U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23030 / June 24, 2014
Securities and Exchange Commission v. Vineet Kalucha et al., Civil Action No. 14 CV 3247 (RMB) (S.D.N.Y.)
Court Modifies and Extends Order Asset Freeze and Temporary Restraining Order
The Securities and Exchange Commission (the "SEC") announced that, at the request of the parties, the Honorable Richard M. Berman, United States District Court Judge for the Southern District of New York, entered on June 19 and 20, 2014 two orders that modified and extended the order freezing assets, temporary restraining order, and granting other relief that the Court had entered on May 5, 2014.
The first order, entered on June 19, 2014, extends until July 31, 2014 all of the relief that the Court had entered on May 5, 2014, including the asset freeze with respect to Vineet Kalucha and Aphelion Fund Management LLC ("Aphelion"). This order also reschedules, from July 10, 2014 to July 23, 2014, the hearing on the SEC's application to show cause as to why the Court should not enter a preliminary injunction against each of the defendants.
The second order, entered on June 20, 2014, modifies the asset freeze with respect to Aphelion by ordering a third party to liquidate into cash all securities held by Aphelion US Fund, LP (the "US Fund") and Aphelion Offshore Fund, Ltd., and to transfer the cash proceeds into a bank account held in the name of the US Fund.
On May 5, 2014, the SEC filed fraud charges and sought emergency relief against Aphelion, Aphelion's chief investment officer, Vineet Kalucha, and Aphelion's chief financial officer, George Palathinkal. The SEC's complaint alleges that Kalucha fraudulently altered an outside audit firm's report reviewing the performance of an investment account he managed, that Palathinkal allegedly learned about Kalucha's falsifications, which essentially changed an investment loss into a major investment gain in the account, and that the falsified report showing the phony gain instead of the actual loss was distributed to prospective investors. The complaint further alleges that investors were separately provided false information about Aphelion's assets under management and Kulucha's litigation history, and that Kalucha allegedly siphoned investor proceeds for his luxury car payments and settlements of legal actions against him personally that are unrelated to Aphelion.
For further information, please see Litigation Release Number LR-22988 (May 9, 2014) [SEC Announces Charges and Asset Freeze Against Hedge Fund Advisory Firm Distributing Falsified Performance Results] and Litigation Release Number LR-22994 (May 16, 2014) [Court Extends Asset Freeze and Temporary Restraining Order]