In the “White Men Speaking with Forked Tongues” Department, the Justice Department and the Securities and Exchange Commission have charged Internet porn payment mogul Jason Galanis and six other men with ripping off the Oglala Sioux Tribe with fake bonds.
DOJ and SEC allege that Galanis, his father John, and accomplices got the Oglala Sioux tribe to issue $63.3 million in municipal bonds between August 2014 and April 2015 through its economic development corporation Wakpamni Lake Community Corporation. (WLCC has been embroiled in controversy over unlicensed online payday lending.) The bonds, say DOJ and SEC, were bogus:
The “primary objective is to get us a source of discretionary liquidity. Sick of begging,” Jason wrote of the bond scheme, in an e-mail quoted by prosecutors.
To carry out their plan, the group created a complex network of companies that secretly paid them hundreds of thousands of dollars to place the bonds with investors, according to the government. They then issued a total of $63 million in four installments.
In a Ponzi-style scheme, they recycled some of the proceeds from the first $27 million issue to buy the later ones, prosecutors said. They also sold millions of dollars of the tribal bonds to unsuspecting pension funds and endowments that were clients of two asset management firms controlled by Jason, according to the U.S.
“This is pure genius alla mikey Milken!!” Bevon Cooney, Jason’s “best friend of 23 years,” wrote in an e-mail contained in the government’s complaint. “The Native American Bonds!!!…Great work here Greek,” he added, using Jason’s nickname [Neil Weinberg and Patricia Hurtado, “Stock Swindler’s Catalog of Charges Grows on Sioux Bond Deal,” Bloomberg, 2016.05.12].
The Galanises have a long record of fraud. Check out this passage from the SEC’s announcement of separate charges against them last September:
The Securities and Exchange Commission today charged six men, including a father and three sons, with defrauding investors in Gerova Financial Group Ltd., whose shares once traded on the New York Stock Exchange.
The SEC’s complaint, filed in U.S. District Court in Manhattan, charges John Galanis, his sons Jason Galanis, Derek Galanis, and Jared Galanis, along with Gerova president and chairman Gary T. Hirst and investment adviser Gavin Hamels. John Galanis has been a defendant in numerous SEC enforcement actions dating back to the early 1970s and his son Jason Galanis was charged by the SEC in 2007.
According to the SEC’s complaint, in early 2010, Jason Galanis and Hirst orchestrated a scheme to secretly issue $72 million of unrestricted Gerova shares to a Galanis family friend in Kosovo. Jason Galanis, his father, and his brothers allegedly directed sales of the shares from the Kosovo friend’s brokerage accounts and had the proceeds wired to them and their associates who collectively realized approximately $20 million in illicit profits [Securities and Exchange Commission, press release, 2015.09.24].
John Galanis has done time twice for fleecing investors, including Sammy Davis Jr. and Eddie Murphy, of over $400 million. Yet people keeping shaking hands with these guys and doing business? Holy cow!