SEC v. John J. Kralik V; JKV Capital, LLC; JKV LLC; and JKV Homes, LLC, No. 8:24-cv-01460, Central District of California (July 2, 2024) — Complaint

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P.DAVIS OLIVER (DC Bar No. 490620)
pro hac vice pendi
ng
Em
ail: [email protected]
JOHN M. MCNULTY (DC Bar No. 1009211)
pro hac vice pending
Email: [email protected]
A
ttorneys for Plaintiff
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Telephone: (202) 551-8920
LOCAL COUNSEL
STEPHEN KAM (Cal. Bar No. 327576)
Email: [email protected]
Securities and Exchange Commission
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone: (323) 965-3998
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Southern Division
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
vs.
JOHN J. KRALIK V, JKV CAPITAL, LLC,
and JKV LLC,
Defendants, and
JKV HOMES, LLC,
Relief Defendant.
Case No.
CO
MPLAINT FOR VIOLATIONS
OF THE FEDERAL SECURITIES
LA
WS
DEMAND FOR JURY TRIAL
8:24-cv-01460

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Plaintiff Securities and Exchange Commission (“SEC”) alleges:
JURISDICTION AND VENUE
1. The Court has jurisdiction over this action under Sections 20(b),
20(d)(1), and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§
77t(b), 77t(d)(1), and 77v(a), and Sections 21(d), 21(e), and 27(a) of the Securities
Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d), 78u(d), 78u(e), and
78aa(a).
2. Defendants John J. Kralik V (“Kralik”), JKV Capital, LLC (“JKV
Capital”), and JKV LLC, along with Relief Defendant JKV Homes, LLC (“JKV
Homes”) have, directly or indirectly, made use of the means or instrumentalities of
interstate commerce, of the mails, or of the facilities of a national securities exchange
in connection with the transactions, acts, practices, and courses of business alleged in
this complaint.
3. Venue is proper in this district under Section 22(a) of the Securities Act,
15 U.S.C. § 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a),
because certain of the transactions, acts, practices, and courses of conduct
constituting violations of the federal securities laws occurred within this district. In
addition, venue is proper in this district because Defendant Kralik resides in this
district, and the principal places of business of Defendants JKV Capital and JKV
LLC and Relief Defendant JKV Homes are in this district.
SUMMARY
4. Defendants Kralik, JKV Capital, and JKV LLC raised more than $16.9
million from dozens of people who invested in multiple real estate investment funds
they manage. The Defendants promised those investors to both preserve the value of
their investments and pay investors profits from “flipping” or renting residential real
estate. Instead, Kralik and JKV LLC misappropriated more than $1.6 million of
investor money and spent it on expenses such as Kralik’s Mercedes-Benz, his house,
a vacation in Mexico, and other personal expenses for Kralik.

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5. Kralik also improperly took investor money to pay operating expenses of
the entity that manages the real estate funds, JKV Capital. And Kralik and JKV LLC
further betrayed their promises by transferring additional millions of dollars of
investor money between the five (purportedly separate) real estate funds. These
transfers were both fraudulent in their own right and were used for improper purposes
such as Ponzi-like distribution and redemption payments to investors in other funds.
At times, these transfers concealed shortfalls in a particular fund. Kralik, JKV
Capital, and JKV LLC also concealed their fraud by issuing false capital account
statements to investors.
6. As the scheme began to unravel, in or around January 2023, Kralik
admitted to an investor that Kralik was in trouble because Kralik had used investor
money to cover certain JKV Capital operating expenses and that a lot of investor
money was gone. In a subsequent meeting with that investor and other investors,
Kralik again admitted that he had taken money from the funds to pay JKV Capital
operating expenses. At that meeting, when an investor asked Kralik if that meant
Kralik had used investor money fraudulently, Kralik responded “Yes.” But the fraud
was even broader than Kralik let on—he not only took investor money for unjustified
expenses, he stole investor money for his personal enrichment.
7. The Defendants’  fraudulent scheme spanned from late 2017 through at
least March 2024 (the “Relevant Period”). Between late 2017 and March 2022,
Kralik, JKV Capital, and JKV LLC raised more than $16.9 million from about 35
investors. One of those 35 investors was a “feeder fund” not controlled by Kralik.
That feeder fund itself has 68 investors. Thus, in total, the Defendants’ fraud
victimized more than 100 people. Even after the Defendants stopped soliciting new
investments, they continued the fraud through at least March 2024 by continuing to
make improper transfers between the real estate funds.

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8. Defendants Kralik, JKV Capital, and JKV LLC manage, and solicited
investments in, five different real estate investment funds (each referred to in this
Complaint as a “JKV Fund”   or the “JKV Funds”)  :
a. JKV Opportunities Fund 1, LP (“Fund I”);
b. JKV Opportunities Fund II, LP (“Fund II”);
c. JKV Investors A, LP (“Investors A”);
d. JKV Investors C, LP (“Investors C”); and
e. Treasure Valley Rental Fund LP (“Treasure Valley”).
9. Each JKV Fund’s stated purpose is to purchase and renovate homes in
California and other states for rent or resale, with investors in each particular fund
getting payments from the rent or resale profits of properties owned and renovated by
that particular fund.
10. The JKV Funds are structured as limited partnerships, with an ownership
and control structure that puts Kralik in charge. For each fund, JKV Capital is the
general partner and has sole control over the management and business affairs of that
fund. JKV LLC is the manager and majority owner of JKV Capital and controls the
affairs of JKV Capital. In turn, Kralik owns 100% of JKV LLC and controls its
decisions. The result of this ownership and control structure is that Kralik controls
JKV LLC, JKV Capital, and the management and business affairs of each JKV Fund.
11. JKV Fund investors bought securities in the form of limited partnership
units in a particular fund, and investors were to share any profits with other limited
partners in the particular fund and with the general partner, JKV Capital.
12. For each JKV Fund, offering documents state that investor money would
be used for that fund’s business and to pay returns to investors in that fund. In reality,
Kralik, JKV Capital, and JKV LLC misappropriated and misused millions of dollars
of investor money in three main ways.
13. First, Kralik misappropriated investor money for his personal use. He
did this by transferring money from the JKV Funds to JKV LLC and then using it for

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personal expenses such as lease payments for his $198,000 Mercedes-Benz, mortgage
payments for his personal residence, a vacation in Mexico, and transfers to his
personal securities trading account. Kralik also transferred investor money (both
directly and through JKV LLC) to his wholly-owned entity JKV Homes—an entity
Kralik used for personal real estate investments unrelated to the JKV Funds.
14. Second, Kralik directed unauthorized transfers of investor money to JKV
Capital. While JKV Capital was entitled to certain management and performance fees
for its role as general partner, these illicit transfers were separate from those fees.
Some of the illicit transfers covered JKV Capital’s operating expenses and employee
salaries, uses that were specifically prohibited in Fund I’s documents.
15. Third, Kralik improperly directed transfers of money between JKV
Funds. Sometimes these transfers went directly from one fund to another fund. Other
times the money was first transferred to JKV LLC as an intermediary and then
transferred to another JKV Fund. Some of these transfers out of a JKV Fund were
used for Ponzi-like distribution or other payments to investors in a different JKV
Fund. In addition, Kralik improperly directed transfers from one JKV Fund to pay the
expenses of another fund.
16. Kralik’s and JKV Capital’s pitch to potential investors in Fund I and
Fund II highlighted capital preservation as a key feature. Contrary to those
representations, and contrary to the Defendants’ representations about how investor
money would be used, the Defendants misappropriated and misused investor money.
This had the predictable result of depleting—not preserving—investors’ capital.
17. After Kralik learned about the SEC staff’s investigation in early 2023, he
assured at least one investor that he would return their capital contributions, but then
failed to do so. Kralik also sold some properties and made payments to certain
investors but not others, apparently favoring investors with whom he had a personal
connection. In addition to these attempts to placate some investors, Kralik also

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continued to direct improper fund-to-fund transfers through at least early 2024, well
after he knew of the SEC’s investigation.
18. Kralik also failed to appear to give testimony in the SEC staff’s
investigation (despite having been served with a subpoena to do so), and even failed
to provide a date on which to reschedule the testimony.
19. As a result of the alleged conduct, the Defendants violated the antifraud
provisions of Section 17(a) of the Securities Act, 15 U.S.C. §77q(a), and Section
10(b) of the Exchange Act, 15 U.S.C. §78j(b), and Rule 10b-5 thereunder, 17 C.F.R.
§ 240.10b-5. Kralik is also liable as a control person for JKV Capital’s and JKV
LLC’s violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder
pursuant to Section 20(a) of the Exchange Act.
20. The SEC seeks a judgment from the Court: (i) permanently enjoining the
Defendants from violating Securities Act Section 17(a), 15 U.S.C. §77q(a), and
Exchange Act Section 10(b), 15 U.S.C. §78j(b), and Rule 10b-5 thereunder, 17
C.F.R. § 240.10b-5; (ii) directing the Defendants to disgorge all ill  -gotten gains they
received as a result of the acts and/or courses of conduct complained of, plus
prejudgment interest thereon; (iii) directing the Defendants to pay civil money
penalties; (iv) barring Kralik from serving as an officer or director of a public
company; (v) ordering Relief Defendant JKV Homes to disgorge any ill-gotten gains,
plus prejudgment interest thereon; and (vi) granting such other relief as this Court
may determine to be just, equitable, and necessary.
DEFENDANTS
21. John J. Kralik V (“Kralik”), age 43, resides in Newport Beach,
California, in this district. Kralik is the CEO and Managing Partner of JKV Capital
and owns 55.02% of JKV Capital’s outstanding shares through his wholly-owned
entity JKV LLC. Through JKV Capital and JKV LLC, Kralik operates and manages
the JKV Funds. Kralik and JKV Capital also manage other real estate investment
funds. Previously, from 2009 to 2017, Kralik was president of an unrelated real estate

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investment firm. Until recently, Kralik had been an active member of an organization
for company officers and directors. Kralik has signed a tolling agreement that
suspends the running of the statute of limitations from September 19, 2023 through
July 2, 2024.
22. JKV Capital, LLC (“JKV Capital”) is a California limited liability
company with its principal place of business in Newport Beach, California, in this
district. JKV Capital’s business involves acquiring, owning, managing, and operating
homes. JKV Capital is the general partner and manages the operations of the JKV
Funds. JKV Capital has signed a tolling agreement that suspends the running of the
statute of limitations from September 19, 2023 through July 2, 2024.
23. JKV LLC is a California limited liability company with its principal
place of business in Newport Beach, California, in this district. Kralik owns 100% of
JKV LLC and is its only member and manager. JKV LLC is listed as the manager of
JKV Capital in fund agreements and the JKV Capital amended operating agreement.
JKV LLC has signed a tolling agreement that suspends the running of the statute of
limitations from March 14, 2024 through July 2, 2024.
RELIEF DEFENDANT
24. JKV Homes LLC (“JKV Homes”) is a California limited liability
company with its principal place of business in Newport Beach, California, in this
district. Kralik formed JKV Homes in November 2019 and owns 100% of its
outstanding shares through JKV LLC. JKV LLC is the manager and only member of
JKV Homes.
RELATED ENTITIES
25. JKV Opportunities Fund 1, LP (“Fund I”) is a California limited
partnership with its principal place of business in Newport Beach, California, in this
district. JKV Capital is the general partner of Fund I. Fund I started raising investor
money in late 2017.

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26. JKV Opportunities Fund II, LP (“Fund II”) is a California limited
partnership with its principal place of business in Newport Beach, California, in this
district. JKV Capital is the general partner of Fund II. Fund II started raising investor
money in late 2019.
27. JKV Investors A, LP (“Investors A”) is a California limited
partnership with its principal place of business in Newport Beach, California, in this
district. JKV Capital is the general partner of Investors A. Investors A started raising
investor money in early 2020.
28. JKV Investors C, LP (“Investors C”) is a California limited
partnership with its principal place of business in Newport Beach, California, in this
district. JKV Capital is the general partner of Investors C. Investors C started raising
investor money in early 2020.
29. Treasure Valley Rental Fund LP (“Treasure Valley”) is a Nevada
limited partnership with its principal place of business in Newport Beach, California,
in this district. JKV Capital is the general partner of Treasure Valley. Treasure Valley
started raising investor money in mid-2020.
OTHER RELEVANT PERSON
30. Accountant A provided outsourced accounting services for the
Defendants from about January 2022 to August 2022 and again from about December
2022 to April 2023. Accountant A raised concerns to Kralik about some of the
improper money transfers discussed in this Complaint.
FACTUAL ALLEGATIONS
A. Kralik, JKV Capital, and JKV LLC Offered and Sold Securities.
31. From late 2017 to March 2022, Kralik, JKV Capital, and JKV LLC
raised over $16.9 million for the five JKV Funds from about 35 investors, including
from the feeder fund (itself with 68 investors) that invested in Fund II. Many of
Kralik’s investor victims are located in the southern California area, but others reside
in other states, including New York, Louisiana, Pennsylvania, and Texas.

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32. The chart below shows the approximate amount raised and number of
investors for each JKV Fund (some investors invested in more than one fund):
Fund Name Amount Raised Number of Investors
(sub-investors)
Fund I $7,500,000 28
Fund II $3,950,000 7 (68)
Investors A $1,000,000 2
Investors C $425,000 1
Treasure Valley $4,075,000 3
33. To raise money for each JKV Fund, Kralik and other JKV Capital
employees solicited their professional or personal contacts and existing investors and
obtained referrals from existing investors. Kralik and JKV Capital also promoted
Fund I and Fund II on JKV Capital’s public website and promoted Fund II via the
feeder fund’s public website. The feeder fund’s website included links to Fund II
offering documents. Kralik and JKV Capital also produced a video in which Kralik
personally advertised Fund II and featured many statements by Kralik. Kralik
authorized posting that video on the feeder fund’s website to solicit potential Fund II
investors.
34. Once Kralik or other JKV Capital employees contacted potential
investors, they sent them offering materials for the JKV Funds, typically consisting of
a   private placement memorandum (“PPM”), limited partnership agreement (“LP
Agreement”) and/or subscription agreement. Kralik and JKV Capital employees
typically sent these offering materials to potential investors by email.
35. JKV Fund documents describe the offerings as involving securities or
being conducted as private placements pursuant to certain provisions of the securities
laws. For example, the PPM and subscription agreements for Fund I and Fund II refer
to the limited partnership units as securities. Similarly, the subscription agreements

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for Investors A, Investors C, and Treasure Valley state that the offerings of limited
partnership units were being conducted as private placements pursuant to registration
exemptions under the Securities Act.
36. Additionally, in December 2017, Kralik, as Fund I’s manager, signed a
Form D Notice of Exempt Offering of Securities for Fund I. This Form D was filed
with the SEC on December 6, 2017. In December 2019, Kralik, as Fund II’s
president/managing member si  gned a Form D Notice of Exempt Offering of
Securities for Fund II. This Form D was filed with the SEC on December 4, 2019.
37. For each fund, investor money was deposited in checking accounts in the
name of the JKV Fund they invested in. For four funds (Fund I, Fund II, Investors A,
and Treasure Valley), investor money was pooled into a checking account for that
fund with the money from other investors in that fund.
38. Investors C fund has only one investor. While the LP Agreement for
Investors C permitted up to 100 limited partners, Kralik and JKV Capital were only
able to raise $425,000 from one investor who received Class A limited partnership
units in this fund.
39. LP Agreements for each of the five JKV Funds provide that investors are
entitled to a pro-rata share of that funds’ profits or losses, part of which is split with
the general partner. For example, Class A limited partners in Investors A fund are
entitled to a preferred return on their invested capital. Once the Class A limited
partners have received that preferred return, they split the remaining net profits with
the fund’s general partner and Class B limited partners, with 80% of net profits from
operating income going to the investors on a pro rata basis and the remaining 20% of
net profits from operating income going to JKV Capital. Class B limited partners
receive no allocation of profits nor any distributions until the Class A limited partners
have received their preferred return. The LP Agreements for the other JKV Funds
contain similar language though the profit splits and preferred return amounts differ.

