By Michelle Price and Katanga Johnson

WASHINGTON (Reuters). -U.S. authorities brought criminal and civil cases against Infinity Q Capital Management LLC’s former chief investment officer and founder. He was accused of engaging in a fraud scheme to overvalue the assets the company advised.

Infinity Q had to liquidate their mutual funds last year after U.S. Securities and Exchange Commission discovered that James Velissaris may have made unreasonable adjustments in a pricing model to value investment fund investments.

Velissaris was also charged by the Southern District of New York for inflating fund value by 1 billion. He was then awarded management and performance fees totalling at least $26.9 Million since 2019, which were not his right.

Velissaris, according to the SEC had inflated valuations using manipulation of computer code in third-party valuation service valuation models. The inputs were wrong; he selected some valuation models that he knew would not correctly value the positions; and knowingly chose one key input.

“Velissaris’ pricing manipulations materially inflated the mutual fund’s net asset values and the private fund’s total assets, as well as reported performance,” the SEC said in its charge.

It added that “the manipulations were so widespread that Velissaris couldn’t keep up with them.”

According to the SDNY, he falsified investor compliance manuals and provided them to investigators. The SDNY also stated in its charges that Infinity Q as well Velissaris distributed materially misleading and false information to investors.

On Thursday, the Commodity Futures Trading Commission filed a similar complaint in SDNY alleging that Velissaris manipulated pricing models to undervalue derivatives owned by pooled funds.

Reuters couldn’t immediately get in touch with Velissaris to comment. Last year, Velissaris’ lawyer told Reuters that he had not manipulated the pricing model.

Thursday’s accusations were made amid regulatory efforts to improve disclosures for hedge and private equity fund investors in order to prevent fraud, enhance oversight and monitor systemic risk.