SEC v. DEVON D. ARCHER; BEV ANT. COONEY; HUGH DUNKERLEY; JASON W. GALANIS; JOHN P. GALANIS; GARY T. HIRST, et al., No. 15 Cr. 0643 (PKC), Southern District of New York (May 11, 2016) — Complaint

ANDREW M. CALAMARI
REGIONAL DIRECTOR
Sanjay Wadhwa
Nancy A. Brown
Tejal D. Shah
H. Gregory Baker
Adam S. Grace
Attorneys for the Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
Brookfield Place
200 Vesey Street, Suite 400
New York, New
York 10281-1022
(212) 336-1023 (Brown)
UNITED STATES
DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v.
DEVON D. ARCHER, BEV ANT. COONEY,
HUGH DUNKERLEY, JASON W. GALANIS,
JOHN P. GALANIS, GARY T. HIRST and
MICHELLE A. MORTON,
Defendants.
16 Civ.
_( )
ECF Case
COMPLAINT AND
JURY DEMAND
Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint against
Defendants Devon
D. Archer ("Archer"), Bevan T. Cooney ("Cooney"), Hugh Dunkerley
("Dunkerley"), Jason
W. Galanis ("Jason Galanis"), John P. Galanis ("John Galanis"), Gary T.
Hirst ("Hirst") and Michelle A. Morton ("Morton") (together, the "Defendants"), alleges
as
follows:
SUMMARY
OF THE ALLEGATIONS
1. This case involves a fraudulent scheme orchestrated by Jason Galanis to obtain
undisclosed control over two registered investment advisers so that over $43 million
of their

clients' funds could be invested in sham Native American tribal bonds (hereinafter, the "bonds"
or "Tribal Bonds"), and ultimately diverted to him and his associates and the entities they
controlled at the expense
of unwitting investors.
2. To carry
out the Tribal Bond scheme, Jason Galanis enlisted his father (John
Galanis) and five
of his associates, Archer, Cooney, Dunkerley, Hirst and Morton. As Jason
Galanis told Cooney and Archer prior to the first issuance
of the Tribal Bonds, the "primary
objective" was "to get us a source
of discretionary liquidity" -  liquidity Jason Galanis would use
to fund his and his father's lavish lifestyles, and to expand the corporate empire in which he,
Archer and Cooney
had invested. Jason Galanis brought on Hirst, Dunkerley and Morton as
needed, and compensated them for the roles they knowingly assumed as front men and
facilitators.
3. Jason Galanis and John Galanis kicked
off the scheme in March 2014, when they
convinced a Native American tribal corporation, the Wakpamni Lake Community Corporation,
affiliated with the Wakpamni District
of the Oglala Sioux Nation, whose members live in one of
the poorest regions in the United States (the " WLCC"), to become the issuer of the limited
recourse bonds that they had already structured and developed. From August
2014 to April
2015, Jason Galanis and John Galanis arranged for WLCC to issue three tranches
of Tribal
Bonds.
4. Having secured an issuer, Jason Galanis and his associates needed investors to
buy the Tribal Bonds, and they found them in the unsuspecting clients of two investment
advisers over which Jason Galanis and his associates gained control. In July 2014, Jason Galanis
arranged the purchase
of investment adviser Hughes Capital Management, LLC ("Hughes") -
which managed approximately $900 million for various pension funds -  and installed Morton as
2

CEO and part owner. And, in April 2015, Jason Galanis arranged for Hughes to acquire another
investment adviser with still more pension fund clients' funds under management, Atlantic Asset
Management LLC ("AAM"), and put Morton in charge
of the larger enterprise. Jason Galanis
arranged for Valor Group Ltd. ("Valor Group"), an entity controlled by Jason Galanis, Archer,
Dunkerley and others, to provide
the financing for both purchases through its wholly-owned
insurance company subsidiaries Wealth-Assurance AG
("Wealth-Assurance") and Valorlife
Lebensversicherungs
AG ("Valorlife"), informing Archer and Cooney that this acquisition
promised greater "liquidity" for "their various projects."
5. Morton understood that Valor Group's financing of both acquisitions was
contingent on her agreement to invest Hughes' and
AAM's clients' funds in the Tribal Bonds. In
August 2014, at the direction
of Jason Galanis, Morton hired Hirst at Hughes and authorized
Hirst to purchase $27 million
of Tribal Bonds on behalf of nine Hughes clients. In April 2015,
again at the direction
of Jason Galanis, Morton used $16.2 million of an AAM client's funds to
buy Tribal Bonds.
6. According to the trust indentures and other documents relating to the Tribal Bond
issuances, the proceeds from each issuance were primarily to be invested in an annuity to benefit
WLCC and generate sufficient income to pay interest, and ultimately to repay the principal, to
the bond holders. In connection with each bond issuance, WLCC entered into an annuity
contract with Wealth Assurance Private Client Corporation ("WAPCC"), an entity described in a
private placement memorandum as a subsidiary
of Valor Group. Pursuant to each annuity
contract, the bond proceeds were to be managed by an independent investment manager,
"Investment Management Company A," in a separately managed account at W APCC.
3

7. However, Investment Management Company A was a fake entity created at the
behest
of Jason Galanis. Jason Galanis paid an associate ("Galanis Associate") $150,000 to sign
the annuity contracts as the purported control person
of Investment Management Company A,
but the Galanis Associate never provided any investment management services. Instead, Jason
Galanis gained undisclosed control over the bond proceeds, and he and the other Defendants
used the proceeds for their personal benefit, including to purchase luxury goods, pay the criminal
defense costs
of John Galanis and Jason Galanis in a previously charged case, boost the net
capital
of two broker-dealers in which Archer and Cooney had interests, and finance the initial
public offering
of "Technology Company," a corporation in which Jason Galanis, Hirst, Cooney,
Dunkerley and Archer held shares, and for which Jason Galanis served as an "advisor."
8. In September 2015, Jason Galanis, John Galanis and Hirst were charged both by
the Commission and by a grand
jury convened by the United States Attorney's Office for the
Southern District
of New York ("USAO") with securities fraud arising out of a different and
umelated scheme. SEC
v. Galanis, et. al., 15 Civ. 7547 (VSB) (S.D.N.Y.) ("SEC v. Galanis");
and United States
v. Jason Galanis, et al., 15 Cr. 0643 (PKC) (S.D.N.Y.) ("US v. Galanis").
9. While free on bail, Jason Galanis has continued to further the fraudulent scheme
described herein by, among other things, orchestrating payments to the Tribal Bond indenture
trustee to fund the Tribal Bonds'  interest payment obligations as they came due.
VIOLATIONS
10. By virtue of the conduct alleged herein, each of the Defendants, directly or
indirectly, singly
or in concert, violated and are otherwise liable for violations of the federal
securities laws as follows:
11. Jason Galanis violated:
4

• Sections 17(a)(l) and (3) of the Securities Act of 1933 ("Securities Act") [15
U.S.C.
§§ 77q(a)(l) and (3)]; and,
• Section 1
O(b) of the Securities Exchange Act of 1934 ("Exchange Act") [15
U.S.C. § 78j(b)], and Rules 10b-5(a) and (c) thereunder  [17 C.F.R. §§
240.10b-5(a) and (c)].
12. Archer, Cooney, Dunkerley, John Galanis and Hirst violated:
• Sections 17(a)(l) and (3)
of the Securities Act [15 U.S.C. §§ 77q(a)(l) and
(3)], or, in the alternative, Section 15(b) of the Securities Act [15 U.S.C. §
77o(b)], by aiding and abetting Jason Galanis's violations of Sections 17(a)(l)
and (3)
of the Securities Act [15 U.S.C. §§ 77q(a)(l) an (3)]; and,
• Section lO(b)
of the Exchange Act [15 U.S.C. § 78j(b)], and Rules 10b-5(a)
and (c) thereunder [17 C.F.R. §§ 240.10b-5(a) and (c)], or, in the alternative,
Section 20(e)
of the Exchange Act [15 U.S.C. § 78t(e)] by aiding and
abetting Jason Galanis's violations
of Section lO(b) of the Exchange Act [ 15
U.S.C. § 78j(b)], and Rules 10b-5(a) and (c) thereunder [17 C.F.R. §§
240.10b-5(a) and (c)];
13. Morton violated:
• Section lO(b)
of the Exchange Act [15 U.S.C. § 78j(b)], and Rules 10b-5(a),
(b) and (c) thereunder [17 C.F.R.
§§ 240.10b-5(a), (b) and (c)];
• Sections 206(1), 206(2) and 206(4)
of the Investment Advisers Act of 1940
("Advisers Act") [15 U.S.C. §§ 80b-6(1), (2), and (4)], and Rule 206(4)-8
thereunder [17 C.F.R. § 275.206(4)-8]; and,
5

