CFTC action against Infinity Q founder remains stayed
The Court has granted an application by the Commodity Futures Trading Commission (CFTC) to continue the stay of its action against Infinity Q founder James Velissaris. The relevant order was signed by Judge Vernon S. Broderick of the New York Southern District Court.
By March 4, 2023, the parties must file a joint letter regarding the status of the related criminal case.
The Criminal Case remains pending before the Honorable Denise L. Cote. On November 21, 2022, Mr. Velissaris entered a change of plea, and pleaded guilty to Count One of the Indictment (securities fraud), pursuant to a plea agreement with the Government. Sentencing is currently set for March 3, 2023.
The parties agree that the CFTC case should remain stayed in its entirety until judgment has been entered and sentencing has occurred in the Criminal Case given the impact those events may have on the nature of and relief in this action.
As alleged in both the Criminal Case and the CFTC Civil Action, from at least in or about 2018 through 2021, Velissaris engaged in scheme to defraud investors in two investment funds managed by Infinity Q Capital Management LLC. Both the Criminal Case and the CFTC Civil Action allege that Velissaris artificially inflated the value of over-the-counter (OTC) derivative positions held by Infinity Q’s investment funds in order to make the funds appear more successful than they were, and increase his compensation in the form of management and performance fees.
The cases also allege that Velissaris made false and misleading statements to investors regarding the independence of the process for valuing OTC derivative positions. Both cases charge that Velissaris executed his scheme by, among other things, inputting false terms into pricing models used to value the OTC derivative positions and changing the models’ underlying computer code.
Both cases also allege that Velissaris endeavored to conceal his fraud by, among other things, providing falsified term sheets to Infinity Q’s auditors and creating other fabricated documents.