March 31–A Pawleys Island man who prosecutors say defrauded investors of millions of dollars, and spent that money on a luxury house and other personal expenses has been sentenced to 18 years in prison.
Stanley Kowalewski, who before the charges lived in a $3.9 million house in Pawleys Island, was sentenced to 18 years for fraudulent activities at SJK Investment Management of Greensboro, N.C., according to federal court records. U.S. District Judge Richard Story sentenced Kowalewski March 25 after a five-hour hearing.
Stanley Kowalewski was indicted in 2013 on 24 counts of wire fraud and obstructing a federal investigation. He remained free on bail until shortly before his trial in October, when the bond was revoked
Story also sentenced Kowalewski to pay $9.4 million in restitution to his victims, documents show.
Fourteen companies and organizations should receive restitution, according to court records. Those investors include Sea Island Co. Retirement Plan; Community Foundation NE Georgia; Resort Hotel Insurance Co.; and Tallulah Falls School.
“Investors trusted Kowalewski to invest their money as promised,” U.S. Attorney John Horn said. “Instead, he stole their hard-earned savings and repeatedly lied to them and the [Securities Exchange Commission] about his investments and self-dealing. 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.”
Kowalewski, who moved to the area from Greensboro, became embroiled in turmoil in 2011 when the U.S. Securities and Exchange Commission accused him of using investment funds as a personal bank account.
He was indicted in 2013 on 24 counts of wire fraud and obstructing a federal investigation, according to court records. He remained free on bail until shortly before his trial in October, when the bond was revoked after authorities said he was masterminding a “Ponzi scheme” in his new home of Pawleys Island.
Michael Fulcher, 59, of Greensboro, pleaded guilty to one count of conspiring with Kowalewski to obstruct the SEC proceeding, according to court documents. His sentencing date has not yet been scheduled.
The SEC said the hedge fund manager and his firm, SJK Investment Management LLC, used investor money to buy a $3.9 million house in Pawleys Island — the most expensive Grand Strand property sold in 2010.
Kowalewski’s attorney could not be reached for comment Thursday.
“While sentencing Mr. Kowalewski to federal prison does not make his many investor-turned-victims fiscally whole again, denying him his freedom and the opportunity to enjoy their money does have value,” said J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office. “It is unfortunate, however, that, in the aftermath of the high-profile Madoff case, and others like it, we are still plagued with large scale investment fraud schemes such as this. The FBI will continue to work with its many partners, to include the SEC, in identifying, investigating, and presenting for prosecution those individuals that would engage in greed based criminal schemes that defraud so many people.”
Kowalewski, who was CEO of SJK, raised more than $65 million through marketing two hedge funds to various investors, then put $16.5 million of it in a new fund he created and put it toward personal use, including buying the Pawleys Island house, according to an SEC complaint.
$9,436,236.23 Total restitution must pay to former investors
He was later charged with wire fraud, conspiracy to obstruct SEC proceeding and obstruction of SEC proceeding.
Kowalewski’s latest legal problems are tied to a Pawleys Island company called Global Remediation Solutions LLC (GRS), according to court records filed in October.
GRS was formed in 2013 and claims to offer industrial tank cleaning, demolition, oil remediation, environmental consulting and other services, court documents show.
Federal officials say a brochure for the company touts Kowalewski’s experience as a hedge fund manager but doesn’t mention his involvement in SJK or his federal trial.
Kirby Oblachinski, who served as the company’s director of global sales from March 1 through Aug. 26, has been providing the FBI with details about Kowalewski’s dealings, records show.
In July, Kowalewski told Oblachinski that he planned to give up 5 to 6 percent of his equity in GRS to generate capital, and later said he raised the money in a few hours, court records state.
Oblachinski was eventually fired and Kowalewski threatened to sue him for $10 million, according to court filings. The terminated employee told federal investigators that Kowalewski left a GRS business card and a knife on is front porch around the time he was fired.
On Sept. 19, Kowalewski sent Oblachinski an email saying, “we are watching your every move,” court records show.
$520,993.91 Restitution ordered to Tullulah Falls School, a private boarding school in Georgia
Oblachinski told investigators his former boss was stockpiling money and once stated that he knew which countries would not extradite him, declaring, “I will never go to jail.”
Court records state that Oblachinski plans to testify that Kowalewski “has a lot of connections in the Middle East. He had a kid working in his office that attended Coastal Carolina University that was part of the Royal family in some Middle Eastern Country. His family had two to three airplanes.”
Another witness, Eric Schwab, plans to testify that Kowalewski lied to investors about the scope of his deals and told some of them that Schwab, who had planned to work with Kowalewski, was the nephew of the brokerage firm founder Charles Schwab.
Eric Schwab told investigators Kowalewski lied to clients about the names of people he’d done business with and wrote him two bad GRS checks totaling $40,000, according to court filings.
None of the GRS investors interviewed by the FBI received any money from Kowalewski, who paid $905,000 in cash for a different Pawleys Island house in May, according to court filings.
Federal officials say a brochure for the company touts Kowalewski’s experience as a hedge fund manager but doesn’t mention his involvement in SJK or his federal trial.
Along with his work as a hedge fund manager, Kowalewski has also coached youth basketball.
A former player for Dartmouth College, Kowalewski led the local S.C. Gators AAU team to a state title in the spring.
In 2009, he coached the Northern Guilford (N.C.) High School squad to a state championship, but the school was later stripped of the title because the squad included players who lived outside the school district, according to local media reports.
Kowalewski also coached at Oak Ridge Military Academy in 2011 before stepping down amid the investment scandal.
Claire Byun: 843-626-0381, @Claire_TSN
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