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40. LP Agreements for each JKV Fund provide that investors become
limited partners of that particular fund. As limited partners, investors have no part in
the management or control of the JKV Funds. Rather, JKV Capital serves as general
partner of each JKV Fund, manages the business of each JKV Fund, and is
responsible for generating any profits.
B. Kralik, JKV Capital, and JKV LLC Each Actively Participated in
the Fraud.
41. Kralik manages JKV Capital, the general partner of the funds, through
his wholly-owned entity JKV LLC. JKV LLC is the manager and majority owner of
JKV Capital. JKV Capital, JKV LLC, and Kralik are parties to the LP Agreements
with investors, the JKV Capital operating agreement, and certain other fund
documents, including promissory notes, and subscription agreements. Many of the LP
Agreements were signed by Kralik on behalf of JKV LLC on behalf of JKV Capital,
with a signature block such as the one below:

42. The JKV Capital PPMs for Fund I and Fund II identify JKV Capital as
the general partner of Fund I and Fund II. These PPMs also identify Kralik as a
manager of Fund I and Fund II. JKV Capital also is listed as the general partner on
most of the JKV Fund subscription agreements, in which limited partnership units
were offered and investors agreed to purchase limited partnership units. In most of
these subscription agreements, JKV Capital accepted investors’ subscriptions for
limited partnership units on behalf of the funds. The subscription agreements for

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Fund II, Investors A, Investors C, and Treasure Valley also list Kralik as the manager
of JKV Capital, which is in turn General Partner of the JKV Fund, or as manager of
the JKV Fund for purposes of accepting or agreeing to investors’ subscriptions. This
is reflected in signature blocks such as this one:

43. Kralik founded, exercised control over, and had decision-making
authority for JKV Capital and JKV LLC. Not only is Kralik the sole owner of JKV
LLC, which is the majority owner of JKV Capital, but also:
a. Kralik approved the content on the JKV Capital website, which
describes its business as managing residential real estate investment
funds and provides a means for investors and prospective investors to
obtain more information.
b. In the video on the feeder fund’s website, Kralik introduces himself
as the founder and CEO of JKV Capital, a real estate investment firm.
c. Kralik is a signatory on the bank accounts held by JKV Capital and
JKV LLC.
d. Kralik directed employees to make transfers between JKV Fund
accounts and accounts held by JKV LLC and JKV Capital.
44. Because, at all relevant times, Kralik exercised control over JKV Capital
and JKV LLC, Kralik’s knowledge, recklessness, and negligence, as detailed below,
can be imputed to his companies.

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45. Additionally, Kralik, either directly or through JKV Capital and/or JKV
LLC, exercised control over and had decision-making authority for each of the JKV
Funds. For example:
a. Kralik helped prepare and had final sign-off on the PPMs.
b. Kralik helped prepare the LP Agreements and subscription
agreements for the JKV Funds, and also signed many subscription
agreements as manager of JKV Capital (or as manager of the JKV
Fund).
c. Kralik is a signatory on the bank accounts held by each of the JKV
Funds.
d. Kralik directed employees to make transfers between JKV Fund
accounts and accounts held by other JKV Funds or his other entities.
e. Kralik provided information for, and had final approval of, the JKV
Funds’ books and records.
f. Kralik solicited investors for the JKV Funds, including serving as
the presenter in the video posted on the feeder fund’s website to
raise money for Fund II.
g. Investors for some JKV Funds were directed to send executed
investment documents to Kralik’s attention at his JKV Capital email
address.
h. Kralik approved quarterly capital account statements provided to
JKV Fund investors.
i. Kralik approved distributions and redemptions and dealt with
complaining investors.

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C. The Defendants Made Materially False and Misleading
Misstatements Regarding the Funds and Investor Money.
1. The Defendants Made Materially False and Misleading
Statements About the Purpose of the Funds.
46. The PPMs and LP Agreements for each fund contain materially false and
misleading statements that describe the overall purpose for each JKV Fund as
acquiring and renovating homes for resale or rental.
47. Kralik is  a party to Fund I’s LP Agreement along with the fund’s general
partner, JKV Capital, and JKV Capital’s manager, JKV LLC. Fund I’s    LP Agreement
states that the fund’s purpose:
shall be: (a) to acquire, own, improve, manage, and sell the Property; (b)
to borrow money to finance the acquisition and improvement of the
Property, and to modify and refinance such borrowings; (c) to manage,
maintain, rent, sell or otherwise deal with the Property as contemplated
by the terms of this Agreement; and (d) to do any all other acts and
things necessary, incidental or convenient to carry on the Partnership
business as contemplated under this Agreement.
48. Fund I’s LP Agreement defines “Property” as “those residential homes
located in the counties of Los Angeles, Orange, Riverside, San Bernardino, and San
Diego which are purchased in the sole and absolute discretion of the General Partner
in accordance with the purpose of this Partnership.”
49. Likewise, Fund I’s PPM, which Kralik helped prepare and approved,
states that Fund I “was formed for the purpose of acquiring and managing single-
family real estate assets,”   “[p]roceeds from the sale of Units will be for: real estate
asset acquisition, renovation expenses, and certain operation expenses of the Fund,”
and Fund I “will seek to acquire and manage distressed and value add real estate
assets with the intention of providing participating investors with a real estate focused

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investment opportunity that combines income, principal investment growth, and
elements of capital preservation.”
50. Kralik is a party to Fund II’s LP Agreement along with the fund’s
general partner, JKV Capital, and JKV Capital’s manager, JKV LLC. Fund II’s LP
Agreement states that the fund:
is organized for the purpose of acquiring, owning, improving, and selling
residential homes located in the counties of Los Angeles, Orange,
Riverside, San Bernardino, and San Diego, California or for any other
purpose on which the Partners agree . . . and engaging in all activities
and transactions as the GP may deem necessary or advisable in
connection therewith and doing such other lawful acts as the GP may
deem necessary or advisable in connection with the maintenance and
administration of the Partnership.
51. Likewise, Fund II’s PPM, which Kralik helped prepare and approved,
states that the fund “was formed for the purpose of acquiring stressed or undervalued
Single Family Residential (“SFR”) homes, renovating the asset, and selling,”
“[p]roceeds from the sale of Units will be used for real estate purchases, real estate
asset renovations, fund management expenses, and brokerage commissions,”   and
“[t]he intention of the Fund is providing participating investors with a real estate
focused investment opportunity that combines income, principal investment growth,
and capital preservation.”
52. The LP Agreements for Investors A, Investors C, and Treasure Valley
(each of which Kralik signed on behalf of both the fund’s general partner JKV
Capital and JKV Capital’s manager JKV LLC) contain nearly identical language to
the language quoted above in paragraph 50 from the Fund II LP Agreement. The only
differences are the location of the real estate and immaterial changes in syntax.
53. Each of the statements quoted or incorporated above is    materially false
and misleading because, as discussed below, the Defendants instead misused and

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misappropriated investor money for Kralik’s personal gain and other improper
purposes. By virtue of his role in preparing, approving, and/or signing the documents
above, and his role in misusing and misappropriating investor money described
below, Kralik knew, or was reckless or negligent in not knowing, that these
statements were materially false and misleading.
2. The Defendants Made Materially False and Misleading
Statements About the Specific Uses of Investor Money.
54. JKV Fund documents also contain numerous materially false and
misleading statements about the specific uses of investor money.
55. For example, in December 2017, Kralik signed a Form D for Fund I that
was then filed with the SEC. A Form D is a form used to file a notice of an exempt
offering of securities. The form is filed online with the SEC and is publicly available
on the SEC’s website, and details certain material facts about the company and
offering for investors, such as the type of securities offered, the minimum investment
amount, and the use of offering proceeds. The December 2017 Form D for Fund I
falsely represented that no gross proceeds from Fund I had been or were proposed to
be used for payments to Kralik, the only named executive officer. Nonetheless, tax
returns show that in 2017, JKV LLC received a total of $45,000 from Fund I for
nonemployee compensation. Such compensation is also strictly prohibited by Fund
I’s LP Agreement, which states that the fund “shall not provide reimbursement” for
“salaries, compensation, fringe benefits, and other payments to employees, officers,
and directors of the General Partner or Affiliates.”
56. In addition, in December 2019, Kralik signed a Form D for Fund II,
which was filed with the SEC and which falsely represented that no gross proceeds
were proposed to be used to pay any named executive officers. Kralik was the only
executive officer named in the December 2019 Form D. He proceeded to use Fund II
money for his personal expenses, as discussed below.

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57. Offering documents for each fund list JKV Capital’s permitted fees and
expenses relating to each fund’s operations, plus JKV Capital’s right to receive a
percentage of the net profits or income from each fund it manages. The offering
documents also state that each JKV Fund should reimburse JKV Capital (or for Fund
I, Kralik) if it paid for that JKV Fund’s organization or operating expenses. Aside
from these fees, profit shares, and reimbursements, the JKV Fund offering documents
do not authorize payments to JKV Capital.
58. For example, Fund I’s LP Agreement states, in relevant part, that JKV
Capital, as the General Partner, “shall receive the following payments:
(a) The Partnership shall pay the General Partner an annual asset
management fee of one percent (1%) ... of the gross market value of all
of the Partnership’s assets under management ...
(b) ... an asset acquisition fee equal to one percent (1%) of the gross
purchase price ... paid for any real property acquired ...
(c) In the event that the General Partner or Affiliate renders services or
provides goods to the Partnership which it would not be required to
provide without charge as a general partner, the Partnership shall pay the
General Partner or Affiliates for those services or goods, but only to the
extent that the payment would not exceed that which would be charged
by an independent, capable third party willing to render those services or
to provide those goods.
(d) The Partnership shall reimburse the General Partner for the actual
costs of goods or services used by or on behalf of the Partnership...”
59. Additionally, Fund I’s LP Agreement specifically prohibits
reimbursements of overhead expenses of JKV Capital, including general office
expenses, salaries, compensation, fringe benefits, and other payments to employees,
officers, and directors of the general partner. Specifically, the LP Agreement states:

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[t]he Partnership shall not provide reimbursement for the following
expenses, except where permitted by this Agreement: ([i]) overhead
expenses of the General Partner, including but not limited to rent and
general office expenses; (ii) salaries, compensation, fringe benefits, and
other payments to employees, officers, and directors of the General
Partner or Affiliates; and (iii) the cost of providing any goods or
rendering any services for which the General Partner or Affiliate is
entitled to compensation under this Agreement.
60. Fund II’s LP Agreement provides that JKV Capital, as the general
partner of the fund, is entitled to a 1% management fee, a 1% acquisition fee, certain
brokerage commissions, organizational expenses, and other specified expenses such
as legal and accounting fees. None of the specified expenses are JKV Capital’s own
overhead costs (such as JKV Capital employee salaries). The agreement does provide
that JKV Capital can be reimbursed for “other similar expenses related to the
Partnership, as the [General Partner] determines in its sole discretion.” But none of
the listed expenses (such as legal and accounting fees) are similar to JKV Capital
paying its own overhead costs.
61. The LP Agreements for Investors A, Investors C, and Treasury Valley
state that JKV Capital, as the general partner of the funds, is entitled to a management
fee, acquisition fees, certain brokerage commissions, a construction management fee,
organizational expenses, and other specified expenses. None of the specified
expenses are JKV Capital’s own overhead costs (such as JKV Capital employee
salaries). These agreements do provide that JKV Capital can be reimbursed for “other
similar expenses related to the Partnership, as the [General Partner] determines in its
sole discretion.” But none of the listed types of expenses are similar to JKV Capital
paying its own overhead costs.
62. The LP Agreements govern how each JKV Fund is supposed to operate
until all investors have redeemed their investment. Kralik’s repeated misappropriation

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of investor money during the pendency of these agreements was part of his scheme to
defraud investors. In addition, Kralik misused Fund I and Fund II money while he
continued raising money from new investors using the PPMs and LP Agreements for
those funds.
63. All of the representations quoted and incorporated above regarding the
specific use of investor money are materially false and misleading because, as
discussed below, the Defendants instead misused and misappropriated investor
money for Kralik’s personal gain and other improper purposes. By virtue of his role
in preparing, approving, and/or signing the documents above, and his role in misusing
and misappropriating investor money described below, Kralik knew, or was reckless
or negligent in not knowing, that these statements were materially false and
misleading.
3. The Defendants Made Materially False and Misleading
Statements About Preserving Investors’ Capital.
64. In connection with their fraudulent scheme, the Defendants made
material misrepresentations to investors promising capital preservation as an
investment objective.
65.  Kralik, JKV Capital, and JKV LLC promoted the Fund I and Fund II as
income generating real estate funds with capital preservation. For example, Fund I’s
PPM and Synopsis of Operations states that the fund intends to provide “participating
investors with a real estate focused investment opportunity that combines income,
principal investment growth, and elements of capital preservation.”
66. Fund II’s PPM and Synopsis of Operations similarly describes “a real
estate focused investment opportunity that combines income, principal investment
growth, and capital preservation.” Kralik and JKV Capital made a video presentation
to raise money for Fund II that was posted on the feeder fund’s website around July
2020. In the video, Kralik touted capital preservation as a key feature of Fund II.

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67. Each of these statements about the preservation of investor money is
materially false and misleading because the Defendants instead misused and
misappropriated investor money for Kralik’s personal gain and other improper
purposes, which reduced the value of investors’ capital. By virtue of his role in
preparing, approving, and/or signing the documents above, and his role in misusing
and misappropriating investor money described below, Kralik knew, or was reckless
or negligent in not knowing, that these statements were materially false and
misleading.
4. Kralik and JKV Capital Made Additional False Statements to
Investors Regarding Fund II.
68. Kralik and JKV Capital also made materially false representations to
investors regarding the safeguarding of investors’ contributions to  Fund II.
69. Fund II’s PPM and subscription agreement provide that investor money
would be deposited and held in a segregated escrow account at a designated bank
until a minimum of $5 million was raised, and all invested funds would be returned to
investors if $5 million was not raised by April 1, 2020, or if the offering period was
extended, by October 2020, stating:
The Company has set a minimum offering proceeds figure of $5,000,000
(the “minimum offering proceeds”) for this Offering. The Company has
established a segregated Company managed bank account with [Bank],
into which minimum offering proceeds will be placed. At least 5,000
Units must be sold for $5,000,000 before such proceeds will be released
from the Holding Account and utilized by the Company. Should the
Offering fail to reach the Minimum Offering Amount by the end of the
Offering Term, then all invested funds held in the Holding Account will
be returned in full immediately to subscribed investors and any
subscription agreements executed between subscribed investors and the
Company will be void ab initio.

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70. Kralik and JKV Capital, however, failed to safeguard Fund II investor
proceeds in a segregated escrow account and return the capital contributions to
investors as promised when the $5 million minimum offering amount was not raised
for this fund. The statements were false because no escrow account existed and
investor money was not segregated. Instead, investor contributions were deposited
into a Fund II checking account and commingled with money from other JKV Funds
and Kralik’s wholly-owned entity, JKV LLC. In addition, Fund II never raised more
than $4 million.
71. Kralik knew, or was reckless or negligent in not knowing, that his
statements promising to safeguard investors’ contributions were false given his
complete control over the decision-making for the JKV Funds and JKV Capital. A
reasonable investor would have wanted to know if the Defendants would maintain a
segregated escrow account, as promised, and return their investment contributions if
the minimum offering amount was not reached.
D. The Defendants Defrauded Investors by Misappropriating and
Misusing Investor Money.
1. Kralik Admitted in Early 2023 That He Misused Fund Money.
72. In or around January 2023, Kralik admitted to an individual who had
invested in Fund I and Fund II that Kralik was in trouble because Kralik had used
investor money to cover certain JKV Capital operating costs and that a lot of investor
money was gone. In a subsequent meeting with that investor and other investors,
Kralik again admitted that he had taken money from the funds to pay JKV Capital
employee salaries and operating expenses. At that meeting, when an investor asked
Kralik if that meant Kralik had used investor money fraudulently, Kralik responded
“Yes.”
73. In fact, Kralik’s misuse and misappropriation were more widespread
than he confessed. Kralik misused and misappropriated investor money for his
personal benefit, for JKV Capital’s benefit, and for the benefit of the other funds.

