When a Bank is called Banc, it is usually a division of the original Bank, and often the persons in control want it for their own sketchy investments, but it is a weird business and it is always amazing how someone as known as Jason Galanis could get what he did.
I find it interesting that Barry Minkow is one guy exposing this. I am not so sure about his rehabilitation either. The Times writer (Lobel?) who originally teamed with him to expose scams quit after it became clear to him that Minkow was using his position to make money by shorting stocks and then publishing negative information about them.
Banc of California, a fast-growing Irvine lender that’s been rocked by allegations that it is connected to a convicted con artist, has started an investigation into those claims for the second time.
This time the bank has hired an outside firm, a move likely aimed at appeasing a major shareholder who argued a previous investigation into allegations of connections between Banc of California insiders and fraudster Jason Galanis was handled by a law firm that was too cozy with the bank and its executives….
Banc of California has been dogged over the last two months by allegations of connections to Galanis, including what Lashley described as “a significant amount of interconnectedness” between Galanis — who this summer pleaded guilty to securities fraud charges — and bank insiders or their family members, including Jason Sugarman, an advisor to the bank and the brother of its chief executive, Steven Sugarman.
Some of those connections were raised in a Sept. 7 Bloomberg story following the bank’s announcement that it would pay a reported $100 million for the naming rights to the soccer stadium being built by new Major League Soccer team L.A. Football Club — a team owned, in part, by Jason Sugarman.
Banc of California’s stock started sliding after that story, then cratered when an anonymous short-seller — an investor who has bet against the bank — wrote a post on a financial blog alleging connections and outlining them in detail, concluding that Galanis had gained control of the bank. Lashley said he does not agree with that conclusion, and the bank has denied the short-seller’s claim.
Aurelius recently exposed purported ties between Banc of California and Jason Galanis, a convicted fraudster who, along with his family members and acquaintances, has been tied to numerous stock frauds over the past few years (find the Gerova conviction here, the Penthouse settlement here, and the current Tribal Bond allegation here). The connections between BANC management and Galanis caused a massive collapse (almost 30%) in BANC’s stock price, which speaks to how much fear the market has when it comes to paper-trail connections between Galanis (a serial fraudster) and public companies. I too have been researching Jason Galanis as his name recently came up in a loan that I was researching regarding BofI Holding (NASDAQ:BOFI).
In this report, I will show a series of connections between BOFI and Jason Galanis that I believe date all the way back to the original Gerova fraud (2010), and carry on as recently as 2015 as a result of BOFI’s involvement in a $7 million loan to Jason Galanis (now delinquent and the subject of messy foreclosure proceedings that involve the Department of Justice). Investors ought to ask/wonder how this loan is being reflected on BOFI’s balance sheet and/or if management will speak to said Galanis ties during the next earnings call.
May 12, 2016: Jason Galanis ‘Porn King’ of LA ‘Ripped off Impoverished Sioux Tribe In $60M Scam’
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.
It was a headline writer’s dream: “Man once dubbed ‘Porn’s New King’ is charged in tribal fraud.” The Associated Press’s May 11 story by Larry Neumeister said six men and one woman were charged in a Southern District of Manhattan Court for defrauding an “arm of the Oglala Sioux Tribe of the Pine Ridge reservation in South Dakota for over $60 million.”
Leading the alleged fraudsters, said U.S. Attorney, Preet Bharara, was Jason Galanis. Galanis earned his title as “Porn’s New King” via a March 2004 Forbes Magazine article that said he led a group of buyers for a company named Internet Billing, or iBill. Forbes reported “IBill is the largest processor of credit-card payments for the purchase of dirty digital pictures. It is literally the engine of paid Internet porn.” Forbes also reported that Jason Galanis is the “son of John Peter Galanis, the notorious white-collar crook who bilked investors of $400 million before he was thrown in prison…”
Oct. 18: Why Shares of Banc of California, Inc. Are Plunging
Banc of California may have some very troubling ties to a family known for fraud.
Jason Galanis is the son of John Galanis, whole stole millions of dollars from banks and investors in the 1970s and 1980s, and even fraudulently took control of the Columbia Federal Savings Bank.
Fraud appears to be a family business, as both men have lengthy histories of involvement in white-collar crime. The father and son duo recently plead guilty to charges stemming from their role in taking control of Gerova Financial, a reinsurance company, and later defrauding shareholders.
As recently as May, Jason and John Galanis were charged by the Securities and Exchange Commission and Department of Justice for their involvement in a Ponzi scheme. The blog post points to evidence that the Ponzi scheme was run out of the same office building as Banc of California’s headquarters.
The post draws a number of links between Jason Galanis and Banc of California’s CEO, Steven Sugarman. Perhaps the most troubling involves an entity known as COR Capital. In 2010, COR Capital led a major investment in the bank that would become Banc of California, and Sugarman was installed as CEO. The author details evidence suggesting that Galanis controlled COR Capital, drawing a direct link between Banc of California’s CEO and a serial fraudster known for financial industry crimes.
With so many Galanis-related entities proving to be vehicles for fraud, any relationship between Banc of California and the Galanis family is cause for deep concern. The market seems to think so, too.
OCTOBER 18: BANC: Extensive Ties To Notorious Fraudster Jason Galanis Make Shares Un-Investible
In 2010, COR Capital (“COR”), an obscure investment firm most visibly known for its associations with Pink-Sheet stocks, led the recapitalization of a Los Angeles based regional bank named First Pactrust (“FPB”). In 2012, Steven Sugarman, COR’s Managing Member, became the CEO of the bank and began a “transformational” growth strategy fueled by a combination of (oftentimes related party) acquisitions and loan growth.
Growing its balance sheet by a factor of 10x and now having crossed the critical $10 Billion asset threshold, the renamed Banc of California (NYSE:BANC) has touted itself as a “community reinvestment” lender. The bank has cultivated relationships with politicians and celebrities to project an air of success and credibility as California’s Bank. Investors have increasingly adopted these promotional narratives and BANC’s shares had doubled over the past year.
The PR effort hit new highs in August when BANC agreed to pay $100 million, roughly 10% of its market cap, for soccer stadium naming rights to the LA Football Club (which just happens to be part-owned by Steven’s brother Jason Sugarman and Jason’s father-in-law Peter Guber).
With our interest piqued by yet another related party transaction, we conducted exhaustive due diligence into BANC’s leadership team, collecting tens of thousands of pages of publicly-available state, federal, and international documents. Taken together, these form to assemble one of the most ominous fact patterns we have ever seen.
Our research establishes that BANC’s senior-most officers and board members have a broad mosaic of extensive and indisputable ties to Jason Galanis. We believe this introduces a significant un-discounted risk that notorious criminals gained control over the $10 Billion taxpayer guaranteed Banc of California.
Jason Galanis and his infamous father, John Galanis, have a long history of secretly gaining control of banks and public companies via front men, looting assets, and leaving unsuspecting investors and taxpayers with hundreds of millions in losses. The mere presence of a bank leadership team associated with Galanis should send diligent investors running for the hills.
We see striking similarities between BANC and Gerova Financial, a $1 Billion NYSE listed financial institution that collapsed on the revelation of Galanis’ secret control. Like BANC, Gerova’s executives had significant ties to Galanis and touted their community reinvestment efforts with politicians to establish credibility. In the end, the promotion was a diversion from a giant fraud that left investors with devastating losses.
