The former chief investment officer and founder of investment adviser Infinity Q Capital Management was sentenced to 15 years in prison and ordered to forfeit $22 million for artificially inflating the values of certain derivatives to defraud investors.
James Velissaris employed a small staff that included a chief compliance and risk officer accused of assisting in his fraud, the Department of Justice noted in its press release Monday. The CCO, Scott Lindell, was charged by the Securities and Exchange Commission (SEC) regarding his alleged role in September.
The actions of Velissaris inflated the value of Infinity Q funds by more than $1 billion, the SEC said.
In 2017, Velissaris learned how to hack into Bloomberg Valuations Service to secretly alter the computer code, enabling him to manipulate inputs so certain funds became artificially inflated.
The SEC opened an investigation into the company’s valuations in May 2020. After the agency informed Infinity Q about evidence of Velissaris’s fraud, he was removed in February 2021.
Velissaris was charged with securities fraud, wire fraud, investment adviser fraud, lying to auditors, obstruction of justice, and conspiracy to obstruct justice. He pleaded guilty to securities fraud in November and had a request to withdraw his plea denied by a judge.
“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 the DOJ’s release. “… We hope this lengthy sentence resonates in the financial sector and deters anyone who may be tempted to lie to investors.”
Editor’s note: This story was updated April 25 to remove reference to Scott Lindell in the third paragraph.