NYS Office of the Comptroller DiNapoli: Value of IDA Projects Grew 10% in 2021 to $126 Billion

 

Number of Projects Rose 1.5% to 4,324

New York’s 107 local Industrial Development Authorities (IDAs) reported 4,324 active projects with an aggregate value of $126 billion in 2021, a 10.4%, or $11.9 billion, increase compared to 2020, according to a report released today by State Comptroller Thomas P. DiNapoli. The number of IDA projects increased by 1.5%. 

“IDAs can play an important role in helping local economies and businesses expand. This report provides taxpayers with a look at the financial and project data reported by local IDAs so they can track their activities,” DiNapoli said. “The tax breaks IDAs provide can impact local taxes so it’s important to ensure these projects are creating or retaining the jobs and economic benefits they are supposed to. Publishing this information, including IDA costs, helps to increase their accountability.”

Since 2011, the number of active IDA projects has remained relatively stable, but total project value has been increasing. Average project value over the period increased 76% from $16.5 million per project in 2011 to $29.2 million in 2021. County IDAs were responsible for 61.2% of all active IDA projects in 2021, followed by towns (18.5%), cities (12.3%), New York City (7.4%), villages (0.5%), and city-town IDAs (0.1%).

The report summarizes data as reported by IDAs for fiscal year end 2021 through the Public Authorities Reporting Information System (PARIS) and is not independently verified by the State Comptroller’s Office. While most IDAs operate on a calendar year basis, several, including the New York City IDA, do not.

DiNapoli’s report found that:

• Tax exemptions for IDA projects totaled almost $1.9 billion, an increase of $134 million, or 7.7%, over 2020. The largest exemptions in any year are property tax exemptions, which totaled $1.7 billion, or 89.1% of the total exemptions.
• Net tax benefits for IDA projects (reflecting total tax exemptions minus payments in lieu of taxes) totaled almost $1.1 billion for the year, an increase of $87 million (9%) from the previous year. This continues a longer-term trend of increasing net tax benefits.
• Project operators estimated that 221,287 jobs would be created during the life of their projects, with a median salary of $40,000. This is 1.7% (3,942 jobs) lower than in 2020. Another 241,236 jobs were retained with a median salary of $45,000.
• IDAs had total revenues of $132 million, an increase of $60 million from 2020. The New York City IDA had the largest revenues at $14.6 million, $12.3 million of which was attributed to the project finance fees from the refunding bond closings of Yankee Stadium LLC and Queens Ballpark Co. LLC (Citi Field).
• Total IDA expenses in 2021 were $79.3 million, down $5.4 million from 2020. The largest operating expense category for IDAs was professional service contracts for accounting, legal, or marketing services ($21.7 million, or 27%, of the total). Erie County IDA had the highest expenses ($9 million), followed by New York City IDA ($6.8 million), and Genesee County IDA ($5.9 million).
• IDAs reported 359 new projects in 2021, led by Finger Lakes region IDAs, which reported 80 new projects with a combined project value of $1.9 billion, followed by Long Island IDAs with 69 new projects with a combined project value of nearly $2.8 billion.
• The number of “clean energy” projects, increased from 25 to 85. Some of the increase is a result of the election by some IDAs to reclassify existing projects, but 34 of the 60 new clean energy projects were approved in 2021. North Country IDAs reported 30 clean energy projects in 2021, far outpacing other regions. In addition, Western New York IDAs reported 18 such projects and Southern Tier IDAs reported 14.
• Legislation enacted in 2020 temporarily authorized IDAs to provide loans and grants to small businesses and not-for-profit corporations during the COVID-19 State disaster emergency. Erie County IDA, which established a COVID-19 Emergency Grant Program in July 2020, was responsible for $5.8 million (68.1%) of all reported grants and donations in 2021.

Three IDAs – Town of Concord IDA, City of Corinth IDA and City of Mount Vernon IDA – did not submit their data in time for this report. The report also contains information on Local Development Corporations, a related type of local authority.

DiNapoli’s office examines IDA costs and outcomes in several ways, including performing audits of the operations of individual IDAs, providing training to IDA officials on various topics, and encouraging improvements in IDA procedures and reporting.

