Devon Archer and Hunter Biden at upper left. Your tax dollars enter at upper right. Alternate Link: https://kumu.io/jeff/startup-paradise
Seven Accused of Selling Fake Bonds
Devon Archer, Jason Galanis and others face securities-fraud charges related to alleged tribal bond scheme
(Yes. This is a story about the latest Hawaii high-tech tax credit scheme. You’re not surprised are you?)
by Christopher M Matthews, Wall Street Journal, May 11, 2016 (excerpts)
…Federal prosecutors charged a former campaign adviser to Secretary of State John Kerry and a second man once dubbed by the media “porn’s new king” (Yep. This must be about Hawaii High Tech tax credits.) along with five others in an alleged scheme involving a Native American Tribal bond offering.
Devon Archer, an adviser to Mr. Kerry’s presidential campaign (Yep. This is just a scheme to enrich national Democrat activists at Hawaii taxpayers’ expense.) in 2004, and Jason Galanis, (Forbes: Galanis scams run from prison) a former investor in the adult-entertainment business, allegedly duped clients into investing more than $43 million in sham bonds issued in 2014 and 2015 by an affiliate of the Oglala Sioux Nation in South Dakota.
(Editor’s Note: Devon Archer is one of two principals of Hawaii’s latest high-tech darling, Mbloom. Seven days after these arrests CodeRebel filed for bankruptcy. Eight days after these arrests, half of Mbloom’s assets were spun off into Snap Ventures, LLC, now known as Reef Capital Ventures....and the story has been kept out of the local press from May 11 until now....)
Messrs Archer, Galanis and the five other defendants, including Mr. Galanis’s father, then allegedly diverted tens of millions of the bond investments to accounts they controlled and used them to purchase luxury goods and support an initial public offering for a technology company, authorities said.
The younger Galanis was charged in Manhattan federal court in September for activities related to an alleged pump-and-dump scheme. He was accused by prosecutors of secretly taking control of reinsurance firm Gerova Financial Group Ltd. and then dumping its stock, reaping nearly $20 million in illegal profits. Mr. Galanis’ father is also charged in that case. They have pleaded not guilty in the Gerova case.
Mr. Archer was the college roommate of the secretary of state’s stepson, H.J. Heinz Co. ketchup heir Christopher Heinz, and has business ties to Vice President Joe Biden’s son, Hunter. (Just for fun: Google ‘Biden sons offshore banking.’ Then play: This Music Video from Creedence. Then go pay your taxes, because Biden, Kerry, and the Porn King need the money.)
Mr. Archer, 39, and Hunter Biden, 44, have worked for Rosemont Seneca Partners, a U.S. investment company. It is affiliated with Rosemont Capital, a private-equity firm Mr. Archer co-founded with Mr. Heinz.
Messrs. Archer and Biden also recently joined the board of directors of Burisma Holdings Ltd, a Ukrainian gas producer controlled by a former top security and energy official for deposed President Viktor Yanukovych, as previously reported by The Wall Street Journal.
That move has attracted attention, given the Obama administration’s recent support for pro-Western demonstrators who toppled Mr. Yanukovych’s Kremlin-backed government in February…. (ooooops!)
Jason Galanis has previously run afoul of the SEC. To settle another SEC case, he agreed to a five-year ban from serving as an officer or director of a publicly traded company in 2007. The agency alleged he had filed false accounting information for Penthouse International Inc., an adult magazine publisher in which Jason Galanis owned a significant stake, that SEC complaint said.
read … The Wall Street Journal if you want to find out about the latest escapades of Hawaii High-Tech Tax Credit Fraudsters
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Seven Defendants Charged In Manhattan Federal Court With Defrauding A Native American Tribe And Investors Of Over $60 Million
(Yes. This is a story about the latest Hawaii high-tech tax credit scheme. You’re not surprised are you?)
