A 39-year-old Wall Street executive, Andrew Caspersen came from a life of privilege and opportunity: Groton, Princeton and then Harvard Law School, where the student center is named after his family because of a generous gift from his father.
But the father had a secret that emerged only after he committed suicide in 2009: Finn M.W. Caspersen, a noted financier and philanthropist, was at the time being investigated by federal authorities, suspected of hiding tens of millions of dollars in a tax shelter.
Now it appears that his son, a former Blackstone Group managing principal, may have had his own secret.
Andrew Caspersen was arrested at La Guardia Airport on Saturday evening. On Monday, federal prosecutors working for Preet Bharara, the United States attorney for Manhattan, charged him in a criminal complaint with securities and wire fraud in what they called a “brazen” scheme to defraud investors — including a foundation affiliated with a major New York hedge fund — of up to $95 million.
The Securities and Exchange Commission filed parallel civil charges.
The authorities contend the executive used a fraudulent investment vehicle and fake emails to dupe the unidentified hedge fund foundation to sink $25 million into the scheme last fall.
Up until last week, Mr. Caspersen was still trying to persuade other institutional investors to give him money.
So persuasive was his pitch that an employee at the hedge fund firm also invested $400,000 with Mr. Caspersen, who lives with his wife in a home they recently bought in Bronxville, N.Y.
But the authorities said that he blew through most of that money “as a result of aggressive options trading” in his personal brokerage account.
Daniel Levy, Mr. Caspersen’s lawyer, declined to comment.
Mr. Caspersen was a partner at the Park Hill Group, which specializes in raising money for private equity firms and hedge funds. The Manhattan firm fired Mr. Caspersen on Monday and promptly removed his profile from its website.
Until last fall, Park Hill was part of the sprawling empire of the private equity giant the Blackstone Group. It is now part of PJT Partners, the advisory firm that was spun out of Blackstone and is run by the investment banker Paul J. Taubman. PJT said in statement that it was “stunned and outraged” to learn of the allegations. The firm added that it was cooperating with the authorities.
The case highlights the broader issue of how much research and checking institutional investors actually do when making an investment, and how much of it comes down to a personal connection and trust.
“This action amply demonstrates that even sophisticated institutional investors are not immune to financial scams,” said Andrew M. Calamari, director of the New York office of the Securities and Exchange Commission, which brought a civil complaint against Mr. Caspersen.
It may also raise questions about the internal controls in place at Park Hill, given that the authorities say Mr. Caspersen’s scheme went on for months before it was detected.
Shares of PJT Partners plunged nearly 11 percent on the news of the charges. Late Monday, Block & Leviton, the securities litigation firm, said it was investigating whether PJT and its officers and directors violated federal securities laws. The firm represents large institutional investors.
PJT said it believed Mr. Caspersen acted on his own. After learning of potential improper behavior, the firm conducted an internal investigation and reported the matter to federal prosecutors in Manhattan.
Mr. Caspersen grew up mainly in an exclusive suburb in western New Jersey before attending the Groton School in Massachusetts, one of the most expensive boarding schools in the country. He was a captain of the football team and he also rowed.
After graduating from Groton in 1995, he went to Princeton University where he met Catherine F. MacRae, who was the daughter of a founding partner of the law firm LeBoeuf, Lamb, Greene & MacRae, which later merged to form Dewey & LeBoeuf. The two dated for several years.
Ms. MacRae, a research analyst at Fred Alger Management, was killed on Sept. 11, 2001, when terrorists crashed two planes into the World Trade Center. She had worked in Fred Alger’s offices on the 93rd floor of the north tower.
Together with Ms. MacRae’s family, Mr. Caspersen created a memorial fund to benefit education programs for children from low-income families.
Mr. Caspersen’s father, Finn M.W. Caspersen, was a prominent philanthropist and the heir to the Beneficial Corporation fortune. The elder Mr. Caspersen was chairman and chief executive of the consumer finance company for nearly two decades before selling the firm in 1998 for $8.6 billion to Household International, which was later acquired by the London-based bank HSBC.
In 2008, Finn Caspersen pledged $30 million to Harvard Law. A year later, he killed himself at age 67 with a single gunshot to the head. About 800 people attended his funeral in Morristown, N.J.
Mr. Caspersen was known to be battling kidney cancer when he killed himself. But soon after it emerged that his name had surfaced in a federal government crackdown on overseas banks that were helping wealthy Americans shelter money to avoid paying taxes.
Finn Caspersen was an active supporter of New Jersey Republicans like former Gov. Tom Kean. Mr. Caspersen was also well known in equestrian circles and was said to have competed with Prince Philip, the husband of Queen Elizabeth, in Windsor, England.
The scheme of the younger Mr. Caspersen, federal authorities say, began last summer and ended only a few weeks ago. It is not clear why the executive, who arguably was successful and wealthy in his own right, may have needed the money.
Still, last summer Mr. Caspersen, who had previously lived on the Upper East Side of Manhattan, set up a shell company called Irving Place III SPV LLC that he soon began seeking to raise money for from institutional investors, the authorities said.
The shell company was similar to the name of a legitimate investment vehicle that Park Hill was raising money for at the time called Irving Place Capital Partners III SPV. Irving Place Capital was originally a private equity fund of Bear Stearns, the Wall Street firm that imploded in 2008.
Mr. Caspersen, who previously worked for Coller Capital, a fund that buys private equity fund assets, never told prospective investors the shell company was controlled completely by him, the authorities said. Mr. Caspersen made up email accounts and invented employees and even went as far as to create a fake domain name to further the scheme, they said.
The scheme began to fall apart this month when the foundation affiliated with the hedge fund asked for its $25 million plus interest to be returned, the authorities said. On March 11, Mr. Caspersen said the funds would be returned by the end of the month. The foundation has not yet received the money, the authorities said.
A few days later, on March 14, Park Hill learned that Mr. Caspersen was raising money for his own investment vehicle when an unidentified firm complained about it. Park Hill then hired lawyers from Paul, Weiss, Rifkind, Wharton & Garrison, including litigation partner Aidan Synnott, to conduct an internal investigation. The law firm notified federal prosecutors of its findings the next day.
By March 18, authorities said the account where the hedge fund’s foundation had wired its $25 million had a balance of roughly $40,000.
Mr. Caspersen was released on Monday after he posted a $5 million bond co-signed by three people and secured by two residences.