impact:

  • $25 million reduction in charitable funding capacity
  • Reduced services to intended beneficiaries
  • Increased scrutiny of investment practices
  • Potential board and staff changes

Broader Charitable Sector Impact:

  • Increased donor skepticism about charitable investment practices
  • Enhanced due diligence requirements across sector
  • Reduced risk tolerance for charitable investments
  • Greater regulatory scrutiny of charitable governance

Lessons for the Charitable Sector

Critical Takeaways

Due Diligence Essentials

Investment Verification:

  1. Independent Validation: Always verify investment advisor credentials and registration
  2. Multiple Approvals: Require board-level approval for significant investments
  3. Professional Review: Mandate legal and financial professional review
  4. Reference Checks: Conduct independent verification of investment partner references

Cultural Change Requirements

Trust Verification:

  • Verify rather than assume based on credentials or connections
  • Implement adversarial thinking in investment evaluation
  • Require independent confirmation of all investment claims
  • Maintain healthy skepticism regardless of social relationships

Protection Strategies

Governance Best Practices

Investment Oversight:

  • Multi-level approval processes for large investments
  • Independent investment committee with professional expertise
  • Mandatory waiting periods for investment decisions
  • Regular review and updating of investment policies

Risk Management:

  • Diversification requirements for charitable investments
  • Professional liability insurance for investment decisions
  • Regular audit of investment processes and outcomes
  • Whistleblower protection for reporting suspicious activities

Current Status and Ongoing Impact

Case Outcome:

  • Caspersen convicted and sentenced to federal prison
  • Restitution ordered but limited by available assets
  • Professional licenses revoked
  • Continuing civil litigation for additional recovery

Sector-Wide Changes

Governance Evolution:

  • Enhanced investment due diligence standards
  • Improved board education and training
  • Stronger regulatory oversight of charitable investments
  • Industry-wide adoption of fraud prevention measures

Conclusion

The Caspersen case demonstrates how elite credentials and social connections can be weaponized to exploit the charitable sector’s trust-based culture. The ease with which $25 million was transferred based primarily on educational pedigree and family reputation highlights critical vulnerabilities in charitable governance and investment oversight.

Key Lessons:

For Charitable Organizations:

  1. Credential Verification: Educational and family background don’t guarantee honesty
  2. Independent Due Diligence: Professional verification is essential regardless of relationships
  3. Governance Structure: Multiple approval levels protect against individual decision-maker fraud
  4. Cultural Change: Balance trust with appropriate verification and oversight

For the Sector:

  1. Education Priority: Fraud awareness training essential for all charitable boards
  2. Professional Standards: Investment decisions require professional expertise and oversight
  3. Regulatory Cooperation: Enhanced coordination between regulators and charitable organizations
  4. Shared Learning: Case studies and best practices sharing across the sector

For Donors and Stakeholders:

  1. Governance Inquiry: Ask about investment oversight and due diligence procedures
  2. Professional Management: Expect professional-level investment management practices
  3. Transparency Demand: Require clear reporting on investment policies and performance
  4. Accountability Support: Support charitable organizations implementing strong governance practices

The Caspersen case serves as a critical reminder that the charitable sector’s mission-driven culture, while essential to its effectiveness, can create vulnerabilities that sophisticated fraudsters will exploit. Protection requires combining the sector’s values-based approach with professional-level due diligence and governance practices.

For charitable organizations seeking to improve their investment oversight:

  • BoardSource: Governance resources and training for nonprofit boards
  • Association of Fundraising Professionals: Professional development and ethics training
  • National Association of State Charity Officials: Regulatory guidance and compliance assistance
  • Legal Counsel: Specialized nonprofit legal advice for investment policy development

This analysis is based on court records, SEC enforcement actions, and public reporting. Charitable organizations should consult with qualified legal and financial professionals when developing investment policies and oversight procedures.