Jason Galanis, a man who in 2004 was called “Porn’s New King,” was arrested by FBI agents at his Los Angeles home on Wednesday and charged with taking part in a $60 million scam that ripped off impoverished South Dakota Sioux and others.
It was the third time in nine years that Galanis had been accused of engineering a financial fraud.
In the latest case, Galanis, his dad, John “Yanni” Galanis, and five others persuaded the tribe to issue more than $60 million in municipal bonds that the group promised would help them bring in added revenue, it is alleged.
But instead of selling the bonds and forking over the proceeds to the needy Native Americans, the seedy seven pocketed the cash — spending it on homes, cars, jewelry and travel, according to the 45-page complaint unsealed in federal court by Manhattan US Attorney Preet Bharara.
The father-and-son duo — along with Jason’s brothers, Derek and Jared — and three others were arrested in September and charged with operating a pump-and-dump that netted them nearly $20 million.
Jason, 45, and his dad, 73, worked the Sioux scam before their September arrests — and continued it after they were released on bail, and until last month, court papers allege.
A trial on the pump-and-dump is scheduled for the fall.
Also charged in the alleged Sioux scam are Gary Hirst, Hugh Dunkerley, Bevan Cooney, Devon Archer and Michelle Morton.
The seven were also charged in a civil action by the Securities and Exchange Commission, which claimed the group spent their ill-gotten gains on designer duds from Gucci, Prada, Valentino and Yves Saint Laurent.
Jason was accused of using nearly $500,000 of the proceeds to cover legal bills related to his pump-and-dump case.
“The defendants also allegedly duped unwitting investors into buying the bonds by hiding material facts about them, including their lack of liquidity,” Bharara said in a statement.
The group “left devastation in its wake: a tribe with tens of millions in bond obligations it cannot pay, and investors out tens of millions, left holding bonds they did not want,” the lawman added.
In fact, upon learning their investment advisers had loaded them up on tribal debt, some investors demanded a quick sale of the securities.
“However, because there was no ready secondary market for the tribal bonds, [they] remain in their accounts,” Bharara said.
Jason Galanis first burst upon the national scene in 2004, after buying the country’s largest processor of credit-card payments for pornographic websites.
At the time, Forbes dubbed him “Porn’s New King.”
But in 2005, the SEC brought a civil suit that charged him with filing fraudulent financial statements as a major investor in Penthouse.
Jason settled the case in 2007, paying a $60,000 fine.
Lawyers for the seven could not immediately be reached for comment.