• Section 209(f) of the Advisers Act [15 U.S.C. § 80b-9(f)] by aiding and
abetting Hughes' and
AAM's violations of Sections 206(1) and 206(2) of the
Advisers Act [15 U.S.C.
§§ 80b-6(1) and (2)] and aiding and abetting
AAM's violation of Section 206(4) of the Advisers Act [15 U.S.C. § 80b-
6(4)], and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].
JURISDICTION AND VENUE
14. The Commission brings this action pursuant to the authority conferred upon it by
Section 20(b)
of the Securities Act [15 U.S.C. § 77t(b)], Sections 2l(d)(l) and 21(d)(5) of the
Exchange Act [15
U.S.C. §§
78u(d)(l) and 78u(d)(5)] and Section 209(d) of the Advisers Act
[15 U.S.C. § 80b-9(d)], seeking a final judgment: (a) restraining and permanently enjoining each
of the Defendants from engaging in the acts, practices and courses of business alleged against
them herein; (b) ordering each
of the Defendants to disgorge all ill-gotten gains and to pay
prejudgment interest on those amounts; (c) prohibiting Jason Galanis, Archer and Dunkerley
from acting as an officer
or director of a public company pursuant to Section 20( e) of the
Securities Act
[15 U.S.C. § 77t(e)] and Jason Galanis, Archer, Dunkerley and Morton from
acting as an officer
or director of a public company pursuant to Section 2 1 ( d)(2) of the
Exchange Act [15 U.S.C. § 78u(d)(2)]; and (d) imposing civil money penalties on Jason Galanis,
Archer, Cooney, Dunkerley, John Galanis and Hirst pursuant to Section 20(d)
of the Securities
Act [15 U.S.C. § 77t(d)];
on Jason Galanis, Archer, Cooney, Dunkerley, John Galanis, Hirst and
Morton pursuant to Section
2l(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)], and on
Morton pursuant to Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)].
15. This Court has jurisdiction over this action, and venue lies in this District,
pursuant to
Section 22(a)
of the Securities Act [15. U.S.C. § 77v(a)], Sections 2l(d) and 27 of
6

the Exchange Act [15. U .S .C. §§ 78u(e) and 78aa], and Section 214 of the Advisers Act [15
U.S.C. § 80b-14]. The Defendants, directly or indirectly, made use
of the means or instruments
of transportation or communication in interstate commerce, or of the mails, or of a facility of a
national securities exchange, in connection with the transactions, acts, practices, or courses
of
business alleged herein, certain of which occurred in this District. For example, Burnham
Securities Inc. ("Burnham Securities"), the placement agent for the sale
of the Tribal Bonds, is
located in
New York, New York.
DEFENDANTS
16. Jason Galanis, age 45, resides in Los Angeles, California. Jason Galanis was the
subject
of a prior Commission enforcement action, SEC v. Penthouse Int'l, Inc., et al., 05 Civ.
0780 (S.D.N.Y.), for engaging in accounting fraud and financial reporting violations. On April
27, 2007, pursuant to a settlement with the Commission, he was enjoined from violating Sections
lO(b) and 15(d)
of the Exchange Act, including Rule lOb-5, and was baned from serving as an
officer and director
of a public company for a period of five years, a bar which expired in 2012.
In September 2015, Jason Galanis was sued
by the Commission and indicted by a grand jury
convened by the USAO, based on allegations that he orchestrated a fraudulent and unregistered
public distribution
of millions of dollars of shares of a publicly traded company, Gerova
Financial Group, Ltd.
(" Gerova"). See SEC
v. Galanis; US v. Galanis.
17.
John Galanis, age 73, resides in Oceanside, California.  John Galanis is the father
of Jason Galanis, and has been the subject of numerous prior criminal proceedings, as well as
enforcement actions by the Commission, dating back to the late 1960s. Most recently, John
Galanis was charged by the
SEC and
USAO for his alleged involvement in the Gerova scheme.
See SEC v. Galanis; US
v. Galanis.
7

18. Archer, age 42, resides in Brooklyn, New York. Archer was, at times relevant
herein, a director, officer and direct
or indirect owner of and/or investor in various entities
connected to the Tribal Bond scheme including Valor Group, Valorlife, COR Fund Advisors
LLC
("CORF A"), Burnham Financial Group, the holding company for broker-dealer Burnham
Securities, BAM Holdings, LLC, the holding company for investment management companies
operating under the Burnham name, including Burnham Asset Management Corporation
("BAM"), Rosemont Seneca Bohai LLC ("RSB"), a Delaware limited liability corporation that
he wholly owns, and BOE Capital, LLC, a Delaware limited liability corporation that he wholly
owned as
of August 12, 2014.
19.
Cooney, age 43, resides in Incline Village, Nevada. Jason Galanis has described
Cooney as his
"best friend
of 23 years and equity holder in all the businesses." At all relevant
times herein, Cooney was a direct or indirect owner
of CORF A, through which he owned an
interest in Burnham Securities.
20.
Dunkerley, age 41, resides in Paris, France and Huntington Beach, California. At
relevant times herein, he served as the Director,
President, Executive Vice President and
Secretary
of Valor Group, Director of Wealth-Assurance, Director of Valor life and a Managing
Director
of Burnham Securities. He is  currently Sole Director and President of W APCC and
Managing Member
of BFG Socially Responsible Investing Limited ("BFG Investments"),
having been installed in each
of these management positions by Jason Galanis. At all relevant
times, Dunkerley acted at the direction
of Jason Galanis or with his knowledge.
21.
Hirst, age 63, resides in Lake Mary, Florida. He served as Hughes' Chief
Investment Officer ("CIO") in August 2014 and directed the investment of over $27 million of
Hughes' clients' funds in Tribal Bonds. Hirst is  the Assistant Secretary of W APCC and
8

signatory on its bank account. In September 2015, Hirst was charged by the Commission and the
USAO along with Jason Galanis and John Galanis in connection with the Gerova scheme. See
SEC v.
Galanis; US v. Galanis.
22.
Morton, age 55, resides in Colonia, New Jersey. She served as the CEO of
Hughes and AAM, and owned an interest in Hughes'  and AAM's parent company, GMT Duncan
LLC
("GMT"). In her capacity as CEO
of Hughes and AAM, Morton oversaw the investment of
over $43 million of client funds in Tribal Bonds.
OTHER RELEVANT ENTITIES
23. Burnham Securities, an SEC-registered broker dealer based in New York, New
York, served as the placement agent for the Tribal Bonds. At all relevant times, Burnham
Securities was wholly owned by
Burnham Financial Group. Beginning in 2014, Jason
Galanis, Archer and Cooney gained control
of Burnham Financial Group and Burnham
Securities, through, at least in part,
CORF A, a Delaware limited liability company in which
Jason Galanis, Archer and Cooney held direct or indirect ownership interests at relevant times
herein.
24.
W APCC was incorporated by Dunkerley in the British Virgin Islands and was
purportedly the ammity provider in connection with the Tribal Bonds.  Dunkerley also
incorporated a company called W APCC in Florida and opened an associated bank account (the
" W APCC Account") for which he and Hirst are the only signatories, and to which the net Tribal
Bond proceeds were sent by the Indenture trustee.
25.
Valor Group was incorporated as Wealth Assurance Holdings Ltd. by Dunkerley
in the British Virgin Islands in 2013, and changed its name to Valor Group Ltd. in December
2014. Through
Thorsdale Fiduciary and Guaranty Company Ltd. ("Thorsdale"), a Nevada
9

incorporated family trust company Jason Galanis controls, Jason Galanis holds a significant
ownership interest in Wealth Assurance Holdings Ltd., and its successor, Valor Group. In 2013,
Wealth Assurance Holdings Ltd. purchased
Wealth-Assurance, and Dunkerley was appointed
to Wealth-Assurance's Board
of Directors. In November 2014, Wealth Assurance Holdings Ltd.
acquired
Valorlife. Jason Galanis became a paid advisor to Valorlife's Board of Directors in
December 2014. Wealth-Assurance provided the financing for GMT's purchase
of Hughes, and
Valorlife provided the financing for
GMT's purchase of AAM. In addition, Wealth-Assurance's
subsidiary,
BFG Investments, became an indirect owner of Hughes and AAM by virtue of an
ownership interest it acquired in GMT.
26.
AAM is  an SEC-registered investment adviser which was principally located in
Stamford, Connecticut. In April 2015, AAM was purchased by GMT and merged with
Hughes,
an SEC-registered investment adviser, which was principally located in Alexandria, Virginia.
The merged entity retained AAM' s name. AAM was charged by the Commission in connection
with its investment
of client funds in the Tribal Bonds in December 2015 and is  now in
receivership and in the process
of winding down. See SEC v. AAM, 15 Civ. 9764 (WHP)
(S.D.N.Y).
FACTS
27. The Tribal Bond scheme orchestrated by Jason Galanis consisted of four parts: 1)
pitching WLCC to issue the Tribal Bonds; 2) engineering the Tribal Bond issuances to give
Jason Galanis and his associates undisclosed control over the Tribal Bond proceeds; 3) securing
victims to purchase the Tribal Bonds; and 4) misappropriating the Tribal Bond proceeds for the
benefit
of Jason Galanis and his associates, including the Defendants.
10

28. E-mails among Jason Galanis, Archer and Cooney reflect their intent, from the
outset
of the scheme, to control and use the proceeds from the Tribal Bonds for their personal
benefit. In April 2014, when
an initial issuance of $20 million bonds appeared imminent, Jason
Galanis e-mailed Archer and Cooney:
"$20 mm bond approved. Proceeds are $15 mm
to us and
5 mm to them." In July 2014, after WLCC had approved issuing the bonds, Jason Galanis
e-
mailed Archer and Cooney: "My primary objective is to get us a source of discretionary
liquidity. Sick
of begging."
A. The Pitch: John Galanis Finds a Bond Issuer.
29. John Galanis handled the initial efforts to find a bond issuer for the scheme. In or
about March
2014, John Galanis attended a Native American economic development conference
in Las Vegas, Nevada and made a presentation to several tribes regarding a prospective Native
American bond issuance. John Galanis purported to be representing Burnham
Securities, even
though he had
no official connection to Burnham Securities.
30.
John Galanis' s presentation
to prospective Native American bond issuers had all
the necessary players (except the issuer) in place, including Burnham
Securities
as the Placement
Agent. During the conference, a representative
of WLCC indicated to John Galanis that WLCC
would be interested in participating in the issuance. John Galanis was WLCC's primary point
of
contact regarding the Tribal Bonds throughout the scheme and induced WLCC to issue each
tranche
of Tribal Bonds.
B. The Tribal Bonds Are Structured to Allow Jason Galanis and Dunkerley to
Control the Bond Proceeds.
31. Jason Galanis and John Galanis arranged for WLCC to issue three tranches of
Tribal Bonds: a) $27,077,436 in August 2014; b) $20,000,000 in September 2014; and c)
$16,200,000 in April 2015. The first and last issuances defrauded investment adviser clients of
11