Annual Report

Performance of Industrial Development Agencies in New York State

IDA Data by Region

Office of the New York State Comptroller - 2021 IDA Data by Region

MAYOR ADAMS DELIVERS REMARKS AT VIRTUAL PRESS CONFERENCE HOSTED BY PLANNED PARENTHOOD OF GREATER NEW YORK ON IMPACT OF RECENT FEDERAL COURT RULING THAT COULD BAN MEDICATION ABORTION ACROSS THE NATION

 

Mayor Eric Adams: Thank you so much. And I really want to applaud our attorney general for her swift action, mobilizing all those who stand on the side of what's right across this country. And the governor has made it clear here in New York that we will be a safe haven for those who are fleeing unfair abortion rulings that's coming from every level of Trump appointed judges, particularly this one. Last Friday, a Trump appointed judge in Texas set on trampling the law instead of upholding it, made the decision to strip away a freedom that American women have had for decades, effectively making the most commonly used medication abortion drug illegal across the nation. The decision by the Texas Court is another assault on women's rights and a setback for this entire country.

 

More than 20 years, the drug has been one of the simplest, quickest, and most common options for women managing an abortion or miscarriage in the United States. Right now at least 29 percent of all women of reproductive age in the US are already living in states where surgical abortions are virtually unavailable. And banning this safe and effective drug with effectively reduced medication abortion options for approximately 40 million women nationwide. New York City supports the federal government's legal effort to reverse this harmful decision and to restore the authority that the FDA should have under the law.

 

Today, with other cities and countries, we are leading the filing of an amicus brief that highlights the negative impact this ruling would have on our public hospitals and the people who rely on them for care. If the safe and effective two drug regimen is suddenly removed, our public healthcare system will have to divert resources to provide alternate options and procedures. This will put a strain on public hospitals' already limited resources. It will affect public hospitals' abilities to provide care to patients seeking abortions, and could impact their ability to provide care across the board, it would make providing healthcare to already vulnerable New Yorkers even more difficult. Our public hospital system will always be open to the patients who need care. Yet, this decision will make delivering care that much harder.

 

Friday's decision was about one thing and one thing only controlling women's bodies, their choices, and their freedom. We have already seen the Supreme Court issue a ruling taking us 50 years back in time with the overturning of Roe versus Wade. And the Texas Court ruling is yet another extremist decision that would affect millions seeking healthcare across the country, including those here in New York City. You have my word as mayor, the largest city in America, we will do everything in our power legally, personally, and politically to fight this ruling and defend the rights of women. New York City is and will remain a hub for reproductive healthcare for all women. Both our Department of Health and our public hospital system will do everything they can to provide support and access to all women in need of reproductive health.

 

Should this ruling go into effect this week, New York City's public hospital system and its Health Department will continue to make medication abortion accessible to all by shifting to a different treatment regimen that will comply with the law. But here in New York City, the birthplace of the Women's Right Movement, a city where Eleanor Roosevelt, Shirley Chisholm, and Gloria Steinem blazed in new path for women in America, who will never let these freedoms be taken away, especially the right to live life on your own terms without conservative judges deciding what's best for you. Thank you for this fight and let's continue to fight together.

 

Urologist Charged With Sexually Abusing Patients

 

 Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing today of a four-count Indictment charging DARIUS A. PADUCH, a New York–area urologist, with inducement of a person to travel to engage in unlawful sexual activity and inducement of a minor to engage in unlawful sexual activity for his yearslong sexual abuse of two victims who were his patients and who were minors during part of the period of abuse.  PADUCH was arrested this morning and will be presented before U.S. Magistrate Judge Sarah L. Cave this afternoon.  The case has been assigned to U.S. District Judge Ronnie Abrams.

U.S. Attorney Damian Williams said: “As alleged, for years, Darius Paduch abused the trust of patients, including minors, who saw him for sensitive medical problems.  Paduch took advantage of his victims for his own deviant satisfaction.  Thanks to this morning’s arrest, Paduch’s abuse of his patients ends today.” 

