Accused Hedge Fund Fraudster Holds 'Estate Sale'

Aug 29 2011 | 12:02pm ET

Accused hedge fund fraudster Stanley Kowalewski can't seem to stay out of trouble.

On Saturday, just two days after the Securities and Exchange Commission asked a judge to impose fines and restitution of more than $75 million against the former high-school basketball coach, Kowalewski was busy selling off the contents of his Summefield, N.C., home, the Greensboro News & Record reports.

The so-called "estate sale" isn't the first time Kowalewski has sold items from his $1.7 million home, which is covered by an asset freeze, neighbors told the newspaper. One said Kowalewski has held about four such sales over the past month.

Kowalewski settled the SEC's lawsuit in June, a month after it accused the head of SJK Investment Management of violating the asset freeze, which it won in January. According to the SEC, Kowalewski misappropriated some $16.5 million of the $65 million he raised, spending millions on himself and lying about SJK's returns.

The court-appointed receiver in the case said he is concerned and sent a private investigator to the house this weekend, after he learned that Kowalewski had cancelled his homeowner's insurance.

"We have made a demand on the Kowalewskis through their attorney that they provide us with a complete accounting," David Dantzler, who represents receiver S. Gregory Hays, said.

The people running the sale—Kowalewski was nowhere to be found on Saturday—told the News & Record that only moveable household items were being sold. But neighbors have said that structural elements, including kitchen cabinets, light fixtures and doors, were also being removed.

"It's a problem because I have seen kitchen cabinets and all kinds of stuff that you would normally associate with an existing house being taken out," Peter Heineman said.

Another neighbor, Russ Stellfox, said that Kowalewski told him that he was moving to a rented house on Pawleys Island, S.C. Stellfox added that Kowalewski may be back up to his old tricks, as well.

"I know that he's looking at a couple of business deals down there because he's tried to get some of the people around here to invest with him."

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