On June 3, the Securities and Exchange Commission filed an emergency enforcement action in the US District Court for the Southern District of New York against Scott Valente, an investment adviser, alleging that he used his advisory firm, ELIV Group, to fraudulently lure approximately 80 clients to invest more than $8.8 million. Valente also allegedly misappropriated at least $2.66 million of investor funds for personal use. The SEC charged Valente and ELIV with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(b) as well as Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Valente denied the allegations.  

The SEC alleged that defendants carried out their fraud by claiming that ELIV had a consistent record of outsized positive returns and assuring prospective clients that their principal was “guaranteed,” backed by a large money market fund, fully liquid and independently audited. In reality, according to the SEC, ELIV had sustained investment losses for each of the three full years the firm existed, client funds were never “guaranteed” or backed by money market funds, and the majority of ELIV’s investments were in highly illiquid investments in privately held companies. Further, the SEC alleged that ELIV never had an auditor, and the firm sent clients monthly investment reports in which they actually inflated the monthly returns, assets under management and client account values. 

On June 11, defendants consented to the entry of an Order Granting Preliminary Injunction, Asset Freeze and Other Relief against them. A preliminary hearing is set for June 18.  

SEC v. Scott Valente and The ELIV Group, LLC, Civil Action No. 14-3974 (VLB) (S.D.N.Y.).