Another person has been added to the list of defendants in a civil case in which the Securities and Exchange Commission says investors were cheated out of millions of dollars in a sham Native American tribal bonds scheme, the SEC announced Wednesday.
Francisco Martin of Woodland Hills, Calif., is named in the civil injunction pending in the U.S. District Court for the Southern District of New York.
The SEC's complaint charges Martin, along with seven other co-defendants, of setting up a scheme in which a Native American tribal corporation affiliated with the Wakpamni District of the Oglala Sioux Nation was convinced to issue limited recourse bonds.
The perpetrators of the scheme included Jason Galanis and his father, John Galanis, two other brothers, and their associates. As Jason Galanis allegedly told two of his associates, the primary objective of the scheme was to provide Jason Galanis and his associates with “a source of discretionary liquidity.”
Jason Galanis allegedly acquired two investment advisory firms and installed officers to arrange the purchase of $43 million in bonds using clients' funds. The amended complaint 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.
Martin took the investors’ money and helped funnel it to Jason Galanis and his associates, the SEC says. Instead of investing the money to benefit the tribal corporation, the money was used to buy luxury personal items and to pay for defense attorneys for criminal charges filed against Jason and John Galanis, according to the complaint.