The Securities and Exchange Commission recently charged a father and son and five associates with defrauding investors in sham Native American tribal bonds in order to steal millions of dollars in proceeds for their own extravagant expenses and criminal defense costs.
The SEC alleges that Jason Galanis conducted the scheme in which the “primary objective is to get us a source of discretionary liquidity,” he wrote in an e-mail to other participants. Galanis and his father John Galanis purportedly convinced a Native American tribal corporation affiliated with the Wakpamni District of the Oglala Sioux Nation to issue limited recourse bonds that the father-and-son duo had already structured. Galanis then acquired two investment advisory firms and installed officers to arrange the purchase of $43 million in bonds using clients’ funds.
The SEC further alleges that instead of investing bond proceeds as promised in annuities to benefit the tribal corporation and generate sufficient income to repay bondholders, the money wound up in a bank account in Florida belonging to a company controlled by Jason Galanis and his associates. Among their alleged misuses of the misappropriated funds were luxury purchases at such retailers as Valentino, Yves Saint Laurent, Barneys, Prada, and Gucci. Investor money also was diverted to pay attorneys representing Jason and John Galanis in a criminal case brought parallel to the SEC’s stock fraud charges last year.
In addition to Jason and John Galanis, the SEC’s complaint names Devon Archer of Brooklyn, N.Y., Bevan Cooney of Incline Village, Nev., Hugh Dunkerley of Huntington Beach, Calif. and Paris, France, Gary Hirst of Lake Mary, Fla., and Michelle Morton of Colonia, N.J. They’re charged with violations of the antifraud provisions of the federal securities laws and related rules. The SEC states that it seeks disgorgement plus interest and penalties as well as permanent injunctions. The SEC also seeks officer-and-director bars against Jason Galanis, Archer, Dunkerley, and Morton.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against the same seven individuals.
The foregoing information, which is all publicly available on the SEC’s website, is being provided by The White Law Group. The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
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