Securities Fraud News: Andrew Caspersen Pleads Guilty to $40M Fraud, Massachusetts Investment Advisor to Pay $8M to Investors, & CFTC Orders Florida Man and His Companies to Pay Almost $175M in Sanctions in FX Ponzi Scam

Ex-Wall Street Executive Admits to Bilking Friends and Relatives
Andrew Caspersen has pleaded guilty to federal criminal charges accusing him of defrauding relatives, friends, and Moore Charitable Foundation of $40M. Caspersen is an ex-Wall Street executive and a member of the wealthy Caspersen family. The charitable foundation he bilked belongs to billionaire hedge fund manager Louis Bacon and his investment firm Moore Capital Management.

Caspersen, 39, pleaded guilty to one charge of wire fraud and one charge of security fraud. Each criminal charge comes with a maximum term of 20 years behind bars.

Caspersen’s defense team initially argued that he was addicted to gambling and suffered from mental illness, which were what supposedly compelled him to run his multi-million dollar Ponzi-like scam. His mother, close friends, the family of an ex-girlfriend, and others were among those whom he bilked.

At the time of the fraud, Caspersen worked at PJT Partners. He told investors he could make them yearly returns of 15% through a private equity-like investment. Caspersen lost investors’ money through aggressive stock options trading and compulsive gambling.

The SEC has also filed civil charges against him over the private equity fraud claims.

Family Endowment Partners and Its Owner to Pay Investors $8.4M
The Securities and Exchange Commission has banned Family Endowment Partners LLC owner Lee Weiss from the investment industry. In addition to a $1.5M penalty, Weiss and his investment advisory firm must pay investors about $8.4M in relief.

According to the Commission, from ’10 to ’12, Weiss and his investment advisory firm gave fraudulent advise to hedge funds and other clients when they told them to invest over $40M in securities that were issued by companies belonging to Biosyntec. The French entity claimed to be making a cigarette filter that lowers the risk of lung cancer. Biosyntec paid Weiss, who was a shareholder, over $600,000 soon after these investments were made.

The SEC accused Weiss of not disclosing these conflicts of interests to clients and failing to tell them how their money would be specifically used. He purportedly did not disclose that there was a “significant” chance that investors would never be repaid for their investments. Weiss is also accused of encouraging some investors to invest in a consumer loan portfolio and then not telling them that he would be taking half of any profits made from these investments.

Although Weiss is settling the SEC’s investment adviser fraud case he is not admitting to or denying the charges.

CFTC Announces $17.5M Sanctions in FX and Commodity Pool Ponzi Scam
The US Commodity Futures Trading Commission says that Dorian Garcia and his companies UKUSA Currency Fund, DG Wealth Management, Quanttra LP, and Macroquantum Capital LLC must pay $17.5M for running a Ponzi scam. The sanctions includes over $5M for bilking investors between 2010 to 2015 in a market abuse scam involving foreign exchange and commodity pools, a $7.5M civil penalty, and over $4.9M in ill-gotten gains.

According to the CFTC, Garcia and his companies misappropriated customer money, made false account statements, and committed other CFTC violations. He defrauded at least 95 investors of more than $7.3M and used $3.3M to cover his own expenses. The regulator said that Garcia falsely claimed to clients that he did not have to be CFTC-registered to make trades for their accounts. He told them he had a licensed broker who would be making the orders.

Last year, Garcia was sentenced to six years in prison after pleading guilty to wire fraud.

Andrew Caspersen Pleads Guilty to Federal Charges in $40 Million Fraud, NY Times, July 6, 2016

The SEC Complaint in the Weiss/Family Endowment Partners case (PDF)

Federal Court Orders Nearly $17.5 Million in Sanctions against Naples, Florida Resident Dorian Garcia and his Companies for Solicitation Fraud, Misappropriation, and Registration Violations in Operating a Ponzi Scheme, CFTC, July 5, 2016