Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Tuesday, June 25, 2024 | Back issues
Courthouse News Service Courthouse News Service

SEC Wins Order to Freeze Alleged Fraudster’s Assets

(CN) - A Georgia federal judge granted an emergency court order late Thursday to freeze the assets of an investment adviser firm and its owner after the Securities and Exchange Commission filed charges alleging they diverted millions in investor money.

The SEC claims in the complaint filed on Thursday that the Delaware-based SJK Investment Management and its CEO Stanley Kowalewski defrauded investors in two hedge funds.

The funds raised more than $65 million in the last year and a half, but Kowalewski put $16.5 million of investors' money in a separate fund that he treated like a bank account.

Investigators say Kowalewski continued to live rent-free in a vacation home that he sold to the fund for nearly $5 million, which is a million more than he originally paid for it.

U.S. District Judge Timothy Batten Sr. granted the SEC's request for an emergency asset freeze, temporary restraining order and other remedies against Kowalewski and his firm.

The SEC also claims Kowalewski used the fund to pay himself about $1 million for personal and business expenses, pay the firm an "unfounded $4 million 'administration' fee" that Kowalewski then took as a "salary draw."

Investors received fraudulent account statements "showing substantial, positive, but illusory, investment returns," according to the complaint.

The SEC seeks permanent injunctions, penalties, disgorgement of ill-gotten gains and a ruling to bar Kowalewski from the financial industry. It is represented by house attorney Paul Kim.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.