The founder and former chief executive officer of Infinity Q Capital Management is facing securities fraud charges for allegedly inflating the value of funds in his portfolio, the Securities and Exchange Commission announced.
According to the SEC, James Velissaris orchestrated the scheme from at least 2017 through February 2021 involving assets held in the Infinity Q Diversified Alpha mutual fund and the Infinity Q Volatility Alpha private fund. The commission’s complaint said he overvalued the assets by over $1 billion by altering inputs and manipulating the code of a third-party pricing service used to value the funds’ assets. The SEC alleged that Velissaris collected over $26 million in profit distributions as a result of the fraud.
“We allege that, while Velissaris marketed the mutual fund as a way for retail investors to access investment strategies typically reserved for high net worth clients, what he actually offered them were fraudulent documents, altered performance results, and manipulated valuations,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
The commission added that Velissaris tried to cover up his scheme by creating backdated minutes of valuation meetings that did not actually occur, and altering documents describing Infinity Q’s valuation policies. He was also accused of sending forged term sheets to the auditor of the two funds.
After the SEC confronted Infinity Q with information regarding Velissaris’s fraudulent conduct, he was removed from his role with the firm in February 2021. The commission then issued an order to suspend redemptions of the mutual fund.
Velissaris was charged with violating antifraud and other provisions of the federal securities laws. The SEC is seeking permanent injunctive relief, return of the allegedly ill-gotten gains, and civil penalties.
Velissaris also faces criminal charges from the U.S. Attorney’s Office of securities fraud, wire fraud, lying to auditors, and obstruction of justice, each of which carries a maximum sentence of 20 years in prison; and investment adviser fraud and conspiracy to obstruct justice, each of which carries a maximum sentence of 5 years in prison.
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