Financial advisor accused of defrauding investors
By Roger Gavan
WARWICK — The complaint filed with the United States District Court, Southern District of New York reads: "Securities and Exchange Commission, plaintiff, against Scott Valente and the ELIV Group, LLC."
Although ELIV was headquartered in Albany, it maintained a branch office in Warwick at 65-67 Main St.
The company has no relationship with and should not be confused with any other financial firm in Warwick.
And ELIV was not a member of the Warwick Valley Chamber of Commerce.
The summary of allegations in the summons begins: "Since at least November 2010 and continuing to the present, Valente, an investment adviser, has used his one-man advisory firm, ELIV, to fraudulently lure approximately eighty individual and unsophisticated investors largely in the Albany and Warwick, New York, communities to become and remain advisory clients, and invest more than $8.8 million with Defendants."
On Tuesday, June 3, the Securities and Exchange Commission (SEC) filed an emergency enforcement action to halt what it describes as an ongoing fraud by Valente who was charged with lying to clients about the success of their investments while stealing their money for his personal use.
The allegation is that he told his clients they would achieve consistent and outsized positive returns from what he claimed were very safe investments.
According to the SEC, his firm, ELIV Group, had in fact earned no positive results at all, instead sustaining consistent investment losses for the past three years.
Meanwhile, Valente had been making substantial cash withdrawals of client funds and spending their money on his home improvements and mortgage payments as well as jewelry and a vacation condominium, according to the government's complaint.
'He said all the right things'
The SEC is seeking an asset freeze to halt the fraud as Valente continues to solicit new clients with his false claims.
"Valente used his one-man advisory firm to fraudulently lure unsuspecting investors in the Albany and Warwick communities to invest millions of dollars with him as advisory clients," said Andrew M. Calamari, director of the SEC's New York Regional Office. "He said all the right things to make investors believe he was making the right investments and taking the right precautions with their money, but he was merely telling blatant false tales about the safety and success of the investments."
Sanjay Wadhwa, senior associate director for enforcement in the SEC's New York office, added: "Beyond the lies to his clients regarding his investment performance, Valente's abuse of his fiduciary obligations included the theft of at least $2.66 million in client funds for personal spending, including hefty credit card bills, a vacation home, and jewelry."
Two bankruptcy filings
What he failed to disclose was that he twice filed for bankruptcy and started ELIV Group only after the Financial Industry Regulatory Authority (FINRA) permanently expelled him from the broker-dealer industry in 2009 for engaging in serial misconduct against numerous customers.
The SEC alleges that Valente and ELIV Group attracted clients by falsely assuring them that the principal amount of their investments was fully liquid and "guaranteed" because it was backed by a large money market fund.
Client funds were in fact never guaranteed or backed by any money market funds, and the majority of ELIV Group's investments were in highly illiquid investments in privately-held companies. Valente and ELIV Group also assured clients that the firm's books and records were audited independently.
However, ELIV Group never had an auditor, and the firm sent clients monthly investment reports in which they actually inflated the monthly returns, assets under management, and client account values, the government said in its complaint.
'I deny all of these allegations'
Valente was not in his ELIV Warwick office but when reached in Albany, he said: "I'm not an attorney. But I didn't do anything wrong. I sincerely deny all of these allegations."