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2. Kralik Misappropriated Money From the JKV Funds for his
Personal Benefit.
a. From the Beginning, Kralik Stole Investor Money and
Lied.
74. Contrary to the representations in the offering documents set forth
above, Kralik repeatedly misappropriated investor money for his own personal
benefit. Many of the improper transfers for Kralik’s benefit were documented on the
books and records of the JKV Funds as money “due to” the JKV Funds by JKV LLC
or JKV Homes. The comingling of assets described in this complaint, and record-
keeping irregularities discovered during the SEC’s investigation suggest that the
amount the Defendants misappropriated could exceed what is shown in these books
and records. Still, according to the JKV Funds’ own books and records, as of the third
quarter of 2022, Kralik, mostly through JKV LLC, owed the JKV Funds a total of
about $1.6 million, as shown in the following chart.
Amounts Owed to JKV Funds by Kralik as of Q3 2022
 Amount Owed by Kralik
Fund I $373,402
Fund II $254,668
Investors A -$87,938
Investors C -$13,250
Treasure Valley $1,122,450
To t a l $1,649,332
75. Additionally, although the books and records list the amounts as “due
to” the JKV Funds, there are no loan documents or other documents supporting a
legitimate business purpose for these transfers. In any event, such loans still would
have violated the terms of the JKV Funds LP Agreements and/or PPMs.
76. Kralik’s misuse of investor money started from the beginning of the JKV
Funds’ operations. In September and October 2017, Kralik directed the transfer of at

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least $30,000 from the first investor contributions in Fund I to his wholly-owned
entity, JKV LLC without documenting an authorized purpose.
b. Kralik Stole Investor Money to Pay for His Car, House,
Vacation, and Other Personal Expenses.
77. Kralik misappropriated investor money to pay personal expenses,
including: car payments; mortgage payments; deposits into his personal securities
trading account; a vacation in Cabo San Lucas, Mexico; payments to his daughter’s
nanny and swim instructor; and payments to a social club in Newport Beach, CA.
78. A number of instances where Kralik stole investor money follow a
similar, clear pattern. For instance:
Car Payment
79. On August 23, 2022, one of JKV LLC’s bank accounts had an ending
daily balance of only $131.54. On August 24, 2022, Kralik transferred $5,000 from a
Fund I bank account to that JKV LLC bank account. No other funds were deposited
or transferred into the JKV LLC bank account on August 24, 2022. That same day,
Kralik made a payment of $3,474.88 from the JKV LLC bank account for a
Mercedes-Benz SUV leased in his name.
Mortgage Payments
80. Kralik also used money from the JKV Funds to pay the monthly
mortgage on his personal residence. For instance, on October 18, 2021, one of JKV
LLC’s bank accounts had an ending balance of $841.45. On October 21, 2021, Kralik
transferred $4,000 from an Investors C bank account, $8,000 from a Fund I bank
account, and $2,000 from a JKV Homes bank account into that JKV LLC bank
account. No other deposits were made into that JKV LLC bank account between
October 18 and October 21, 2021. On October 21, 2021, Kralik made a mortgage
payment for his personal residence of $13,325.18 from that JKV LLC bank account.
81. Similarly, on April 20, 2022, one of JKV LLC’s bank accounts had an
ending daily balance of only $9.88. On April 21, 2022, Kralik transferred $15,000

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from a   Fund II bank account into that JKV LLC bank account. No other deposits
were made into that JKV LLC account on April 21, 2022. That same day, Kralik
made a mortgage payment for his personal residence of $13,325.18 from that JKV
LLC bank account.
82. On December 20, 2022, Kralik made a mortgage payment for his
personal residence of $13,358.74 from a JKV LLC bank account, which resulted in
an ending daily balance of -$12,470.35. On December 21, 2022, Kralik transferred
$13,000 from an Investors A account along with $7,500 from other sources into the
JKV LLC account to cover the overdraft in the account caused by the mortgage
payment. No other deposits were made into that JKC LLC account on December 21,
2022.
Personal Securities Brokerage Account
83. In another example, on March 26, 2020, one of JKV LLC’s bank
accounts had an ending daily balance of $770.90. On March 27, 2020, Kralik
transferred $5,000 from a Fund I bank account into that JKV LLC bank account. No
other deposits were made into that JKV LLC bank account on March 27, 2020. That
same day, Kralik transferred $3,000 from the JKV LLC account to his personal
securities brokerage account.
Childcare and Swim Lessons
84. On April 14, 2021, one of JKV LLC’s bank accounts had an ending
daily balance of $431.33. On April 15, 2021, Kralik transferred $15,000 from a
Treasure Valley bank account into that JKV LLC bank account. No other deposits
were made into that JKV LLC bank account on April 15 or April 16, 2021. On April
16, 2021, Kralik made a payment of $1,000 from that JKV LLC bank account for a
mortgage on a property he personally owned and two checks written from the JKV
LLC bank account were cashed in the amounts of $318.75 and $475 for nanny
payments and swim lessons for Kralik’s daughter.

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Social Club
85. On May 10, 2022, one of JKV LLC’s bank accounts had a negative
ending daily balance of -$805.29. On May 11, 2022, Kralik’s waterfront social club
in Newport Beach, California cashed a   check for $1,516.39 that was issued from that
JKV LLC bank account. That same day, Kralik transferred $3,000 from a Fund I
account to the JKV LLC account to cover the overdraft in the account caused in part
by the check issued to his social club. No other deposits were made into that JKV
LLC bank account on May 11, 2022.
International Vacation
86. On December 1, 2022, one of JKV LLC’s banking accounts had a
beginning balance of $397.94. On December 2, 2022, Kralik transferred $7,500 from
a Treasure Valley bank account into that JKV LLC bank account. On December 5,
2022, Kralik transferred an additional $25,000 from the Treasure Valley bank
account into the JKV LLC bank account. No other deposits were made into the JKV
LLC bank account between December 2 and December 5, 2022. On December 5,
2022, Kralik made payments and withdrew money from several stores and ATMs
while on vacation in Cabo San Lucas, Mexico. Kralik’s payments and ATM
withdrawals from the JKV LLC account while in Cabo San Lucas totaled $4,295.62
(including international transaction and ATM fees).
c. Kralik Improperly Transferred Fund Money to His
Personal Investment Vehicle JKV Homes.
87. According to the JKV Funds’ books and records, Relief Defendant JKV
Homes—an entity Kralik uses for personal real estate investments unrelated to the
JKV Funds—owed the JKV Funds over $350,000 as of the third of quarter 2022, as
shown in the below chart:

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Amounts Owed to JKV Funds by JKV Homes as of Q3 2022
 Amount Owed by JKV Homes
Fund I $95,528
Fund II $259,871
Investors A N/A
Investors C N/A
Treasure Valley $3,520
To t a l $358,919
88. According to bank records, as of early 2024, JKV Homes still retained at
least $177,000 of the money it had received from the JKV Funds.
89. Fund offering documents do not authorize transfers of money from the
JKV Funds to JKV Homes. JKV Homes has no legitimate claim to the ill-gotten
funds and has been unjustly enriched by its receipt of this  fund money. JKV Homes
therefore should be required to disgorge all of the net amounts it directly or indirectly
received from the JKV Funds, as well as to pay prejudgment interest on such
amounts.
90. Kralik, as the signatory on and party to the fund offering documents
discussed above (which contain representations about how fund money would be
used) knew, or was reckless or negligent in not knowing, that the transfers to JKV
LLC and JKV Homes were not permitted by the terms of the fund offering documents
and were improper.
91. In deciding whether to invest in the JKV Funds, investors would have
considered it important to know whether the Defendants would misappropriate fund
money for Kralik’s own enrichment, and multiple investors have confirmed this to
the SEC’s staff investigating this matter.
92. Based on the facts alleged above, the Defendants intentionally,
knowingly, recklessly, and/or negligently carried out their fraudulent scheme
involving the misappropriation of investor money.

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3. Kralik and JKV Capital Also Misused Investor Money
Through Improper Transfers to JKV Capital.
93. Kralik and JKV Capital misused investor money by directing improper
transfers to JKV Capital. Although JKV Capital was entitled to (and received) a
percentage of profits, and certain fees/reimbursements discussed above, the improper
transfers to JKV Capital are in addition to those categories of expenses.
94. Among the JKV Fund books and records maintained by JKV Capital are
general ledger sub-accounts called the “Due Fr/To JKV Capital” accounts. A negative
balance in this account in any of the JKV Fund’s books and records reflects that JKV
Capital owes that JKV Fund money.
95. The “Due Fr/To JKV Capital” accounts, along with other books and
records for the JKV Funds, including quarterly balance sheets, indicate that starting in
mid-2018 and continuing until at least November 2023, JKV Capital owed significant
amounts of money—at times millions of dollars—to the JKV Funds. Beginning in
early 2020, numerous entries in the “Due Fr/To JKV Capital” accounts for money
transferred to JKV Capital from the JKV Funds have no explanation for the transfer
noted. For example, according to Fund I’s “Due Fr/To JKV Capital” account, in June
2022 alone, at least 17 transfers totaling over $240,000 were made to JKV Capital
with no explanation or purpose noted for any of them. Additionally, there are no loan
documents or other documents supporting a legitimate business purpose for these
transfers. In any event, such loans still would have violated the terms of the JKV
Funds LP Agreements and/or PPMs.
96. As of September 30, 2022, the books and records show the amounts that
JKV Capital owed to the JKV Funds was close to $4 million, as shown in the
following chart.

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Improper Payments from JKV Funds to JKV Capital as of Q3 2022
 Amount Owed by JKV Capital
Fund I $1,401,862
Fund II $1,945,430
Investors A $355,137
Investors C $30,487
Treasure Valley $224,919
Total $3,957,835

97. Some of the money transferred from JKV Funds to JKV Capital was
used to cover JKV Capital’s own costs, including employee payroll, when JKV
Capital’s accounts lacked sufficient funds.
98. The transfers from Fund I to JKV Capital for operating expenses
including employee salaries are expressly prohibited by Fund I’s LP Agreement. That
agreement specifically prohibits reimbursements of overhead expenses of JKV
Capital, including general office expenses, salaries, compensation, fringe benefits,
and other payments to employees, officers, and directors of the general partner. JKV
Capital, JKV LLC, and Kralik are all parties to the Fund I’s LP Agreement.
99. Documents for other JKV Funds do not expressly prohibit
reimbursement of these expenses, but, as discussed above, do specify precisely which
fees and expenses JKV Capital is entitled to. Reimbursement for employee salaries is
not a   permitted item. And although some of the agreements allow JKV Capital to get
reimbursed for “other similar” expenses, JKV Capital employee payroll is not similar
to the listed expenses. Moreover, Kralik’s later confession that the transfers to JKV
Capital were fraudulent confirms that these were not permissible expenses.
100. Given his role in preparing, approving, and/or signing numerous
documents setting forth the permitted uses of investor money and permissible fees to
JKV Capital, Kralik knew, or was reckless or negligent in not knowing, that these
transfers to JKV Capital for JKV Capital’s expenses were improper. Additionally, in

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early 2022, Accountant A told Kralik that he would not transfer money from the JKV
Funds to JKV Capital for employee payroll or other unauthorized purposes without
documentation that the funds’ limited partners agreed to such transfers.
Notwithstanding no such documentation, Kralik continued to make unauthorized
transfers from the JKV Funds to JKV Capital throughout 2022.
101. When deciding whether to invest in the JKV Funds, investors would
have considered it important to know that investor money would be used to make
illicit payments to JKV Capital. Two investors have given sworn statements attesting
that if they had known investor money would be transferred to JKV Capital beyond
the amount that JKV Capital was owed, they would not have invested.
102. Based on the facts alleged above, the Defendants intentionally,
knowingly, recklessly, and/or negligently carried out their fraudulent scheme by
making unauthorized transfers to JKV Capital.
4. Kralik, JKV Capital, and JKV LLC Misused Investor Money
By Making Illicit Fund-to-Fund Transfers.
a. The Defendants Improperly Transferred Millions of
Dollars Between Funds.
103. As discussed above, the offering documents for each JKV Fund make
clear that the money invested in each fund should have been used solely for the
purposes of that fund. Contrary to these representations, between October 2019 and
March 2024, Kralik transferred or directed transfers totaling over $8 million directly
from bank accounts held by JKV Funds into accounts held by other JKV Funds, or to
pay expenses owed by other JKV Funds.
104. Like the other improper transfers discussed above, the improper fund-to -
fund transfers were documented as liabilities on the books and records of the funds.
Transfers between the funds were posted to liability accounts in the general ledgers
for each JKV Fund. Those general ledger liability account balances and quarterly
balance sheets show that certain JKV Funds owed money to other JKV Funds.

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Additionally, although the books and records list the amounts as owed from one JKV
Fund to another, there are no loan documents or other documents supporting a
legitimate business purpose for these transfers. In any event, such loans still would
have violated the terms of the JKV Funds LP Agreements and/or PPMs.
105. Contrary to JKV Fund documents, which represented to investors that
their investment in a fund was specific to that particular fund, Kralik misused investor
money by frequently making fund-to-fund transfers directly or by using JKV LLC as
an intermediary. The Defendants knew or were reckless or negligent in not knowing
that the statements about the use of investor money were false given their role in
misusing fund money.
106. The Defendants made numerous and frequent fund-to-fund transfers. For
instance, in March 2022 alone, Kralik made or authorized fifteen transfers into a
Fund I bank account from other JKV Funds, and also made or authorized six transfers
from that Fund I bank account to other JKV Funds.
107. The following chart shows the approximate aggregate net amounts
directly transferred between the JKV Funds.
Net Direct Fund-to-Fund Transfers from October 2019 to April 2024
 Sent to Other
JKV Funds
Received From
Other JKV
Funds
Net Sent to
Other JKV
Funds
Fund I $3,091,703 $4,220,045 -$1,128,342
Fund II $3,099,777 $2,857,500 $242,277
Investors A $380,020 $185,519 $194,501
Investors C $74,236 $41,110 $33,126
Treasure Valley $1,402,598 $744,160 $658,438
Totals $8,048,334 $8,048,334

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108. Additionally, of the over $4 million that Kralik transferred or had
transferred from certain JKV Funds to the bank account for JKV LLC, he
subsequently transferred at least $700,000 of that money to other JKV Funds.
109. When deciding whether to invest in the JKV Funds, investors would
have considered it important to know that the Defendants would make fund-to -fund
transfers. Two investors attested they would not have invested in the JKV Funds had
they known that investor money would be transferred between JKV Funds.
110. Even for Fund I, which over a four-year time frame ultimately received
more money from other funds than it transferred out, investors in Fund I were
defrauded by receiving capital account statements falsely claiming that distributions
were from Fund I’s profits. In fact, certain distributions to Fund I investors came
from other JKV Funds. Thus, these investors (who had the right to request
redemptions of their money) were lulled into believing that their money was safe and
their investment was prosperous, when in fact some of the purported gains came from
improper transfers from other JKV Funds. Any reasonable investor would consider it
important to know whether the gains shown on an account statement represented
actual gains from the business operations of that fund and not from the proceeds of
other funds.
b. The Improper Fund-to-Fund Transfers Started Early
On and Continued Throughout the Relevant Period.
111. In one early example, on October 29, 2019, a   Fund II bank account had a
beginning balance of $1,000. On that same day, a Fund II investor transferred his
$500,000 contribution into that Fund II bank account. No other deposits were made
into the Fund II bank account between October 29 and November 5, 2019. On
November 5, 2019, Kralik transferred $46,180 from that Fund II account to a Fund I
account.
112. On April 9, 2021, a JKV LLC bank account had an ending daily balance
of $477.44. On April 12, 2021, Kralik transferred $75,000 from a Treasure Valley

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bank account and $7,500 from an Investors A bank account into the JKV LLC bank
account. No other deposits were made into JKV LLC’s bank account between April 9
and April 12, 2021. On April 12, 2021, Kralik made transfers totaling the following
amounts out of the JKV LLC bank account: $53,500 to a Fund I bank account, $5,350
to an Investors C bank account, and $22,000 to a Fund II bank account.
113. On May 10, 2023, a Fund I bank account had a beginning balance of
$986.66. That same day, the Fund I bank account received a deposit of $571,712.11
from an escrow company in connection with the sale of a Fund I property. No other
deposits were made into that Fund I bank account on May 10 and May 11, 2023. On
May 11, 2023, Kralik transferred $71,000 from the Fund I property sale proceeds to a
bank account held by Treasure Valley.
c. Kralik Made Improper Fund-to-Fund Transfers to
Facilitate Ponzi-like Payments to Other Investors.
114. Some of the improper fund-to-fund transfers were used for Ponzi-like
distribution payments to investors in other JKV Funds, which is part of the fraudulent
scheme and also contrary to the Defendants’ representations that investors would
receive profits from the particular fund they invested in.
115. In one example, on August 17, 2021, a   Fund II bank account had a
beginning balance of $75.14. That same day, Kralik transferred $65,000 from a   Fund
I bank account to Fund II’s bank account. That same day, Kralik used most of the
money received by Fund II from Fund I to make a distribution payment of $60,954.71
to an investor in Fund II. JKV Capital then provided a Q3 2021 capital account
statement to this Fund II investor falsely indicating that the recent $180,000 in profit
share distributions were from Fund II’s quarterly profits. To the contrary, close to
$61,000 of those distributions had come from money taken from Fund I, in which this
investor was not a participant.
116. In an additional example, on January 14, 2022, a Fund II bank account
had a beginning balance of $32,984.58. That same day, Kralik transferred in

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$225,000 to that account (consisting of $160,000 from a Fund I bank account,
$50,000 from JKV LLC, and $15,000 from JKV Capital). That brought the balance in
the Fund II bank account to $257,984.58. No other deposits were made into the Fund
II bank account on that day. That same day, Kralik made redemption and distribution
payments totaling $226,354.42 to Fund II investors from that Fund II account.
117. In another example of Ponzi-like fund-to-fund transfers, on March 30,
2022, Fund II’s bank account had a beginning balance of $502.44. That same day,
Kralik transferred $115,000 from a Treasure Valley bank account and $60,000 from a
Fund I bank account into Fund II’s bank account. Kralik also transferred $27,000
from a JKV Capital bank account and $3,000 from a JKV Homes bank account into
that same Fund II account. No other deposits were made into the Fund II bank
account on that day. That same day, Kralik made distribution payments of
$187,168.78 and $17,535.69 to Fund II investors from the Fund II account.
118. In a further example, on December 13, 2022, a Fund I bank account had
a beginning balance of $562.06. That same day, Kralik transferred $21,100 from a
Fund II bank account to the Fund I bank account. No other deposits were made into
the Fund I bank account on that day. That same day, two Fund I investors cashed
checks issued from the Fund I bank account in the amounts of $6,168.16 and
$15,420.40.
d. The Defendants Made Improper Transfers that
Concealed Shortfalls When a Fund Could Not Make
Mortgage Payments or Other Property-Related Costs.
119. Kralik improperly transferred money from one JKV Fund for operating
expenses of another JKV Fund, such as payments to mortgage companies and other
costs. This use of fund money conflicts with the stated purpose of each JKV Fund to
operate a real estate business for the investors participating in that specific fund. It
also concealed from investors that there were shortfalls in the funds.

