Infinity Q Capital Management LLC founder James Velissaris was sentenced to 15 years in prison after pleading guilty to fraudulently inflating assets held by two investment funds.
(Bloomberg) — Infinity Q Capital Management LLC founder James Velissaris was sentenced to 15 years in prison after pleading guilty to fraudulently inflating assets held by two investment funds.
Velissaris, 38, who was also the chief investment officer of New York-based Infinity Q, was arrested and charged in February 2022 with overstating assets of a hedge fund and a mutual fund by hundreds of millions of dollars. The funds together claimed to manage about $3 billion in assets, according to prosecutors.
The sentence, which is a long one by the standards of white-collar crime, was imposed Friday by US District Judge Denise Cote, Manhattan US Attorney Damian Williams said in a statement Monday.
“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,” Williams said in the statement “We hope this lengthy sentence resonates in the financial sector and deters anyone who may be tempted to lie to investors.”
A lawyer for Velissaris didn’t immediately return a call seeking comment on the sentence.
Read more: Sudden Demise of $1.8 Billion Fund Points to Long-Feared Danger
Prosecutors claimed Velissaris inputted fraudulent data for calculating yield values that were often much higher than fair market value. In some cases the altered values were mathematically impossible, according to the government.
Velissaris lied to investors by telling them that over-the-counter derivatives held by the funds were independently valued by a Bloomberg LP valuation service, according to the government. In fact, according to the indictment, he used a Bloomberg template that allows users to model their own valuation for OTC derivative positions by inputting data themselves.
Bloomberg, the parent company of Bloomberg News, “provides its clients with a derivatives valuation service,” a company spokeswoman said in a statement at the time of the charges. “In this case, the valuations shown by this user were not an output of the Bloomberg valuation service.”
In addtion to the prison term, Velissaris agreed to forfeit $22 million.
Velissaris pleaded guilty to fraud in November, but sought to withdraw the plea last month and take his case to trial. He argued that Infinity Q disclosed to investors that the firm had discretion to break from prices provided by third-party services and that he used his professional judgment in providing the most accurate pricing possible.
Cote denied the request, sentenced Velissaris and immediately placed him in custody on Friday.
The case is U.S. v. Velissaris, 22-cr-00105, U.S. District Court, Southern District of New York (Manhattan).
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.