Hughes and AAM. The middle issuance did not represent an additional capital raising event;
instead, bond proceeds from the first issuance were used to purchase newly issued Tribal Bonds,
so that Jason Galanis, Archer, Cooney and Dunkerley could obtain $20 million worth of bonds
for their own use without any capital outlay on their part.
32. To Jason Galanis, the Tribal Bonds were simply a source
of cash, providing him
with the liquidity he needed to expand the corporate empire he sought to assemble with Archer,
Cooney and Dunkerley. In one revealing email to Archer and Cooney from August
2014, Jason
Galanis proposed an acquisition
of a European fund of funds -  brought to him by Dunkerley -
and identified the source
of funds for the acquisition as proceeds from a Tribal Bond issuance.
After describing the deal, Jason Galanis wrote: "Hugh [Dunkerley] [has] locked it up and came
to me for the money, which i have agreed to arrange/provide (probably Indians)."
33. Each Tribal Bond issuance was governed by an indenture that provided for the
vast majority
of proceeds to be invested in an annuity that was supposed to generate income
sufficient to pay interest to the bond investors, plus a smaller annual sum to WLCC for use in
various development projects. The interest payments and ultimate repayment
of the principal of
the bond issuance depended on the success of the investments held by the annuity in which the
proceeds
of the issuances were to be invested.
34. In June 2014, Burnham Securities' counsel provided WLCC with a summary
of
the bond program that listed Wealth-Assurance as the Annuity Issuer and Investment
Management Company A as the
Portfolio Manager.
35.
In May 2013, Jason Galanis had arranged Valor Group's purchase of Wealth-
Assurance, purportedly a Liechtenstein-based life insurance and annuity provider with €1.5
billion in assets under management, and soon after installed Dunkerley on its Board
of Directors.
12

Ultimately, Wealth-Assurance never provided any annuity contracts in connection with any of
the bond issuances.
36. In August
2014, when WLCC issued its first bonds, Investment Management
Company A nominally became the investment manager for the bond proceeds. The trust
indenture and a separate investment management agreement with WLCC tasked Investment
Management Company A with selecting
an annuity provider and placing the bond proceeds in a
variable annuity. Galanis Associate signed the trust indenture and investment management
agreement on behalf
of Investment Management Company A as its Managing Director.
37. However, Galanis Associate was not an independent investment manager but
simply a shill for Jason Galanis. In return for a
$150,000 fee (ultimately paid to him out
of bond
proceeds that were supposed
to be invested in the annuity), Galanis Associate agreed to act on
behalf
of Investment Management Company A in signing the annuity contracts associated with
the bond issuances.
38. Although the annuity contracts named Investment Management Company A
as
the independent manager of the monies held by the annuity provider in a separately managed
account, Galanis Associate exercised no authority over any such account and made
no
investment decisions regarding the funds.
39. The annuity provider was not chosen by Galanis Associate, but by Jason Galanis.
Instead
of selecting Wealth-Assurance, Jason Galanis selected WAPCC. The annuity contract
between WLCC and W APCC identifies W APCC as a British Virgin Islands ("BVI")-
incorporated entity that is "part
of the Wealth-Assurance Group of companies."
40. In fact, Dunkerley
is the sole shareholder of W APCC and it  has no known
affiliation with Wealth-Assurance. At Jason
Galanis' s instruction, or with his knowledge,
13

Dunkerley incorporated W APCC in the BVI on August 22, 2014, just four days before Jason
Galanis selected W
APCC as the annuity provider for the first issuance
of the Tribal Bonds.
W
APCC' s unaudited financial statements reflect that through the end
of December 2014, WLCC
was WAPCC's only annuity "counterparty."
41. Also contrary to the annuity contract between W APCC and WLCC, the bond
proceeds were not directed to a W APCC account at a bank "without any offices and/or branches
in the United States." Instead, the indenture trustee was instructed to send the bond proceeds to a
bank account at a Florida branch
of a US bank, in the name of an identically named company
that had been incorporated in Florida on July
7, 2014.
42. In its Florida incorporation papers, W APCC listed Dunkerley as its sole officer,
and gave its mailing address as a post office box in Florida used by Hirst. As described below,
the misappropriation
of the bond proceeds all flowed from the W APCC Account associated with
W APCC in Florida.
C. Jason Galanis Secures Victims to Purchase the Tribal Bonds by Obtaining Control
over Hughes and AAM.
43. In order to secure victims to purchase the Tribal Bonds, Jason Galanis and his
associates arranged to obtain control over two investment advisers, thereby gaining access to
captive client funds. First, in August
2014, Jason Galanis, Archer, Cooney and Dunkerley
obtained control over Hughes, and Jason Galanis, Morton and Hirst arranged for Hughes to
invest $27 million
of its clients'  funds in Tribal Bonds. Second, in April 2015, Jason Galanis,
Archer, Cooney and Dunkerley obtained control over AAM, and Jason Galanis and Morton
arranged for AAM to invest $16.2 million
of its clients'  funds in Tribal Bonds.
14

1. Hughes
44. In May 2014, Jason Galanis was introduced to Morton, the half-owner of GMT,
which had the stated business purpose
of providing socially responsible fixed income investment
management and advisory services as a minority business enterprise. Together, Jason Galanis
and Morton began negotiating to purchase Hughes, an investment adviser with approximately
$900 million under management, based in Alexandria, Virginia.
45. On June 3, 2014, Jason Galanis provided Morton with a document to provide to
Hughes' then-owner to "demonstrate who [Morton's] financial sponsors are." The document
described a private equity control investor that owned several businesses, including Wealth-
Assurance and Burnham Securities. On June 5, 2014, Jason Galanis sent Morton a term sheet
outlining the terms by which CORF A -  a corporation owned in part by Jason Galanis, Archer
and Cooney -  would directly or indirectly (through a subsidiary) finance GMT's purchase
of
Hughes. Archer and Cooney knew that their agreement to finance the Hughes' acquisition with
CORF A funds was a necessary part
of the plan to place the Tribal Bonds and obtain "liquidity"
for themselves and their corporate expansion projects.
46. Jason Galanis kept Archer and Cooney in the loop regarding the negotiations to
acquire Hughes. On July 16, 2014, he sent them a copy
of the executed term sheet for the
acquisition
of Hughes. He proclaimed: "I believe they will take $28 million of the [Tribal]
is sue." Cooney and Archer expressed their enthusiasm, with Cooney replying: "West Coast
Offense charging down the field!" Archer added: "This is very encouraging!"
47. On August 1, 2014, Jason Galanis sent Morton a text message stating that he
would form BFG Investments -  the entity through which the contribution to the acquisition
would be made -  the next day.
On August
5, 2014, at the direction of Jason Galanis, Dunkerley
formed BFG Investments and became its managing member.
15

48. One week later, GMT entered into an amended and restated operating agreement
with its members, pursuant
to which BFG Investments became a "Preferred Member." The
agreement was signed by Dunkerley on behalf
of BFG Investments, and stated that notices to
BFG Investments were to be sent to Archer. After the merger closed, Hughes became GMT's
subsidiary and Morton and her business partner became officers
of Hughes.
49. On August 12, 2014, Jason Galanis arranged for Wealth-Assurance to fund BFG
Investments' initial capital contribution
of $2,660,618 to GMT, which GMT used to finance its
purchase
of Hughes.
50. As Morton knew, Jason Galanis, Archer, Cooney and Dunkerley's agreement to
finance the acquisition of Hughes was contingent on her agreement to invest Hughes' client
funds in Tribal Bonds. In July 2014, even before the purchase
of Hughes had been completed,
Morton e-mailed Jason Galanis "an update on how we will place the bonds in a portfolio" and
promised him via text message, "I will make sure you make a TON
of money and smile all the
way to the bank." On August
12, 2014, Morton sent Jason Galanis a text message noting, "You
invested because
of the bonds not me," to which he responded: "The bonds are only possible
because
of you my dear."
51. Pursuant to GMT's amended operating agreement, BFG Investments was
accorded certain privileges, including the right to approve the CIO for GMT and Hughes, and to
appoint members to Hughes' board.
52. Before GMT completed its purchase of Hughes, Jason Galanis introduced Morton
to Hirst
as a potential CIO. On August 12, 2014, Hirst sent Morton a draft employment contract.
Hirst and Morton executed the contract and related paperwork that same day.
16

53. However, a few days later, Hirst informed Morton that he did not want Hughes to
disclose his name in its Form ADV, a form that investment advisers registered with the
Commission are required to file upon registration and annually thereafter. For that reason, Hirst
decided to resign as Hughes'
CIO and agreed to act as a paid independent investment consultant
instead, a position that he understood would not require disclosure on Hughes' Form ADV. As
Mo1ion told Jason Galanis,
"In regard to Hirst, he opted to be a consultant because as an
employee he would have been required to make certain disclosures for our ADV
... If we want
to follow the contract which has him as CIO its [sic] no problem, we just have to change the title,
but he has to make the disclosures per
regulations."
54. By August 14, 2014, just two days after the purchase
of Hughes was completed,
Jason Galanis and Hirst worked to invest Hughes client funds in the Tribal Bonds. Hirst quickly
undertook an analysis
of Hughes' clients' accounts and investments to determine what could be
liquidated to generate funds to purchase Tribal Bonds.
55. Morton asked Hughes' compliance officer to conduct an analysis
of the
investment guidelines
of seven of Hughes' clients to determine whether they allowed for
purchase
of the Tribal Bonds.  The compliance officer concluded that most of the clients'
guidelines prohibited privately-placed, unrated bonds like the Tribal Bonds, and that in
no case
could the investment be made without consulting the client first.
56.
On August
17, 2014, Jason Galanis, using a Burnham-affiliated e-mail address
(burnhamequitypartners.com), e-mailed Morton a copy
of the draft trust indenture for the Tribal
Bonds.
It provided that the bond proceeds would be invested in an annuity that would be issued
and managed by Wealth-Assurance.
In addition, pursuant to a Placement Agency Agreement for
the Tribal Bonds, Burnham Securities was entitled to a $250,000 fee from the bond sale
17