News Release from US Department of Justice, May 11, 2016
Preet Bharara, the United States Attorney for the Southern District of New York, Diego Rodriguez, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced that seven defendants were arrested today and charged with orchestrating a scheme to defraud investors and a Native American tribal entity of tens of millions of dollars.
JASON GALANIS and HUGH DUNKERLEY were arrested in the Central District of California. JASON GALANIS will be presented later today before a U.S. Magistrate Judge in Los Angeles and DUNKERLEY will be presented before a U.S. Magistrate Judge in Santa Ana, California. GARY HIRST was arrested in the Middle District of Florida and will be presented later today before a U.S. Magistrate Judge in Orlando. JOHN GALANIS, a/k/a “Yanni,” was arrested in the Southern District of California and will be presented later today before a U.S. Magistrate Judge in San Diego. BEVAN COONEY was arrested in the District of Nevada and will be presented later today before a U.S. Magistrate Judge in Reno. DEVON ARCHER was arrested in the Eastern District of New York. MICHELLE MORTON was arrested in New Jersey. ARCHER and MORTON will be presented later today before United States Magistrate Judge Ronald L. Ellis in Manhattan.
(Editor’s Note: Devon Archer is one of two principals of Hawaii’s latest high-tech darling, Mbloom. Seven days after these arrests CodeRebel filed for bankruptcy. Eight days after these arrests, half of Mbloom’s assets were spun off into Snap Ventures, LLC, now known as Reef Capital Ventures.)
Manhattan U.S. Attorney Preet Bharara said: “As alleged, the defendants induced an Oglala Sioux Native American tribal entity to issue bonds through lies about how the bond proceeds would be invested. 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, homes, cars, travel, and jewelry. The defendants’ alleged fraud did not stop with the tribe. The defendants also allegedly duped unwitting investors into buying the bonds by hiding material facts about them, including their lack of liquidity. 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.”
FBI Assistant Director-in-Charge Diego Rodriguez 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.”
USPIS Inspector-in-Charge Philip R. Bartlett said: “These individuals allegedly took advantage of their clients, by luring them into creating bonds the defendants allegedly knew would never pay any returns to investors. White-collar criminals always believe their crimes and abilities are above the law, but Postal Inspectors and their law enforcement partners are very skilled at bringing these fraudsters to justice for their illegal financial schemes.”
According to the Complaint unsealed today in Manhattan federal court:
From at least in or about March 2014 through in or about April 2016, JASON GALANIS, GARY HIRST, JOHN GALANIS, a/k/a “Yanni,” HUGH DUNKERLEY, MICHELLE MORTON, DEVON ARCHER, and BEVAN COONEY engaged in a fraudulent scheme to cause a Native American tribal entity to issue more than $60 million in municipal bonds and then misappropriate the proceeds from their sale. JASON GALANIS and JOHN GALANIS used the millions of dollars in illicit profits derived from the scheme to pay for a variety of personal and business expenses, including house payments, car payments and tax obligations, and to make food, travel and jewelry purchases. JASON GALANIS also used the proceeds to make millions of dollars of payments to other defendants, including to HIRST, DUNKERLEY, and COONEY, as well as to asset management firms run by MORTON.
To accomplish the scheme, JASON GALANIS and JOHN GALANIS first induced the Wakpamni Lake Community Corporation (“WLCC”), an Oglala Sioux tribal entity, to issue tens of millions of dollars in municipal bonds (the “Tribal Bonds”) based on false and misleading representations. MORTON and HIRST, at the direction of JASON GALANIS, used approximately $40 million of funds belonging to clients of two related investment advisers run by MORTON – Hughes Capital Management, Inc. (“Hughes”) and Atlantic Asset Management, LLC (“Atlantic”) – to purchase the Tribal Bonds, even though those defendants were well aware that material facts about the Tribal Bonds had been withheld from clients in whose accounts they were placed, including the fact that the Tribal Bond purchases fell outside the investment parameters of certain Hughes clients and of the Atlantic investment vehicle in which the Tribal Bonds were placed. In addition, those defendants failed to apprise the Hughes and Atlantic clients of substantial conflicts of interest relating to the defendants – including that HIRST and DUNKERLEY were on multiple sides of the deal with respect to the issuance and placement of the Tribal Bonds. When Hughes and Atlantic clients learned about the purchase of the Tribal Bonds, several of them demanded that the Tribal Bonds be sold. However, because there was no ready secondary market for the Tribal Bonds, the Tribal Bonds remain in their accounts.
