Securities and Exchange Commission v. Velissaris
- P. Castel
- 1:22-cv-01346
- U.S. District Court · Southern District of New York
- 3
In Securities and Exchange Commission v. Velissaris, Judge Castel denied James Velissaris’s motion for appointed counsel in the SEC’s civil enforcement case.
James Velissaris’s request for court-appointed counsel was denied; the SEC’s underlying civil enforcement claims were not decided by this order.
What happened
In Securities and Exchange Commission v. Velissaris, defendant James Velissaris asked the court to appoint a lawyer for him in the Securities and Exchange Commission’s civil case. The SEC alleges that he violated federal securities laws while serving as chief investment officer and majority owner of Infinity Q Management Equity LLC.
The court considered whether Velissaris’s defense appeared substantially meritorious, whether the facts required investigation or credibility determinations, whether he could present his case, and whether the legal issues were complex. The court recognized that his imprisonment and financial penalties limited his ability to investigate and that he lacked resources. But it concluded that he had not shown that his defense had substantial merit, that the fraud and false-statement issues were unusually difficult, or that the case depended on witness credibility. The court also noted that his criminal conviction could prevent him from disputing some allegations.
Judge Castel denied the motion for appointment of counsel. The opinion did not decide the SEC’s underlying claims; it ruled only on Velissaris’s request for a court-appointed lawyer.
The detailed version
- Securities and Exchange Commission v. Velissaris · No. 1:22-cv-01346
- P. Castel
- Jan. 23, 2025
Background
The Securities and Exchange Commission brought claims against James Velissaris under section 17(a) of the Securities Act of 1933, section 10(b) of the Securities Exchange Act of 1934, Rule 10(b)(5), and the Investment Company Act of 1940 and related rules. The complaint alleges that Velissaris was the chief investment officer and majority owner of Infinity Q Management Equity LLC.
Velissaris pleaded guilty to one count of securities fraud in a separate criminal case. He received a 180-month prison sentence and a $50,000 fine. An amended criminal judgment imposed restitution of $125,969,962.78, and his civil forfeiture amount was $22 million. The opinion states that his appeal was dismissed as to the prison term and otherwise affirmed.
During his guilty-plea hearing, Velissaris admitted that he knowingly and intentionally made material false statements to investors about using an independent Bloomberg system to value the Infinity Q funds’ over-the-counter derivatives. He admitted that he manually adjusted the system to increase reported derivative values and that he understood disclosure of that conduct might have caused investors to redeem their investments or avoid investing. He also acknowledged that his actions caused investors to lose money.
Motion for Appointment of Counsel
Velissaris moved for appointment of counsel. Under 28 U.S.C. § 1915(e)(1), a court may request a lawyer to represent a person unable to afford counsel. The court applied the factors from Hodge v. Police Officers, including whether the defense has substantial merit; whether the factual issues require investigation that the party cannot conduct; whether credibility disputes make a lawyer’s assistance important; the party’s ability to present the case; and the complexity of the legal issues.
The court concluded that Velissaris had not shown that his defense had substantial merit. It stated that the issues involving fraud and material misstatements were likely relatively simple and straightforward, and that his criminal conviction might prevent him from challenging some allegations in the SEC’s case. Velissaris had not shown that the case would turn on witness credibility or that he could not explain the custom illiquid derivatives at issue.
The court accepted that Velissaris’s incarceration limited his ability to investigate facts and that the criminal penalties left him without resources. Nevertheless, after considering the factors, it concluded that requesting a volunteer lawyer to represent him without a fee was unwarranted at that time.
Disposition
The court denied Velissaris’s motion at ECF 28 for appointment of counsel. The order addressed the request for counsel and did not resolve the SEC’s underlying civil claims.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.