A man once dubbed ‘Porn’s New King’ was arrested in Los Angeles on Wednesday on charges he scammed a Native American tribe and others of more than $60 million.
Charges against Jason Galanis, 45, and six others were announced by US Attorney Preet Bharara in Manhattan. Defense lawyers did not immediately comment.
Prosecutors said Galanis, his father John ‘Yanni’ Galanis, Gary Hirst, Hugh Dunkerley, Bevan Cooney, Devon Archer and Michelle Morton lied to the Oglala Sioux tribe from March 2014 through April about how proceeds from its bonds would be invested.
They said the dealings occurred with the Wakpamni Lake Community Corp., an economic development corporation arm of the Oglala Sioux tribe of the Pine Ridge reservation in South Dakota.
The government alleges that Galanis and the others spent most of the proceeds on homes, cars, travel, designer clothing like Gucci, Prada, Valentino and jewelry.
It said they duped investors into buying the bonds as well. Galanis was charged with conspiracy to commit securities fraud, conspiracy to commit investment adviser fraud and investment adviser fraud.
‘Instead of investing the proceeds in a way that would provide capital for development and help cover the interest payments, the defendants allegedly pocketed most of it to pay for their own personal expenses,’ Bharara said in a statement.
‘The defendants’ alleged fraud has left devastation in its wake: a tribe with tens of millions in bond obligations it cannot pay, and investors out tens of millions, left holding bonds they did not want.’
Diego Rodriguez, head of New York’s FBI office, said: ‘The alleged fraudsters named in this case didn’t just see an opportunity to steal money when they thought no one was looking, they allegedly hatched a plan to scam a municipal entity from the start.
‘The most egregious fallout from this scheme is that the bondholders now hold worthless securities, and the tribe can’t make the interest payments due.’
Galanis was labeled ‘Porn’s New King’ by Forbes magazine when it reported in 2004 that he had bought the nation’s largest payment processor for Internet porn.
According to the New York Post, this is the third time in nine years that Galanis has been accused of masterminding a financial fraud scheme.
Galanis and his 73-year-old father were arrested in September and ‘charged with operating a pump-and-dump that netted them nearly $20million,’ the Post reported.
In addition, he was accused of using nearly $500,000 of the proceeds to pay for legal bills related to his pump-and-dump case.
‘The defendants also allegedly duped unwitting investors into buying the bonds by hiding material facts about them, including their lack of liquidity,’ Bharara said in a statement.
Court papers allege that the father-son-duo worked the Sioux scam prior to their arrests in September and still continued on with it after they were released on bail.
A trial for that case is scheduled for the fall of this year.