[Photo: Nate Raymond / Metro.US/News]

U.S. District Judge Jed Rakoff, accepting the defense argument that the defendant was impaired by a gambling addiction, sentenced Andrew Caspersen to 4 years in prison for bilking his friends and family out of millions of dollars to fund risky stock market bets.  Prosecutors had recommended at least 15 years in prison. He’ll begin his sentence in January.

What brought notoriety to the case was Caspersen’s investing pedigree. He had been a managing principal at buyout giant Blackstone Group’s Park Hill Group and became a partner at the private-equity-fund advisory business after it separated from Blackstone last year. His father, Finn M.W. Caspersen, ran consumer-finance company Beneficial Corp. for nearly 2 decades before pocketing a fortune when it was sold for $8.6 billion in 1998. His father committed suicide in 2009 while battling liver cancer. 

Mr. Caspersen, 40, pleaded guilty in July to stealing some $38.5 million from family members and close friends while soliciting other investors for millions more. He subsequently lost most of the money on aggressive stock options bets. Over the years, Mr. Caspersen drew on his family fortune to fund his bets, but after squandering that he turned to family and friends, pitching them on phony investments he claimed to be putting together at work.

During the sentencing, which lasted for 3 hours, a Yale School of Medicine psychiatrist testified that Mr. Caspersen has a severe gambling addiction, but said the science around such addictions is still developing. Apparently, his gambling began at Princeton and grew more severe by the time he was enrolled at Harvard Law. Paul Shechtman, Caspersen’s lawyer, said his client is in treatment and was seeking to make amends.