proceeds. The agreement stated that notices to Burnham Securities should be sent to Jason
Galanis (spelled
" Galanos" in the agreement) and was signed by Dunkerley. Morton knew that
Burnham Securities would be acting
as the Placement Agent for the Tribal Bonds.
57. On August 17, 2014, Morton e-mailed Jason Galanis, acknowledging the conflicts
of interest presented by her investment of client funds in a transaction in which affiliated
companies -  Wealth-Assurance and Burnham Securities -  stood to benefit. She complained that
she was spending much time performing due diligence regarding the Tribal Bonds
"because
of
the multiple views I had to take." She explained: "For instance, since many of the accounts are
ERISA funds, I had to consider those guidelines and regulations, I have a fiduciary duty to
Burnham, and a fiduciary duty to the clients."
58. In another e-mail dated August
17, 2014, Morton sent Jason Galanis a memo
articulating concerns regarding the Tribal Bonds. Among other things, Morton's memo
questioned whether the tribe affiliated with the
issuer-a tribal corporation operating in an
impoverished
region-would be legally or financially accountable for the Tribal Bonds and
whether institutional clients would fire Hughes
if they were dissatisfied with the investment.
59. In her e-mail transmitting the memo to Jason Galanis, Morton wrote, in reference
to BFG Investments'  investment in Hughes: "The decision regarding what should be done is
yours, not mine ... To be fair to both of us, if you made the investment with this in mind, I do
not have the moral right to stand in the way and everything is  in place to move forward .. .. "
She reiterated in a text message to Jason Galanis: "Let
's be clear, if you want the bonds to go in,
I have no say. I am not sitting in the position
of making a judgement [sic]. If you invested in
Hughes for this sole purpose than it
is your call not mine ... If you're thinking that I can or would
18

stop this then I have totally screwed up my communication." Jason Galanis told Morton to let
Hirst
"make the decision."
60. Between August 22 and 26, 2014, Hirst signed trade tickets purchasing
$27,077,436 of Tribal Bonds on behalf of nine of Hughes'  clients. The funds were sent to a trust
account at
US Bank for the benefit
of WLCC. Neither Morton nor Hirst informed any of those
clients about the investments beforehand.  As one
of the costs of issuance associated with the
bonds, WLCC paid Burnham Securities a $250,000 placement agent fee out of the bond
proceeds,
of which $125,000 was then paid to Dunkerley as his share of the fee.
61. Morton and Hirst knew that Morton's "financial sponsors," including Jason
Galanis and Dunkerley, were associated with Wealth-Assurance and Burnham Securities, which
had been described to her as the annuity provider and placement agent, respectively-entities
that would financially benefit from Hughes' clients'  purchases
of the Tribal Bonds.
Nevertheless, neither she nor Hirst disclosed to Hughes' clients that Hughes was investing their
funds in investments that would financially benefit its undisclosed part owners and financiers.
62. Upon learning
of the investments in the bonds, several Hughes clients expressed
concerns regarding the bonds'  valuation and suitability and demanded that the investments be
unwound. Morton assured them that Burnham Securities, as the placement agent, had other
clients interested in the bonds and was in the process
of arranging purchases. However, despite
repeated promises, Burnham Securities never produced buyers for the bonds, and none of
Hughes' clients was able to liquidate its position in the bonds.
2. AAM
63. In the fall of 2014, Jason Galanis began searching for additional investors to
purchase another tranche
of Tribal Bonds. Morton identified AAM, an investment manager with
$11 billion in assets under management, as a potential target for Hughes.
19

64. During the course of Morton's negotiations to acquire AAM, on October 30,
2014, Morton e-mailed Jason Galanis that she had had a conversation with AAM's Chief
Strategist "about our SRI [Socially Responsible Investing]/Native American Initiative" and that
"he is  so on board with this." According to Morton,
AAM's Chief Strategist told her that if she
made him aware
of the details of the bonds ahead of time, he would do his "damndest to get it
placed within a day after the acquisition." Jason Galanis forwarded the e-mail to Cooney and
Archer, with the note "working on more liquidity and sources for the various projects ... see
below. Promising." Cooney replied: "Very promising Greco!!"
65. With the backing
of Jason Galanis, Archer, Cooney and Dunkerley, Morton
continued to negotiate with AAM.
On December
1, 2014, at Jason Galanis's direction or with
his knowledge, Dunkerley provided
AAM' s General Counsel a letter on behalf of the "Cor
Group
of Companies, Inc.," a CORF A affiliate,  confirming its agreement to provide financing to
capitalize the purchase
of AAM. On February 2, 2015, Jason Galanis sent Archer and Cooney a
"consultant report" directed to the "Board
of Valorlife" regarding the financing of the proposed
acquisition
of AAM. Valorlife was a foreign insurer that Valor Group had acquired in
November 2014.
66. On April 2, 2015, at the direction
of Jason Galanis, Valorlife financed the
purchase
of AAM through BFG Investments with an upfront capital contribution of $6, 120,398.
In addition to the upfront capital contribution, the purchase
of AAM also included an agreement
to make a deferred payment
of $4,854,420, payable pursuant to two Reset Notes. The deferred
payment was guaranteed by Valor Group and the guaranty was signed by Dunkerley as Valor
Group
's President.
20

67. On March 30, 2015, Jason Galanis forwarded copies of the executed AAM
acquisition documents to Cooney, Archer and Burnham Financial Group's President, and
Cooney replied: "18 Balloons!!! Fantastic J!! !" The terms
of the purchase were memorialized
in an Amended and Restated Liability Company Agreement for GMT ("Restated Agreement"),
entered into as
of April 2, 2015.  Dunkerley signed the agreement on behalf of BFG Investments
as its
Managing Member.
68. Pursuant to the Restated Agreement,
AAM became GMT's wholly owned
subsidiary. The Restated Agreement provided that
AAM's Board of Managers was to consist of
four persons, comprised of two Class A Holders (Morton and her business partner) and two
persons selected
by BFG Investments as the Class B Holder. Together, the Board of Managers
was granted the exclusive right to control AAM. In addition,
GMT was required to appoint a
CIO that was acceptable to BFG Investments.
69. Immediately  after the acquisition
of AAM was completed, and in furtherance of
his pledge to Archer and Cooney to obtain more "liquidity" for their "various projects," Jason
Galanis instructed
Motion to identify investors to purchase additional Tribal Bonds.  By that
point, Morton was aware that there was no active market for the bonds. Since at least November
2014, she had been dealing with client complaints, including threatened litigation, regarding the
original bond investments by Hughes' clients and had been unsuccessful in her efforts to
an-ange
for Burnham Securities to find buyers or purchase
them itself. Indeed, in January 2015, she e-
mailed Jason Galanis:
"I thought that if necessary B[urnham] would bid on the bonds if the
clients wished.
It appears not to be the case.  We have received one formal communication and I
expect we will receive others in the coming days."
21

70. As before, Morton learned that entities affiliated with her "financial sponsors,"
including Jason Galanis, Archer, Cooney and Dunkerley, would financially benefit from the sale
of this tranche of Tribal Bonds. On April 9, 2015, Burnham Securities' counsel sent Morton a
private placement memorandum for the new issuance
of Tribal Bonds. Like the August 2014
Tribal Bonds issuance, it provided that the proceeds
of the new issuance would be used for
transaction costs, including a placement agent fee, and to purchase an annuity.
It identified
"Wealth Assurance Private Client Corporation, a subsidiary
of Valor Group" as the underwriter
and issuer
of the annuity contract. It also disclosed that pursuant to a placement agreement
entered into between the issuer, WLCC, and Burnham Securities, "Burnham Securities will
receive an $80,000 fee from the Issuer for the sale
of the Bonds by the Issuer."
71. On April 10, 2015, Jason Galanis sent Morton a "Class A board member
communication
request," in which he demanded a conference call to discuss a number
of
business related items. In the e-mail, Jason Galanis expressed frustration regarding AAM's lack
of support for a potential investment in additional Tribal Bonds: "On the Native American
initiative, this was and has been a fundamental part
of the business plan since we met. .. "and
"[i]t is  in everyone's interest to maintain their word." In the e-mail, Jason Galanis stated: "I am
not a member
of the  board. However, I was responsible for arranging the financing for the
company and have been requested to continue to be the lead in liaising with the
investors."
72. On April 14, 2015, Morton e-mailed Jason Galanis explaining that they "had a
challenge
regarding bond
placement," and proposing that they could "mitigate the challenge
of
restrictive investment policies by going directly to our client base (which numbers over 40
clients) and introduce the concept. Exceptions to investment policies occur all
of the time, the
key is to have the relationship necessary and begin the discussions in advance of the placement."
22

