GREENSBORO, N.C. --A federal grand jury in Atlanta indicted Stanley J. Kowalewski for defrauding investors of hedge funds. Kowalewski is accused of defrauding victims for almost $8 million. He was also indicted on charges of obstructing the U.S. Securities and Exchange Commission's investigation. Kowalewski was also a former Northern High School basketball coach.
Authorities arrested Kowalewski in South Carolina on Wednesday.
Federal investigators say Kowalewski defrauded victims of pension funds, schools, hospitals, and other non-profits and used the money for his own personal use. Kowalewski was the owner and Chief Executive Officer of SJK Investment Management, LLC in Greensboro. He started asking for money in 2009 and placed it into two SJK "hedge fund of funds" called Absolute Return Funds. Investors say he began diverting the money to pay for personal and business expenses.
However, investigators say the same year he started a new SJK fund called the Special Opportunities Fund but failed to disclose the information to investors. He then put money from the Absolute Return Funds to the Special Opportunities Fund without telling investors.
Investigators say Kowalewski bought three homes for himself and family members through the Special Opportunities Fund. But he also bought a beach house. But federal agents say he also altered documents to make the transactions appear legitimate. They also say he overhauled the assets from the Special Opportunities Fund and used it to calculate returns for the investors in the Absolute Return Funds. The action showed fraudulently inflated returns.
Former Northern High Basketball Coach Charged With Defrauding Investors
The indictment also revealed Kowalewski lied in his sworn testimony. He's charged with 22 Counts of Wire Fraud, One Count of Conspiracy, and one Count of Obstructing the SEC Proceeding. Each wire fraud carries a maximum sentence of 20 years in prison. The Conspiracy and Obstruction charges each carry a maximum sentence of five years in prison.