SEC Sues Aphelion Fund’s Kalucha for Misusing Investor Money

May 05, 2014 5:41 pm ET

(Updates with SEC’s allegations in fourth paragraph.)

May 5 (Bloomberg) -- The U.S. Securities and Exchange Commission sued Vineet Kalucha and his Aphelion Fund Management LLC, claiming they used investor funds to pay for a luxury car and other personal expenses.

The SEC asked a federal judge in New York today to block Kalucha, Aphelion’s founder and managing partner, from raising money from investors based on false and misleading representations. New York-based Aphelion has almost $8 million under management, according to the complaint.

After telling investors that at least $1.5 million would be applied to firm expenses, Kalucha, 49, used a “substantial portion” of the money to pay off personal expenses, the SEC said in its complaint. He used investor funds to settle a foreclosure action involving his home and a separate civil suit, and to make a personal tax payment and a down payment on a BMW sedan, the SEC said.

In 2013, Kalucha altered an outside auditor’s report so that it showed Aphelion had a positive performance when results were actually negative, the SEC alleged. After the fund began to perform poorly in 2011, Kalucha fabricated e-mails purportedly from the audit firm and provided investors with false and misleading statements, the SEC said.

Kalucha, contacted at home in Washington, declined to comment on the complaint, saying he hadn’t seen it.

The case is SEC v. Vineet Kalucha, 14-cv-3247, U.S. District Court, Southern District of New York (Manhattan).