In the same e-mail, Morton also requested a $500,000 loan, explaining that AAM was suffering
from financial difficulty and was struggling to pay its operating costs. Jason Galanis replied to
Morton's message, "Let's talk, I don't like e-mail."
73. The next day, Morton texted Jason Galanis: "I would really like
to have clarity on
the working capital
as soon as possible. The trade will go through in the am." Jason Galanis
replied: "Will wire 305 on Friday. Worst Monday." On April 16, 2015, Morton directed the
investment
of $16.2 million of an AAM client's funds in the new issuance of Tribal Bonds. One
week later, AAM received a $305,000 payment, funded by bond proceeds from the WAPCC
Account
in Florida and authorized by Dunkerley at Jason Galanis's direction or with hi s
knowledge.
74. Morton arranged for AAM
to use funds maintained in one of its managed funds
(the "HY Fund") for the bond purchase. HY Fund implements a strategy
of making diverse, high
yielding, liquid investments through designated investment managers. HY Fund's only investor
was
Pension Fund
1, an existing client of AAM' s for which AAM managed other investments in
addition to its investment in the HY Fund.
75. The purchase
of the Tribal bonds was inconsistent with HY Fund's investment
strategy, and notwithstanding her previous e-mail to Jason Galanis suggesting that AAM
"introduce the concept" to Pension Fund 1 prior to making the investment, Morton did not
discuss the purchase
of the bonds with Pension Fund 1 prior to making the investment.
76. After the purchase, on April 23, 2015, Morton informed Pension Fund 1 about the
investment in the bonds and the fact that there was a potential conflict
of interest because the
individuals who controlled the annuity provider and the placement agent were also AAM's
financiers. Morton did not tell
Pension Fund 1 that those same individuals were also AAM's
23

part-owners, and the largest source of AAM's capital. Nor did Morton disclose that Jason
Galanis had promised her additional funding for AAM in connection with her approval
of the
bond purchase.
77. The next day,
Pension Fund 1
's Executive Director informed AAM that it
"strongly disagree[d]" with the purchase
of the bonds and that Pension Fund 1 "should have been
'
provided advance notice of this questionable purchase, pmiicularly due to the fact that a conflict
of interest exists in the purchase." Pension Fund 1 demanded that the bonds be liquidated
immediately.
78.
Once again, Burnham Securities promised to find a purchaser for the bonds.
However, neither Burnham Securities nor AAM was able to find any purchaser for the Tribal
Bonds.
79.
Pension Fund 1 sent AAM a notice
of redemption of all of its funds in HY Fund
on September 24,
2015 and, on October 29, 2015, it notified AAM that it was redeeming the rest
of its funds under AAM' s management. Pension Fund 1 explained that its decision to end its
relationship with AAM was based on Morton
's "unilateral actions (which [were not yet]
reversed) to violate investment guidelines and purchase inappropriate securities with the money
contributed by the hard working members
of [Pension Fund 1]."
80. In October 2015, Dunkerley, on behalf of Burnham Securities, e-mailed AAM
acknowledging the lack
of a market for the bonds, and admitted that they could not even be
priced:
"You may want to refer to the risks section
of the PPM where it clearly says there is  'no
market for these and none is  expected to develop in the future'
.... This situation is  clearly true
at the moment and given the current investigation any price attributed to these bonds may not be
appropriate for accounting or even misleading for any other
purposes."
24

81. At the time, Dunkerley knew that, contrary to the annuity contract he had signed,
none of the bond proceeds had been sent to a separate account held by W APCC BVI and
managed by Investment Management Company
A, but, in accordance with the scheme, had
instead been sent to the separately incorporated W
APCC in FL and misappropriated from there.
D. Jason Galanis, John Galanis, Dunkerley, Hirst, Archer and Cooney Misappropriate
the Tribal Bond Proceeds.
82. Based on the documents governing the sale of the $43.2 million in Tribal Bonds
to Hughes and AAM clients, and after the deduction
of various issuance costs and up-front
payments to WLCC, $40.1 million
of the bond proceeds were to be invested by Investment
Management Company A in annuities issued by W APCC in BVI. The bonds issued to Hughes
investors were to pay 5.62% interest annually and mature in
10 years; the bonds issued to
AAM's HY Fund were to pay 6.02% interest annually and mature in 7 years. The payment of
the interest and return of the full $43.2 million in principal upon maturity of all the bonds was
dependent
on the successful investment of the proceeds by W APCC, under the direction of
Investment Management Company A.
83. As set out in the two separate annuity contracts governing the bond issuances to
Hughes and AAM clients (both signed by Dunkerley on
WAPCC's behalf), WAPCC promised
that the initial proceeds received would be kept in a "segregated asset account" that would be
"unique to this Contract" and would be "segregated from the Company's other assets." The
annuity contract governing the Hughes clients' bond proceeds also explicitly provided that the
annuity purchase payment was to be made by wire transfer to
"a bank without any offices and/or
branches in the United States" (a provision that was apparently edited out
of the subsequent
annuity contract used for the bond issuance sold to the HY Fund).
25

84. As described above, instead, all of the bond proceeds were sent to the WAPCC
Account in Florida, held in the name
of an identically named entity (W APCC) incorporated and
based in Florida rather than in the BVI, and were never managed by Investment Management
Company
A, which, as noted earlier, was a fake entity.
85. In furtherance of the scheme, with Jason Galanis's knowledge, Dunkerley
misappropriated the Tribal Bond proceeds from the W APCC Account
by authorizing wires to a
number
of other entities, at least on some occasions doing so based on written instructions he
received from Jason Galanis.
86. Dunkerley wired the largest portion
of the proceeds to Thorsdale, an entity Jason
Galanis controlled, from which they were further misappropriated by Jason Galanis for his own
benefit and that
of his associates. According to its operating agreement, Thorsdale was
incorporated in Nevada as a "Family Trust Company" for "members
of the Berger family and its
Family Affiliates." Berger is  the maiden name
of Jason Galanis's wife. Jason Galanis had
signing authority over Thorsdale's bank account, held its only debit card, and directed all the
wires that Thorsdale sent that were funded by bond proceeds from the W APCC Account.
87. The misappropriation of Tribal Bond proceeds by WAPCC and Thorsdale
included the following:
1. Payments to Hughes and AAM
88. Morton's decisions to invest Hughes' and AAM's clients'  funds in the Tribal
Bonds were driven in part by her expectation that Jason Galanis would continue to arrange
financial backing for the firms. Not only were her expectations met, but they were met by
Hughes' and
AAM's receipt of a portion of the very proceeds that WAPCC was supposed to be
investing on behalf
of the bond issuer and for the ultimate benefit of Morton's clients.
26

89. At the direction of Jason Galanis, Hughes and AAM received at least $655,000 of
Tribal Bond proceeds: 1) a $350,000 payment on September 8, 2014, that Jason Galanis had
Dunkerley wire from W APCC to Thorsdale and then to Valor Group, which then wired it to
Hughes; and 2) a $305,000 payment (matching the amount that Jason Galanis had expressly
promised to Morton the day before she effected the April 2015 bond purchase by the HY Fund)
that Dunkerley wired to AAM directly from the WAPCC Account on April 23, 2015.
2. $2,350,000 to John Galanis
90. The closing documents for the sale of the first issuance of Tribal Bonds in August
2014 did not reflect any payments to John Galanis for the work he did in presenting the
transaction to WLCC and securing its participation as issuer.
Nor was WLCC informed by John
Galanis, or anyone else, that John Galanis would earn any fees in connection with the Tribal
Bonds, although John Galanis knew that proceeds from the issuance would be directed to him by
his son.
91. Yet, after WAPCC received the bond proceeds in August
2014, all
of which it had
received as purchase money for the bogus annuity contract it signed, at Jason Galanis's direction,
Dunkerley sent $2.35 million from WAPCC to an entity controlled by John Galanis called
Sovereign Nations Development Corp. From Sovereign Nations Development Corp' s bank
account, John Galanis directed several further distributions to another account in his name.
3. Jason Galanis and Dunkerley Misappropriate Millions to Benefit
Jason Galanis, Dunkerley, Hirst, Cooney and Archer.
92. Jason Galanis arranged to have W APCC and Thorsdale transfer over $3 million to
lenders and others for the mortgage on and maintenance
of his estate in Los Angeles, California.
He also arranged to have money wired from W APCC and Thorsdale to his criminal defense
attorneys ($497,210) a
nd to his mother, wife and father-in-law (totaling $214,000).
27

93. In addition, Jason Galanis used his Thorsdale debit card to spend thousands more
at restaurants and luxury retailers such as Valentino, Yves Saint Laurent, Barneys, Prada and
Gucci.
94. Dunkerley, Hirst, Cooney and Archer all benefited from their participation in the
scheme as well through transfers directed by Jason Galanis out
of the Thorsdale account that
they receiyed individually or through entities that they controlled, including but not limited to:
a) $700,513 to Archer between November 2014 and April 2015; b) $4,370,000 to Cooney
between August 2014 and April 2015; c) $20,485 to Dunkerley in September 2014; and
d)
$1,300,000 to Hirst in August 2014.
4. Jason Galanis, Archer and Cooney Recycle Tribal Bond Proceeds to
Acquire New Tribal Bonds for Burnham's Use.
95. In August 2014, the Independent Trustees of an asset manager affiliated with
Burnham Securities sought "iron-clad assurance(s)" from Archer (representing CORFA and
BAM Holdings,  LLC) that Jason Galanis would
"not be involved with any
of the Burnham
entities" or have an "interest
of any kind, direct or indirect, in any of the Burnham entities or
their successors, that he will not source deals to the Burnham entities and that the Burnham
entities will not invest with or in, directly or indirectly, any business or enterprise in which Mr.
Galanis has any association, affiliation or investment, pecuniary or otherwise, directly or
indirectly." Archer provided the requested assurances to the Independent Trustees via a letter
dated September 26, 2014, but nonetheless continued to significantly involve Jason Galanis in
Burnham's business activities, not only by allowing Jason Galanis to solicit Burnham Securities'
involvement as the private placement agent for the Tribal Bonds and underwriter for at least one
initial public offering, as described below, but also by accepting his direction and guidance on
how to use the Tribal Bonds to benefit Burnham
Securities and its affiliates.
28

