A federal judge has dismissed charges that a New York man participated in a $1.5 million hedge fund fraud by passing falsified reports to prospective investors.

George Palathinkal, general partner and chief financial officer of Aphelion Fund Manager LLC, was cleared of all charges in the U.S. District Court, Southern District of New York, in Manhattan on June 18, 2015.

Aphelion and Vineet Kalucha, the firm’s chief investment officer, still face charges brought by the U.S. Securities and Exchange Commission in May 2014.

The SEC alleges that Kalucha siphoned off some of the $1.5 million raised from investors in 2013 and 2014 for personal expenses, including the purchase of a luxury car and the settlement of a foreclosure on his home.

At the time, the firm and Palathinkal were also charged with knowingly distributing performance results that understated the firm’s assets and showed a 30 percent increase in an Aphelion investment account when in reality there was a 3 percent loss.

Judge Richard Berman dismissed the SEC’s charges against Palathinkal with prejudice and without costs, while the case against Kalucha and Aphelion remains in the pre-trial phase.