SEC v. Vineet Kalucha, et al.
Case No.: 14-cv-03247-RMB (S.D.N.Y.)
On May 5, 2014, the SEC filed a complaint against Vineet Kalucha (“Kalucha”), George Palathinkal (“Palathinkal”), and Aphelion Fund Management, LLC (“Aphelion”). The complaint alleged that, from late 2013 to 2014, Kalucha, the majority owner, managing partner, and Chief Investment Officer of Aphelion, an investment adviser, lied to prospective investors about the amount of Aphelion’s assets under management and misused investor funds invested into Aphelion. As of March 2014, Aphelion had raised approximately $1.5 million invested into Aphelion contributed by approximately seven investors. See Complaint.
On June 17, 2015, the SEC and Palathinkal jointly stipulated that all claims that were asserted by the SEC against him in the action be dismissed with prejudice and without costs, and waived all rights of appeal. See Stipulation of Dismissal.
On July 30, 2015, pursuant to its consent and without admitting or denying the allegations against it, the Court entered a final judgment as to Aphelion. The final judgment permanently enjoined Aphelion from violating Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933 (the “Securities Act”), and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 (“Advisers Act”) and Rule 206(4)-8 thereunder. The final judgment ordered that the Court’s July 14, 2014 Order of Preliminary Injunction Asset Freeze, and Other Ancillary Relief was vacated and the assets recovered would be distributed pursuant to further order of the Court. See Aphelion’s Final Judgment.
On July 30, 2015, pursuant to his consent and without admitting or denying the allegations against him, the Court entered a final judgment as to Kalucha. The final judgment permanently enjoined Kalucha from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, Section 17(a) of the Securities Act, and Sections 206(1), 206(2) and 206(4) of the Advisers Act and Rule 206(4)-8 thereunder, and required him to pay a total of $503,713.00 in disgorgement, prejudgment interest, and a civil penalty (the “Distribution Fund”). The Commission was ordered to hold all monies paid, plus accrued interest, pending further order of the Court.See Kalucha’s Final Judgment.
On November 13, 2015, the SEC filed a letter proposing the distribution of the remaining funds of Aphelion, which were recovered pursuant to the Court’s asset freeze. See Request for Distribution. On November 18, 2015, the Court entered an order authorizing the distribution of $322,200.01, less reasonable banking and wiring fees, to the six investors of Aphelion on a ratable basis. The Court also approved Pinnacle Canada Fund Administration, Ltd. to oversee and administer the return of funds to investors in Aphelion as set forth in the order. See the Court’s Order.
On May 11, 2016, the Court appointed Damasco & Associates LLP as the Tax Administrator to fulfill the tax obligations of the Distribution Fund
On May 16, 2016, the SEC filed a motion to appoint plan administrator and to approve a distribution plan, together with a distribution plan (“Distribution Plan”). See Motion to Appoint Plan Administrator and Approve Distribution Plan.
On May 23, 2016, the Court approved the Distribution Plan, appointed Michael S. Lim, as the Plan Administrator to oversee the distribution of the Distribution Fund to injured investors, and authorized the Plan Administrator to distribute the Distribution Fund in accordance with the approved Distribution Plan. See Order Appointing Plan Administrator and Approving Distribution Plan.
The Distribution Plan provides for a total of approximately $504,097.00, less any tax obligations and fees and expenses of the Tax Administrator, to be distributed on a pro rata basis in the amounts identified in the Distribution Plan, to the six investors harmed by Kalucha's misconduct described in the complaint.
On November 9, 2016, the Plan Administrator directed the Commission to disburse $499,485.53 from the Distribution Fund to eligible investors in accordance with the Distribution Plan.
For more information, please contact the Plan Administrator.
Michael S. Lim
Office of Distributions
Telephone Number: 202-551-4659