FBI Assistant Director Michael J. Driscoll said: “The indictment unsealed today against Paduch, a New York-area doctor, details alleged systemic abuse of a number of patients, to include minors, over the course of several years.  Sexual abuse of anyone at any age for any reason is a horrific crime that carries strict penalties.  If you have been victimized by Darius Paduch in any way or have any additional information about his alleged illegal behavior, please call us at 1-800-CALL-FBI, or reach out to us at www.tips.fbi.gov.”

According to the allegations in the Indictment unsealed today in Manhattan federal court:[1] 

Over the course of several years, PADUCH sexually abused multiple male patients, including minor male patients, while conducting purported urological examinations in his capacity as a medical doctor employed by a prestigious medical institution in New York, New York (“Medical Institution-1”).

From at least in or about 2015 through at least in or about 2019, PADUCH, while working as a urologist, enticed and induced multiple victims to travel to his medical offices at Medical Institution-1, so PADUCH could, among other things, sexually abuse the victims.  In or about 2019, PADUCH began practicing at a different hospital located in Long Island, New York (“Medical Institution-2”), where he continued to sexually abuse patients.  PADUCH used his position as a urologist at prominent medical institutions in New York to make or attempt to make the victims believe that the sexual abuse he inflicted on them was medically necessary and appropriate, when, in fact, it was not.  PADUCH often directed the victims to schedule follow-up visits, and he instructed victims to return to see him again.  As a result, some of the victims attended many appointments with PADUCH over the course of multiple years, at which PADUCH repeatedly abused them.

After appointments, PADUCH sent certain victims — including minor victims — text messages from his personal cellphone.  In those messages, he made inappropriate and sexual comments and jokes, and he directed the victims to schedule follow-up appointments or to visit his office after regular business hours. 

As alleged, PADUCH induced two victims to travel to New York, New York, from or through another state to engage in unlawful sexual activity — in other words, his abuse of the victims.  PADUCH also used a telephone and other means of interstate commerce to induce two minor victims to engage in the unlawful sexual activity.

PADUCH, 55, of North Bergen, New Jersey, is charged with inducement of a victim (“Minor Victim-1”) to travel to engage in unlawful sexual activity, which carries a maximum sentence of 20 years in prison;  inducement of a victim (“Minor Victim-2”) to travel to engage in unlawful sexual activity, which carries a maximum sentence of 20 years in prison; inducement of Minor Victim-1 to engage in unlawful sexual activity, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; and inducement of Minor Victim-2 to engage in unlawful sexual activity, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison. 

The minimum and maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the FBI.

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.

Housing Lottery Launches For 659 East 222nd Street In Wakefield, The Bronx

 

The affordable housing lottery has launched for 659 East 222nd Street, a four-story residential building in Wakefield, The Bronx. Designed by Fred Geremia Architects and Planners and developed by Ed Lekaj of Bond Construction, the structure yields ten residences. Available on NYC Housing Connect are three units for residents at 130 percent of the area median income (AMI), ranging in eligible income from $74,572 to $156,130.

Residences have air conditioning, hardwood floors, and name-brand kitchen appliances, countertops, and finishes. Amenities include virtual doorman, pet-friendly policies, security cameras, and outdoor space. Tenants are responsible for electricity.

At 130 percent of the AMI, there is one studio with a monthly rent of $2,175 for incomes ranging from $74,572 to $138,840, and two one-bedrooms with a monthly rent of $2,200 for incomes ranging from $75,429 to $156,130.

Prospective renters must meet income and household size requirements to apply for these apartments. Applications must be postmarked or submitted online no later than April 26, 2023.

Attorney General James Leads Multistate Coalition to Fight Back Against Decision to Block Medication Abortion Access

 

Coalition of 24 Attorneys General Argues that Ruling to Stay FDA Approval of Mifepristone Could Endanger Lives Nationwide

New York Attorney General Letitia James today led a multistate coalition to challenge the decision issued by a district court judge in the U.S. District Court for the Northern District of Texas that could restrict medication abortion access nationwide. The amicus brief, filed in the U.S. Court of Appeals for the Fifth Circuit, urges the court to stay pending appeal the district court’s ruling, which if allowed to take effect would halt the more than two-decade old approval from the U.S. Food and Drug Administration (FDA) of the medication abortion drug, mifepristone. Attorney General James and the coalition of 24 attorneys general warn that revoking federal approval for mifepristone will drastically reduce access to safe abortion care and miscarriage management for millions of people across the country, endangering lives and trampling states’ authority to protect and promote access to abortion.  

