Tragedy, depression fueled Caspersen’s gambling addiction: attorney

Often, when I swap gossip with industry folks, the subject turns to Andrew Caspersen, one of the more famous (or infamous) people in private equity land these days.

Soon his story will be over and he’ll be sentenced to prison for some time.

The question about Caspersen always is: What happened? People who know him and worked with him have had nothing bad to say about him — until he was arrested for defrauding friends and family out of more than $38 million in a sham private equity scheme. He was charged in March and pleaded guilty in July.

Drugs, drinking, psychosis, simple greed? None of the usual clichés seemed to explain how a person of great privilege and wealth, a family man, could have fallen so low as to pursue a fraudulent scheme that appeared so reckless.

Here’s Frank Morgan, president of Coller Capital and Caspersen’s mentor, in a letter to the court that sums up most of my conversations about the situation:

“This all came as a complete shock. There is absolutely nothing in my long experience of Andrew that would cause me to believe he would be capable of what he has done. I can only believe that this was caused by a deep sickness that took over the guy I knew who had values and principles totally inconsistent with this behavior.”

Well, now we have an answer from Caspersen’s side: a pathological gambling addiction, one that evolved along with Caspersen’s depression into an obsession. His addiction grew stronger as he lived through almost unimaginable tragedies: first his girlfriend (and likely future wife), Catherine MacRae, died in the September 11 terrorist attacks. Then his father committed suicide in 2009.

His gambling addiction, manifest in options trading, began before these events, starting in his days at Princeton University and accelerating while he was at Harvard Law School, according to the filing. He lost $4 million while at Harvard and around $8.1 million during his career at Coller Capital from 2004 to 2012.

But his mother, Barbara Caspersen, believes the loss of MacRae helped fuel his addiction, according to court filings. “Looking back, I think that his years of despair following 9/11 fueled addictions that might have been tamed and overcome had he been able to face them clearly,” she wrote in a letter to court.

With all this history in mind, Caspersen’s attorney, Paul Shechtman of Bracewell LLP, wrote to Judge Jed Rakoff, appealing for clemency in his sentencing of Caspersen, set for Nov. 4 at U.S. District Court in Manhattan. The appeal included letters in support of Caspersen from people like Morgan.

Caspesen is committed to getting treatment and sobriety and rebuilding his relationship with his wife and their two children, Shechtman said in the filing. “A lengthy prison sentence could derail him. … [If] ever compassion and mercy were called for in sentencing a defendant, this is such a case,” the filing said.

Prosecutors have asked Rakoff to impose a sentence within the federal guidelines of 151 to 188 months imprisonment, according to the prosecutors’ sentencing memorandum.

Photo: Andrew Caspersen (R) departs after a hearing at the U.S. Federal Court in New York March 28, 2016. REUTERS/Lucas Jackson