On January 7, 2011, the Securities and Exchange Commission charged a Greensboro, N.C.-based investment adviser firm, SJK Investment Management LLC and its owner Stanley Kowalewski with defrauding investors in two hedge funds by secretly diverting millions of dollars in self-dealing transactions.
The SEC alleges that, starting in mid-2009, Kowalweski raised more than $65 million from investors such as pension funds, school endowments, hospitals and non-profit foundations, and diverted $16.5 million of it to a secret third fund, which he treated like his own personal bank account. Among other things, Kowalweski allegedly used $3.9 million of it to purchase a vacation home.
William P. Hicks, Associate Regional Director of Enforcement in the SEC’s Atlanta Regional Office, was quoted as saying: “He breached his responsibilities as an investment adviser in the worst manner possible.”
The SEC further alleges that SJK and Kowalewski never disclosed the existence of the third fund to investors, much less their self-dealing transactions and misuses of investor money. In furtherance of the fraudulent scheme, Kowalewski and SJK allegedly sent fraudulent monthly account statements to investors, which falsely showed substantial investment returns.
The SEC’s request for emergency relief for investors, including an asset freeze and temporary restraining order against Kowalewski and SJK, was granted by Judge Timothy C. Batten, Sr. of the U.S. District Court for the Northern District of Georgia. The SEC is also seeking permanent injunctions, disgorgement of ill-gotten gains with pre-judgment interest, financial penalties, and a financial industry bar against Kowalewski.
Page Perry has over 125 years collective experience representing institutional and individual investors in securities-related litigation and arbitration all over the country. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 40 occasions.