The Securities and Exchange Commission charged James Velissaris, the former Chief Investment Officer and founder of Infinity Q Capital Management, with overvaluing assets by more than $1 billion while pocketing tens of millions of dollars in fees.
The SEC’s complaint alleges that, from at least 2017 through February 2021, James Velissaris engaged in a fraudulent scheme to overvalue assets held by the Infinity Q Diversified Alpha mutual fund and the Infinity Q Volatility Alpha private fund. According to the complaint, Velissaris executed the overvaluation scheme by altering inputs and manipulating the code of a third-party pricing service used to value the funds’ assets. Velissaris allegedly collected more than $26 million in profit distributions through his fraudulent conduct and without disclosing his activities to investors.
One of the victims of the alleged fraud was David Bonderman. The Bonderman Family was a major investor in Q Capital Management and James Velissaris had worked for them before he started his own firm. According to Forbes, David Bonderman is chairman and founding partner of private equity giant TPG, which managed about $80 billion in assets. He is 79 years old and worth an estimated $4.5 billion.
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Neither David Bonderman nor his firm have commented on the matter. It is not clear how much they invested in the fund nor how much they may have lost.
Founded in 2014 by James Velissaris, Infinity Q Capital Management describes itself as a pioneering investment advisor that is managed by David Bonderman’s family office. The firm says that it provides “innovative hedge fund strategies to institutional and retail investors. Infinity Q seeks to develop next generation forecasting models to identify persistent behavioral biases across global markets. Infinity Q is a registered investment advisor.” But if the charges leveled by the SEC have any merit then the firm probably will not last very long.