New York (HedgeCo.Net) – A New York-based investment advisory firm and two executives have had fraud charges and an asset freeze filed against them by the SEC for distributing falsified performance results to investors in two hedge funds they managed.
The SEC alleges that Aphelion Fund Management’s chief investment officer Vineet Kalucha fraudulently altered an outside audit firm’s report reviewing the performance of an investment account he managed. Aphelion’s chief financial officer George Palathinkal allegedly learned about Kalucha’s falsifications, which essentially changed an investment loss into a major investment gain in the account. Nevertheless, the falsified report showing the phony gain instead of the actual loss was distributed to prospective investors. Furthermore, investors were separately provided false information about Aphelion’s assets under management and Kolucha’s litigation history.
Kalucha, who is majority owner and managing partner of the firm in addition to chief investment officer, also is charged with siphoning investor proceeds for his luxury car payments and settlements of legal actions against him personally that are unrelated to Aphelion.
In response to the SEC’s request for emergency relief for investors, U.S. District Court Judge Jed S. Rakoff 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 M. Berman.
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