Scott Valente, age 60, of East Greenbush, New York, was sentenced today to 20 years in prison for running a large investment fraud scheme. Valente was also ordered to pay USD8,616,113.39 in restitution to his victims.
The announcement was made by Acting United States Attorney Grant C. Jaquith; Special Agent in Charge James D. Robnett, Internal Revenue Service-Criminal Investigation, New York Field Office; and Special Agent in Charge Vadim D. Thomas, Federal Bureau of Investigation, Albany Field Office.
Senior United States District Judge Gary L. Sharpe also imposed a 3-year term of supervised release, to begin after Valente’s release from prison.
Valente was originally sentenced, on November 20, 2015, to 20 years in prison after pleading guilty to charges of securities fraud, mail fraud, and obstructing and impeding the internal revenue laws. In April 2017, the United States Court of Appeals for the Second Circuit vacated the sentence and remanded the case for resentencing. Valente has been in custody since his original sentencing date.
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.
Scott 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, contrary to what he told investors he would do with their money.
Scott 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 U.S. Securities and Exchange Commission, 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.