Infinity Q founder, once claiming $3 billion assets, pleads guilty to fraud
7:06 pm Monday, November 21st, 2022
By Jonathan Stempel and Jody Godoy
NEW YORK (Reuters) – The founder of Infinity Q Capital Management, a New York firm accused of inflating assets by over $1 billion to collect more fees, pleaded guilty on Monday to securities fraud.
James Velissaris, 38, of Atlanta, entered his plea before U.S. District Judge Denise Cote in Manhattan, averting a scheduled Nov. 28 trial.
He faces up to 20 years in prison at his scheduled March 3, 2023 sentencing, mirroring recommended federal guidelines, though he could get much less.
Lawyers for the defendant did not immediately respond to requests for comment.
Prosecutors said Velissaris misled investors and regulators by promising to fairly value over-the-counter derivative positions that comprised much of a mutual fund and hedge fund he ran and which purportedly contained $3 billion of assets.
Velissaris instead mismarked many holdings, sometimes inflating their values to “impossible” levels, and concealed the mismarking from auditors by falsifying term sheets, prosecutors said.
He was also accused of obstructing a U.S. Securities and Exchange Commission probe by submitting altered documents to hide the mismarking.
The defendant “lied to his investors in order to line his own pockets with inflated fees,” U.S. Attorney Damian Williams in Manhattan said in a statement. “Velissaris will now be held accountable.”
Earlier this month, the SEC tentatively settled civil charges against the Infinity Q Diversified Alpha mutual fund, and asked a judge to appoint a special master to oversee its liquidation.
Before suspending redemptions in February 2021, the fund reported $1.73 billion of assets. A subsequent review found that some assets were overvalued by more than 30%.
The case is U.S. v. Velissaris, U.S. District Court, Southern District of New York, No. 22-cr-00105.
(Reporting by Jonathan Stempel and Jody Godoy in New York; Editing by Bill Berkrot)
