SEC v. Devon Archer; Francisco Martin; Jason Galanis; John Galanis; Bevan Cooney; Hugh Dunkerley, et al., No. LR-23689, Southern District of New York (Nov. 16, 2016) — Press Release

Litigation Release No. 23689 / November 16, 2016 Securities and Exchange Commission v. Devon Archer, et al., No. 16-cv-3505 (S.D.N.Y. filed May 11, 2016) SEC Charges Individual Who Headed Fake Investment Manager Used In Tribal Bonds Scheme On November 14, 2016, the Securities and Exchange Commission added Francisco Martin of Woodland Hills, California to a civil injunctive action currently pending in the U.S. District Court for the Southern District of New York, charging him with defrauding investors in sham Native American tribal bonds. The SEC's amended complaint alleges that Martin, along with seven other co-defendants, participated in a scheme to convince a Native American tribal corporation affiliated with the Wakpamni District of the Oglala Sioux Nation to issue limited recourse bonds that Jason Galanis and his father, John Galanis, had already structured. As Jason Galanis allegedly told two of his associates, the "primary objective" of the scheme was to provide Jason Galanis and his associates "a source of discretionary liquidity." Jason Galanis then allegedly acquired two investment advisory firms and installed officers to arrange the purchase of $43 million in bonds using clients' funds. The amended complaint further alleges that in exchange for $150,000 from Jason Galanis, Martin served as the "Managing Director" or "Portfolio Manager" of a fake entity that was held out to bond investors as an independent investment manager for the bond proceeds. Through his role with the fake investment manager, Martin facilitated the transfer of proceeds from investors in the tribal bonds to Jason Galanis and his associates. The SEC further alleges that instead of investing bond proceeds as promised in annuities to benefit the tribal corporation and generate sufficient income to repay bondholders, the money wound up in a bank account in Florida belonging to a company controlled by Jason Galanis and his associates. Among their alleged misuses of the misappropriated funds were luxury purchases at such retailers as Valentino, Yves Saint Laurent, Barneys, Prada, and Gucci, and to support an IPO of a technology company in which Jason Galanis and several other defendants had interests. Investor money also was diverted to pay attorneys representing Jason and John Galanis in a separate criminal case brought parallel to the SEC's stock fraud charges last year. In addition to Martin, and Jason and John Galanis, the amended complaint also names as defendants Devon Archer of Brooklyn, N.Y., Bevan Cooney of Incline Village, Nev., Hugh Dunkerley of Irvine, Calif., Gary Hirst of Lake Mary, Fla., and Michelle Morton of Colonia, N.J., all of whom were charged in the original complaint in this matter. The amended complaint charges Archer, Cooney, Dunkerley, Hirst, Jason Galanis, John Galanis and Martin with violations of Sections 17(a)(1) and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rules 10b-5(a) and (c) thereunder and Morton with violations of Section 10(b) of the Exchange Act, and Rules 10b-5(a), (b) and (c) thereunder, Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940, and Rule 206(4)-8 thereunder, and Section 209(f) of the Advisers Act by aiding and abetting violations of Section 206(1), 206(2) and 206(4) of the Advisers Act, and Rule 206(4)-8 thereunder. In addition, the Commission alleges, in the alternative, that Archer, Cooney, Dunkerley, Hirst, John Galanis and Martin violated Section 15(b) of the Securities Act by aiding and abetting violations of Section 17(a)(1) and (3) of the Securities Act and Section 20(3) of the Exchange Act by aiding and abetting violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder. The SEC seeks disgorgement plus interest and penalties as well as permanent injunctions against all defendants, and officer-and-director bars against Jason Galanis, Archer, Dunkerley, and Morton. Jason and John Galanis, Archer, Cooney, Dunkerley, Hirst and Morton were also charged criminally by the U.S. Attorney's Office for the Southern District of New York. The criminal action is still pending. The SEC's litigation is being led by Nancy A. Brown, Tejal Shah, and H. Gregory Baker, and is being supervised by Sanjay Wadhwa. For further information, see Litigation Release No. 23535 (May 11, 2016). SEC Complaint

