U.S. investment banker gets 11 years in prison for stock scam
15/02/2017 20:22
By Nathan Layne
Feb 15 (Reuters) - A former Los Angeles investment banker
was sentenced to more than 11 years in prison by a federal judge
on Wednesday for his role in a stock manipulation scheme,
resolving one of two criminal cases facing the man once dubbed
"Porn's New King."
Jason Galanis, 46, admitted last year to securities fraud,
investment adviser fraud and two conspiracy charges in
connection with the scheme to manipulate shares in the now
defunct reinsurer, Gerova Financial Group Ltd GVFG.PK .
Galanis did not have a publicly disclosed role at Gerova but
was head of a subsidiary and exerted control over the company
through associates, prosecutors said. They said Galanis worked
with the reinsurer's former chairman to amass nearly half of the
company's public float and had them issued to a so-called straw
holder to disguise Galanis' ownership.
Galanis then allegedly bribed investment advisers to buy
Gerova shares for their own clients, and through coordinated
trading sold Gerova shares from the straw holder's account in a
scheme that generated nearly $20 million in profits, prosecutors
said.
U.S. District Judge Kevin Castel in Manhattan sentenced
Galanis to 11 years and three months in prison and ordered him
to forfeit nearly $38 million, a mansion in Bel Air, California,
and a $7 million apartment in New York.
The sentence was at the bottom of the range of up to 14
years sought by prosecutors.
The case is one of two against Galanis, who was nicknamed
"Porn's New King" by Forbes magazine in 2004 after buying the
nation's largest processor of credit card payments for internet
pornography. Galanis also pleaded guilty in the second case, in
which prosecutors say he and associates misappropriated the
proceeds of a bond issue by a Native American tribe.
Galanis is due to be sentenced in May for that case, also in
Manhattan federal court.
Galanis apologized and told the judge he understood the
damage he had done.
"My moral compass is not broken," Galanis said. "In certain
cases I just ignored it."
Judge Castel said he took into account that Galanis faces an
additional sentence in the second case. He said Galanis stood
apart from other defendants suffering from issues like drug
addiction or mental illness in that he faced few impediments to
doing well in life.
"Jason Galanis used his very considerable intellect and
talents as a weapon," the judge said. "In other words, he didn't
have to do it."
(reporting by Nathan Layne in New York; Editing by Noeleen
Walder and Lisa Shumaker)
((nathan.layne@thomsonreuters.com; +1 646 223 7217; Reuters
Messaging: nathan.layne.thomsonreuters@thomsonreuters.net))
Keywords: GEROVA FINANCIAL FRAUD/