The founder and former chief investment officer (CIO) of New York-based investment advisory firm Infinity Q Capital Management has been sentenced to 15 years in prison for defrauding clients.
U.S. district court judge Denise Cote sentenced James Velissaris, former CIO at Infinity Q, to 15 years in jail followed by three years of supervised release. The court also ordered approximately US$22 million in forfeiture for Velissaris’ role in a scheme to defraud investors by inflating the value of its funds’ holdings in over-the-counter (OTC) derivatives.
“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 Damian Williams, U.S. attorney for the Southern District of New York, in a release.
According to court filings, Infinity Q’s mutual fund and hedge fund investors were defrauded by the firm improperly valuing and mis-marking its OTC holdings.
When the funds ultimately liquidated those positions, they “were sold for hundreds of millions of dollars less than their purported market values… resulting in substantial losses to the investors,” U.S. authorities alleged.
Additionally, authorities alleged that Velissaris lied to auditors and regulators to cover up the scheme.
Last year, Velissaris — who was charged with securities fraud, wire fraud, lying to auditors and obstruction of justice — pleaded guilty to one count of securities fraud.