Litigation Release No. 23689 / November 16, 2016 Securities and Exchange Commission v. Devon Archer, et al., No. 16-cv-3505 (S.D.N.Y. filed May 11, 2016) SEC Charges Individual Who Headed Fake Investment Manager Used In Tribal Bonds Scheme On November 14, 2016, the Securities and Exchange Commission added Francisco Martin of Woodland Hills, California to a civil injunctive action currently pending in the U.S. District Court for the Southern District of New York, charging him with defrauding investors in sham Native American tribal bonds. The SEC's amended complaint alleges that Martin, along with seven other co-defendants, participated in a scheme to convince a Native American tribal corporation affiliated with the Wakpamni District of the Oglala Sioux Nation to issue limited recourse bonds that Jason Galanis and his father, John Galanis, had already structured. As Jason Galanis allegedly told two of his associates, the "primary objective" of the scheme was to provide Jason Galanis and his associates "a source of discretionary liquidity." Jason Galanis then allegedly acquired two investment advisory firms and installed officers to arrange the purchase of $43 million in bonds using clients' funds. The amended complaint further alleges that in exchange for $150,000 from Jason Galanis, Martin served as the "Managing Director" or "Portfolio Manager" of a fake entity that was held out to bond investors as an independent investment manager for the bond proceeds. Through his role with the fake investment manager, Martin facilitated the transfer of proceeds from investors in the tribal bonds to Jason Galanis and his associates. The SEC further alleges that instead of investing bond proceeds as promised in annuities to benefit the tribal corporation and generate sufficient income to repay bondholders, the money wound up in a bank account in Florida belonging to a company controlled by Jason Galanis and his associates. Among their alleged misuses of the misappropriated funds were luxury purchases at such retailers as Valentino, Yves Saint Laurent, Barneys, Prada, and Gucci, and to support an IPO of a technology company in which Jason Galanis and several other defendants had interests. Investor money also was diverted to pay attorneys representing Jason and John Galanis in a separate criminal case brought parallel to the SEC's stock fraud charges last year. In addition to Martin, and Jason and John Galanis, the amended complaint also names as defendants Devon Archer of Brooklyn, N.Y., Bevan Cooney of Incline Village, Nev., Hugh Dunkerley of Irvine, Calif., Gary Hirst of Lake Mary, Fla., and Michelle Morton of Colonia, N.J., all of whom were charged in the original complaint in this matter. The amended complaint charges Archer, Cooney, Dunkerley, Hirst, Jason Galanis, John Galanis and Martin with violations of Sections 17(a)(1) and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rules 10b-5(a) and (c) thereunder and Morton with violations of Section 10(b) of the Exchange Act, and Rules 10b-5(a), (b) and (c) thereunder, Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940, and Rule 206(4)-8 thereunder, and Section 209(f) of the Advisers Act by aiding and abetting violations of Section 206(1), 206(2) and 206(4) of the Advisers Act, and Rule 206(4)-8 thereunder. In addition, the Commission alleges, in the alternative, that Archer, Cooney, Dunkerley, Hirst, John Galanis and Martin violated Section 15(b) of the Securities Act by aiding and abetting violations of Section 17(a)(1) and (3) of the Securities Act and Section 20(3) of the Exchange Act by aiding and abetting violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder. The SEC seeks disgorgement plus interest and penalties as well as permanent injunctions against all defendants, and officer-and-director bars against Jason Galanis, Archer, Dunkerley, and Morton. Jason and John Galanis, Archer, Cooney, Dunkerley, Hirst and Morton were also charged criminally by the U.S. Attorney's Office for the Southern District of New York. The criminal action is still pending. The SEC's litigation is being led by Nancy A. Brown, Tejal Shah, and H. Gregory Baker, and is being supervised by Sanjay Wadhwa. For further information, see Litigation Release No. 23535 (May 11, 2016). SEC Complaint