“The decision to halt the FDA’s longstanding approval of mifepristone was clearly misguided and not based on science or medical research,” said Attorney General James. “Restricting access to a medication that has been proven safe over decades of research harms public health and rights of millions of Americans. So long as I am New York’s Attorney General, every effort to weaken and deny abortion access will be met with the full force of my office.” 

This ruling comes in a challenge brought by anti-abortion groups seeking to revoke the FDA’s approval of mifepristone. On April 7, Judge Matthew Kacsmaryk of the U.S. District Court for the Northern District of Texas, ordered the FDA to stay its approval of mifepristone, which happened in 2000. The court’s order does not take effect immediately, as the district court put its ruling on hold for seven days to give the federal government and the drug manufacturer an opportunity to appeal. Attorney General James and the coalition are urging the appellate court to continue to stay the lower court’s unprecedented and legally erroneous decision pending the appeal, given the decades of clinical research and studies that have confirmed mifepristone’s safety and the critical role medication abortion plays in reproductive health care, particularly in low-income, underserved, and rural communities.  

The coalition notes that if the lower court decision takes effect, it could drastically curtail abortion access for millions of Americans. Mifepristone has been particularly critical in providing access to safe abortion care in low-income, underserved, and rural communities. According to current estimates, medication abortion accounts for over half, approximately 54 percent, of all abortions performed in the United States. Obstructing access to mifepristone would significantly increasedemand for procedural abortions, resulting in later and more risky procedures, and more complicated and costly logistics for many patients, especially those where procedural abortion is unavailable. Moreover, lack of access to safe abortion care leads to worsened health outcomes and higher mortality, especially for Black women. 

Attorney General James has been a national leader in protecting access to reproductive healthcare, including medication abortion. In March, Attorney General James, together with Governor Hochul, sent a letter to the CEOs of Walgreens (owner of Duane Reade), Rite Aid, and CVS to demand answers about the companies’ plans to make the abortion medication mifepristone available in New York state. In February, Attorney General James led a multistate coalition to defend and protect access to medication abortion in the initial court challenge that sought to revoke FDA’s approval of mifepristone. Following the Supreme Court’s decision to end Roe v. Wade, Attorney General James launched a pro bono legal hotline to provide legal support to patients and healthcare providers nationwide. Attorney General James has helped lead a coalition of attorneys general to defend abortion access in Idaho, Texas, Arizona, Indiana, and Mississippi. 

Joining Attorney General James in filing today’s amicus brief are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Hawai‘i, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia. 

Governor Hochul Nominates Rowan Wilson to be Chief Judge of the New York State Court of Appeals

 

Governor Also Intends to Nominate Caitlin J. Halligan to Serve as Associate Justice of the Court of Appeals; Supports Judge Joseph Zayas to Serve as Chief Administrative Judge

 Governor Kathy Hochul today nominated the Honorable Rowan D. Wilson, who has served as Associate Judge of the Court of Appeals for the past six years, to serve as Chief Judge and fill the vacancy created last summer. The Governor also intends to nominate Caitlin J. Halligan, who has served as New York State Solicitor General and General Counsel to the New York County District Attorney and is currently partner at the law firm of Selendy Gay Elsberg PLLC, to fill Judge Wilson's vacancy as Associate Judge of the Court of Appeals. In addition, Hochul announced her strong support for Judge Wilson's intention to recommend the Honorable Joseph Zayas for appointment as Chief Administrative Judge, charged with oversight over court operations, including a budget of more than $3 billion.

