Born Into Life of White-Collar Crime, Convict Asks for Mercy

(Bloomberg) -- Being born into a life of white-collar crime was great for Jason Galanis when he was young and rich in Los Angeles. Not so much now that he's pushing 50 in a New York prison.

Galanis, who was raised in private schools and got a $100,000 Ferrari for his 16th birthday, is serving 11 years for swindling investors in Bermuda-based Gerova Financial Group Ltd. out of $20 million. On Friday, he asked a judge not to extend his time behind bars for a separate $60 million fraud against one of the poorest American Indian tribes.

In a filing in Manhattan federal court, defense attorney Lisa Scolari cited her client's unique travails, having been raised by a wealthy father prone to ripping people off. "There is a sadly familiar path," she said, and her client "has followed directly in his father's footsteps."

Galanis's father, John, was charged alongside him in both frauds, while two of his brothers were charged in the Gerova scam. It's a pattern. The elder Galanis once ripped off the former head of the New York Stock Exchange and was previously convicted in 1988 of masterminding a purported tax-shelter scheme that bilked actors including Eddie Murphy and Sammy Davis Jr.

Jason Galanis, 47, was initially sentenced in February after pleading guilty to the Gerova scam. Now U.S. District Judge Judge Ronnie Abrams in New York is weighing a sentence for a Ponzi-like scheme involving the bonds of a Sioux tribe, to which Galanis also pleaded guilty. U.S. probation officials have recommended a sentence that would add another 5 1/2 years. He'll be sentenced Aug. 11.

Growing up rich with a shady father can be challenging, Scolari said. The Galanis family name, she said, "has been etched into more than 45 years of state and federal criminal indictments, beginning in the early 1970s."

And those crimes paid off, at least at the time. The family had a multimillion-dollar mansion in Greenwich, Connecticut, with a tennis court, an indoor swimming pool and a lake, topped off by a Utah ranch, a Rolls Royce, an 80-foot yacht and a Lear Jet, according to the court filing. The family later moved to California, where they lived in a Del Mar mansion that last sold for $50 million, according to the filing.

More on Galanis's part crimes

When Galanis was 13, his father, a man whom he idolized, was indicted on state charges for defrauding JPMorgan Chase & Co. out of millions of dollars. That was just the beginning.

"A few years later federal agents raided his father's Greenwich office, collecting evidence of yet another fraud. In 1986, the house of cards collapsed," Scolari said. The elder Galanis "was indicted and arrested for additional fraud schemes" in federal and state courts in New York.

The arrests left Galanis feeling embarrassed and abandoned by his father, with his "wild extravagance" leading to chaos at home and a sense that he didn't fit in with his private-school peers, according to the filing.

"The children from the Galanis's conservative, wealthy Connecticut town enjoyed Jason's lavish birthday celebrations -- they included professional circus performers and even elephants," the lawyer said. "However, even at an early age, Jason sensed his friends' parents' disdain."

Shady Dealings

Galanis nevertheless engaged in his own shady dealings, eventually buying the largest processor of credit card payments for pornography websites. In 2007, he was fined $60,000 by the U.S. Securities and Exchange Commission after the agency accused him of preparing false financial statements for Penthouse International Inc., the former publisher of the men's magazine.

"The toxic influence of Jason's father, John Galanis, cannot be overstated," Scolari wrote. "As John's eldest, Jason's life has been dominated by the man who has been called ‘one of the 10 biggest white-collar criminals in America.'"

In the latest case, father and son were accused of persuading a corporation affiliated with the Wakpamni District of the Oglala Sioux Nation, whose members live in one of the poorest regions in the U.S., to issue limited-recourse bonds the pair had structured. John, now 74, and Jason promised that the bond proceeds would be invested in annuities to benefit the tribe and repay investors. Instead, prosecutors said, Jason stole $8.5 million and his father $2.3 million.

"I don't believe we would support a request for leniency," said Geneva Lone Hill, president the Wakpamni Lake Community Corp. "He must have put a lot of effort into this scheme, and victimized us. We're just trying to improve our community."

Federal Lockup

Jason is being held in a lockup in Manhattan, while John is at a low-security prison in California. He's due to be released in 2022 and has pleaded not guilty in the bonds case, according to court records.

Even after all that, Galanis doesn't blame his father or his upbringing for his crimes. The filing "is not an attempt to offload responsibility for his crimes," the lawyer said. His current sentence, she added, is sufficient, especially given Galanis's good deeds behind bars, including tutoring inmates from diverse and humble backgrounds.

"Eleven years of incarceration, total financial ruin, tens of millions of dollars in forfeiture, along with the public shame and contempt that Mr. Galanis has brought upon himself is anything but ‘modest' punishment," Scolari said. "The man now before the court is qualitatively different than he was 15 months ago" and deserves "a chance at a life beyond incarceration."

The case is USA v. Galanis, 1:16-cr-00371, U.S. District Court for the Southern District of New York (Manhattan).

--With assistance from Patricia Hurtado and Neil Weinberg

To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net.

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider