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!
What is the state’s compelling interest in this case? I don’t see anyway Jackley can use state law to take Indian kids away from their parents or use this case to make it harder for Indians to vote. From what I’ve read, those are the issues near and dear to South Dakota’s heart when dealing with Native Americans.
This should be a federal case- since none of the defendants lives in South Dakota and the issues cross state lines.
Which Sioux tribe got ripped off by Jason?
Security fraud is covered by Federal law.
To quote Warren Zevon: “Even a dog can shake hands.”
mike from iowa, from what I have read and understand, Jackley or the state are not involved in this case, yet. It strictly a federal case originating out of New York.
On the tribal level this controversy has been going for a number of years now, with tribal members questioning both Raycen Raines and Jason Galanis true intentions.
It is most disturbing is that a simple Google search of Jason Galanis produces article after article about these corrupt bastards.
In previous discussions on Dakota Free Press about tribal economic development I tried to point out how tribes are both gullible and suspect of outside developers operating on the reservation
Incog, the tribe here is the Oglala Sioux, based at Pine Ridge.
That strikes me, too, Roger: Galanis isn’t hard to find. He and his dad have a record of shady deals. How does suspicion of outsiders not trump gullibility in this case?
Discouraging for sure. Community based frustration with the harsh conditions sometimes results in poor decisions. The community people where mostly just trying to improve life.
I do not think the corporation was an economic enterprise of the Tribe. It could have been an independent corporation. So the Tribal government would not actually be a party to this. The Oglala Tribe has successfully issued bonds before. Many tribes do. The bonds have funded many good projects.
Good people go to the reservations to help and bad people too.
Were was an attorney? Why could not the SEC or some other regulatory or technical support organization help the WLCC? How in the heck could this happen so easily. The tribal government did not support this endeavor I’ve been told. Unfortunately the tribe apparently also didn’t get involved early enough, which might have stopped this. I would like to think people spoke up eventually but it appears not soon enough.
I have an admission to make: for my first comment I either saw something somewhere that led me to believe the state was involved with this prosecution, or, I’m a total mindless dummy.
In Texas, the state and feds both indicted sitting AG for securities fraud.
And of course, no tribal officials made any money on this deal?
If you read the links to Cory’s story you will see the name Raycen Raines, tribal member, that likely made money off this scam just as he had a huge role in the illegal payday lending operation.
This scam seems to be huge, it is likely that other tribal members will be revealed. Native Americans have learned well from white politicians and are quite capable of stealing.
Tribal members stole from Lewis and Clark. Did not learn theft from them.