96. On October 1, 2014, Jason Galanis used $15 million of the $27 million that
Hughes' clients invested in the August 2014 issuance
of the Tribal Bonds to fund the acquisition
of a new $15 million issuance of Tribal Bonds by RSB, an entity wholly owned by Archer. In
other words, instead
of having WAPCC invest the first bond issuance's proceeds in an annuity
and assure repayment
of the bonds' principal and interest, Jason Galanis used $15 million of
those proceeds to invest in more Tribal Bonds, causing WLCC to issue $15 million more in
obligations even though it was not, in actuality, receiving any additional proceeds to fund an
annuity that would be the only source for repayment
of the bonds. The point of this recycling
scheme was to allow Jason Galanis to use the bonds as currency in various transactions,
including to bolster Burnham
Securities' net capital.
97. To coordinate Archer's purchase
of the $15 million Tribal Bonds, Jason Galanis
arranged for $ 15 million to be sent from Thorsdale to RSB. RSB then wired $15 million
to the
indenture trustee for the benefit
of WLCC to purchase the newly issued Tribal Bonds. Most of
the funds received in this issuance were sent again to WAPCC as purchase money supposedly
for a new annuity. Prior to receiving these funds,
RSB's account balance was about $2 million.
In the course
of paying for the Tribal Bonds, Archer's bank asked him to identify the source of
the funds. Archer facilitated the recycling of the bond proceeds by telling his bank in a client
representation letter he signed on October 20, 2014: "The funds used to purchase the bonds were
from real estate sales through my business, Rosemont Seneca Bohai LLC," a statement Archer
knew was untrue when he made
it.
98. Jason Galanis then recycled a portion of the funds again, this time to fund the
acquisition
of a new $5 million issuance of Tribal Bonds by Cooney. Between October 2 and 6,
2014, Dunkerley, at Jason Galanis's direction or with his knowledge, sent back to Thorsdale a
29

large portion of the funds W APCC had received from WLCC in connection with the $15 million
sale
of Tribal Bonds to RSB. On October 8, 2014, Jason Galanis sent $5 million of the money
that Thorsdale received to Cooney, who used it to purchase Tribal Bonds. By twice recycling a
po1iion
of the proceeds from the initial bond issuance, Jason Galanis and his coh01is caused
WLCC to issue $47 million
of Tribal Bonds in exchange for $27 million (minus transaction-
related fees) in proceeds.
99. Archer and Cooney then used their illegitimate Tribal Bonds to benefit Burnham
Securities, an entity in which they each held an ownership interest. In April 2015, Archer used
RSB's Tribal Bonds to purchase shares of Valor Group with Dunkerley signing the documents
on Valor Group's behal
f. In May 2015, one of Valor Group's wholly-owned subsidiaries
transferred $2.6 million
of the Tribal Bonds to Burnham Securities to boost its net capital in
order to meet regulatory requirements.
100. Similarly, in May 2015, Cooney transferred his
$5 million Tribal Bonds to
Burnham Securities in a transaction devised by Jason Galanis "to get Cooney some reliable
income while getting Burnham Net Cap it can commercialize." In an e-mail dated April 24,
2015, to Cooney, Archer and Burnham Financial Group's President, Jason Galanis instructed
them:
"if we hustle, we can get the $5 mm on to Burnham's balance sheet this month. This
would require Bevan [Cooney] getting the physical bond delivered to
US Bank for transfer into
Burnham's name."
101. Eventually, on May 29, 2015, Cooney directly transferred the
$5 million Tribal
Bonds, on Burnham Securities' behalf, to Broker Dealer
1 in partial consideration of Burnham
Securities' purchase
of an interest in Broker Dealer 1. Cooney received nothing in exchange
from Burnham Securities for transferring the Tribal Bonds to Broker Dealer
1 on Burnham
30

Securities' behalf, and no documents evidence the contribution by Cooney as either an
investment or loan in Burnham
Securities. In response to inquiries from FINRA regarding the
specifics
of the bonds and Cooney's contribution of them, Jason Galanis told Broker Dealer 1 's
President to tell FINRA that Cooney had been an investor in Burnham Securities since 2013 and
"agreed to make a follow-on investment in 2015 in support
of Burnham's business plan to
diversify."
5. Jason Galanis, Hirst, and Dunkerley Use Tribal Bond Proceeds to
Support an IPO Underwritten by Burnham.
102. At the direction of Jason Galanis and Hirst, W APCC used a significant portion of
the proceeds from the sale of the April 2015 Tribal Bonds to support the successful initial public
offering
of Technology Company, in which Jason Galanis, Hirst, Archer, Cooney and Dunkerley
all held shares, and for which Jason Galanis served as an
"advisor."
103. In February 2014, Jason Galanis sent Dunkerley the first draft of an S-1 for
Technology Company in connection with a potential discussion regarding
"Burnham West
handling the IPO" but asked him to "not distribute to Burnham colleagues until later drafts."
Jason Galanis also told Dunkerley that "Burnham will not be expected to raise any real money,
rather will act as an IPO sponsor." Jason Galanis forwarded the e-mail to Archer and Cooney
to
include them in his plans.
104. In May 2015, Jason Galanis and Hirst coordinated the success
of Technology
Company's IPO, which was underwritten by Burnham Securities, with Dunkerley taking a lead
on the deal. Technology Company's stock was initially offered on the NASDAQ on May 19,
2015 at $5/share.
105. Between April
29th and May l8t11, 2015, Dunkerley, acting at  Jason Galanis's
direction or with his knowledge, authorized wires totaling $4,336,000 from the W APCC
31

Account to two brokerage accounts at Burnham Securities, in the names of IPO Participant 1 and
IPO Participant
2. Both accounts were opened by Galanis Associate, at the direction of Hirst.
106. IPO Participant 1 and IPO Participant 2 used $4,335,000
of the funds that they
received from WAPCC to purchase 867,000 shares
of Technology Company during the IPO.
The shares purchased by IPO Participant 1 and IPO Participant 2 represented 87%
of the shares
offered during Technology Company's IPO. The remaining 13% was also sold to friendly
accounts, including accounts controlled by Hirst.
107. IPO Participant 1 and IPO Participant 2 liquidated at least a portion
of the shares
immediately on the open market at prices ranging from $14 to $36 per share, above the
IPO
purchase price
of$5 per share. As of October 15, 2015, IPO Participant 1 and IPO Participant 2
liquidated 324, 120 shares
of Technology Company for proceeds of $4,523 ,312.
108. Despite IPO Participant
l's and IPO Participant 2's profitable trading with money
furnished by W APCC, WAPCC did not recoup the $4.3 million it had sent to their accounts.
Instead,
IPO Participant 1 and IPO Participant 2, acting at Jason Galanis's direction, sent
millions
of dollars to a variety of other transferees, including Jason Galanis's criminal defense
attorneys, Burnham Financial Group and RSB.
E. In September 2015, Jason Galanis and Hirst Were Charged and Arrested in a
Separate Matter.
109. In September 2015, the Commission charged Hirst, John Galanis, Jason Galanis,
and two
of Jason Galanis's brothers, with defrauding investors in Gerova, whose shares once
traded on the New York
Stock Exchange. The USAO filed parallel criminal charges.
110. John Galanis, Jason Galanis and Hirst are currently free on bail, pending the
resolution
of the Gerova criminal charges. As a condition of his release, Jason Galanis is
required to disclose whether he serves as an officer, director, consultant, advisor or investment
32

banker as to any company. To evade detection by law enforcement authorities of his ongoing
activities with respect to Burnham Securities, GMT and W APCC, Jason Galanis directed Galanis
Associate to create a new internet domain, colarisventures.com, along with the e-mail address,
[email protected], immediately after his arrest. Using this new e-mail address, Jason
Galanis has continued to correspond with Dunkerley, Archer, Cooney and others, going
so far as
to dictate correspondence Dunkerley should send to third-parties. And he has continued to direct
business decisions and transactions, including coordinating an interest payment due on the Tribal
Bonds, as described in the section below.
F. The Aftermath: Jason Galanis, Archer and Dunkerley Continue
to Mislead WLCC
and Scramble
to Fund WAPCC's Interest Payment Obligations under the Annuity
Contracts
111. Pursuant to the annuity contracts in connection with the August and September
2014 issuances
of Tribal Bonds, W APCC was obligated to make respective interest payments in
September 2015 and in October 2015. Since W APCC had misappropriated the proceeds from
the Tribal Bonds instead
of investing them in annuities, Jason Galanis scrambled to ensure that
W
APCC had sufficient funds from other sources to pay the interest payments that were due in
order to protect the Tribal Bond scheme from exposure, calling on associates for contributions as
needed.
112. In September 2015, Dunkerley authorized WAPCC to forward $1.5 million to the
indenture trustee as interest due on the August 2014 bonds. That amount covered the interest
payments due to investors, but failed to cover an additional $277,182.87 in amrnal income that
WAPCC was obligated to pay WLCC. Based on the sources
of funds held in WAPCC's bank
account at the time, the $1.5 million payment that it did make was funded by a small portion
of
Technology Company stock sale proceeds it received from IPO Participant 1 and IPO Participant
33

2 ($1.3 million), amounts contributed by Archer ($250,000), and/or amounts received from
another associate
of Jason Galanis ($250,000).
113. After he had been arrested, using his new [email protected] e-mail
address, Jason Galanis orchestrated the $1, 197 ,311 interest payment due on the October
2014
Tribal Bonds -  bonds that Archer and Cooney had "bought" using recycled proceeds from the
first Tribal Bond issuance, and at least a portion
of which Burnham Securities now held after
they had been contributed by Valor Group's subsidiary in May 2015. First, on September 30,
2015, Jason Galanis instructed Dunkerley to tell Burnham Financial Group's President to have
Burnham Financial Group wire
$903,000 to the indenture trustee on behalf
of WLCC. That
same day, in order to make that payment, Burnham Financial Group received the necessary funds
from a wholly-owned subsidiary
of Valor Group in a transaction Archer coordinated. The next
day, RSB sent Burnham Financial Group an additional
$1,098,000, a portion of which Burnham
Financial Group used to send an additional $294,311.11 interest payment to the indenture trustee.
In other words, Burnham Financial Group (through funds provided by Valor Group's subsidiary
and
RSB) ended up paying for the interest on the Tribal Bonds that it controlled. But as with the
August 2014 Tribal Bonds, W APCC failed to make the additional income payment ($250,000)
due to WLCC under the annuity contract.
114.
On October
8, 2015, WLCC sent Dunkerley a letter expressing concern regarding
information it had recently learned about Burnham Securities and the ongoing difficulty it was
experiencing in receiving funds due it under the Annuity contracts. In the letter, WLCC
requested that Dunkerley immediately provide valuations on all three annuity contracts.
115.
On October
15, 2015, at Jason Galanis's direction or with his knowledge,
Dunkerley responded to WLCC' s letter and attached fabricated annual account statements on
34

