Schenectady Man Pleads Guilty To Securities Fraud, Mail Fraud, and Tax Charges
Investment Fraud Scheme Used “The ELIV Group, LLC”
ALBANY, NEW YORK – SCOTT T. VALENTE, age 58, of Schenectady, New York, pled guilty today in Albany before Chief United States District Judge Gary L. Sharpe to one count of securities fraud, one count of mail fraud, and one count of obstructing and impeding the due administration of the Internal Revenue laws, announced United States Attorney Richard S. Hartunian, Special Agent-in-Charge Shantelle P. Kitchen, Internal Revenue Service, Criminal Investigation, New York Field Office, and Andrew W. Vale, Special Agent-in-Charge, Federal Bureau of Investigation, Albany Division. VALENTE was released pending his sentencing, scheduled for September 8, 2015, at 11:00 a.m. in Albany. VALENTE faces up to twenty years of imprisonment, a fine of $5,255,000, supervised release for three years, restitution, a money judgment of $10,555,954.27, and forfeiture of condominiums at River Oaks Golf and Tennis Resort II, Myrtle Beach, South Carolina, and Jackson Gore Road Adams House, Ludlow, Vermont.
During the plea hearing, VALENTE admitted that:
Between December 2010 and June 16, 2014, VALENTE falsely inflated rates of return for his investment company, The ELIV Group, LLC ("ELIV"). During this time, ELIV raised more than $10.5 million from more than 100 investors. In written materials and investor account statements provided to ELIV investors, VALENTE made false claims about annual investment returns. Specifically, he claimed that ELIV had annual investment returns of 36.38% for 2010, 48.27% for 2011, 44.56% for 2012, and 45.11% for 2013 when ELIV actually lost money every year and lost more than $1.2 million by the end of April 2014. VALENTE also paid himself more than $2.2 million in unauthorized management fees which he used to enrich himself through cash withdrawals, personal credit card payments, and the purchases of real estate, jewelry, home improvements, and liquor.
VALENTE falsely represented to more than 30 ELIV investors that he and his company were authorized to accept, hold, and manage individual retirement accounts ("IRAs"). In reality, neither VALENTE nor ELIV had that authorization. To prevent the IRS from learning that he had improperly accepted, held, and managed IRA accounts, VALENTE altered a legitimate quarterly ELIV investment statement to make it appear as though ELIV had received an investor’s purported IRA rollover investment and was holding that investment as an IRA. He then caused that altered statement to be submitted to the IRS.
At the time ELIV ceased operations, approximately $2.4 million of the more than $10 million dollars of investor principal that VALENTE had received from investors during ELIV’s operational period had been returned to investors with the false representations that these payments were a return of principal or a distribution of profits. VALENTE knew that the very small profits earned were far less than those payments.
U.S. Attorney Hartunian said, "VALENTE made false statements to investors to persuade them to part with their hard earned money so he could line his own pockets with millions of dollars, and submitted false documents to the Internal Revenue Service to cover his tracks. We will continue to pursue aggressively those who use investment fraud to fleece folks of their savings and retirement money." U.S. Attorney Hartunian thanked IRS-Criminal Investigation and the FBI for working with the U.S. Attorney’s Office to hold VALENTE accountable for his fraud.
IRS-CI Special Agent-in-Charge Shantelle P. Kitchen said, "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, for which he is now being held accountable. Fortunately, the partnership of IRS-Criminal Investigation, the U.S. Attorney’s Office and the FBI was successful in preventing his victims from sustaining additional losses and protecting potential investors from harm."
"These schemes and other securities related frauds have a devastating impact on the victims," said FBI Special Agent-in-Charge Andrew W. Vale. "The FBI is committed to working with our law enforcement partners to protect investor confidence in the U.S. financial markets."
This case was investigated by the Internal Revenue Service - Criminal Investigation (IRS-CI) and the Federal Bureau of Investigation. This case is being prosecuted by Assistant United States Attorney Rick Belliss.