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GREENSBORO — A well-known basketball coach defrauded hedge fund investors of $16.5 million and used the money for homes, vacations and jerseys for his team, according to a complaint filed by the Securities and Exchange Commission.

Stan Kowalewski, who coaches the boys team at Oak Ridge Military Academy, is accused of diverting money into a secret fund he created.

The SEC, in its complaint, says Kowalewski spent the money on a $3.9 million vacation home in Pawley’s Island, S.C., along with food, underwear and diapers, among other things.

The SEC got an emergency order Thursday freezing the assets of Kowalewski and his business, SJK Investment Management. A hearing is set for Jan. 20 in Atlanta.

“We completely deny all of the allegations,” said Kowalewski, adding that he remains Oak Ridge’s boys basketball coach. “We are very confident that we will have an opportunity to attend the hearing, we will be vindicated and cleared.”

He declined to discuss specific charges Friday.

The SEC says SJK Investment Management raised more than $65 million beginning in summer 2009 by marketing two hedge funds.

In August 2009, the SEC alleges, Kowalewski put about $16.5 million into an undisclosed third fund that only he controlled.

In October 2010, the firm took $4 million from the fund to pay what it described as salaries and administrative fees, according to the complaint. The fund also paid for groceries, landscaping, clothes and plane tickets for the basketball teams he coached, the complaint says.

The SEC said investors never knew about the third account or Kowalewski’s purchases. Investors received fraudulent monthly statements about the two known accounts, according to the SEC.

“Kowalewski treated these funds like his own personal bank account and siphoned off millions of dollars that his clients entrusted to him,” William Hicks, associate regional director of enforcement in the SEC’s Atlanta office said in a news release on Friday.

“He breached his responsibilities as an investment adviser in the worst possible manner.”

Kowalewski’s attorney, David Brown of Pinto Coates Kyre & Brown, said he is “confident that everything that was done was done appropriately” with Kowalewski’s fund management.

“The returns in those funds are strong, and investors have been well-rewarded for being in the funds,” Brown said.

Kowalewski has been a successful — and controversial — basketball coach at Bishop McGuinness, High Point Central and Northern Guilford high schools.

In 2009, his Northern team won the state championship. But the state high school athletics group stripped the school of its title two months later after an investigation revealed that two players should not have been attending Northern.

The school system didn’t renew his coaching contract, although Guilford County Schools never cited a reason.

A News & Record investigation that same year revealed that Kowalewski spent more than $4,000 from a nonprofit account set up for the basketball team to pay for yard work, his electric and natural gas bills, and a home extermination service.

Kowalewski told the News & Record then he managed the account poorly, but he denied misappropriating the money.

Recently, Kowalewski helped rescue Oak Ridge Military Academy from financial ruin and aided in reviving its athletics programs.

In December, he told the News & Record that SJK Investment Management is building the school a 30,000-square-foot building, complete with two basketball courts and rooms for high-level, sport-specific personal training.

He estimated the construction cost at $2.5 million to $4 million, paid for with either his money or the company’s money.

“There’s zero cost to Oak Ridge,” he told the News & Record. “At some point, way down the road, I probably will gift the building to the school for tax purposes.”

For a time, Kowalewski was coaching there for free. It’s unclear now whether that’s still the case.

When asked how the SEC investigation will affect the academy’s financial situation, Kowalewski said: “That’s a question for Oak Ridge.”

Staff writers Gerald Witt and Jason Wolf contributed to this report.

Contact Margaret Moffett Banks at 373-7031 or mbanks@news-record.com