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120. For example, on October 15, 2020, Kralik used money from Fund II to
make a   payment to a mortgage company on behalf of Fund I. On that day, a Fund I
bank account had a beginning balance of $5,345.47. Kralik then authorized the
transfer of $55,000 from a Fund II bank account into the Fund I bank account. No
other deposits were made into this Fund I bank account on October 15, 2020. That
same day, Kralik made a payment to a mortgage company of $58,352.31 from the
Fund I account.
121. In another example, on October 13, 2021, Kralik used money from
Treasure Valley to make a payment to a mortgage company on behalf of Fund II. On
that day, a Fund II bank account had a beginning balance of $3,712.78. That same
day, Kralik authorized a transfer of $35,000 from a Treasure Valley bank account
into a Fund II bank account. No other deposits were made into this Fund II bank
account on October 13, 2021. That same day, Kralik made a payment to a mortgage
company of $34,829.15 from the Fund II account.
122. Kralik also transferred money directly to escrow companies from JKV
Funds for payments relating to properties held by other JKV Funds. For instance, on
March 25, 2021, Kralik authorized a transfer of $140,281.57 from a Fund II bank
account to an escrow company in connection with the purchase of a Fund I property.
123. Fund offering documents do not authorize these transfers of money
between the JKV Funds or to other entities for the benefit of other JKV Funds. These
transfers for mortgages and other operating costs were not made in the form of loans
and were not made in pursuit of the partnerships’ purposes. Nor did investors give
consent to the transfers.
124. Given his role in preparing, approving, and/or signing the fund offering
documents discussed above, Kralik knew, or was reckless or negligent in not
knowing, that the fund-to-fund transfers were improper.
125. Additionally, in early 2022, Accountant A raised concerns to Kralik
about being directed to transfer money between the JKV Funds if the transfers were

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not authorized in writing by the funds’ limited partners. Accountant A refused to
continue making these transfers. Nevertheless, even after Accountant A raised
concerns, Kralik kept making improper fund-to-fund transfers throughout 2022, 2023
and into 2024.
126. Based on the facts alleged above, the Defendants intentionally,
knowingly, recklessly and/or negligently carried out their fraudulent scheme by
making illicit fund-to-fund transfers.
5. The Defendants Diminished the Equity in Properties and
Concealed the Fraud by Incurring a Large Amount of Debt.
127. Throughout the Relevant Period, the Defendants took out large
mortgages and loans encumbering properties owned by Fund I, Fund II, Investors A,
and Treasure Valley, resulting in very little, if any, equity in the properties owned by
those funds.
128. Balance sheets for Fund I as of the first quarter of 2022 and Fund II as of
the third quarter 2022 show th ose funds owed mortgage companies significantly
greater amounts than investors’ contributions and greater amounts than the total
purchase price of the properties. Kralik, JKV Capital, and JKV LLC also took out
large amounts of debt against the properties held by Investors A and Treasure Valley,
resulting in little equity in those properties. The large amount of debt diminished the
equity in the properties and the value of investors’ capital investments in these four
funds.
E. The Defendants’ Scheme Unravels.
129. Near the end of 2022, Kralik conveyed to an employee that there was a
shortfall of millions of dollars for JKV Fund investors. After the SEC issued a
January 2023 document subpoena to JKV Capital, Kralik ceased making regular
distributions to investors (Kralik had stopped raising money from investors prior to
January 2023). Kralik then sold some of the remaining valuable properties and
provided payments to only some investors.

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130. In early 2023, JKV Capital again retained Accountant A to make
adjustments to the December 31, 2022 entries in the books and records for the JKV
Funds and JKV Capital. Among other adjustments, Accountant A recognized some of
the unauthorized fund-to-fund transfers and improper transfers to JKV Capital, which
resulted in at least $1.8 million in losses for Fund I and Fund II. As a result, the
fourth quarter 2022 capital account statements for Fund I and Fund II showed a
substantial decrease in the value of each investor’s capital in those two funds.
131. In January 2023, Kralik confessed part of his fraud to some of his
investors, as discussed above.
FIRST CLAIM FOR RELIEF
Violations of Exchange Act Section 10(b) and Rule 10b-5  thereunder
(against all Defendants)
132. The SEC realleges and incorporates by reference paragraphs 1 through
131 above.
133. As set forth above, the Defendants engaged in a scheme to defraud by
misappropriating investor money (i) for Kralik’s own enrichment through transfers of
money to Kralik and to his companies, JKV LLC and JKV Homes; (ii) through
unauthorized transfers to JKV Capital, and (iii) through improper fund-to -fund
transfers.
134. As set forth above, Defendants made material misstatements and
omissions concerning the use of investor money, the preservation of investors’
capital, the safekeeping of investor money in a segregated account for Fund II, and
the return of investors’ contributions when Fund II did not raise a minimum of $5
million.
135. By engaging in the acts and conduct alleged in this Complaint, the
Defendants directly or indirectly, by the use of the means and instrumentalities of
interstate commerce or of the mails, in connection with the purchase or sale of
securities, with scienter: (a) employed devices, schemes, or artifices to defraud, (b)

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made untrue statements of a material fact or omitted to state a material fact necessary
in order to make the statements made, in light of the circumstances under which they
were made, not misleading; and (c) engaged in acts, practices, or courses of business
which operated or would operate as a fraud or deceit upon other persons.
136. By reason of the conduct described above, the Defendants violated, and
unless restrained and enjoined will continue to violate, Section 10(b) of the Exchange
Act, 15 U.S.C. §78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5.
SECOND CLAIM FOR RELIEF
Violations of Securities Act Section 17(a)
(against all Defendants)
137. The SEC realleges and incorporates by reference paragraphs 1 through
136 above.
138. As set forth above, the Defendants engaged in a scheme to defraud by
misappropriating investor money (i) for Kralik’s own enrichment through transfers of
money to Kralik and to his companies, JKV LLC and JKV Homes; (ii) through
unauthorized transfers to JKV Capital, and (iii) through improper fund-to -fund
transfers.
139. The Defendants obtained money from investors by making material
misstatements and omissions concerning the use of investor money, the preservation
of investors’ capital, the safekeeping of investor money in a segregated account for
Fund II, and the return of investors’ contributions when Fund II did not raise a
minimum of $5 million.
140. By engaging in the conduct described above, the Defendants, directly or
indirectly, in the offer or sale of securities, and by the use of means or instruments of
transportation or communication in interstate commerce or by use of the mails
directly or indirectly: (a) employed devices, schemes, or artifices to defraud; (b)
obtained money or property by means of untrue statements of a material fact or by
omitting to state a material fact necessary in order to make the statements made, in

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light of the circumstances under which they were made, not misleading; and (c)
engaged in transactions, practices, or courses of business which operated or would
operate as a fraud or deceit upon the purchaser of the securities offered or sold by the
Defendants.
141. By reason of the conduct described above, the Defendants violated
Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a).
THIRD CLAIM FOR RELIEF
Control Person Violations of Exchange Act Section 10(b) and Rule 10b-5
thereunder, pursuant to Exchange Act Section 20(a)
(against Kralik)
142. The SEC realleges and incorporates by reference paragraphs 1 through
141 above.
143. At all relevant times herein, Kralik was a control person of JKV Capital
and JKV LLC because he possessed, directly or indirectly, and exercised actual
control over the operations of JKV Capital and JKV LLC. Kralik owns 55% of JKV
Capital and 100% of JKV LLC, JKV Capital’s manager. Kralik is a signatory on all
relevant bank accounts and improperly directed transfers out of the JKV Fund
accounts into accounts for other JKV Funds, JKV Capital, JKV LLC, and his entity
JKV Homes. As CEO of JKV Capital, Kralik controls the business’s day-to -day
operations, and as JKV LLC’s sole member and manager, he controls the operations
of JKV LLC. He prepared, approved, signed, and was a party to fund documents on
behalf of JKV Capital and JKV LLC. Kralik directly or indirectly caused JKV Capital
and JKV LLC to misuse and misappropriate investor money. He also directly or
indirectly caused JKV Capital and JKV LLC’s false and misleading statements.
Kralik did not act in good faith with regard to any of this conduct.
144. Accordingly, pursuant to Section 20(a) of the Exchange Act, Kralik is
liable to the SEC to the same extent as JKV Capital and JKV LLC would be liable for

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their respective violations of Section 10(b) of the Exchange Act and Rule 10b-5
thereunder.
FOURTH CLAIM FOR RELIEF
Unjust Enrichment
(against Relief Defendant JKV Homes)
145. The SEC realleges and incorporates by reference paragraphs 1 through
144 above.
146. As alleged above, Relief Defendant JKV Homes received ill-gotten
gains from the Defendants’ fraudulent scheme involving the misappropriation and
misuse of fund money.
147. Relief Defendant JKV Homes obtained ill-gotten gains described above
as part of the securities law violations alleged above under circumstances in which it
is not just, equitable, or conscionable for them to retain the funds. Relief Defendant
JKV Homes does not have a legitimate claim to these funds.
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court:
I.
Issue findings of fact and conclusions of law that the Defendants committed the
alleged violations.
II.
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Defendants Kralik, JKV Capital, and JKV
LLC and their officers, agents, servants, employees, and attorneys, and those persons
in active concert or participation with any of them, who receive actual notice of the
judgment by personal service or otherwise, and each of them, from violating Section
17(a) of the Securities Act, 15 U.S.C. § 77q(a), and Section 10(b) of the Exchange
Act [15 U.S.C. §§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]

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III.
Issue an order, pursuant to Section 20(e) of the Securities Act, 15 U.S.C.
§ 77t(e), and Sections 2l(d)(2) of the Exchange Act, 15 U.S.C. § 78u(d)(2),
prohibiting Defendant Kralik from acting as an   officer or director of any issuer that
has a class of securities registered pursuant to Section 12 of the Exchange Act, 15
U.S.C. § 78l, or that is required to file reports pursuant to Section 15(d) of the
Exchange Act, 15 U.S.C. § 78o(d).
IV.
Issue an order requiring Defendant Kralik jointly and severally with Defendant
JKV Capital, and jointly and severally with Defendant JKV LLC to disgorge their ill-
gotten gains, together with prejudgment interest thereon, pursuant to Sections
21(d)(3), 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(3),
78u(d)(5), and 78u(d)(7)].
V.
Issue an order requiring Relief Defendant JKV Homes to disgorge ill-gotten
funds received by it and to which it has no legitimate claim, together with
prejudgment interest thereon, pursuant to Sections 21(d)(3)(A)(ii), 21(d)(5) and
21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(3)(A)(ii), 78u(d)(5), and
78u(d)(7)].
VI.
Issue an order requiring Defendants Kralik, JKV Capital, and JKV LLC to pay
civil penalties under Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and
Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)].
VII.
Retain jurisdiction of this action in accordance with the principles of equity and
the Federal Rules of Civil Procedure in order to implement and carry out the terms of
all orders and decrees that may be entered, or to entertain any suitable application or
motion for additional relief within the jurisdiction of this Court.

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VIII.
Grant such other and further relief as this Court may determine to be just and
necessary.

DEMAND FOR JURY TRIAL

 Pursuant to Federal Rule of Civil Procedure 38, the SEC demands trial by jury.
Dated: July 2, 2024

/s/ Stephen Kam
STEPHEN KAM, Local Counsel
P. DAVIS OLIVER (pro hac vice
pending)
JOHN M. MCNULTY (pro hac vice
pending)

Attorneys for Plaintiff
Securities and Exchange Commission

Of counsel:
 Christopher M. Bruckmann
 Sarah E. Routh

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P. DAVIS OLIVER (DC Bar No. 490620)
pro hac vice pending
Email: [email protected]
JOHN M. MCNULTY (DC Bar No. 1009211)
pro hac vice pending
Email: [email protected]

Attorneys for Plaintiff 
Securities and Exchange Commission 
100 F Street, NE 
Washington, D.C. 20549 
Telephone: (202) 551-8920 

LOCAL COUNSEL 
STEPHEN KAM (Cal. Bar No. 327576) 
Email: [email protected] 
Securities and Exchange Commission 
444 S. Flower Street, Suite 900 
Los Angeles, California 90071 
Telephone: (323) 965-3998 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

Southern Division 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 

vs. 

JOHN J. KRALIK V, JKV CAPITAL, LLC, 
and JKV LLC, 

Defendants, and 

JKV HOMES, LLC, 

Relief Defendant. 

Case No. 

COMPLAINT FOR VIOLATIONS 

OF THE FEDERAL SECURITIES 

LAWS 

DEMAND FOR JURY TRIAL 

8:24-cv-01460

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Plaintiff Securities and Exchange Commission (“SEC”) alleges: 

JURISDICTION AND VENUE 

1. The Court has jurisdiction over this action under Sections 20(b), 

20(d)(1), and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§ 

77t(b), 77t(d)(1), and 77v(a), and Sections 21(d), 21(e), and 27(a) of the Securities 

Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d), 78u(d), 78u(e), and 

78aa(a). 

2. Defendants John J. Kralik V (“Kralik”), JKV Capital, LLC (“JKV 

Capital”), and JKV LLC, along with Relief Defendant JKV Homes, LLC (“JKV 

Homes”) have, directly or indirectly, made use of the means or instrumentalities of 

interstate commerce, of the mails, or of the facilities of a national securities exchange 

in connection with the transactions, acts, practices, and courses of business alleged in 

this complaint.  

3. Venue is proper in this district under Section 22(a) of the Securities Act, 

15 U.S.C. § 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a), 

because certain of the transactions, acts, practices, and courses of conduct 

constituting violations of the federal securities laws occurred within this district. In 

addition, venue is proper in this district because Defendant Kralik resides in this 

district, and the principal places of business of Defendants JKV Capital and JKV 

LLC and Relief Defendant JKV Homes are in this district.  

SUMMARY 

4. Defendants Kralik, JKV Capital, and JKV LLC raised more than $16.9 

million from dozens of people who invested in multiple real estate investment funds 

they manage. The Defendants promised those investors to both preserve the value of 

their investments and pay investors profits from “flipping” or renting residential real 

estate. Instead, Kralik and JKV LLC misappropriated more than $1.6 million of 

investor money and spent it on expenses such as Kralik’s Mercedes-Benz, his house, 

a vacation in Mexico, and other personal expenses for Kralik.  

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5. Kralik also improperly took investor money to pay operating expenses of 

the entity that manages the real estate funds, JKV Capital. And Kralik and JKV LLC 

further betrayed their promises by transferring additional millions of dollars of 

investor money between the five (purportedly separate) real estate funds. These 

transfers were both fraudulent in their own right and were used for improper purposes 

such as Ponzi-like distribution and redemption payments to investors in other funds. 

At times, these transfers concealed shortfalls in a particular fund. Kralik, JKV 

Capital, and JKV LLC also concealed their fraud by issuing false capital account 

statements to investors.  