"The Chief Judge of the Court of Appeals not only leads the State's highest court, but is also responsible for managing the diverse and complex courts across the State. New Yorkers deserve a strong, effective, and thoughtful leader, and I am proud to nominate Judge Wilson as Chief Judge," Governor Hochul said. "Judge Wilson's sterling record of upholding justice and fairness makes him well-suited to lead the court at this critical time. To ensure the Court continues to function effectively, I also intend to nominate Caitlin Halligan, who will bring a critical perspective to our justice system. Ms. Halligan was one of the highly recommended candidates from the list of seven reviewed by the Commission on Judicial Nomination. I look forward to working with these talented individuals to elevate the esteem of our State's highest court, protect New Yorkers' rights and safety, and ensure that justice is administered. Our courts have been clogged since the pandemic, and I will work hard with the new leadership in the Judiciary to ensure that justice is no longer denied due to insufficiencies in our system."

Hon. Rowan D. Wilson has served as an Associate Judge of the Court of Appeals since 2017. If confirmed, Judge Wilson would make history as the first Black Chief Judge. He received his undergraduate degree from Harvard College and graduated from Harvard Law School. Following law school, from 1984 to 1986, Judge Wilson served as Law Clerk to Hon. James R. Browning, Chief Judge of the United States Court of Appeals for the Ninth Circuit.

He then joined Cravath, Swaine & Moore LLP as an associate, and became a partner in 1992, notably serving as the first Black partner in the firm's history. While in private practice, Judge Wilson handled numerous corporate and pro bono matters. He also served as Trustee for the Lawyers Committee for Civil Rights Under Law and for the National Center for Law and Economic Justice, and for twenty-one years as Chairman of the Neighborhood Defender Service of Harlem, which provides legal representation and community-based public defense services to the Harlem community.

Rowan D. Wilson said, "Serving as Chief Judge of the Court of Appeals would be the honor of my career, and I am humbled by this nomination from Governor Hochul. Protecting the rights of New Yorkers is my top priority, and I look forward to working with Governor Hochul and our partners throughout the judiciary system to manage our courts and deliver justice."

Caitlin J. Halligan is currently a partner at the law firm of Selendy Gay Elsberg PLLC. Ms. Halligan received her undergraduate degree from Princeton University and graduated from Georgetown University Law Center in 1995. Upon graduation from law school, she served as Law Clerk to Hon. Patricia Wald of the United States Court of Appeals for the District of Columbia Circuit and Hon. Stephen Breyer, Associate Justice of the Supreme Court of the United States.

Ms. Halligan has served as head of the Internet Bureau in the Office of the New York State Attorney General and First Deputy Solicitor General for the State of New York, and from 2001 to 2007 served as Solicitor General for the State of New York. She has also served as General Counsel to the New York County District Attorney's Office. She currently teaches several classes as a Lecturer on Law at Harvard Law School, and previously taught at Columbia Law School and Georgetown Law Center.

Caitlin J. Halligan said, "Now more than ever, our courts must be a place of integrity, fairness and justice for all, and I am committed to upholding those values if confirmed to the Court. I am grateful to Governor Hochul for placing her trust in me during this critical time for our judiciary."

The New York Court of Appeals was established by constitutional amendment in 1847. For its first twenty years, half the judges of the Court were elected and half appointed by the Governor from among the justices of the Supreme Court. The Constitutional Convention of 1867-68 drafted new articles providing for seven judges and from then until 1977, judges of the court were chosen by statewide elections. In 1977, the State Constitution was amended to create a Commission on Judicial Nomination to recommend to the Governor candidates for appointment to the Court, and to require the Governor to appoint from among those recommended, with the advice and consent of the Senate. The legislature, required by the constitutional amendment to provide for the organization and procedure of the Commission, adopted Article 3-A of the Judiciary Law in 1978, which was amended twice more in the 1980s. Consistent with constitutional and statutory mandates, Governor Hochul plans to sign a further amendment to the Judiciary Law, which allows a Governor to expeditiously fill an Associate Judge vacancy when one is created by an Associate Judge becoming Chief Judge by creating the option to select an individual already on the existing approved list to fill a court vacancy.

Team AOC - It’s time to impeach Clarence Thomas.

Supreme Court Justice Clarence Thomas has been accepting luxury trips from billionaire Republican mega-donor Harlan Crow nearly every year for 20 years — and has never once reported them on financial disclosures, as per ethics rules for judges, members of Congress, and other federal officials. 

