Investment Adviser Sentenced to 20 Years in Prison
ALBANY, NY—Scott Valente, age 58, of East Greenbush, New York, was sentenced today to 20 years in prison, and ordered to pay about $8.2 million in restitution, after being convicted in May of securities fraud, mail fraud, and obstructing and impeding the internal revenue laws.
The announcement was made by United States Attorney Richard S. Hartunian; Shantelle P. Kitchen, Special Agent-in-Charge of the Internal Revenue Service-Criminal Investigation’s New York Field Office; and Andrew W. Vale, Special Agent-in-Charge of the Albany Division of the Federal Bureau of Investigation.
United States District Judge Gary L. Sharpe also ordered Valente, formerly of Schenectady, to serve three years of supervised release following his release from prison. The Securities and Exchange Commission (SEC) has also filed a civil enforcement action against Valente and his company The ELIV Group LLC in the United States District Court for the Southern District of New York.
“What Scott Valente did was terrible, both in terms of the financial ruin he caused and the emotional anguish he inflicted on his victims,” stated U.S. Attorney Richard S. Hartunian. “He stole several million dollars, improperly invested millions more, and lied to people who put their trust in him and gave him their life savings. These people are devastated. My Office and our agency partners are working hard to recoup as much money as possible for them. And as we have done for many years, we will continue to investigate and prosecute investment advisors who steal from their clients.”
“Today, Mr. Valente was held accountable for the harm he inflicted on the many investors who trusted him,” said Special Agent-in-Charge Shantelle P. Kitchen of IRS-Criminal Investigation. “Ultimately, this investigation succeeded in preventing Mr. Valente’s victims from sustaining additional losses and protecting potential investors from harm. Additionally, through his representations that he and ELIV were authorized to accept, hold and manage IRA accounts, Mr. Valente made the Internal Revenue Service an unwilling part of his investment fraud scheme. He subsequently learned how seriously IRS-Criminal Investigation takes attempts to impede and obstruct the tax laws.”
“This kind of fraud is an insidious act that involves not only criminality but a willingness to prey on others for personal gain,” said FBI Special Agent in Charge Andrew W. Vale. “The FBI is committed to working with its law enforcement partners to ensure people like Mr. Valente are held accountable for their misdeeds. The FBI is pleased to see justice for Mr. Valente’s victims.”
Valente, working out of Albany, Schenectady and Warwick, New York, operated an investment fraud scheme that began in December 2010 and ended on June 16, 2014.
Through his investment company The ELIV Group, LLC, Valente received more than $10.6 million from more than 100 individual investors, many of them residing in Upstate New York. He told them that he had achieved annual investment returns of 36.38%, 48.27%, 44.56% and 45.11% for the years 2010 through 2013, respectively. In fact, Valente lost money in each of those years.
Valente also took about $2.2 million in unauthorized management fees, which he used to enrich himself through cash withdrawals totaling $230,000, personal credit card payments totaling $443,000, and the purchases of real estate (including a $117,000 condominium in Vermont), $424,000 in home improvements, $35,000 worth of jewelry, and $20,000 worth of liquor. In addition to taking $2.2 million, Valente made substantial investments in non-public companies that will be difficult to liquidate, contrary to what he told investors he would do with their money.
Valente also falsely represented to more than 30 ELIV investors that he or his company were authorized to accept, hold and manage Individual Retirement Accounts (IRA), which get preferential treatment under U.S. tax law. In fact, neither Valente nor ELIV was authorized by the IRS to accept, establish or maintain IRA accounts. In an effort to obstruct and impede the IRS by preventing the IRS from learning of his unauthorized acceptance, holding and management of IRA accounts, Valente altered ELIV investment statements to make it appear as though ELIV had properly received certain investors’ IRA rollover investments, that ELIV was holding the investments as an IRA, and that there should be no taxable distributions to the ELIV investors.
ELIV ceased operations on June 16, 2014, when the SEC, in a separate civil proceeding, obtained a preliminary injunction enjoining ELIV’s operations and freezing its assets.
This case was investigated by Internal Revenue Service-Criminal Investigation and the Federal Bureau of Investigation, and was prosecuted by Assistant United States Attorney Rick Belliss.