The Securities and Exchange Commission is charging a father, three sons, and two other men with bilking people who invested money in Gerova Financial Group. The regulator’s complaint names John Galanis, his sons Derek, Jason, and Jared, Gerova president Gary T. Hurst, and investment adviser Gavin Hamels. John has been a defendant in SEC enforcement actions numerous times over the last four decades. Jason faced SEC charges in 2007.
The SEC contends that Jason and Hirst came up with a securities scam in 2010 to secretly issue $72M of unrestricted shares to a friend in Kosovo. The Galanis’ are accused of redirecting the proceeds from the sales of those shares from the friend’s brokerage accounts and wiring the money to themselves and others. This resulted in about $20 million in illicit profits.
Jason is accused of bribing Hamels to buy stock in Gerovia to help stabilize its price as shares went into liquidation. Hamels is accused of buying the stock for clients according to arrangements made with Jared about prices, times, and how much to buy. He allegedly did not tell clients about Jason’s bribe.
The SEC is charging all of the men with federal securities laws and securities registration violations. It is charging Hamels with investment adviser fraud. Meantime, prosecutors in New York have put out a parallel action filing criminal charges against the six men, as well as Ymer Shahini, who was the family friend in Kosovo.
Jason Galanis, who was dubbed Porn’s New King by Forbes magazine in 2004 after he bought the country’s’ biggest credit cart payment processor for online porn, has been arrested, and so has his brother Derek. The seven men are charged with fraud and conspiracy.
If you suspect that your losses may be due to securities fraud, do not hesitate to contact our stock fraud law firm right away. At Shepherd Smith Edwards and Kantas, LTD LLP, our securities law firm is her to help investor get back their losses caused by the negligence and criminal acts of those in the financial industry and other. Contact us today.
Read the Complaint (PDF)
SEC Charges Six in Stock Fraud Scheme, SEC, September 24, 2015