W APCC letterhead (reflecting an address in the BVI) for the annuity contracts purportedly
purchased in connection with the August 2014 and September 2014 Tribal Bonds. On
November 5, 2015, also at Jason Galanis
's direction or with his knowledge, Dunkerley provided
a similar fabricated annual account statement for the annuity contract purportedly purchased in
connection with the April
2015 Tribal Bonds. None
of the statements contained any information
regarding the underlying investments and each indicated that the value
of the accounts had not
changed one penny from the initial amount
of money that had purportedly been invested in the
annuities.
116. On February 17, 2016, after the Commission filed its complaint in SEC
v. AAM,
Jason Galanis sent WLCC a letter to rebut the Commission's allegations and to assure WLCC
of
the Tribal Bonds' validity and W APCC' s appropriate investment of the bonds' proceeds. In the
letter, Jason Galanis pointed to the timely payment
of interest on the bonds as evidence of their
legitimacy, noting, "WLCC bond interest
of over $2.72 million was already paid by these
distributions precisely as contemplated in the Indenture and related agreement," and falsely
stated: "These annuity distributions wi
ll continue from the assets owned in the annuities.
Therefore, the WLCC bonds will continue to be paid." Among other things, Jason Galanis
concealed the fact that the two interest payments had been funded by sources other than annuity
investments.
117. More recently, and with an interest payment due date for the April 2015 bond
issuance fast approaching, Jason Galanis changed tacks. In an April 4,
2016 letter to WLCC,
Dunkerley, writing on behalf
of W APCC, declared that W APCC had suspended its interest
payments on the Tribal Bonds. In his letter, written at the direction or with the knowledge
of
Jason Galanis, Dunkerley notified WLCC that W APCC would "withhold Annuity distribution
35

payment to WLCC until such time as WLCC provides a satisfactory financial surety" to
indemnify WAPCC for the costs it and its "agents" incurred in defense
of the Commission's
investigation, among other matters.
G. The Commission's Action Against AAM
118. On December 15, 2015, the Commission filed an emergency action charging
AAM with investment adviser fraud for investing over $43 million in Tribal Bonds without
disclosing the conflicts
of interest inherent in the transactions arising from the benefits the bond
sales generated for entities related to
AAM' s parent company and financiers. The Commission
obtained a
TRO appointing a monitor to oversee
AAM, in order to protect
AAM's clients from
further inappropriate investments.
119.
On January 8, 2016, based on concerns identified by the Court-appointed monitor,
the Commission obtained an order expanding the monitor' s powers to that
of a receiver. The
receiver is in the process of winding down the company. By consent of the receiver, the
Commission has obtained a bifurcated judgment as to liability against AAM.
FIRST CLAIM FOR RELIEF
Violations of and Aiding and Abetting Violations of Section 17(a)(l) and (3) of the
Securities Act
(Against
Jason Galanis, Archer, Cooney, Dunkerley, John Galanis and Hirst)
120. The Commission realleges and incorporates by reference herein each and every
allegation contained in paragraphs 1 - 119.
121. Jason Galanis, Archer, Cooney, Dunkerley, John Galanis and Hirst each, directly
or indirectly, singly or in concert with others, by use
of the means or instruments of
transportation or communication in interstate commerce or by use of the mails in the offer or sale
of securities, with scienter, employed devices, schemes or artifices to defraud or engaged in
36

transactions, practices or courses of business which operated or would operate as a fraud or
deceit upon a purchaser.
122. By virtue
of the foregoing, Jason Galanis, Archer, Cooney, Dunkerley, John
Galanis and Hirst each, directly
or indirectly, violated, and unless restrained and enjoined, will
continue violating, Sections 17(a)(l) and (3)
of the Securities Act [15 U.S .C. §§ 77q(a)(l) and
(3)].
123. In the alternative, Archer, Cooney, Dunkerley, John Galanis and Hirst each,
directly or indirectly, knowingly or recklessly provided substantial assistance to Jason Galanis,
who, directly or indirectly, singly or in concert with others,
in the offer or sale of a security, with
scienter, used the means
or instruments of transportation or communication in interstate
commerce
or used the mails to employ devices, schemes or artifices to defraud or to engage in
transactions, practices or courses
of business which operated or would operate as a fraud or
deceit upon a purchaser.
124. By virtue
of the foregoing, Archer, Cooney, Dunkerley, John Galanis and Hirst
aided and abetted, and unless restrained and enjoined, will continue aiding and abetting,
violations
of Sections 17(a)(l) and (3) of the Securities Act [15 U.S.C. §§ 77q(a)(l) and (3)] in
violation
of Section 15(b) of the Securities Act [15 U.S.C. § 77o(b)].
SECOND CLAIM FOR RELIEF
Violations
of and Aiding and Abetting Violations of Section IO(b) of the Exchange Act
and Rules lOb-S(a), (b) and (c) Thereunder
(Against Jason Galanis, Archer, Cooney, Dunkerley, John Galanis, Hirst and Morton)
125. The Commission realleges and incorporates by reference herein each and every
allegation contained in paragraphs 1 - 119.
126. Jason Galanis, Archer, Cooney, Dunkerley, John Galanis, Hirst and Morton each
directly
or indirectly, singly or in concert with others, in connection with the purchase or sale of
37

a security, with scienter, used the means or instrumentalities of interstate commerce or of the
mails or
of a facility of a national securities exchange to employ devices, schemes, or artifices to
defraud; and to engage in acts, practices, or courses
of business which operated or would operate
as a fraud or deceit upon others.
127.
By virtue of the foregoing, Jason Galanis, Archer, Cooney, Dunkerley, John
Galanis, Hirst and Morton each violated, and unless restrained and enjoined, will continue
violating, Section lO(b)
of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) [17
C.F.R.§§ 240.10b-5(a) and (c)].
128. Morton directly
or indirectly, singly or in concert with others, in connection with
the purchase
or sale of a security, with sci enter, used the means or instrumentalities of interstate
commerce
or of the mails or of a facility of a national securities exchange to make an untrue
statement
of a material fact or to omit to state a material fact necessary in order to make the
statements made, in the light
of the circumstances under which they were made, not misleading.
129. By virtue
of the foregoing, Morton violated, and unless restrained and enjoined,
will continue violating, Section IO(b)
of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-
5(b) [17 C.F.R. § 240.10b-5(b)].
130. In the alternative, Archer, Cooney, Dunkerley, John Galanis and Hirst each
directly
or indirectly, provided knowing and substantial assistance to Jason Galanis, who,
directly or indirectly, singly or in conce1i with others, in connection with the purchase or sale of
a security, with scienter, used the means or instrumentalities of interstate commerce or of the
mails or
of a facility of a national securities exchange to employ devices, schemes, or artifices to
defraud; and to engage in acts , practices, or courses
of business which operated or would operate
as a fraud or deceit upon others.
38

131. By virtue of the foregoing, Archer, Cooney, Dunkerley, John Galanis and Hirst
each aided and abetted, and unless restrained and enjoined, will continue aiding and abetting,
violations
of Section lO(b) of the Exchange Act (15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c)
thereunder [17 C.F.R.§§ 240.10b-5(a) and
(c)] in violation of Section 20(e) of the Exchange Act
(15 U.S.C. § 78t(e)].
THIRD CLAIM FOR RELIEF
Violations
of Sections 206(1), 206(2) and 206(4) of the Advisers Act, and Rule 206(4)-8
thereunder
(Against Morton)
132. The Commission realleges and incorporates by reference herein each and every
allegation contained in paragraphs 1 -119.
133. Morton, while acting as an investment adviser, by use
of the mails, or the means
and instrumentalities
of interstate commerce, directly or indirectly, singly or in concert with
others: (a) employed devices, schemes, or artifices to defraud her clients or prospective clients
with sci enter; and (b) knowingly, recklessly or negligently engaged in transactions, practices,
and courses
of business which operated as a fraud or deceit upon her clients or prospective
clients.
134. Morton, while acting as an investment adviser to a pooled investment vehicle, (a)
made untrue statements
of material fact or omitted to state a material fact, necessary to make the
statements made, in the light
of the circumstances under which they were made, not misleading,
to an investor in the pooled investment vehicle; and (b) engaged in acts, practices, or courses
of
business that were fraudulent, deceptive, or manipulative with respect to an investor or
prospective investor in the pooled investment vehicle.
39

135. By virtue of the foregoing, Morton violated, and unless restrained and enjoined,
will continue violating, Sections 206(1), (2) and (4)
of the Advisers Act [15 U.S.C. §§ 80b-6(1),
(2) and (4) ] and Rule 206(4)-8 thereunder [17 C.F.R.
§ 275.206(4)-8].
FOURTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Sections 206(1), 206(2) and 206( 4) of the Advisers Act
and Rule 206( 4)-8 Thereunder
(Against Morton)
136. The Commission realleges and incorporates by reference herein each and every
allegation contained in paragraphs 1 -119.
137. Morton, directly or indirectly, knowingly or recklessly provided substantial
assistance to Hughes and AAM, which, while acting as investment advisers, by use
of the mails,
and the means and instrumentalities
of interstate commerce, directly or indirectly, singly or in
concert with others: (a) employed devices, schemes, or artifices to defraud their respective
clients or prospective clients with scienter; and (b) knowingly, recklessly or negligently engaged
in transactions, practices, and courses
of business which operated as a fraud or deceit upon their
respective clients or prospective clients.
138. Mo1ion, directly or indirectly, knowingly or recklessly provided substantial
assistance to AAM which, while acting as an investment adviser to a pooled investment vehicle,
(a) made untrue statements
of material fact or omitted to state a material fact necessary to make
the statements made, in the light
of circumstances under which they were made, not misleading,
to an investor in the pooled investment vehicle; and (b) engaged in acts, practices, or courses
of
business that were fraudulent, deceptive, or manipulative with respect to an investor or
prospective investor in the pooled investment vehicle.
139. By virtue
of the foregoing, Morton aided and abetted, and unless restrained and
enjoined, will continue aiding and abetting, violations of Sections 206(1 ),  (2) and ( 4) of the
40

