Monday, April 10, 2023
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Agency Founder Sentenced to fifteen Years in Jail For Fraud

The founder and former chief funding officer of a New York-based funding advisor that ran a mutual fund and hedge fund claiming to have about $3 billion in belongings beneath administration mixed was sentenced on Thursday to fifteen years in jail for his function in a scheme to defraud traders, the Justice Division mentioned Monday.

James Velissaris, 38, of Atlanta began Infinity Q Capital Administration, a Securities and Alternate Fee-registered agency that employed a small employees, together with a chief compliance and chief danger officer, in 2014, in response to the Justice Division.

The sentence was imposed on Velissaris by Decide Denise L. Cote in U.S. District Courtroom for the Southern District of New York.

Along with his jail time period, Velissaris was sentenced to 3 years of supervised launch and agreed to pay about $22 million in forfeiture. The court docket reserved resolution on the quantity of restitution.

A ‘Advanced’ Scheme

“Velissaris wove a posh scheme to defraud traders in Infinity Q’s funding funds, and he constantly lied to traders, auditors, and even the SEC in an effort to cover his crimes,” in response to Damian Williams, U.S. Lawyer for the Southern District of New York.

His “large scheme was calculated and misleading, and he now justly faces 15 years in federal jail,” Williams mentioned in a press release on Monday. “We hope this prolonged sentence resonates within the monetary sector and deters anybody who could also be tempted to deceive traders.”

A significant part of each the mutual fund and hedge fund’s holdings was over-the-counter spinoff positions involving personalized contracts that allowed the counterparties to take positions on the volatility, or worth motion, of underlying belongings or indexes, in response to the Justice Division.

Velissaris, via Infinity Q, represented to its traders that it valued these OTC spinoff positions primarily based on truthful worth, and that so as to take action, it utilized the companies of an unbiased third-party supplier.

Specifically, Infinity Q represented to traders and different stakeholders that it used Bloomberg Valuations Service to independently calculate the truthful worth of those positions, in accordance with the phrases of the underlying spinoff contracts, in response to the Justice Division.

The truth is, nevertheless, Velissaris defrauded Infinity Q’s traders by taking an lively function within the valuation of Infinity Q’s positions and by modeling the positions in ways in which weren’t primarily based on the precise phrases of the underlying contracts and had been inconsistent with truthful worth, in response to the Justice Division.



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