A North Carolina hedge fund manager who defrauded investors while out on bond and facing charges for another scam has been sentenced to 18 years in federal prison.
Stanley J. Kowalewski, of Greensboro, N.C., was first accused in 2011 of using investors’ money, including funds from Sea Island Co.’s employee pension, to buy a nearly $4 million beach home in South Carolina. Investors’ money also paid for three other homes he and relatives occupied.
Kowalewski also managed money from the Georgia Ports Authority, though authorities determined none of that money was diverted.
"Incredibly, while on bond awaiting trial in the case, Kowalewski continued to defraud investors based on false promises relating to a new investment business that turned out to be just another scam," U.S. Attorney John A. Horn said Friday in a press release.
Kowalewski, 44, of Pawleys Island, S.C., was sentenced to 18 years, minus six months already served, by U.S. District Judge Richard W. Story. The Atlanta judge also ordered Kowalewski to pay more than $9.4 million in restitution.
As part of an earlier civil case by the U.S. Securities and Exchange Commission, Kowalewski was also ordered to pay $16 million in civil penalties and disgorgement of investors’ money.
Kowalewski had collected millions of dollars in investments from pension funds, school endowments, foundations and other institutional investors to go into a so-called hedge fund of funds that he had created in 2009, according to investigators.
Soon after, however, investigators said, he secretly diverted $16 million to another fund he had created. He then began taking the money from that fund through self-dealing transactions, such as buying three homes that he owned and that he and his relatives lived in.
He also bought a multimillion-dollar beach house on posh Pawley’s Island, according to investigators.
During the SEC’s investigation starting in 2010 of his firm, SJK Investment Management, Kowalewski and an accomplice lied and created fake documents to cover up the self-dealing real estate investments, according to the U.S. Attorney’s office.
Kowalewski was out on bond and facing trial for those infractions, investigators said, when he started a new company, Global Remediation Solutions, and again started diverting investors’ money for his own use, investigators said.
His bond was revoked and he was put in jail last September.
His accomplice, 59-year-old Michael J. Fulcher, of Greensboro, has pleaded guilty to a charge of conspiring with Kowalewski to obstruct the SEC’s investigation. His sentencing date hasn’t been set.