6. As the scheme began to unravel, in or around January 2023, Kralik 

admitted to an investor that Kralik was in trouble because Kralik had used investor 

money to cover certain JKV Capital operating expenses and that a lot of investor 

money was gone. In a subsequent meeting with that investor and other investors, 

Kralik again admitted that he had taken money from the funds to pay JKV Capital 

operating expenses. At that meeting, when an investor asked Kralik if that meant 

Kralik had used investor money fraudulently, Kralik responded “Yes.” But the fraud 

was even broader than Kralik let on—he not only took investor money for unjustified 

expenses, he stole investor money for his personal enrichment. 

7. The Defendants’ fraudulent scheme spanned from late 2017 through at 

least March 2024 (the “Relevant Period”). Between late 2017 and March 2022, 

Kralik, JKV Capital, and JKV LLC raised more than $16.9 million from about 35 

investors. One of those 35 investors was a “feeder fund” not controlled by Kralik. 

That feeder fund itself has 68 investors. Thus, in total, the Defendants’ fraud 

victimized more than 100 people. Even after the Defendants stopped soliciting new 

investments, they continued the fraud through at least March 2024 by continuing to 

make improper transfers between the real estate funds. 

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8. Defendants Kralik, JKV Capital, and JKV LLC manage, and solicited 

investments in, five different real estate investment funds (each referred to in this 

Complaint as a “JKV Fund” or the “JKV Funds”):  

a. JKV Opportunities Fund 1, LP (“Fund I”);  

b. JKV Opportunities Fund II, LP (“Fund II”);  

c. JKV Investors A, LP (“Investors A”);  

d. JKV Investors C, LP (“Investors C”); and  

e. Treasure Valley Rental Fund LP (“Treasure Valley”).  

9. Each JKV Fund’s stated purpose is to purchase and renovate homes in 

California and other states for rent or resale, with investors in each particular fund 

getting payments from the rent or resale profits of properties owned and renovated by 

that particular fund.  

10. The JKV Funds are structured as limited partnerships, with an ownership 

and control structure that puts Kralik in charge. For each fund, JKV Capital is the 

general partner and has sole control over the management and business affairs of that 

fund. JKV LLC is the manager and majority owner of JKV Capital and controls the 

affairs of JKV Capital. In turn, Kralik owns 100% of JKV LLC and controls its 

decisions. The result of this ownership and control structure is that Kralik controls 

JKV LLC, JKV Capital, and the management and business affairs of each JKV Fund.  

11. JKV Fund investors bought securities in the form of limited partnership 

units in a particular fund, and investors were to share any profits with other limited 

partners in the particular fund and with the general partner, JKV Capital. 

12. For each JKV Fund, offering documents state that investor money would 

be used for that fund’s business and to pay returns to investors in that fund. In reality, 

Kralik, JKV Capital, and JKV LLC misappropriated and misused millions of dollars 

of investor money in three main ways.  

13. First, Kralik misappropriated investor money for his personal use. He 

did this by transferring money from the JKV Funds to JKV LLC and then using it for 

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personal expenses such as lease payments for his $198,000 Mercedes-Benz, mortgage 

payments for his personal residence, a vacation in Mexico, and transfers to his 

personal securities trading account. Kralik also transferred investor money (both 

directly and through JKV LLC) to his wholly-owned entity JKV Homes—an entity 

Kralik used for personal real estate investments unrelated to the JKV Funds. 

14. Second, Kralik directed unauthorized transfers of investor money to JKV 

Capital. While JKV Capital was entitled to certain management and performance fees 

for its role as general partner, these illicit transfers were separate from those fees. 

Some of the illicit transfers covered JKV Capital’s operating expenses and employee 

salaries, uses that were specifically prohibited in Fund I’s documents. 

15. Third, Kralik improperly directed transfers of money between JKV 

Funds. Sometimes these transfers went directly from one fund to another fund. Other 

times the money was first transferred to JKV LLC as an intermediary and then 

transferred to another JKV Fund. Some of these transfers out of a JKV Fund were 

used for Ponzi-like distribution or other payments to investors in a different JKV 

Fund. In addition, Kralik improperly directed transfers from one JKV Fund to pay the 

expenses of another fund. 

16. Kralik’s and JKV Capital’s pitch to potential investors in Fund I and 

Fund II highlighted capital preservation as a key feature. Contrary to those 

representations, and contrary to the Defendants’ representations about how investor 

money would be used, the Defendants misappropriated and misused investor money. 

This had the predictable result of depleting—not preserving—investors’ capital.  

17. After Kralik learned about the SEC staff’s investigation in early 2023, he 

assured at least one investor that he would return their capital contributions, but then 

failed to do so. Kralik also sold some properties and made payments to certain 

investors but not others, apparently favoring investors with whom he had a personal 

connection. In addition to these attempts to placate some investors, Kralik also 

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continued to direct improper fund-to-fund transfers through at least early 2024, well 

after he knew of the SEC’s investigation.  

18. Kralik also failed to appear to give testimony in the SEC staff’s 

investigation (despite having been served with a subpoena to do so), and even failed 

to provide a date on which to reschedule the testimony. 

19. As a result of the alleged conduct, the Defendants violated the antifraud 

provisions of Section 17(a) of the Securities Act, 15 U.S.C. §77q(a), and Section 

10(b) of the Exchange Act, 15 U.S.C. §78j(b), and Rule 10b-5 thereunder, 17 C.F.R. 

§ 240.10b-5. Kralik is also liable as a control person for JKV Capital’s and JKV 

LLC’s violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder 

pursuant to Section 20(a) of the Exchange Act. 

20. The SEC seeks a judgment from the Court: (i) permanently enjoining the 

Defendants from violating Securities Act Section 17(a), 15 U.S.C. §77q(a), and 

Exchange Act Section 10(b), 15 U.S.C. §78j(b), and Rule 10b-5 thereunder, 17 

C.F.R. § 240.10b-5; (ii) directing the Defendants to disgorge all ill-gotten gains they 

received as a result of the acts and/or courses of conduct complained of, plus 

prejudgment interest thereon; (iii) directing the Defendants to pay civil money 

penalties; (iv) barring Kralik from serving as an officer or director of a public 

company; (v) ordering Relief Defendant JKV Homes to disgorge any ill-gotten gains, 

plus prejudgment interest thereon; and (vi) granting such other relief as this Court 

may determine to be just, equitable, and necessary. 

DEFENDANTS 

21. John J. Kralik V (“Kralik”), age 43, resides in Newport Beach, 

California, in this district. Kralik is the CEO and Managing Partner of JKV Capital 

and owns 55.02% of JKV Capital’s outstanding shares through his wholly-owned 

entity JKV LLC. Through JKV Capital and JKV LLC, Kralik operates and manages 

the JKV Funds. Kralik and JKV Capital also manage other real estate investment 

funds. Previously, from 2009 to 2017, Kralik was president of an unrelated real estate 

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investment firm. Until recently, Kralik had been an active member of an organization 

for company officers and directors. Kralik has signed a tolling agreement that 

suspends the running of the statute of limitations from September 19, 2023 through 

July 2, 2024.   

22. JKV Capital, LLC (“JKV Capital”) is a California limited liability 

company with its principal place of business in Newport Beach, California, in this 

district. JKV Capital’s business involves acquiring, owning, managing, and operating 

homes. JKV Capital is the general partner and manages the operations of the JKV 

Funds. JKV Capital has signed a tolling agreement that suspends the running of the 

statute of limitations from September 19, 2023 through July 2, 2024. 

23. JKV LLC is a California limited liability company with its principal 

place of business in Newport Beach, California, in this district. Kralik owns 100% of 

JKV LLC and is its only member and manager. JKV LLC is listed as the manager of 

JKV Capital in fund agreements and the JKV Capital amended operating agreement. 

JKV LLC has signed a tolling agreement that suspends the running of the statute of 

limitations from March 14, 2024 through July 2, 2024.  

RELIEF DEFENDANT 

24. JKV Homes LLC (“JKV Homes”) is a California limited liability 

company with its principal place of business in Newport Beach, California, in this 

district. Kralik formed JKV Homes in November 2019 and owns 100% of its 

outstanding shares through JKV LLC. JKV LLC is the manager and only member of 

JKV Homes. 

RELATED ENTITIES 

25. JKV Opportunities Fund 1, LP (“Fund I”) is a California limited 

partnership with its principal place of business in Newport Beach, California, in this 

district. JKV Capital is the general partner of Fund I. Fund I started raising investor 

money in late 2017. 

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26. JKV Opportunities Fund II, LP (“Fund II”) is a California limited 

partnership with its principal place of business in Newport Beach, California, in this 

district. JKV Capital is the general partner of Fund II. Fund II started raising investor 

money in late 2019.  

27. JKV Investors A, LP (“Investors A”) is a California limited 

partnership with its principal place of business in Newport Beach, California, in this 

district. JKV Capital is the general partner of Investors A. Investors A started raising 

investor money in early 2020. 

28. JKV Investors C, LP (“Investors C”) is a California limited 

partnership with its principal place of business in Newport Beach, California, in this 

district. JKV Capital is the general partner of Investors C. Investors C started raising 

investor money in early 2020. 

29. Treasure Valley Rental Fund LP (“Treasure Valley”) is a Nevada 

limited partnership with its principal place of business in Newport Beach, California, 

in this district. JKV Capital is the general partner of Treasure Valley. Treasure Valley 

started raising investor money in mid-2020. 

OTHER RELEVANT PERSON 

30. Accountant A provided outsourced accounting services for the 

Defendants from about January 2022 to August 2022 and again from about December 

2022 to April 2023. Accountant A raised concerns to Kralik about some of the 

improper money transfers discussed in this Complaint. 

FACTUAL ALLEGATIONS 

A. Kralik, JKV Capital, and JKV LLC Offered and Sold Securities. 

31. From late 2017 to March 2022, Kralik, JKV Capital, and JKV LLC 

raised over $16.9 million for the five JKV Funds from about 35 investors, including 

from the feeder fund (itself with 68 investors) that invested in Fund II. Many of 

Kralik’s investor victims are located in the southern California area, but others reside 

in other states, including New York, Louisiana, Pennsylvania, and Texas.  

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32. The chart below shows the approximate amount raised and number of 

investors for each JKV Fund (some investors invested in more than one fund): 

Fund Name Amount Raised Number of Investors 
(sub-investors) 

Fund I $7,500,000 28 

Fund II $3,950,000 7 (68) 

Investors A $1,000,000 2 

Investors C $425,000 1 

Treasure Valley $4,075,000 3 

33. To raise money for each JKV Fund, Kralik and other JKV Capital 

employees solicited their professional or personal contacts and existing investors and 

obtained referrals from existing investors. Kralik and JKV Capital also promoted 

Fund I and Fund II on JKV Capital’s public website and promoted Fund II via the 

feeder fund’s public website. The feeder fund’s website included links to Fund II 

offering documents. Kralik and JKV Capital also produced a video in which Kralik 

personally advertised Fund II and featured many statements by Kralik. Kralik 

authorized posting that video on the feeder fund’s website to solicit potential Fund II 

investors.  

34. Once Kralik or other JKV Capital employees contacted potential 

investors, they sent them offering materials for the JKV Funds, typically consisting of 

a private placement memorandum (“PPM”), limited partnership agreement (“LP 

Agreement”) and/or subscription agreement. Kralik and JKV Capital employees 

typically sent these offering materials to potential investors by email.  

35. JKV Fund documents describe the offerings as involving securities or 

being conducted as private placements pursuant to certain provisions of the securities 

laws. For example, the PPM and subscription agreements for Fund I and Fund II refer 

to the limited partnership units as securities. Similarly, the subscription agreements 

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for Investors A, Investors C, and Treasure Valley state that the offerings of limited 

partnership units were being conducted as private placements pursuant to registration 

exemptions under the Securities Act. 

36. Additionally, in December 2017, Kralik, as Fund I’s manager, signed a 

Form D Notice of Exempt Offering of Securities for Fund I. This Form D was filed 

with the SEC on December 6, 2017. In December 2019, Kralik, as Fund II’s 

president/managing member signed a Form D Notice of Exempt Offering of 

Securities for Fund II. This Form D was filed with the SEC on December 4, 2019.  

37. For each fund, investor money was deposited in checking accounts in the 

name of the JKV Fund they invested in. For four funds (Fund I, Fund II, Investors A, 

and Treasure Valley), investor money was pooled into a checking account for that 

fund with the money from other investors in that fund.  

38. Investors C fund has only one investor. While the LP Agreement for 

Investors C permitted up to 100 limited partners, Kralik and JKV Capital were only 

able to raise $425,000 from one investor who received Class A limited partnership 

units in this fund.  

39. LP Agreements for each of the five JKV Funds provide that investors are 

entitled to a pro-rata share of that funds’ profits or losses, part of which is split with 

the general partner. For example, Class A limited partners in Investors A fund are 

entitled to a preferred return on their invested capital. Once the Class A limited 

partners have received that preferred return, they split the remaining net profits with 

the fund’s general partner and Class B limited partners, with 80% of net profits from 

operating income going to the investors on a pro rata basis and the remaining 20% of 

net profits from operating income going to JKV Capital. Class B limited partners 

receive no allocation of profits nor any distributions until the Class A limited partners 

have received their preferred return. The LP Agreements for the other JKV Funds 

contain similar language though the profit splits and preferred return amounts differ. 

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40. LP Agreements for each JKV Fund provide that investors become 

limited partners of that particular fund. As limited partners, investors have no part in 

the management or control of the JKV Funds. Rather, JKV Capital serves as general 

partner of each JKV Fund, manages the business of each JKV Fund, and is 

responsible for generating any profits.  

B. Kralik, JKV Capital, and JKV LLC Each Actively Participated in 

the Fraud. 

41. Kralik manages JKV Capital, the general partner of the funds, through 

his wholly-owned entity JKV LLC. JKV LLC is the manager and majority owner of 

JKV Capital. JKV Capital, JKV LLC, and Kralik are parties to the LP Agreements 

with investors, the JKV Capital operating agreement, and certain other fund 

documents, including promissory notes, and subscription agreements. Many of the LP 

Agreements were signed by Kralik on behalf of JKV LLC on behalf of JKV Capital, 

with a signature block such as the one below:   

 

 

 

 

 

 

 

42. The JKV Capital PPMs for Fund I and Fund II identify JKV Capital as 

the general partner of Fund I and Fund II. These PPMs also identify Kralik as a 

manager of Fund I and Fund II. JKV Capital also is listed as the general partner on 

most of the JKV Fund subscription agreements, in which limited partnership units 

were offered and investors agreed to purchase limited partnership units. In most of 

these subscription agreements, JKV Capital accepted investors’ subscriptions for 

limited partnership units on behalf of the funds. The subscription agreements for 

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Fund II, Investors A, Investors C, and Treasure Valley also list Kralik as the manager 

of JKV Capital, which is in turn General Partner of the JKV Fund, or as manager of 

the JKV Fund for purposes of accepting or agreeing to investors’ subscriptions. This 

is reflected in signature blocks such as this one: 

 

 

 

 

 

 

 

 

43. Kralik founded, exercised control over, and had decision-making 

authority for JKV Capital and JKV LLC. Not only is Kralik the sole owner of JKV 

LLC, which is the majority owner of JKV Capital, but also: 

a. Kralik approved the content on the JKV Capital website, which 

describes its business as managing residential real estate investment 

funds and provides a means for investors and prospective investors to 

obtain more information.  

b. In the video on the feeder fund’s website, Kralik introduces himself 

as the founder and CEO of JKV Capital, a real estate investment firm.  

c. Kralik is a signatory on the bank accounts held by JKV Capital and 

JKV LLC.  

d. Kralik directed employees to make transfers between JKV Fund 

accounts and accounts held by JKV LLC and JKV Capital.  

44. Because, at all relevant times, Kralik exercised control over JKV Capital 

and JKV LLC, Kralik’s knowledge, recklessness, and negligence, as detailed below, 

can be imputed to his companies. 

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45. Additionally, Kralik, either directly or through JKV Capital and/or JKV 

LLC, exercised control over and had decision-making authority for each of the JKV 

Funds. For example: 

a. Kralik helped prepare and had final sign-off on the PPMs. 

b. Kralik helped prepare the LP Agreements and subscription 

agreements for the JKV Funds, and also signed many subscription 

agreements as manager of JKV Capital (or as manager of the JKV 

Fund).  

c. Kralik is a signatory on the bank accounts held by each of the JKV 

Funds.  

d. Kralik directed employees to make transfers between JKV Fund 

accounts and accounts held by other JKV Funds or his other entities.  

e. Kralik provided information for, and had final approval of, the JKV 

Funds’ books and records. 

f. Kralik solicited investors for the JKV Funds, including serving as 

the presenter in the video posted on the feeder fund’s website to 

raise money for Fund II.  

g. Investors for some JKV Funds were directed to send executed 

investment documents to Kralik’s attention at his JKV Capital email 

address.  

h. Kralik approved quarterly capital account statements provided to 

JKV Fund investors.  

i. Kralik approved distributions and redemptions and dealt with 

complaining investors.  

