Feds accuse former local basketball coach of ‘looting’ luxury home

The Securities and Exchange Commission launched an emergency effort Monday to stop former Greensboro financial adviser Stan Kowalewski from “looting” his exclusive home, urging a federal judge to hold him in contempt a second time.

Lawyers for the watchdog agency said they acted after a private investigator documented the apparent gutting of the $1.7 million house’s exterior lighting network and other apparent irregularities.

Officials learned of the situation late last week when several of Kowalewski’s Summerfield neighbors told them he held a series of weekend “estate sales” this month at which kitchen cabinets and other built-in items were sold.

“Kowalewski’s conduct is egregious,” SEC lawyer Alex Rue said in requesting an emergency hearing. “His contempt of this court’s freeze order this second time is demonstrated by the looting of the house of fixtures, light fixtures, doors, kitchen cabinets and other items, the full extent of which is yet to be determined. … There is no predicting what further damage he may cause.”
A report from the builder of the lakeside house said that if Kowalewski sold all its granite countertops and associated cabinets, it could cost more than $167,000 to replace, plus a potential $44,100 for interior doors and hardware, plumbing and lighting fixtures, according to documents filed Monday in the U.S. District Court for Northern Georgia.

Within hours, U.S. District Judge Timothy C. Batten set a hearing on the petition for Wednesday afternoon in Atlanta.

Kowalewski did not return a phone call Monday. His lawyer, Thomas Todd Jr. of Atlanta, did not respond to an email.

http://liarcatchers.com/fraud_investigation.html 

The SEC sued Kowalewski in January, saying he misused millions of dollars belonging to clients. The agency first sought a contempt citation several months ago against the financial adviser and well-known coach of high school basketball, after he violated a freeze on his assets by tapping $200,000 in supposedly frozen money.

To settle that first contempt charge, Kowalewski agreed to repay the frozen $200,000 at a rate of $2,500 a month, starting Aug. 1.

Batten froze Kowalewski’s assets shortly after the SEC filed its suit. The agency says that during 2009 and 2010, Kowalewski fraudulently diverted about $16 million of investor money, of which $8.4 million either was paid improperly to him or spent wrongly for his benefit.

The freeze aims to stop further losses while a court-appointed receiver recovers as much of the money as possible. Frozen assets include the house, which could be sold to recoup some of the loss.

The case emerged in Georgia because the SEC’s regional office is there, as are several of Kowalewski’s larger clients.

In this latest incident, the SEC wants an order that Kowalewski return his house to normal condition, replacing any fixtures, doors, lights and other material he removed. If Kowalewski can’t or won’t, Batten should impose a penalty stiff enough to get his attention, said Rue and his colleague, Paul Kim.

Authorities learned the house on Henson Farm Road was in jeopardy last week after discovering Kowalewski canceled his insurance policy on it, then moved his family to Pawleys Island, S.C., without telling court officials.

They began probing further after fielding complaints from his neighbors.

Kowalewski knew better than to dismantle his house for cash, Rue and Kim said in a memorandum accompanying the contempt petition.

“He knew that he was removing valuable parts of the house that he knew was part of his frozen assets,” they said. “Kowalewski should be made to replace the property and restore the damage he has caused by his defiance of the court’s freeze order.”

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