NEW YORK: An Indian-origin executive at an investment advisory firm here has been charged by the U.S. Securities and Exchange Commission with fraud and of siphoning investor proceeds to pay for his luxury car payments and settle other personal expenses.
The SEC alleges that Kalucha fraudulently altered an outside audit firm's report reviewing the performance of an investment account he managed.
Kalucha, who is majority owner and managing partner of the firm in addition to chief investment officer, is also charged with siphoning about 40 per cent of the $1.5 million the firm raised in 2013 for his personal benefit.
He withdrew investor proceeds to settle a foreclosure action involving his personal residence, settle a breach of contract action filed against him in his personal capacity, make down payment of a luxury sedan and pay for tax and accounting services for his personal finances.
Aphelion's chief financial officer George Palathinkal allegedly learned about Kalucha's falsifications and approved all of Kalucha's withdrawals.
In response to the SEC charge, U.S. District Court Judge Jed Rakoff has issued a temporary restraining order, imposed an asset freeze to protect client assets and temporarily prohibited the defendants from soliciting new investors or additional investments from existing investors.
A hearing on the SEC's motion for a preliminary injunction has been scheduled for May 15 before Judge Richard Berman.
According to the SEC's complaint filed in US District Court for the Southern District of New York, Aphelion served as the investment adviser and general partner for two unregistered hedge funds Aphelion US Fund and Aphelion Offshore Fund.