Moreover, certain defendants, including JASON GALANIS and DUNKERLEY, falsely represented to the WLCC that proceeds from the sale of the Tribal Bonds would be placed with an investment manager who would invest the proceeds in investments that would generate annuity payments sufficient to pay the interest on the Tribal Bonds and provide additional funds to the WLCC to be used for tribal economic development purposes. In fact, none of the proceeds of the Tribal Bonds were turned over to the investment manager specified in the closing documents. Instead, the defendants misappropriated significant portions of the proceeds for their own personal use.
Some of the misappropriated proceeds were recycled and provided by JASON GALANIS to entities affiliated with ARCHER and COONEY in order to facilitate the purchase of additional Tribal Bonds issued by the WLCC in subsequent offerings induced by JOHN GALANIS. As with the first offering of Tribal Bonds, none of the proceeds of the Tribal Bonds were actually turned over to the investment manager specified in the closing documents. Instead, the defendants again misappropriated substantial portions of the proceeds for their own use. As a result of the defendants’ fraudulent scheme, the investors in whose accounts the Tribal Bonds were placed now hold worthless securities that cannot be sold, and the WLCC has no means of paying the interest payments due on the Tribal Bonds.
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JASON GALANIS, HIRST, JOHN GALANIS, DUNKERLEY, MORTON, ARCHER, and COONEY are each charged with one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense; and one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense. JASON GALANIS, HIRST, and MORTON are also charged with conspiracy to commit investment adviser fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense; and investment adviser fraud, which carries a maximum sentence of five years in prison and a maximum fine of $10,000. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge.
Mr. Bharara praised the investigative work of the FBI and USPIS, and thanked the SEC, which has filed civil charges in a separate action.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brian Blais, Aimee Hector, and Rebecca Mermelstein are in charge of the prosecution.
The allegations contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
 As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.
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Another Hi Tech Media Darling Goes Bust: Self Dealer Flees, Takes Half of MBloom With Him
PBN June 27, 2016 (excerpt with appropriate commentary)
Arben Kryeziu, the manager of Maui-based venture capital fund mbloom, has resigned, and a new fund called Reef Capital Ventures has been created in its place…. (Translation: Something really strange has happened at MBloom, but we at PBN don’t want you to notice so we are acting as if the departure of an exec normally leads to the creation of a new corporate entity.)
When mbloom was formed, it was from a public-private partnership with the HSDC and hedge fund RSTP Capital. For the first fund, mbloom1, HSDC committed $5 million and RSTP another $5 million. Primiano said HSDC will be the sole remaining partner of the fund…. (Translation: RSTP website is defunct. 50% of value is destroyed. Funny how PBN just can’t say this. Question: Did Kryeziu take down—or just take--50% of MBloom when his Code Rebel went BK???)
Kryeziu, who has since changed his last name to Kane, has been in the spotlight in the past few months. One of his companies, Maui-based Code Rebel, filed for Chapter 7 bankruptcy liquidation at the end of May. Investors have filed a class action lawsuit against the company seeking monetary damages for investments they claim were made based on false and/or misleading statements.
In 2014, mbloom was also embroiled in controversy as two of the companies it invested in were founded by the fund’s general partners, including Kryeziu….
read … Status Quo
INDIAN TRIBE DRAGGED INTO PAYDAY LENDING SCAM
FRAUDSTER GOING BACK TO 1970s