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C. The Defendants Made Materially False and Misleading 

Misstatements Regarding the Funds and Investor Money. 

1. The Defendants Made Materially False and Misleading 

Statements About the Purpose of the Funds. 

46. The PPMs and LP Agreements for each fund contain materially false and 

misleading statements that describe the overall purpose for each JKV Fund as 

acquiring and renovating homes for resale or rental. 

47. Kralik is a party to Fund I’s LP Agreement along with the fund’s general 

partner, JKV Capital, and JKV Capital’s manager, JKV LLC. Fund I’s LP Agreement 

states that the fund’s purpose:  

shall be: (a) to acquire, own, improve, manage, and sell the Property; (b) 

to borrow money to finance the acquisition and improvement of the 

Property, and to modify and refinance such borrowings; (c) to manage, 

maintain, rent, sell or otherwise deal with the Property as contemplated 

by the terms of this Agreement; and (d) to do any all other acts and 

things necessary, incidental or convenient to carry on the Partnership 

business as contemplated under this Agreement.   

48. Fund I’s LP Agreement defines “Property” as “those residential homes 

located in the counties of Los Angeles, Orange, Riverside, San Bernardino, and San 

Diego which are purchased in the sole and absolute discretion of the General Partner 

in accordance with the purpose of this Partnership.” 

49. Likewise, Fund I’s PPM, which Kralik helped prepare and approved, 

states that Fund I “was formed for the purpose of acquiring and managing single-

family real estate assets,” “[p]roceeds from the sale of Units will be for: real estate 

asset acquisition, renovation expenses, and certain operation expenses of the Fund,” 

and Fund I “will seek to acquire and manage distressed and value add real estate 

assets with the intention of providing participating investors with a real estate focused 

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investment opportunity that combines income, principal investment growth, and 

elements of capital preservation.”    

50. Kralik is a party to Fund II’s LP Agreement along with the fund’s 

general partner, JKV Capital, and JKV Capital’s manager, JKV LLC. Fund II’s LP 

Agreement states that the fund:  

is organized for the purpose of acquiring, owning, improving, and selling 

residential homes located in the counties of Los Angeles, Orange, 

Riverside, San Bernardino, and San Diego, California or for any other 

purpose on which the Partners agree . . . and engaging in all activities 

and transactions as the GP may deem necessary or advisable in 

connection therewith and doing such other lawful acts as the GP may 

deem necessary or advisable in connection with the maintenance and 

administration of the Partnership.   

51. Likewise, Fund II’s PPM, which Kralik helped prepare and approved, 

states that the fund “was formed for the purpose of acquiring stressed or undervalued 

Single Family Residential (“SFR”) homes, renovating the asset, and selling,” 

“[p]roceeds from the sale of Units will be used for real estate purchases, real estate 

asset renovations, fund management expenses, and brokerage commissions,” and 

“[t]he intention of the Fund is providing participating investors with a real estate 

focused investment opportunity that combines income, principal investment growth, 

and capital preservation.” 

52. The LP Agreements for Investors A, Investors C, and Treasure Valley 

(each of which Kralik signed on behalf of both the fund’s general partner JKV 

Capital and JKV Capital’s manager JKV LLC) contain nearly identical language to 

the language quoted above in paragraph 50 from the Fund II LP Agreement. The only 

differences are the location of the real estate and immaterial changes in syntax.  

53. Each of the statements quoted or incorporated above is materially false 

and misleading because, as discussed below, the Defendants instead misused and 

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misappropriated investor money for Kralik’s personal gain and other improper 

purposes. By virtue of his role in preparing, approving, and/or signing the documents 

above, and his role in misusing and misappropriating investor money described 

below, Kralik knew, or was reckless or negligent in not knowing, that these 

statements were materially false and misleading. 

2. The Defendants Made Materially False and Misleading 

Statements About the Specific Uses of Investor Money. 

54. JKV Fund documents also contain numerous materially false and 

misleading statements about the specific uses of investor money. 

55. For example, in December 2017, Kralik signed a Form D for Fund I that 

was then filed with the SEC. A Form D is a form used to file a notice of an exempt 

offering of securities. The form is filed online with the SEC and is publicly available 

on the SEC’s website, and details certain material facts about the company and 

offering for investors, such as the type of securities offered, the minimum investment 

amount, and the use of offering proceeds. The December 2017 Form D for Fund I 

falsely represented that no gross proceeds from Fund I had been or were proposed to 

be used for payments to Kralik, the only named executive officer. Nonetheless, tax 

returns show that in 2017, JKV LLC received a total of $45,000 from Fund I for 

nonemployee compensation. Such compensation is also strictly prohibited by Fund 

I’s LP Agreement, which states that the fund “shall not provide reimbursement” for 

“salaries, compensation, fringe benefits, and other payments to employees, officers, 

and directors of the General Partner or Affiliates.” 

56. In addition, in December 2019, Kralik signed a Form D for Fund II, 

which was filed with the SEC and which falsely represented that no gross proceeds 

were proposed to be used to pay any named executive officers. Kralik was the only 

executive officer named in the December 2019 Form D. He proceeded to use Fund II 

money for his personal expenses, as discussed below.  

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57. Offering documents for each fund list JKV Capital’s permitted fees and 

expenses relating to each fund’s operations, plus JKV Capital’s right to receive a 

percentage of the net profits or income from each fund it manages. The offering 

documents also state that each JKV Fund should reimburse JKV Capital (or for Fund 

I, Kralik) if it paid for that JKV Fund’s organization or operating expenses. Aside 

from these fees, profit shares, and reimbursements, the JKV Fund offering documents 

do not authorize payments to JKV Capital.   

58. For example, Fund I’s LP Agreement states, in relevant part, that JKV 

Capital, as the General Partner, “shall receive the following payments:  

(a) The Partnership shall pay the General Partner an annual asset 

management fee of one percent (1%) … of the gross market value of all 

of the Partnership’s assets under management …  

(b) … an asset acquisition fee equal to one percent (1%) of the gross 

purchase price … paid for any real property acquired …  

(c) In the event that the General Partner or Affiliate renders services or 

provides goods to the Partnership which it would not be required to 

provide without charge as a general partner, the Partnership shall pay the 

General Partner or Affiliates for those services or goods, but only to the 

extent that the payment would not exceed that which would be charged 

by an independent, capable third party willing to render those services or 

to provide those goods.   

(d) The Partnership shall reimburse the General Partner for the actual 

costs of goods or services used by or on behalf of the Partnership…”   

59. Additionally, Fund I’s LP Agreement specifically prohibits 

reimbursements of overhead expenses of JKV Capital, including general office 

expenses, salaries, compensation, fringe benefits, and other payments to employees, 

officers, and directors of the general partner. Specifically, the LP Agreement states:  

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[t]he Partnership shall not provide reimbursement for the following 

expenses, except where permitted by this Agreement: ([i]) overhead 

expenses of the General Partner, including but not limited to rent and 

general office expenses; (ii) salaries, compensation, fringe benefits, and 

other payments to employees, officers, and directors of the General 

Partner or Affiliates; and (iii) the cost of providing any goods or 

rendering any services for which the General Partner or Affiliate is 

entitled to compensation under this Agreement.  

60. Fund II’s LP Agreement provides that JKV Capital, as the general 

partner of the fund, is entitled to a 1% management fee, a 1% acquisition fee, certain 

brokerage commissions, organizational expenses, and other specified expenses such 

as legal and accounting fees. None of the specified expenses are JKV Capital’s own 

overhead costs (such as JKV Capital employee salaries). The agreement does provide 

that JKV Capital can be reimbursed for “other similar expenses related to the 

Partnership, as the [General Partner] determines in its sole discretion.” But none of 

the listed expenses (such as legal and accounting fees) are similar to JKV Capital 

paying its own overhead costs. 

61. The LP Agreements for Investors A, Investors C, and Treasury Valley 

state that JKV Capital, as the general partner of the funds, is entitled to a management 

fee, acquisition fees, certain brokerage commissions, a construction management fee, 

organizational expenses, and other specified expenses. None of the specified 

expenses are JKV Capital’s own overhead costs (such as JKV Capital employee 

salaries). These agreements do provide that JKV Capital can be reimbursed for “other 

similar expenses related to the Partnership, as the [General Partner] determines in its 

sole discretion.” But none of the listed types of expenses are similar to JKV Capital 

paying its own overhead costs. 

62. The LP Agreements govern how each JKV Fund is supposed to operate 

until all investors have redeemed their investment. Kralik’s repeated misappropriation 

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of investor money during the pendency of these agreements was part of his scheme to 

defraud investors. In addition, Kralik misused Fund I and Fund II money while he 

continued raising money from new investors using the PPMs and LP Agreements for 

those funds.   

63. All of the representations quoted and incorporated above regarding the 

specific use of investor money are materially false and misleading because, as 

discussed below, the Defendants instead misused and misappropriated investor 

money for Kralik’s personal gain and other improper purposes. By virtue of his role 

in preparing, approving, and/or signing the documents above, and his role in misusing 

and misappropriating investor money described below, Kralik knew, or was reckless 

or negligent in not knowing, that these statements were materially false and 

misleading. 

3. The Defendants Made Materially False and Misleading 

Statements About Preserving Investors’ Capital. 

64. In connection with their fraudulent scheme, the Defendants made 

material misrepresentations to investors promising capital preservation as an 

investment objective. 

65.  Kralik, JKV Capital, and JKV LLC promoted the Fund I and Fund II as 

income generating real estate funds with capital preservation. For example, Fund I’s 

PPM and Synopsis of Operations states that the fund intends to provide “participating 

investors with a real estate focused investment opportunity that combines income, 

principal investment growth, and elements of capital preservation.”  

66. Fund II’s PPM and Synopsis of Operations similarly describes “a real 

estate focused investment opportunity that combines income, principal investment 

growth, and capital preservation.” Kralik and JKV Capital made a video presentation 

to raise money for Fund II that was posted on the feeder fund’s website around July 

2020. In the video, Kralik touted capital preservation as a key feature of Fund II.   

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67. Each of these statements about the preservation of investor money is 

materially false and misleading because the Defendants instead misused and 

misappropriated investor money for Kralik’s personal gain and other improper 

purposes, which reduced the value of investors’ capital. By virtue of his role in 

preparing, approving, and/or signing the documents above, and his role in misusing 

and misappropriating investor money described below, Kralik knew, or was reckless 

or negligent in not knowing, that these statements were materially false and 

misleading. 

4. Kralik and JKV Capital Made Additional False Statements to 

Investors Regarding Fund II.  

68. Kralik and JKV Capital also made materially false representations to 

investors regarding the safeguarding of investors’ contributions to Fund II. 

69. Fund II’s PPM and subscription agreement provide that investor money 

would be deposited and held in a segregated escrow account at a designated bank 

until a minimum of $5 million was raised, and all invested funds would be returned to 

investors if $5 million was not raised by April 1, 2020, or if the offering period was 

extended, by October 2020, stating:  

The Company has set a minimum offering proceeds figure of $5,000,000 

(the “minimum offering proceeds”) for this Offering. The Company has 

established a segregated Company managed bank account with [Bank], 

into which minimum offering proceeds will be placed. At least 5,000 

Units must be sold for $5,000,000 before such proceeds will be released 

from the Holding Account and utilized by the Company. Should the 

Offering fail to reach the Minimum Offering Amount by the end of the 

Offering Term, then all invested funds held in the Holding Account will 

be returned in full immediately to subscribed investors and any 

subscription agreements executed between subscribed investors and the 

Company will be void ab initio. 

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70. Kralik and JKV Capital, however, failed to safeguard Fund II investor 

proceeds in a segregated escrow account and return the capital contributions to 

investors as promised when the $5 million minimum offering amount was not raised 

for this fund. The statements were false because no escrow account existed and 

investor money was not segregated. Instead, investor contributions were deposited 

into a Fund II checking account and commingled with money from other JKV Funds 

and Kralik’s wholly-owned entity, JKV LLC. In addition, Fund II never raised more 

than $4 million.  

71. Kralik knew, or was reckless or negligent in not knowing, that his 

statements promising to safeguard investors’ contributions were false given his 

complete control over the decision-making for the JKV Funds and JKV Capital. A 

reasonable investor would have wanted to know if the Defendants would maintain a 

segregated escrow account, as promised, and return their investment contributions if 

the minimum offering amount was not reached.  

D. The Defendants Defrauded Investors by Misappropriating and 

Misusing Investor Money.  

1. Kralik Admitted in Early 2023 That He Misused Fund Money. 

72. In or around January 2023, Kralik admitted to an individual who had 

invested in Fund I and Fund II that Kralik was in trouble because Kralik had used 

investor money to cover certain JKV Capital operating costs and that a lot of investor 

money was gone. In a subsequent meeting with that investor and other investors, 

Kralik again admitted that he had taken money from the funds to pay JKV Capital 

employee salaries and operating expenses. At that meeting, when an investor asked 

Kralik if that meant Kralik had used investor money fraudulently, Kralik responded 

“Yes.”  

73. In fact, Kralik’s misuse and misappropriation were more widespread 

than he confessed. Kralik misused and misappropriated investor money for his 

personal benefit, for JKV Capital’s benefit, and for the benefit of the other funds. 

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2. Kralik Misappropriated Money From the JKV Funds for his 

Personal Benefit. 

a. From the Beginning, Kralik Stole Investor Money and 

Lied. 

74. Contrary to the representations in the offering documents set forth 

above, Kralik repeatedly misappropriated investor money for his own personal 

benefit. Many of the improper transfers for Kralik’s benefit were documented on the 

books and records of the JKV Funds as money “due to” the JKV Funds by JKV LLC 

or JKV Homes. The comingling of assets described in this complaint, and record-

keeping irregularities discovered during the SEC’s investigation suggest that the 

amount the Defendants misappropriated could exceed what is shown in these books 

and records. Still, according to the JKV Funds’ own books and records, as of the third 

quarter of 2022, Kralik, mostly through JKV LLC, owed the JKV Funds a total of 

about $1.6 million, as shown in the following chart.   

Amounts Owed to JKV Funds by Kralik as of Q3 2022 

 Amount Owed by Kralik 
Fund I $373,402 
Fund II $254,668 

Investors A -$87,938 
Investors C -$13,250 

Treasure Valley $1,122,450 
Total $1,649,332 

75. Additionally, although the books and records list the amounts as “due 

to” the JKV Funds, there are no loan documents or other documents supporting a 

legitimate business purpose for these transfers. In any event, such loans still would 

have violated the terms of the JKV Funds LP Agreements and/or PPMs.  

76. Kralik’s misuse of investor money started from the beginning of the JKV 

Funds’ operations. In September and October 2017, Kralik directed the transfer of at 

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least $30,000 from the first investor contributions in Fund I to his wholly-owned 

entity, JKV LLC without documenting an authorized purpose.  

b. Kralik Stole Investor Money to Pay for His Car, House, 

Vacation, and Other Personal Expenses. 

77. Kralik misappropriated investor money to pay personal expenses, 

including: car payments; mortgage payments; deposits into his personal securities 

trading account; a vacation in Cabo San Lucas, Mexico; payments to his daughter’s 

nanny and swim instructor; and payments to a social club in Newport Beach, CA.  

78. A number of instances where Kralik stole investor money follow a 

similar, clear pattern. For instance: 

Car Payment 

79. On August 23, 2022, one of JKV LLC’s bank accounts had an ending 

daily balance of only $131.54. On August 24, 2022, Kralik transferred $5,000 from a 

Fund I bank account to that JKV LLC bank account. No other funds were deposited 

or transferred into the JKV LLC bank account on August 24, 2022. That same day, 

Kralik made a payment of $3,474.88 from the JKV LLC bank account for a 

Mercedes-Benz SUV leased in his name.  

Mortgage Payments 

80. Kralik also used money from the JKV Funds to pay the monthly 

mortgage on his personal residence. For instance, on October 18, 2021, one of JKV 

LLC’s bank accounts had an ending balance of $841.45. On October 21, 2021, Kralik 

transferred $4,000 from an Investors C bank account, $8,000 from a Fund I bank 

account, and $2,000 from a JKV Homes bank account into that JKV LLC bank 

account. No other deposits were made into that JKV LLC bank account between 

October 18 and October 21, 2021. On October 21, 2021, Kralik made a mortgage 

payment for his personal residence of $13,325.18 from that JKV LLC bank account.   

