SEC Temporarily Shuts Down Investment Adviser Over Alleged $8.8M NY Securities Fraud

The U.S. Securities and Exchange Commission is temporarily shutting down investment adviser Scott Valente and his ELIV Group LLC. The regulator is charging both with defrauding about 80 investors of $8.8 million. The regulator says that Valente promised huge returns to customers, who are mostly from the Warwick and Albany areas.

However, rather than earning positive returns, he took close to $3 million of investor money and spent the funds on his own expenses, including mortgage payments and jewelry. Meantime, he charged these unsophisticated investors a 1% yearly fee for assets under management.

The SEC said that Valente kept the fraud going by issuing bogus investment statements every month that showed returns and assets under management that had been inflated. In fact, contends the regulator, in its few years of operation the investment firm lost $1.2 million and placed client money in illiquid and speculative privately held-companies. Also, while Valente said he had $17 million in assets under management, that amount was actually just $3.8 million.

Valente, who was fired in 2009 from Purshe Kaplan Sterling, founded Eliv Group in 2010. According to public records, in the 20 years that Valente has worked in the securities industry, he has been named in 17 customer complaints. The SEC says that even after it notified Valente he was under investigation, he continued with the securities fraud. Now, the regulator has gotten a temporary restraining order to keep his firm from out of business for now and his assets are frozen. The SEC wants a final judgment, along with penalties and disgorgement.

In other recent investment adviser news, regulators in Illinois and Massachusetts say they are looking at the RIAs in their state to find out if they have cybersecurity readiness. The survey will assess firm procedures and policies about hardware, authentication, electronic backup, encryption software, third party provider arrangements, insurance, and costs.

Please contact our investment fraud lawyers if you suspect your losses are because of securities fraud. The SSEK Partners Group represents high net worth individuals and institutional investors.

Read the SEC Complaint (PDF)

Massachusetts, Illinois surveying RIAs about cybersecurity, InvestmentNews, June 4, 2014

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FINRA Arbitration Panel Says Wells Fargo Must Repurchase $94M of Auction-Rate Securities from Investors, Stockbroker Fraud Blog, December 29, 2013