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Jason Galanis

Wakpamni Lakotas Blindsided By $60M Wall Street Scam

David Rooks
6/9/16

“Oh, what a tangled web we weave, when first we practice to deceive…”  – Sir Walter Scott

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…”

A Bernie Sanders rally in Pine Ridge village the morning after the headline, and a tour of local schools by the Obama Administration’s Secretary of Education, John B. King, on the same day, overshadowed the breaking news and caught the tribal nation off guard. Post-rally, Oglala Sioux Tribal Chairman John Yellow Bird Steele’s office received multiple media requests for comment about the tribe “being ripped off for such an incredible amount.”

Heated questions about the tribe’s “$60 million debt” inundated the Tribal Council. Lacreek District Councilman Craig Dillon said, “We had no idea what was going on.”

Bharara’s press release from 1,500 miles away in New York was frequently quoted: “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.”

The same day, the tribe learned the Securities and Exchange Commission (SEC) had also filed charges. Citing Jason Galanis and his father, John Galanis, as ringleaders, a May 11 SEC press release alleged: “[They] 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 U.S. Attorney charged that, once the Galanis’ had the $43 million in hand, they “allegedly pocketed most of it to pay for their own personal expenses, homes, cars, travel, and jewelry.” The “Native American Tribal Corporation” mentioned in the press release was identified as the Wakpamni Lake Community Corporation (WLCC).

How much of the proceeds of the bond sales made it to WLCC has not been released, though Jason Galanis, in a February 2016 letter to the Wakpamni Lake board references two prior bond annuity interest payments totaling “$2.72 million” that WLCC had received. Also four new industrial sized steel structures have been erected in the Wakpamni Lake community. The buildings’ construction contractor, Richard Shangreaux, says he is not at liberty to discuss the costs or any other details of the buildings without the WLCC board’s permission.

To date, no one on the Wakpamni Lake Community Corporation Board, nor any other Oglala Lakota tribal member has been charged with a crime. By Monday, May 16, Chairman Yellow Bird Steele, had been briefed by sources within WLCC. The tribal chairman had also consulted the tribe’s lawyers, the SEC, and U.S. Attorney’s office. “We’re victims,” Yellow Bird Steele said, “and they (WLCC) are even bigger victims.”

Wounded Knee District Councilman, Mike Her Many Horses reserved judgement on who was or was not a victim, and pointed out that the entire incident showed the need for regulatory oversight of what is being done in the name of the tribe. Wakpamni Lake Community Corporation says it has obeyed all laws, including those of the tribe.

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