SEC v. Devon Archer; Jason Galanis; John Galanis; Bevan Cooney; Hugh Dunkerley; Gary Hirst, et al., No. LR-23535, Southern District of New York (May 11, 2016) — Press Release

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 23535 / May 11, 2016 Securities and Exchange Commission v. Devon Archer, et. al., Civil Action No. 16-cv-3505 (Southern District of New York, Complaint filed May 11, 2016) SEC Charges Father, Son, Others in Tribal Bonds Scheme On May 11, 2016, the Securities and Exchange Commission filed fraud charges against a father and son and five associates with defrauding investors in sham Native American tribal bonds in order to steal millions of dollars in proceeds for their own extravagant expenses and criminal defense costs. The SEC alleges that Jason Galanis, whose checkered past dates from an accounting fraud case during his days as a major Penthouse shareholder to stock fraud charges last year, conducted the scheme in which the "primary objective is to get us a source of discretionary liquidity," he wrote in an e-mail to other participants. Galanis and his father John Galanis 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 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. Investor money also was diverted to pay attorneys representing Jason and John Galanis in a criminal case brought parallel to the SEC's stock fraud charges last year. In addition to Jason and John Galanis, the SEC's complaint names Devon Archer of Brooklyn, N.Y., Bevan Cooney of Incline Village, Nev., Hugh Dunkerley of Huntington Beach, Calif. and Paris, France, Gary Hirst of Lake Mary, Fla., and Michelle Morton of Colonia, N.J. The complaint charges Archer, Cooney, Dunkerley, Hirst, Jason Galanis and John Galanis with violations of Sections 17(a)(1) and (3) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), 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 ("Advisers Act"), 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 and John Galanis 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. The SEC also seeks officer-and-director bars against Jason Galanis, Archer, Dunkerley, and Morton. In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against the same seven individuals. The SEC's continuing investigation is being conducted by Tejal D. Shah, Nancy A. Brown, H. Gregory Baker, Christopher Ferrante, and Adam S. Grace. The litigation will be led by Ms. Brown, Ms. Shah, and Mr. Baker. The case is being supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, and the U.S. Postal Inspection Service. SEC Complaint

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 23535 / May 11, 2016 Securities and Exchange Commission v. Devon Archer, et. al., Civil Action No. 16-cv-3505 (Southern District of New York, Complaint filed May 11, 2016) SEC Charges Father, Son, Others in Tribal Bonds Scheme On May 11, 2016, the Securities and Exchange Commission filed fraud charges against a father and son and five associates with defrauding investors in sham Native American tribal bonds in order to steal millions of dollars in proceeds for their own extravagant expenses and criminal defense costs. The SEC alleges that Jason Galanis, whose checkered past dates from an accounting fraud case during his days as a major Penthouse shareholder to stock fraud charges last year, conducted the scheme in which the "primary objective is to get us a source of discretionary liquidity," he wrote in an e-mail to other participants. Galanis and his father John Galanis 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 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. Investor money also was diverted to pay attorneys representing Jason and John Galanis in a criminal case brought parallel to the SEC's stock fraud charges last year. In addition to Jason and John Galanis, the SEC's complaint names Devon Archer of Brooklyn, N.Y., Bevan Cooney of Incline Village, Nev., Hugh Dunkerley of Huntington Beach, Calif. and Paris, France, Gary Hirst of Lake Mary, Fla., and Michelle Morton of Colonia, N.J. The complaint charges Archer, Cooney, Dunkerley, Hirst, Jason Galanis and John Galanis with violations of Sections 17(a)(1) and (3) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), 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 ("Advisers Act"), 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 and John Galanis 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. The SEC also seeks officer-and-director bars against Jason Galanis, Archer, Dunkerley, and Morton. In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against the same seven individuals. The SEC's continuing investigation is being conducted by Tejal D. Shah, Nancy A. Brown, H. Gregory Baker, Christopher Ferrante, and Adam S. Grace. The litigation will be led by Ms. Brown, Ms. Shah, and Mr. Baker. The case is being supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, and the U.S. Postal Inspection Service. SEC Complaint