81. Similarly, on April 20, 2022, one of JKV LLC’s bank accounts had an 

ending daily balance of only $9.88. On April 21, 2022, Kralik transferred $15,000 

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from a Fund II bank account into that JKV LLC bank account. No other deposits 

were made into that JKV LLC account on April 21, 2022. That same day, Kralik 

made a mortgage payment for his personal residence of $13,325.18 from that JKV 

LLC bank account.  

82. On December 20, 2022, Kralik made a mortgage payment for his 

personal residence of $13,358.74 from a JKV LLC bank account, which resulted in 

an ending daily balance of -$12,470.35. On December 21, 2022, Kralik transferred 

$13,000 from an Investors A account along with $7,500 from other sources into the 

JKV LLC account to cover the overdraft in the account caused by the mortgage 

payment. No other deposits were made into that JKC LLC account on December 21, 

2022. 

Personal Securities Brokerage Account 

83. In another example, on March 26, 2020, one of JKV LLC’s bank 

accounts had an ending daily balance of $770.90. On March 27, 2020, Kralik 

transferred $5,000 from a Fund I bank account into that JKV LLC bank account. No 

other deposits were made into that JKV LLC bank account on March 27, 2020. That 

same day, Kralik transferred $3,000 from the JKV LLC account to his personal 

securities brokerage account.  

Childcare and Swim Lessons 

84. On April 14, 2021, one of JKV LLC’s bank accounts had an ending 

daily balance of $431.33. On April 15, 2021, Kralik transferred $15,000 from a 

Treasure Valley bank account into that JKV LLC bank account. No other deposits 

were made into that JKV LLC bank account on April 15 or April 16, 2021. On April 

16, 2021, Kralik made a payment of $1,000 from that JKV LLC bank account for a 

mortgage on a property he personally owned and two checks written from the JKV 

LLC bank account were cashed in the amounts of $318.75 and $475 for nanny 

payments and swim lessons for Kralik’s daughter.  

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Social Club 

85. On May 10, 2022, one of JKV LLC’s bank accounts had a negative 

ending daily balance of -$805.29. On May 11, 2022, Kralik’s waterfront social club 

in Newport Beach, California cashed a check for $1,516.39 that was issued from that 

JKV LLC bank account. That same day, Kralik transferred $3,000 from a Fund I 

account to the JKV LLC account to cover the overdraft in the account caused in part 

by the check issued to his social club. No other deposits were made into that JKV 

LLC bank account on May 11, 2022. 

International Vacation 

86. On December 1, 2022, one of JKV LLC’s banking accounts had a 

beginning balance of $397.94. On December 2, 2022, Kralik transferred $7,500 from 

a Treasure Valley bank account into that JKV LLC bank account. On December 5, 

2022, Kralik transferred an additional $25,000 from the Treasure Valley bank 

account into the JKV LLC bank account. No other deposits were made into the JKV 

LLC bank account between December 2 and December 5, 2022. On December 5, 

2022, Kralik made payments and withdrew money from several stores and ATMs 

while on vacation in Cabo San Lucas, Mexico. Kralik’s payments and ATM 

withdrawals from the JKV LLC account while in Cabo San Lucas totaled $4,295.62 

(including international transaction and ATM fees). 

c. Kralik Improperly Transferred Fund Money to His 

Personal Investment Vehicle JKV Homes. 

87. According to the JKV Funds’ books and records, Relief Defendant JKV 

Homes—an entity Kralik uses for personal real estate investments unrelated to the 

JKV Funds—owed the JKV Funds over $350,000 as of the third of quarter 2022, as 

shown in the below chart:  

 

 

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Amounts Owed to JKV Funds by JKV Homes as of Q3 2022 

 Amount Owed by JKV Homes 
Fund I $95,528 
Fund II $259,871 

Investors A N/A 
Investors C N/A 

Treasure Valley $3,520 
Total $358,919 

88. According to bank records, as of early 2024, JKV Homes still retained at 

least $177,000 of the money it had received from the JKV Funds.  

89. Fund offering documents do not authorize transfers of money from the 

JKV Funds to JKV Homes. JKV Homes has no legitimate claim to the ill-gotten 

funds and has been unjustly enriched by its receipt of this fund money. JKV Homes 

therefore should be required to disgorge all of the net amounts it directly or indirectly 

received from the JKV Funds, as well as to pay prejudgment interest on such 

amounts. 

90. Kralik, as the signatory on and party to the fund offering documents 

discussed above (which contain representations about how fund money would be 

used) knew, or was reckless or negligent in not knowing, that the transfers to JKV 

LLC and JKV Homes were not permitted by the terms of the fund offering documents 

and were improper. 

91. In deciding whether to invest in the JKV Funds, investors would have 

considered it important to know whether the Defendants would misappropriate fund 

money for Kralik’s own enrichment, and multiple investors have confirmed this to 

the SEC’s staff investigating this matter. 

92. Based on the facts alleged above, the Defendants intentionally, 

knowingly, recklessly, and/or negligently carried out their fraudulent scheme 

involving the misappropriation of investor money.  

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3. Kralik and JKV Capital Also Misused Investor Money 

Through Improper Transfers to JKV Capital. 

93. Kralik and JKV Capital misused investor money by directing improper 

transfers to JKV Capital. Although JKV Capital was entitled to (and received) a 

percentage of profits, and certain fees/reimbursements discussed above, the improper 

transfers to JKV Capital are in addition to those categories of expenses.  

94. Among the JKV Fund books and records maintained by JKV Capital are 

general ledger sub-accounts called the “Due Fr/To JKV Capital” accounts. A negative 

balance in this account in any of the JKV Fund’s books and records reflects that JKV 

Capital owes that JKV Fund money.  

95. The “Due Fr/To JKV Capital” accounts, along with other books and 

records for the JKV Funds, including quarterly balance sheets, indicate that starting in 

mid-2018 and continuing until at least November 2023, JKV Capital owed significant 

amounts of money—at times millions of dollars—to the JKV Funds. Beginning in 

early 2020, numerous entries in the “Due Fr/To JKV Capital” accounts for money 

transferred to JKV Capital from the JKV Funds have no explanation for the transfer 

noted. For example, according to Fund I’s “Due Fr/To JKV Capital” account, in June 

2022 alone, at least 17 transfers totaling over $240,000 were made to JKV Capital 

with no explanation or purpose noted for any of them. Additionally, there are no loan 

documents or other documents supporting a legitimate business purpose for these 

transfers. In any event, such loans still would have violated the terms of the JKV 

Funds LP Agreements and/or PPMs.   

96. As of September 30, 2022, the books and records show the amounts that 

JKV Capital owed to the JKV Funds was close to $4 million, as shown in the 

following chart.  

 

 

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Improper Payments from JKV Funds to JKV Capital as of Q3 2022 

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Fund I $1,401,862 
Fund II $1,945,430 

Investors A $355,137 
Investors C $30,487 

Treasure Valley $224,919 
Total $3,957,835 

 

97. Some of the money transferred from JKV Funds to JKV Capital was 

used to cover JKV Capital’s own costs, including employee payroll, when JKV 

Capital’s accounts lacked sufficient funds.  

98. The transfers from Fund I to JKV Capital for operating expenses 

including employee salaries are expressly prohibited by Fund I’s LP Agreement. That 

agreement specifically prohibits reimbursements of overhead expenses of JKV 

Capital, including general office expenses, salaries, compensation, fringe benefits, 

and other payments to employees, officers, and directors of the general partner. JKV 

Capital, JKV LLC, and Kralik are all parties to the Fund I’s LP Agreement. 

99. Documents for other JKV Funds do not expressly prohibit 

reimbursement of these expenses, but, as discussed above, do specify precisely which 

fees and expenses JKV Capital is entitled to. Reimbursement for employee salaries is 

not a permitted item. And although some of the agreements allow JKV Capital to get 

reimbursed for “other similar” expenses, JKV Capital employee payroll is not similar 

to the listed expenses. Moreover, Kralik’s later confession that the transfers to JKV 

Capital were fraudulent confirms that these were not permissible expenses. 

100. Given his role in preparing, approving, and/or signing numerous 

documents setting forth the permitted uses of investor money and permissible fees to 

JKV Capital, Kralik knew, or was reckless or negligent in not knowing, that these 

transfers to JKV Capital for JKV Capital’s expenses were improper. Additionally, in 

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early 2022, Accountant A told Kralik that he would not transfer money from the JKV 

Funds to JKV Capital for employee payroll or other unauthorized purposes without 

documentation that the funds’ limited partners agreed to such transfers. 

Notwithstanding no such documentation, Kralik continued to make unauthorized 

transfers from the JKV Funds to JKV Capital throughout 2022.  

101. When deciding whether to invest in the JKV Funds, investors would 

have considered it important to know that investor money would be used to make 

illicit payments to JKV Capital. Two investors have given sworn statements attesting 

that if they had known investor money would be transferred to JKV Capital beyond 

the amount that JKV Capital was owed, they would not have invested. 

102. Based on the facts alleged above, the Defendants intentionally, 

knowingly, recklessly, and/or negligently carried out their fraudulent scheme by 

making unauthorized transfers to JKV Capital.  

4. Kralik, JKV Capital, and JKV LLC Misused Investor Money 

By Making Illicit Fund-to-Fund Transfers. 

a. The Defendants Improperly Transferred Millions of 

Dollars Between Funds. 

103. As discussed above, the offering documents for each JKV Fund make 

clear that the money invested in each fund should have been used solely for the 

purposes of that fund. Contrary to these representations, between October 2019 and 

March 2024, Kralik transferred or directed transfers totaling over $8 million directly 

from bank accounts held by JKV Funds into accounts held by other JKV Funds, or to 

pay expenses owed by other JKV Funds.  

104. Like the other improper transfers discussed above, the improper fund-to-

fund transfers were documented as liabilities on the books and records of the funds. 

Transfers between the funds were posted to liability accounts in the general ledgers 

for each JKV Fund. Those general ledger liability account balances and quarterly 

balance sheets show that certain JKV Funds owed money to other JKV Funds. 

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Additionally, although the books and records list the amounts as owed from one JKV 

Fund to another, there are no loan documents or other documents supporting a 

legitimate business purpose for these transfers. In any event, such loans still would 

have violated the terms of the JKV Funds LP Agreements and/or PPMs.    

105. Contrary to JKV Fund documents, which represented to investors that 

their investment in a fund was specific to that particular fund, Kralik misused investor 

money by frequently making fund-to-fund transfers directly or by using JKV LLC as 

an intermediary. The Defendants knew or were reckless or negligent in not knowing 

that the statements about the use of investor money were false given their role in 

misusing fund money. 

106. The Defendants made numerous and frequent fund-to-fund transfers. For 

instance, in March 2022 alone, Kralik made or authorized fifteen transfers into a 

Fund I bank account from other JKV Funds, and also made or authorized six transfers 

from that Fund I bank account to other JKV Funds.  

107. The following chart shows the approximate aggregate net amounts 

directly transferred between the JKV Funds. 

Net Direct Fund-to-Fund Transfers from October 2019 to April 2024 
 Sent to Other 

JKV Funds 
Received From 
Other JKV 
Funds 

Net Sent to 
Other JKV 
Funds 

Fund I $3,091,703 $4,220,045 -$1,128,342 

Fund II $3,099,777 $2,857,500 $242,277 

Investors A $380,020 $185,519 $194,501 

Investors C $74,236 $41,110 $33,126 

Treasure Valley $1,402,598 $744,160 $658,438 

Totals $8,048,334 $8,048,334  

 

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108. Additionally, of the over $4 million that Kralik transferred or had 

transferred from certain JKV Funds to the bank account for JKV LLC, he 

subsequently transferred at least $700,000 of that money to other JKV Funds.  

109. When deciding whether to invest in the JKV Funds, investors would 

have considered it important to know that the Defendants would make fund-to-fund 

transfers. Two investors attested they would not have invested in the JKV Funds had 

they known that investor money would be transferred between JKV Funds. 

110. Even for Fund I, which over a four-year time frame ultimately received 

more money from other funds than it transferred out, investors in Fund I were 

defrauded by receiving capital account statements falsely claiming that distributions 

were from Fund I’s profits. In fact, certain distributions to Fund I investors came 

from other JKV Funds. Thus, these investors (who had the right to request 

redemptions of their money) were lulled into believing that their money was safe and 

their investment was prosperous, when in fact some of the purported gains came from 

improper transfers from other JKV Funds. Any reasonable investor would consider it 

important to know whether the gains shown on an account statement represented 

actual gains from the business operations of that fund and not from the proceeds of 

other funds. 

b. The Improper Fund-to-Fund Transfers Started Early 

On and Continued Throughout the Relevant Period. 

111. In one early example, on October 29, 2019, a Fund II bank account had a 

beginning balance of $1,000. On that same day, a Fund II investor transferred his 

$500,000 contribution into that Fund II bank account. No other deposits were made 

into the Fund II bank account between October 29 and November 5, 2019. On 

November 5, 2019, Kralik transferred $46,180 from that Fund II account to a Fund I 

account.  

112. On April 9, 2021, a JKV LLC bank account had an ending daily balance 

of $477.44. On April 12, 2021, Kralik transferred $75,000 from a Treasure Valley 

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bank account and $7,500 from an Investors A bank account into the JKV LLC bank 

account. No other deposits were made into JKV LLC’s bank account between April 9 

and April 12, 2021. On April 12, 2021, Kralik made transfers totaling the following 

amounts out of the JKV LLC bank account: $53,500 to a Fund I bank account, $5,350 

to an Investors C bank account, and $22,000 to a Fund II bank account.  

113. On May 10, 2023, a Fund I bank account had a beginning balance of 

$986.66. That same day, the Fund I bank account received a deposit of $571,712.11 

from an escrow company in connection with the sale of a Fund I property. No other 

deposits were made into that Fund I bank account on May 10 and May 11, 2023. On 

May 11, 2023, Kralik transferred $71,000 from the Fund I property sale proceeds to a 

bank account held by Treasure Valley.  

c. Kralik Made Improper Fund-to-Fund Transfers to 

Facilitate Ponzi-like Payments to Other Investors. 

114. Some of the improper fund-to-fund transfers were used for Ponzi-like 

distribution payments to investors in other JKV Funds, which is part of the fraudulent 

scheme and also contrary to the Defendants’ representations that investors would 

receive profits from the particular fund they invested in.  

115. In one example, on August 17, 2021, a Fund II bank account had a 

beginning balance of $75.14. That same day, Kralik transferred $65,000 from a Fund 

I bank account to Fund II’s bank account. That same day, Kralik used most of the 

money received by Fund II from Fund I to make a distribution payment of $60,954.71 

to an investor in Fund II. JKV Capital then provided a Q3 2021 capital account 

statement to this Fund II investor falsely indicating that the recent $180,000 in profit 

share distributions were from Fund II’s quarterly profits. To the contrary, close to 

$61,000 of those distributions had come from money taken from Fund I, in which this 

investor was not a participant.  

116. In an additional example, on January 14, 2022, a Fund II bank account 

had a beginning balance of $32,984.58. That same day, Kralik transferred in 

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$225,000 to that account (consisting of $160,000 from a Fund I bank account, 

$50,000 from JKV LLC, and $15,000 from JKV Capital). That brought the balance in 

the Fund II bank account to $257,984.58. No other deposits were made into the Fund 

II bank account on that day. That same day, Kralik made redemption and distribution 

payments totaling $226,354.42 to Fund II investors from that Fund II account. 

117. In another example of Ponzi-like fund-to-fund transfers, on March 30, 

2022, Fund II’s bank account had a beginning balance of $502.44. That same day, 

Kralik transferred $115,000 from a Treasure Valley bank account and $60,000 from a 

Fund I bank account into Fund II’s bank account. Kralik also transferred $27,000 

from a JKV Capital bank account and $3,000 from a JKV Homes bank account into 

that same Fund II account. No other deposits were made into the Fund II bank 

account on that day. That same day, Kralik made distribution payments of 

$187,168.78 and $17,535.69 to Fund II investors from the Fund II account. 

118. In a further example, on December 13, 2022, a Fund I bank account had 

a beginning balance of $562.06. That same day, Kralik transferred $21,100 from a 

Fund II bank account to the Fund I bank account. No other deposits were made into 

the Fund I bank account on that day. That same day, two Fund I investors cashed 

checks issued from the Fund I bank account in the amounts of $6,168.16 and 

$15,420.40. 

d. The Defendants Made Improper Transfers that 

Concealed Shortfalls When a Fund Could Not Make 

Mortgage Payments or Other Property-Related Costs. 

