Caspersen, accompanied by his attorney, pleaded guilty in a Manhattan federal courtroom to one charge of wire fraud and one charge of securities fraud, each of which carries a maximum penalty of 20 years in prison. Caspersen’s attorney argued that his gambling addiction and mental illness caused him to commit the fraud.

Caspersen raised money from friends, family members and other investors and used it to trade one-week put options, betting against the Standard & Poor’s index and often instructing his broker to trade all the cash in his account each week. According to news reports, that account held $112.8 million as recently as February 1, which would have been more than enough to pay back Caspersen’s investors. However, he continued to make all-in bets against the market.

In court, Caspersen read from a statement saying that he had harmed people he cared for and was sorry and ashamed. In a plea agreement, Caspersen and federal prosecutors agreed to a sentencing range of up to 16 years in prison, as well as possible restitution and fines. However, it was unclear whether Judge Jed S. Rakoff would view Caspersen’s mental health as a mitigating circumstance and use leniency in the sentencing. Judge Rakoff has criticized federal sentencing guidelines, calling them “irrational” and too harsh.