United States v. Stanley J. Kowalewski , 708 F. App'x 605 ( 2017 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-11969
________________________
D.C. Docket No. 2:13-cr-00045-RWS-JCF-1
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
STANLEY J. KOWALEWSKI,
Defendant - Appellant.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(September 6, 2017)
Before TJOFLAT and JORDAN, Circuit Judges, and HUCK, * District Judge.
PER CURIAM:
*
The Honorable Paul C. Huck, United States District Judge for the Southern District of Florida,
sitting by designation.
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Stanley J. Kowalewski was the owner and CEO of SJK Investment
Management, Inc., a hedge fund of funds manager. In 2009, Mr. Kowalewski
formed a new SJK fund called the Special Opportunities Fund, which he did not
disclose to investors. He diverted more than $16 million into the SOF without the
investors’ knowledge and used that money to make a number of personal
purchases and to transfer over $4 million into his personal bank account.
A federal grand jury charged Mr. Kowalewski with 22 counts of wire fraud,
in violation of 18 U.S.C. §§ 1343 & 2, based on his alleged diversion of funds and
misrepresentations to investors; one count of conspiracy to obstruct a Securities
and Exchange Commission proceeding, in violation of 18 U.S.C. § 371; and one
count of obstruction of an SEC proceeding, in violation of 18 U.S.C. §§ 1505 & 2,
based on false testimony and altered documentation that he provided to the SEC
during its investigation of SJK. Following a trial, a jury found Mr. Kowalewski
guilty on all counts and the district court sentenced him to 209 months’
imprisonment.
Mr. Kowalewski argues on appeal that the government presented insufficient
evidence to sustain his convictions for wire fraud, conspiracy to obstruct, and
obstruction. We address each conviction in turn.
“On review, we must affirm if the evidence and the inferences it supports,
viewed in the light most favorable to the government, would permit a reasonable
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trier of fact to establish guilt beyond a reasonable doubt.” United States v. Harrell,
737 F.2d 971, 979 (11th Cir. 1984). We consider the evidence “with all inferences
and credibility choices drawn in the government’s favor,” and we “are bound by
the jury’s credibility choices, and by its rejection of the inferences raised by the
defendant.” United States v. Broughton, 689 F.3d 1260, 1276–77 (11th Cir. 2012)
(citation omitted). In doing so, we do not ask whether we believe “that the
evidence at the trial established guilt beyond a reasonable doubt”—rather, the
“relevant question is whether, after viewing the evidence in the light most
favorable to the prosecution, any rational trier of fact could have found the
essential elements of the crime beyond a reasonable doubt.” Jackson v. Virginia,
443 U.S. 307, 318–19 (1979) (emphasis in original). The “evidence need not
exclude every reasonable hypothesis of innocence or be wholly inconsistent with
every conclusion except that of guilt.” Harrell, 737 F.2d at 979.
To establish wire fraud under 18 U.S.C. § 1343 the government must prove
“(1) intentional participation in a scheme to defraud and (2) use of the interstate
wires in furtherance of the scheme.” United States v. Hasson, 333 F.3d 1264, 1270
(11th Cir. 2003). Mr. Kowalewski argues that the government did not present
sufficient evidence to demonstrate intent to defraud, but we disagree.
Intent to defraud may be established by circumstantial evidence, see United
States v. Jennings, 599 F.3d 1241, 1250 (11th Cir. 2010), and the government
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presented sufficient circumstantial evidence from which a reasonable jury could
find the requisite intent to convict Mr. Kowalewski of wire fraud. For example, the
government presented evidence that Mr. Kowalewski provided investors with
monthly statements that misrepresented their account balances through inflated
valuations (up to $20 million more than the actual value of the accounts) and sent
letters to them that misrepresented how their money was invested and what had
driven performance for the month. Mr. Kowalewski also misrepresented to
investors that he was managing more than $400 million in assets, when he never
had more than approximately $71 million under management. The government
presented further evidence that Mr. Kowalewski told investors that he used equity
investment strategies that did not include real estate investments, yet he purchased
a personal home, two homes for relatives, and a beach house with investor funds.
Similarly, he told investors that he would invest in only “unaffiliated” hedge funds,
but instead diverted more than $16 million into the SOF—an “affiliated” fund—
without the investors’ knowledge, using that money to, among other things, buy
personal homes and transfer at least $4 million to himself. Viewing this evidence
and appropriate inferences in the light most favorable to the government, a
reasonable jury could find that Mr. Kowalewski intended to defraud his investors. 1
1
Mr. Kowalewski argues that the language in the Private Placement Memoranda provided to the
investors permitted him to change investment strategies and negated any oral representations
made to investors. But, unlike in a civil fraud case, such contractual disclaimers do not preclude
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To prove conspiracy under 18 U.S.C. § 371, the government must present
evidence of “(1) an agreement among two or more persons to achieve an unlawful
objective; (2) knowing and voluntary participation in the agreement; and (3) an
overt act by a conspirator in furtherance of the agreement.” Hasson, 333 F.3d at
1270. Michael Fulcher, SJK’s chief financial officer, pled guilty to conspiring with
Mr. Kowalewski to obstruct the SEC investigation. Mr. Fulcher testified that he, at
Mr. Kowalewski’s direction, created two rental agreements in November of 2010
and backdated them to July of 2010 to make it appear that Mr. Kowalewski’s
family members were leasing properties purchased by the SOF with investor funds
when there were in fact no rental agreements. Mr. Kowalewski told the SEC that
the rental agreements existed and were signed at the time the SOF purchased each
property. Viewing this evidence in the light most favorable to the government, a
reasonable jury could find that Mr. Fulcher and Mr. Kowalewski conspired to
submit false documents to the SEC in order to obstruct its proceeding.
As for the substantive count of obstruction, the government was required to
prove that Mr. Kowalewski “corruptly . . . endeavor[ed] to influence, obstruct, or
impede the due and proper administration of the law” in the SEC proceeding.
18 U.S.C. § 1505. The term “corruptly” means “acting with an improper purpose,
a criminal conviction for fraud. See United States v. Weaver, 860 F.3d 90, 95 (2d Cir. 2017);
United States v. Lucas, 516 F.3d 316, 339 (5th Cir. 2008); United States v. Ghilarducci, 480 F.3d
542, 546–47 (7th Cir. 2007). In any event, some of the misrepresentations went beyond the types
of investments made.
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personally or by influencing another, including making a false or misleading
statement, or withholding, concealing, altering, or destroying a document or other
information.” 18 U.S.C. § 1515(b). The government presented evidence that
Mr. Kowalewski and Mr. Fulcher created the back-dated rental agreements, and
that Mr. Kowalewski falsely testified to the SEC that the SOF had leased the
properties to him and his family members. There is also evidence that
Mr. Kowalewski falsely stated during his SEC testimony that he had disclosed the
SOF fund to investors, and that his attorneys and other professionals had
authorized his fraudulent activity. Based on this evidence, a reasonable jury could
conclude that Mr. Kowalewski had corruptly endeavored to obstruct the SEC’s
investigation.
In sum, the government provided sufficient evidence from which a
reasonable jury could find Mr. Kowalewski guilty beyond a reasonable doubt on
the wire fraud, conspiracy, and obstruction charges. Accordingly we affirm his
convictions and sentence.2
AFFIRMED.
2
Mr. Kowalewski also raises a number of evidentiary, procedural, and sentencing issues.
Following oral argument and a review of the record, we affirm on those issues without further
discussion.
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