SEC shuts down adviser it says is defrauding clients

Agency says Scott Valente convinced 80 investors in upstate New York to turn over $8.8 million in the last four years

Jun 3, 2014 @ 5:26 pm

By Mark Schoeff Jr.

Sec, adviser, fraud, defraud,
+ Zoom

The Securities and Exchange Commission has temporarily shut down an investment adviser in upstate New York who is allegedly attracting clients with phony promises of large returns while stealing their money to fund his rich lifestyle.

On Tuesday, the SEC filed an emergency enforcement action against Scott Valente, founder and manager of ELIV Group, which is based in Albany, N.Y, and also has an office in Warwick, N.Y.

In its complaint, the agency said that Mr. Valente has induced approximately 80 clients into investing a total of $8.8 million with his firm since 2010 based on fraudulent claims that he can achieve “outsized, positive returns” and guarantee the safety of their money by placing it in large money market funds.

He has kept the fraud going, the SEC alleges, by providing false monthly investment statements to clients showing inflated returns and assets under management. In reality, his firm has lost $1.2 million in the three full years of its existence and invested client funds in speculative and illiquid privately-held companies. Instead of managing up to $17 million in funds, as he claims, Mr. Valente has $3.8 million in assets under management.

Mr. Valente, a former registered representative who was barred from the brokerage business in 2009 by the Financial Industry Regulatory Authority Inc., has used at least $2.66 million in client money to finance personal spending on his home, vacation condominium and jewelry, in addition to “substantial cash withdrawals,” according to the SEC.

This conduct has continued as recently as within the last two weeks, even after Mr. Valente was notified of the SEC investigation, the agency said. The SEC has obtained a temporary restraining order to freeze his assets and prevent his firm from operating. It also will pursue a final judgment for disgorgement and financial penalties.

“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,” Andrew Calamari, director of the SEC's New York Regional Office, said in a statement. “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 talks about the safety and success of the investments.”

Mr. Valente's lawyer said the adviser will fight the charges.

“We were surprised to see the SEC's action today,” said Robert Heim, a partner at Meyers & Heim. “Mr. Valente denies the allegations and looks forward to clearing his name in court.”

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

How to redesign, rebrand and recast your practice

Redesigning and reshaping your practice is a tough pill to swallow for advisers. But what got you here won't get you there, says John Kozuch, a Chicago financial adviser.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

T. Rowe Price steps up its game to serve financial advisers

The Baltimore-based mutual fund giant is more aggressively targeting financial advisers with a beefed-up wholesale crew and placement on custodial platforms.

The most important tax changes for 2018

The Internal Revenue Service issued inflation adjustments to more than 50 tax provisions for 2018.

Shift to Roth 401(k)s 'highly likely' part of tax reform: former Treasury official Mark Iwry

Mandated contributions to Roth accounts would likely only be partial, as opposed to having a full repeal of pre-tax accounts.

E*Trade acquiring custodian Trust Company of America

Discount broker buying second-tier custodian for $275 million.

Another thousand Dow points higher, and investors yawn

Market milestones keep falling like dominoes, with 51 records broken so far this year.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print