And after the explosive report from ProPublica became public, Justice Thomas’ own statement raises even more serious questions. 

In the statement, Thomas says the reason and rationale for this exemption was ‘personal hospitality from an old friend.’ He said himself in the statement ‘a friend of 25 years.’ Justice Thomas has been on the Court for 30 years. 

What he is admitting is that he began this relationship with a billionaire, and receiving these sorts of gifts, after he was appointed to the Supreme Court of the United States. 

That, in and of itself, indicates a very serious problem.

On top of that, when it comes to Justice Thomas’ statement, when he’s talking about his colleagues and who advised him to break the law, we need to know who those people are.

There have been calls for Chief Justice Roberts to initiate an investigation, but this court no longer has any legitimacy — especially after the investigation into the Supreme Court leak last year, which never came to a conclusion.

Alexandria made it clear yesterday on CNN’s State of the Union: It is the House’s responsibility to pursue that investigation in the form of impeachment.

We’ll admit that it’s difficult to see a path in a Republican Party that refuses to hold itself accountable, and breaches the law itself.

For all of the Republican talk about a crime wave across the country, the crime wave is in the Republican Party. We are seeing laws broken by conservative members of the court, and a former President of the United States indicted in recent days. 

If it is Republicans that decide to protect those who are breaking the law, then they are the ones who are responsible for the decision. We need to hold our systems accountable, and we should not refuse to do that for political reasons. 

Yours in service,

Team AOC

Founder And Former Chief Investment Officer Of Infinity Q Sentenced To 15 Years In Prison

 

 Damian Williams, the United States Attorney for the Southern District of New York, announced that JAMES VELISSARIS, the founder and former chief investment officer of Infinity Q Capital Management (“Infinity Q”), a New York-based investment adviser that ran a mutual fund and a hedge fund that purported to have approximately $3 billion in assets under management, was sentenced to 15 years in prison for his participation in a scheme to defraud Infinity Q’s investors.  The sentence was imposed by U.S. District Judge Denise L. Cote.

U.S. Attorney Damian Williams said: “Velissaris wove a complex scheme to defraud investors in Infinity Q’s investment funds, and he continuously lied to investors, auditors, and even the SEC in order to hide his crimes.  Velissaris’s massive scheme was calculated and deceptive, and he now justly faces 15 years in federal prison.  We hope this lengthy sentence resonates in the financial sector and deters anyone who may be tempted to lie to investors.”

According to public court filings and statements made in Court:     

Background

VELISSARIS was the founder and chief investment officer of Infinity Q, an investment adviser that ran both a mutual fund (the “Mutual Fund”), started in about 2014, and a hedge fund (the “Hedge Fund,” and collectively the “Investment Funds”), started in about 2017.  As of 2021, the two funds purported to have approximately $3 billion in assets under management.  Infinity Q was headquartered in New York, New York, and employed a small staff, including a chief compliance and chief risk officer (“Employee-1”). 

A major component of both the Mutual Fund and the Hedge Fund’s holdings were over-the-counter (“OTC”) derivative positions that involved customized contracts that allowed the counterparties to take positions on the volatility, or price movement, of underlying assets or indices.  VELISSARIS, through Infinity Q, represented to its investors that it valued these OTC derivative positions based on fair value, and that in order to do so, it utilized the services of an independent third-party provider.  In particular, Infinity Q represented to investors and other stakeholders that it used Bloomberg Valuations Service (“BVAL”) to independently calculate the fair value of these positions, in accordance with the terms of the underlying derivative contracts.  These OTC derivative positions comprised hundreds of millions of dollars of the Investment Funds’ portfolios.  

