The Securities and Exchange Commission has dropped a 2-year-old lawsuit accusing investment firms from Colorado Springs and Puerto Rico, and three partners in those firms, of fraud and aiding and abetting fraud in a series of related transactions.

A federal judge in Denver dismissed the lawsuit at the agency’s request in late September, ending six years of inquiries, subpoenas, lawsuits and settlement negotiations involving SkiHawk Capital Partners of Colorado Springs; The Convergence Group and Clement Borkowski, both of Puerto Rico; Sean Hawkins of Colorado Springs; and Joseph Schiff of Monument.

The lawsuit was filed in mid-2021 but hadn’t progressed much beyond the initial complaint; Borkowski, president of The Convergence Group, lived in Colorado Springs at the time the suit was filed.

The order dismissing the suit said the agency, “in light of evidence produced following defendant’s waiver of the attorney-client privilege during this litigation,” agreed to dismiss the case. The SEC declined to comment on the dismissal, a spokesman said via email.

The suit had alleged that the two investment firms and the three partners worked together and fraudulently failed to tell investors in funds they managed that those funds had invested much of their money in companies owned by the three partners.

Paul Vorndran, a Denver lawyer representing the companies and partners, said the defendants argued in a brief sent to the agency but not filed in court that the companies and partners relied on advice from their attorneys in what they told investors. The SEC, he said, responded it would drop that part of the case if the evidence backed what the brief stated.

The suit also alleged that the companies and partners overvalued assets in the funds they were selling through a related entity that they also controlled, ASI Capital, and that they made false and misleading statements in two instances to investors in private investment funds that ASI managed. In those cases, Vorndran said his brief argued that the companies and partners relied on advice from accountants and other professionals.

The agency told the court it planned to amend its suit, he said, but also began negotiating a settlement with the companies and partners, though no agreement was reached. Vorndran said the agency wanted the companies and partners to admit to one of the fraud allegations, which they refused to do. He said the agency’s lawyer contacted him days before a deadline for the SEC to amend its suit, telling him they planned to dismiss the case instead.

“We all have a deep conviction that we didn’t do anything wrong. To admit we did would violate our character,” Hawkins said in an interview.

“Because of this case, we had business partners abandon us, had credit cards and brokerage accounts closed (involuntarily) and one partner had a mortgage denied. We lost potential deals as long as this dragged out, but we had faith in God and the legal system, so we were willing to go to trial to clear our name.”

Hawkins said he felt a “huge sense of relief and vindication” from the dismissal, calling the investigation and lawsuit “a six-year ordeal.”

The Securities and Exchange Commission headquarters in Washington.

the associated press file