The Securities and Exchange Commission charged investment advisers SkiHawk Capital Partners, LLC and The Convergence Group, LLC (TCG), along with the owners and managers of those advisers, Clement Borkowski, Sean Hawkins, and Joseph Schiff, with fraud.
According to the SEC’s complaint, filed in the U.S. District Court for the District of Colorado, the defendants violated the securities laws in connection with three private funds. First, from 2016 to present, Borkowski and Hawkins, through SkiHawk, allegedly caused a private fund, ASI Healthcare Capital Partners I, L.P., to engage in conflicted transactions that resulted in significant financial benefits to themselves without adequate disclosure or consent. The SEC alleges that SkiHawk, Borkowski, and Hawkins made false and misleading statements to investors about both the existence of conflicts and the fund’s review of those conflicts. Second, from 2016 to 2020, SkiHawk, TCG, Borkowski, and Hawkins allegedly made false and misleading statements to investors in another private fund, ASI Capital Income Fund, LLC (Income Fund), by representing that bonds offered by that fund were secured by UCC-1 financing statements, when, in fact, they were not. Finally, the complaint alleges that SkiHawk, TCG, Borkowski, Hawkins, and Schiff overvalued assets held by the Income Fund and/or a third private fund, ASI Capital, LLC, and also falsely represented to investors that these funds’ financial statements were prepared in accordance with generally accepted accounting principles.
The complaint charges the defendants with violating or aiding and abetting violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, Sections 206(1), 206(2) and 206(4) of the Advisers Act and Rule 206(4)-8 thereunder, and seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties.
The SEC’s investigation was conducted by John Mulhern and Brian Fitzpatrick of the Asset Management Unit, and Tracy Bowen of the Denver Regional Office, and was supervised by Kimberly L. Frederick, also of the Asset Management Unit, with assistance from Kenneth L. Bossert, Jason Morrison, David Buhler, Mark Snyder, and Lisa Byington of the Denver Regional Office. The SEC’s litigation will be led by Polly Atkinson and Mark Williams and supervised by Gregory A. Kasper from the Denver Regional Office.