For misrepresenting the value of some derivatives in order to deceive investors, the former chief investment officer and founder of investment firm Infinity Q Capital Management received a 15-year prison sentence and was compelled to forfeit $22 million.
According to the Department of Justice's press release on Monday, James Velissaris had a small team that included a chief compliance and risk officer who is said to have helped him commit fraud. The Securities and Exchange Commission (SEC) filed charges against the CCO, Scott Lindell, relating his alleged role in September.
According to the SEC, Velissaris and Lindell's activities increased the value of Infinity Q funds by almost $1 billion.
In order to secretly change the computer code, Velissaris learnt how to hack into Bloomberg Valuations Service in 2017. With this knowledge, he was able to edit inputs so that some funds were artificially inflated.
In May 2020, the SEC commenced an investigation into the company's values. Velissaris was removed in February 2021 when the agency informed Infinity Q of the proof of his fraud.
Velissaris was accused of lying to auditors, wire fraud, investment adviser fraud, securities fraud, and conspiracy to obstruct justice. A judge turned down his motion to withdraw his guilty plea after he admitted to committing securities fraud in November.
"Velissaris wove a complex scheme to defraud investors in Infinity Q’s investment funds, and he continuously lied to investors, auditors, and even the SEC in order to hide his crimes," said U.S. Attorney Damian Williams of the Southern District of New York in a statement to the DOJ. "We hope this lengthy sentence resonates in the financial sector and deters anyone who may be tempted to lie to investors."
By fLEXI tEAM