VELISSARIS’s Scheme to Lie to Investors and Inflate Derivative Swap Positions

In fact, however, VELISSARIS defrauded Infinity Q’s investors by taking an active role in the valuation of Infinity Q’s positions and by modeling the positions in ways that were not based on the actual terms of the underlying contracts and were inconsistent with fair value.  VELISSARIS’s input into the BVAL valuation process was inconsistent with Infinity Q’s representations about the independence of the process and allowed VELISSARIS to fraudulently mismark positions in BVAL.  VELISSARIS engaged in the mismarking of positions in BVAL by making false entries in BVAL’s system, including by secretly altering the computer code employed by BVAL that caused BVAL to alter and disregard certain critical terms.  Altering and disregarding terms in this fashion caused BVAL to report values that were artificially inflated and, often, much higher than fair value. 

By manipulating OTC derivative positions in BVAL in this way, VELISSARIS caused numerous positions in the Investment Funds to have anomalous and, at times, impossible valuations.  For example, at times, VELISSARIS made manipulations in either the Mutual Fund and/or the Hedge Fund that caused certain identical positions that were held by both the Mutual Fund and the Hedge Fund (namely, a position where all the material terms are the same) to have substantially divergent values.  In other cases, some of VELISSARIS’s manipulations caused certain positions held by the Investment Funds to have impossible values, such as where, under the true terms of the swap, the value adopted by VELISSARIS could only be true if volatility were negative – a condition which is mathematically impossible.

Ultimately, after VELISSARIS’s mismarking scheme was uncovered in or about February 2021, Infinity Q liquidated the Investment Funds and sold its OTC derivative positions.  These positions were sold for hundreds of millions of dollars less than their purported market values in BVAL, thereby resulting in substantial losses to the investors in the Investment Funds.

VELISSARIS Lies to Auditors and Obstructs the SEC’s Investigation

In order to hide this scheme and prevent its detection, VELISSARIS lied to numerous outside stakeholders and regulators.  First, in order to prevent Infinity Q’s outside auditor (the “Auditor”) from discovering the fraud, VELISSARIS provided the Auditor with falsified term sheets from counterparties that he had altered to change the true terms of certain OTC derivative positions.  In particular, in connection with a number of audits, the Auditor selected certain OTC positions that it would independently value in order to confirm the reasonableness of Infinity Q’s values from BVAL.  In order to ensure that the Auditor would not arrive at materially different results when independently valuing positions that VELISSARIS had manipulated in BVAL, VELISSARIS altered the terms of certain deal documents and provided them to the Auditor.  After receiving these falsified documents and relying on them in its independent evaluation, the Auditor confirmed the reasonableness of VELISSARIS’s valuations in BVAL.

Furthermore, beginning in May 2020, the Securities and Exchange Commission (“SEC”) opened an inquiry and later an investigation into Infinity Q’s valuation practices.  In connection with that investigation, VELISSARIS provided false and misleading information to the SEC.  For example, when the SEC asked for original documents that had been provided to investors, VELISSARIS altered the documents before providing them to the SEC, including certain alterations that would help hide his mismarking scheme.  For example, Infinity Q’s original investor materials stated that “[o]nce a price is established for a portfolio security, it shall be used for all Funds that hold the security.”  As explained above, this was untrue, and on numerous occasions, manipulations in BVAL made by VELISSARIS caused the same positions in the Mutual Fund and the Hedge Fund to have substantially different values.  To conceal the falsity of Infinity Q’s disclosures, VELISSARIS, along with Employee-1, removed this line from investor documents that were provided to the SEC.

In June 2020, the SEC requested that Infinity Q provide additional materials, including documents regarding Infinity Q’s valuation committee and all of its meeting minutes.  Infinity Q’s investor materials had represented that Infinity Q had a valuation committee, including VELISSARIS; that the committee would meet monthly or more often; and that VELISSARIS would be responsible for preparing minutes of such meetings.  In fact, however, VELISSARIS had not kept notes of any such meetings.  Accordingly, days before responding to the SEC, VELISSARIS made up notes purporting to be from valuation committee meetings in 2019 and 2020 and submitted them to the SEC.

In addition to his prison term, VELISSARIS, 38, of Atlanta, Georgia, was sentenced to three years of supervised release and agreed to pay approximately $22 million in forfeiture.  The Court reserved decision on the amount of restitution.

Mr. Williams praised the work of the Federal Bureau of Investigation.  He further thanked the SEC and the Commodity Futures Trading Commission for their cooperation and assistance in this investigation.