119. Kralik improperly transferred money from one JKV Fund for operating 

expenses of another JKV Fund, such as payments to mortgage companies and other 

costs. This use of fund money conflicts with the stated purpose of each JKV Fund to 

operate a real estate business for the investors participating in that specific fund. It 

also concealed from investors that there were shortfalls in the funds. 

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120. For example, on October 15, 2020, Kralik used money from Fund II to 

make a payment to a mortgage company on behalf of Fund I. On that day, a Fund I 

bank account had a beginning balance of $5,345.47. Kralik then authorized the 

transfer of $55,000 from a Fund II bank account into the Fund I bank account. No 

other deposits were made into this Fund I bank account on October 15, 2020. That 

same day, Kralik made a payment to a mortgage company of $58,352.31 from the 

Fund I account.  

121. In another example, on October 13, 2021, Kralik used money from 

Treasure Valley to make a payment to a mortgage company on behalf of Fund II. On 

that day, a Fund II bank account had a beginning balance of $3,712.78. That same 

day, Kralik authorized a transfer of $35,000 from a Treasure Valley bank account 

into a Fund II bank account. No other deposits were made into this Fund II bank 

account on October 13, 2021. That same day, Kralik made a payment to a mortgage 

company of $34,829.15 from the Fund II account.  

122. Kralik also transferred money directly to escrow companies from JKV 

Funds for payments relating to properties held by other JKV Funds. For instance, on 

March 25, 2021, Kralik authorized a transfer of $140,281.57 from a Fund II bank 

account to an escrow company in connection with the purchase of a Fund I property. 

123. Fund offering documents do not authorize these transfers of money 

between the JKV Funds or to other entities for the benefit of other JKV Funds. These 

transfers for mortgages and other operating costs were not made in the form of loans 

and were not made in pursuit of the partnerships’ purposes. Nor did investors give 

consent to the transfers.  

124. Given his role in preparing, approving, and/or signing the fund offering 

documents discussed above, Kralik knew, or was reckless or negligent in not 

knowing, that the fund-to-fund transfers were improper. 

125. Additionally, in early 2022, Accountant A raised concerns to Kralik 

about being directed to transfer money between the JKV Funds if the transfers were 

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not authorized in writing by the funds’ limited partners. Accountant A refused to 

continue making these transfers. Nevertheless, even after Accountant A raised 

concerns, Kralik kept making improper fund-to-fund transfers throughout 2022, 2023 

and into 2024. 

126. Based on the facts alleged above, the Defendants intentionally, 

knowingly, recklessly and/or negligently carried out their fraudulent scheme by 

making illicit fund-to-fund transfers.  

5. The Defendants Diminished the Equity in Properties and 

Concealed the Fraud by Incurring a Large Amount of Debt. 

127. Throughout the Relevant Period, the Defendants took out large 

mortgages and loans encumbering properties owned by Fund I, Fund II, Investors A, 

and Treasure Valley, resulting in very little, if any, equity in the properties owned by 

those funds.  

128. Balance sheets for Fund I as of the first quarter of 2022 and Fund II as of 

the third quarter 2022 show those funds owed mortgage companies significantly 

greater amounts than investors’ contributions and greater amounts than the total 

purchase price of the properties. Kralik, JKV Capital, and JKV LLC also took out 

large amounts of debt against the properties held by Investors A and Treasure Valley, 

resulting in little equity in those properties. The large amount of debt diminished the 

equity in the properties and the value of investors’ capital investments in these four 

funds. 

E. The Defendants’ Scheme Unravels. 

129. Near the end of 2022, Kralik conveyed to an employee that there was a 

shortfall of millions of dollars for JKV Fund investors. After the SEC issued a 

January 2023 document subpoena to JKV Capital, Kralik ceased making regular 

distributions to investors (Kralik had stopped raising money from investors prior to 

January 2023). Kralik then sold some of the remaining valuable properties and 

provided payments to only some investors. 

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130. In early 2023, JKV Capital again retained Accountant A to make 

adjustments to the December 31, 2022 entries in the books and records for the JKV 

Funds and JKV Capital. Among other adjustments, Accountant A recognized some of 

the unauthorized fund-to-fund transfers and improper transfers to JKV Capital, which 

resulted in at least $1.8 million in losses for Fund I and Fund II. As a result, the 

fourth quarter 2022 capital account statements for Fund I and Fund II showed a 

substantial decrease in the value of each investor’s capital in those two funds. 

131. In January 2023, Kralik confessed part of his fraud to some of his 

investors, as discussed above.  

FIRST CLAIM FOR RELIEF 

Violations of Exchange Act Section 10(b) and Rule 10b-5 thereunder  

(against all Defendants) 

132. The SEC realleges and incorporates by reference paragraphs 1 through 

131 above. 

133. As set forth above, the Defendants engaged in a scheme to defraud by 

misappropriating investor money (i) for Kralik’s own enrichment through transfers of 

money to Kralik and to his companies, JKV LLC and JKV Homes; (ii) through 

unauthorized transfers to JKV Capital, and (iii) through improper fund-to-fund 

transfers.  

134. As set forth above, Defendants made material misstatements and 

omissions concerning the use of investor money, the preservation of investors’ 

capital, the safekeeping of investor money in a segregated account for Fund II, and 

the return of investors’ contributions when Fund II did not raise a minimum of $5 

million. 

135. By engaging in the acts and conduct alleged in this Complaint, the 

Defendants directly or indirectly, by the use of the means and instrumentalities of 

interstate commerce or of the mails, in connection with the purchase or sale of 

securities, with scienter: (a) employed devices, schemes, or artifices to defraud, (b) 

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made untrue statements of a material fact or omitted to state a material fact necessary 

in order to make the statements made, in light of the circumstances under which they 

were made, not misleading; and (c) engaged in acts, practices, or courses of business 

which operated or would operate as a fraud or deceit upon other persons.  

136. By reason of the conduct described above, the Defendants violated, and 

unless restrained and enjoined will continue to violate, Section 10(b) of the Exchange 

Act, 15 U.S.C. §78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5. 

SECOND CLAIM FOR RELIEF 

Violations of Securities Act Section 17(a) 

(against all Defendants) 

137. The SEC realleges and incorporates by reference paragraphs 1 through 

136 above. 

138. As set forth above, the Defendants engaged in a scheme to defraud by 

misappropriating investor money (i) for Kralik’s own enrichment through transfers of 

money to Kralik and to his companies, JKV LLC and JKV Homes; (ii) through 

unauthorized transfers to JKV Capital, and (iii) through improper fund-to-fund 

transfers.  

139. The Defendants obtained money from investors by making material 

misstatements and omissions concerning the use of investor money, the preservation 

of investors’ capital, the safekeeping of investor money in a segregated account for 

Fund II, and the return of investors’ contributions when Fund II did not raise a 

minimum of $5 million. 

140. By engaging in the conduct described above, the Defendants, directly or 

indirectly, in the offer or sale of securities, and by the use of means or instruments of 

transportation or communication in interstate commerce or by use of the mails 

directly or indirectly: (a) employed devices, schemes, or artifices to defraud; (b) 

obtained money or property by means of untrue statements of a material fact or by 

omitting to state a material fact necessary in order to make the statements made, in 

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light of the circumstances under which they were made, not misleading; and (c) 

engaged in transactions, practices, or courses of business which operated or would 

operate as a fraud or deceit upon the purchaser of the securities offered or sold by the 

Defendants.  

141. By reason of the conduct described above, the Defendants violated 

Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a).  

THIRD CLAIM FOR RELIEF 

Control Person Violations of Exchange Act Section 10(b) and Rule 10b-5 

thereunder, pursuant to Exchange Act Section 20(a) 

(against Kralik) 

142. The SEC realleges and incorporates by reference paragraphs 1 through 

141 above. 

143. At all relevant times herein, Kralik was a control person of JKV Capital 

and JKV LLC because he possessed, directly or indirectly, and exercised actual 

control over the operations of JKV Capital and JKV LLC. Kralik owns 55% of JKV 

Capital and 100% of JKV LLC, JKV Capital’s manager. Kralik is a signatory on all 

relevant bank accounts and improperly directed transfers out of the JKV Fund 

accounts into accounts for other JKV Funds, JKV Capital, JKV LLC, and his entity 

JKV Homes. As CEO of JKV Capital, Kralik controls the business’s day-to-day 

operations, and as JKV LLC’s sole member and manager, he controls the operations 

of JKV LLC. He prepared, approved, signed, and was a party to fund documents on 

behalf of JKV Capital and JKV LLC. Kralik directly or indirectly caused JKV Capital 

and JKV LLC to misuse and misappropriate investor money. He also directly or 

indirectly caused JKV Capital and JKV LLC’s false and misleading statements.  

Kralik did not act in good faith with regard to any of this conduct.  

144. Accordingly, pursuant to Section 20(a) of the Exchange Act, Kralik is 

liable to the SEC to the same extent as JKV Capital and JKV LLC would be liable for 

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their respective violations of Section 10(b) of the Exchange Act and Rule 10b-5 

thereunder. 

FOURTH CLAIM FOR RELIEF 

Unjust Enrichment 

(against Relief Defendant JKV Homes) 

145. The SEC realleges and incorporates by reference paragraphs 1 through 

144 above. 

146. As alleged above, Relief Defendant JKV Homes received ill-gotten 

gains from the Defendants’ fraudulent scheme involving the misappropriation and 

misuse of fund money. 

147. Relief Defendant JKV Homes obtained ill-gotten gains described above 

as part of the securities law violations alleged above under circumstances in which it 

is not just, equitable, or conscionable for them to retain the funds. Relief Defendant 

JKV Homes does not have a legitimate claim to these funds. 

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court: 

I. 

Issue findings of fact and conclusions of law that the Defendants committed the 

alleged violations. 

II. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Defendants Kralik, JKV Capital, and JKV 

LLC and their officers, agents, servants, employees, and attorneys, and those persons 

in active concert or participation with any of them, who receive actual notice of the 

judgment by personal service or otherwise, and each of them, from violating Section 

17(a) of the Securities Act, 15 U.S.C. § 77q(a), and Section 10(b) of the Exchange 

Act [15 U.S.C. §§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5] 

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III. 

Issue an order, pursuant to Section 20(e) of the Securities Act, 15 U.S.C. 

§ 77t(e), and Sections 2l(d)(2) of the Exchange Act, 15 U.S.C. § 78u(d)(2), 

prohibiting Defendant Kralik from acting as an officer or director of any issuer that 

has a class of securities registered pursuant to Section 12 of the Exchange Act, 15 

U.S.C. § 78l, or that is required to file reports pursuant to Section 15(d) of the 

Exchange Act, 15 U.S.C. § 78o(d). 

IV. 

Issue an order requiring Defendant Kralik jointly and severally with Defendant 

JKV Capital, and jointly and severally with Defendant JKV LLC to disgorge their ill-

gotten gains, together with prejudgment interest thereon, pursuant to Sections 

21(d)(3), 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(3), 

78u(d)(5), and 78u(d)(7)]. 

V. 

Issue an order requiring Relief Defendant JKV Homes to disgorge ill-gotten 

funds received by it and to which it has no legitimate claim, together with 

prejudgment interest thereon, pursuant to Sections 21(d)(3)(A)(ii), 21(d)(5) and 

21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(3)(A)(ii), 78u(d)(5), and 

78u(d)(7)]. 

VI. 

Issue an order requiring Defendants Kralik, JKV Capital, and JKV LLC to pay 

civil penalties under Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and 

Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]. 

VII. 

Retain jurisdiction of this action in accordance with the principles of equity and 

the Federal Rules of Civil Procedure in order to implement and carry out the terms of 

all orders and decrees that may be entered, or to entertain any suitable application or 

motion for additional relief within the jurisdiction of this Court. 

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VIII. 

Grant such other and further relief as this Court may determine to be just and 

necessary.  
 

DEMAND FOR JURY TRIAL 
 

 Pursuant to Federal Rule of Civil Procedure 38, the SEC demands trial by jury. 

Dated: July 2, 2024  
 /s/ Stephen Kam 

STEPHEN KAM, Local Counsel 
P. DAVIS OLIVER (pro hac vice 
pending) 
JOHN M. MCNULTY (pro hac vice 
pending) 
 
Attorneys for Plaintiff 
Securities and Exchange Commission 

 
Of counsel: 

 Christopher M. Bruckmann 
 Sarah E. Routh 

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	a. JKV Opportunities Fund 1, LP (“Fund I”);
	b. JKV Opportunities Fund II, LP (“Fund II”);
	c. JKV Investors A, LP (“Investors A”);
	d. JKV Investors C, LP (“Investors C”); and
	e. Treasure Valley Rental Fund LP (“Treasure Valley”).
	A. Kralik, JKV Capital, and JKV LLC Offered and Sold Securities.
	B. Kralik, JKV Capital, and JKV LLC Each Actively Participated in the Fraud.
	a. Kralik approved the content on the JKV Capital website, which describes its business as managing residential real estate investment funds and provides a means for investors and prospective investors to obtain more information.
	b. In the video on the feeder fund’s website, Kralik introduces himself as the founder and CEO of JKV Capital, a real estate investment firm.
	c. Kralik is a signatory on the bank accounts held by JKV Capital and JKV LLC.
	d. Kralik directed employees to make transfers between JKV Fund accounts and accounts held by JKV LLC and JKV Capital.
	a. Kralik helped prepare and had final sign-off on the PPMs.
	b. Kralik helped prepare the LP Agreements and subscription agreements for the JKV Funds, and also signed many subscription agreements as manager of JKV Capital (or as manager of the JKV Fund).
	c. Kralik is a signatory on the bank accounts held by each of the JKV Funds.
	d. Kralik directed employees to make transfers between JKV Fund accounts and accounts held by other JKV Funds or his other entities.
	e. Kralik provided information for, and had final approval of, the JKV Funds’ books and records.
	f. Kralik solicited investors for the JKV Funds, including serving as the presenter in the video posted on the feeder fund’s website to raise money for Fund II.
	g. Investors for some JKV Funds were directed to send executed investment documents to Kralik’s attention at his JKV Capital email address.
	h. Kralik approved quarterly capital account statements provided to JKV Fund investors.
	i. Kralik approved distributions and redemptions and dealt with complaining investors.
	C. The Defendants Made Materially False and Misleading Misstatements Regarding the Funds and Investor Money.
	1. The Defendants Made Materially False and Misleading Statements About the Purpose of the Funds.
	2. The Defendants Made Materially False and Misleading Statements About the Specific Uses of Investor Money.

	(a) The Partnership shall pay the General Partner an annual asset management fee of one percent (1%) … of the gross market value of all of the Partnership’s assets under management …
	(b) … an asset acquisition fee equal to one percent (1%) of the gross purchase price … paid for any real property acquired …
	(c) In the event that the General Partner or Affiliate renders services or provides goods to the Partnership which it would not be required to provide without charge as a general partner, the Partnership shall pay the General Partner or Affiliates for...
	(d) The Partnership shall reimburse the General Partner for the actual costs of goods or services used by or on behalf of the Partnership…”
	3. The Defendants Made Materially False and Misleading Statements About Preserving Investors’ Capital.
	4. Kralik and JKV Capital Made Additional False Statements to Investors Regarding Fund II.

	D. The Defendants Defrauded Investors by Misappropriating and Misusing Investor Money.
	1. Kralik Admitted in Early 2023 That He Misused Fund Money.
	2. Kralik Misappropriated Money From the JKV Funds for his Personal Benefit.
	a. From the Beginning, Kralik Stole Investor Money and Lied.
	b. Kralik Stole Investor Money to Pay for His Car, House, Vacation, and Other Personal Expenses.
	c. Kralik Improperly Transferred Fund Money to His Personal Investment Vehicle JKV Homes.

	3. Kralik and JKV Capital Also Misused Investor Money Through Improper Transfers to JKV Capital.
	4. Kralik, JKV Capital, and JKV LLC Misused Investor Money By Making Illicit Fund-to-Fund Transfers.
	a. The Defendants Improperly Transferred Millions of Dollars Between Funds.
	b. The Improper Fund-to-Fund Transfers Started Early On and Continued Throughout the Relevant Period.
	c. Kralik Made Improper Fund-to-Fund Transfers to Facilitate Ponzi-like Payments to Other Investors.
	d. The Defendants Made Improper Transfers that Concealed Shortfalls When a Fund Could Not Make Mortgage Payments or Other Property-Related Costs.


	5. The Defendants Diminished the Equity in Properties and Concealed the Fraud by Incurring a Large Amount of Debt.
	E. The Defendants’ Scheme Unravels.