Stay of CFTC action against Infinity Q founder gets extended
The New York Southern District Court has kept in force the stay of the proceedings brought by the Commodity Futures Trading Commission (CFTC) against Infinity Q founder James Velissaris. The relevant order was signed by Judge Vernon S. Broderick on June 24, 2022.
By September 23, 2022, the parties will have to file a joint letter providing the status of the related criminal case and the parties’ views on whether this action should remain stayed.
The related criminal case remains pending before the Honorable Denise L. Cote and currently is scheduled for trial on November 28, 2022. The parties agree that the same factors that weighed in favor of the stay sought by the United States Attorney and that support the Court’s Stay Order continue to exist today.
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.