U.S. Eleventh Circuit - The FindLaw 11th Circuit Court of Appeals Opinion Summaries Blog

HS Basketball Coach/Hedge Funder Loses Wire Fraud Appeal

The former high school basketball coach out of Greensboro, North Carolina that led North Guilford High boys' team to win the state championship, Stan Kowalewski, has had his 24 count federal felony conviction upheld by the Eleventh Circuit Court of Appeals. Thankfully, none of these counts have anything to do with abusing his team, but rather, just the financial trust of the community.

Kowalewski ran a hedge fund company, SJK Investment Management. However, it turns out that SJK's management mismanaged funds, causing losses to clients totaling $8 million. Included in those losses is the $4 million beach home Kowalewski bought in the other Carolina, on Pawley's Island.

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Kowalewski based his appeal on the theory that the government failed to carry their burden of proof as to the wire fraud, conspiracy, and obstruction convictions. However, as the appellate court noted, Kowalewski's argument lacked merit. Given the testimony and evidence admitted at trial, the appellate court found that each conviction was based on sufficient evidence.

When it came to the conspiracy charge, the appellate court explained that the testimony of the individual he instructed to back-date rental documents, and their agreement to do so in order to satisfy a SEC probe, was sufficient. This evidence showed that he defrauded investors by claiming that the home he purchased for personal use was being, and had been, rented by his family, when in fact the rental agreement was a mere rouse.

The court found that the government's evidence of the misrepresentations by Kowalewski to his investors to be more than sufficient. Some specific examples of the misrepresentations include:

  • Telling investors he was managing more than $400 million, when in fact the max was never more than $71 million.
  • Misrepresenting investor account balances through inflated valuations up to $20 million over the actual.
  • Misrepresenting to investors how their money would be, and was, invested.

However, what really made this case bad for Kowalewski (which is evidence by the multiple mentions in the opinion) was that he purchased a luxury home and beach house for himself, and two other homes for relatives, using investor funds.

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