DOJ secures stay of CFTC action against Infinity Q founder
The Court has granted the request by the Department of Justice (DOJ) to intervene and stay the CFTC action against Infinity Q founder James Velissaris. The relevant order was signed by Judge Vernon S. Broderick on March 28, 2022.
By 90 days from entry of the order, the parties will have to file a joint letter discussing the status of the Criminal Case and whether the CFTC action should remain stayed.
Let’s recall that the Government moved to intervene in the CFTC Civil Action, pursuant to Rule 24 of the Federal Rules of Civil Procedure, and to stay the CFTC Civil Action matter in its entirety until the completion of the trial or other disposition in the parallel criminal case.
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.