Advisers Act [15 U.S.C. §§ 80b-6(1), (2) and (4)], and Rule 206(4)-8 thereunder [17 C.F.R. §
275.206(4)-8], in violation
of Section 209(f) of the Advisers Act [15 U.S.C. § 80b-9(f)].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court enter a Final
Judgment:
I.
Permanently restraining and enjoining Jason Galanis, Archer, Cooney, Dunkerley, John
Galanis and Hirst, their agents, servants, employees and attorneys and
all persons in active
concert
or participation with them who receive actual notice of the injunction by personal
service
or otherwise, and each of them, from violating, directly or indirectly, Sections 17(a)(l)
and (3)
of the Securities Act [15 U.S .C. §§ 77q(a)(l) and (3)];
II.
Permanently restraining and enjoining Jason Galanis, Archer, Cooney, Dunkerley, John
Galanis and Hirst, their agents, servants, employees and attorneys and
all persons in active
concert or paiiicipation with them who receive actual notice
of the injunction by personal
service
or otherwise, and each of them, from violating, directly or indirectly, Section 1 O(b) of
the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) [17 C.F.R.§§ 240.10b-5(a)
and (c)];
III.
Permanently restraining and enjoining Morton, her agents, servants, employees and
attorneys and all persons in active concert or participation with them who receive actual notice
of the injunction by personal service or otherwise, and each of them, from violating, directly or
indirectly, Section lO(b)
of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a), (b) and
41

(c) thereunder (17 C.F.R.§§ 240.10b-5(a), (b) and (c)] and Sections 206(1), (2) and (4) of the
Advisers Act
(15 U.S.C. §§ 80b-6(1), (2) and (4)] and Rule 206(4)-8 thereunder (17 C.F.R. §
275.206(4)-8];
IV.
Permanently barring Jason Galanis, Archer and Dunkerley from acting as an officer or
director
of a public company pursuant to Section 20(e) of the Securities Act (15 U.S.C. § 77t(e)]
and Section 2l(d)(2)
of the Exchange Act (15 U.S.C. § 78u(d)(2)]; and permanently barring
Morton from acting as an officer or director
of a public company pursuant to Section 21 ( d)(2) of
the Exchange Act (15 U.S.C. § 78u(d)(2)];
v.
Directing each of the Defendants to disgorge all ill-gotten gains, plus prejudgment
interest thereon;
VI.
Directing Jason Galanis, Archer, Cooney, Dunkerley, John Galanis, Hirst and Morton to
pay civil money penalties pursuant to Section
21 ( d)(3) of the Exchange Act [ 1 5 U.S. C. §
78u( d)(3)];
VII.
Directing Morton to pay civil money penalties pursuant to Section 209(e) of the Advisers
Act
(15 U.S.C. § 80b-9(e)]; and
VIII.
Granting such other and fmiher relief as this Court deems just and appropriate.
42

JURY DEMAND
Pursuant to Rule 3 8
of the Federal Rules of Civil Procedure, Plaintiff demands that this
case be tried to a jury.
Dated: New York, New York
May 11,
2016
By:
43
Andrew M. Calamari
Sanjay Wadhwa
Adam
S. Grace
Nancy
A. Brown
Tejal D. Shah
H. Gregory Baker
Attorneys for the Plaintiff
SECURITIES AND EXCHANGE
COMMISSION
New York Regional Office
Brookfield Place
200 Vesey Street, Suite 400
New York, New York 10281
(212) 336-1023 (Brown)
Email: [email protected]

Case 1:16-cv-03505   Document 1   Filed 05/11/16   Page 1 of 43

ANDREW M. CALAMARI 
REGIONAL DIRECTOR 
Sanjay Wadhwa 
Nancy A. Brown 
Tejal D. Shah 
H. Gregory Baker 
Adam S. Grace 
Attorneys for the Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
Brookfield Place 
200 Vesey Street, Suite 400 
New York, New York 10281-1022 
(212) 336-1023 (Brown) 

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

SECURITIES AND EXCHANGE COMMISSION, 

Plaintiff, 

v. 

DEVON D. ARCHER, BEV ANT. COONEY, 
HUGH DUNKERLEY, JASON W. GALANIS, 
JOHN P. GALANIS, GARY T. HIRST and 
MICHELLE A. MORTON, 

Defendants. 

16 Civ. _( ) 

ECF Case 

COMPLAINT AND 
JURY DEMAND 

Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint against 

Defendants Devon D. Archer ("Archer"), Bevan T. Cooney ("Cooney"), Hugh Dunkerley 

("Dunkerley"), Jason W. Galanis ("Jason Galanis"), John P. Galanis ("John Galanis"), Gary T. 

Hirst ("Hirst") and Michelle A. Morton ("Morton") (together, the "Defendants"), alleges as 

follows: 

SUMMARY OF THE ALLEGATIONS 

1. This case involves a fraudulent scheme orchestrated by Jason Galanis to obtain 

undisclosed control over two registered investment advisers so that over $43 million of their 



Case 1:16-cv-03505   Document 1   Filed 05/11/16   Page 2 of 43

clients' funds could be invested in sham Native American tribal bonds (hereinafter, the "bonds" 

or "Tribal Bonds"), and ultimately diverted to him and his associates and the entities they 

controlled at the expense of unwitting investors. 

2. To carry out the Tribal Bond scheme, Jason Galanis enlisted his father (John 

Galanis) and five of his associates, Archer, Cooney, Dunkerley, Hirst and Morton. As Jason 

Galanis told Cooney and Archer prior to the first issuance of the Tribal Bonds, the "primary 

objective" was "to get us a source of discretionary liquidity" - liquidity Jason Galanis would use 

to fund his and his father's lavish lifestyles, and to expand the corporate empire in which he, 

Archer and Cooney had invested. Jason Galanis brought on Hirst, Dunkerley and Morton as 

needed, and compensated them for the roles they knowingly assumed as front men and 

facilitators. 

3. Jason Galanis and John Galanis kicked off the scheme in March 2014, when they 

convinced a Native American tribal corporation, the Wakpamni Lake Community Corporation, 

affiliated with the Wakpamni District of the Oglala Sioux Nation, whose members live in one of 

the poorest regions in the United States (the "WLCC"), to become the issuer of the limited 

recourse bonds that they had already structured and developed. From August 2014 to April 

2015, Jason Galanis and John Galanis arranged for WLCC to issue three tranches of Tribal 

Bonds. 

4. Having secured an issuer, Jason Galanis and his associates needed investors to 

buy the Tribal Bonds, and they found them in the unsuspecting clients of two investment 

advisers over which Jason Galanis and his associates gained control. In July 2014, Jason Galanis 

arranged the purchase of investment adviser Hughes Capital Management, LLC ("Hughes") -

which managed approximately $900 million for various pension funds - and installed Morton as 

2 



Case 1:16-cv-03505   Document 1   Filed 05/11/16   Page 3 of 43

CEO and part owner. And, in April 2015, Jason Galanis arranged for Hughes to acquire another 

investment adviser with still more pension fund clients' funds under management, Atlantic Asset 

Management LLC ("AAM"), and put Morton in charge of the larger enterprise. Jason Galanis 

arranged for Valor Group Ltd. ("Valor Group"), an entity controlled by Jason Galanis, Archer, 

Dunkerley and others, to provide the financing for both purchases through its wholly-owned 

insurance company subsidiaries Wealth-Assurance AG ("Wealth-Assurance") and Valorlife 

Lebensversicherungs AG ("Valorlife"), informing Archer and Cooney that this acquisition 

promised greater "liquidity" for "their various projects." 

5. Morton understood that Valor Group's financing of both acquisitions was 

contingent on her agreement to invest Hughes' and AAM's clients' funds in the Tribal Bonds. In 

August 2014, at the direction of Jason Galanis, Morton hired Hirst at Hughes and authorized 

Hirst to purchase $27 million of Tribal Bonds on behalf of nine Hughes clients. In April 2015, 

again at the direction of Jason Galanis, Morton used $16.2 million of an AAM client's funds to 

buy Tribal Bonds. 

6. According to the trust indentures and other documents relating to the Tribal Bond 

issuances, the proceeds from each issuance were primarily to be invested in an annuity to benefit 

WLCC and generate sufficient income to pay interest, and ultimately to repay the principal, to 

the bond holders. In connection with each bond issuance, WLCC entered into an annuity 

contract with Wealth Assurance Private Client Corporation ("WAPCC"), an entity described in a 

private placement memorandum as a subsidiary of Valor Group. Pursuant to each annuity 

contract, the bond proceeds were to be managed by an independent investment manager, 

"Investment Management Company A," in a separately managed account at W APCC. 

3 



Case 1:16-cv-03505   Document 1   Filed 05/11/16   Page 4 of 43

7. However, Investment Management Company A was a fake entity created at the 

behest of Jason Galanis. Jason Galanis paid an associate ("Galanis Associate") $150,000 to sign 

the annuity contracts as the purported control person of Investment Management Company A, 

but the Galanis Associate never provided any investment management services. Instead, Jason 

Galanis gained undisclosed control over the bond proceeds, and he and the other Defendants 

used the proceeds for their personal benefit, including to purchase luxury goods, pay the criminal 

defense costs of John Galanis and Jason Galanis in a previously charged case, boost the net 

capital of two broker-dealers in which Archer and Cooney had interests, and finance the initial 

public offering of "Technology Company," a corporation in which Jason Galanis, Hirst, Cooney, 

Dunkerley and Archer held shares, and for which Jason Galanis served as an "advisor." 

8. In September 2015, Jason Galanis, John Galanis and Hirst were charged both by 

the Commission and by a grand jury convened by the United States Attorney's Office for the 

Southern District of New York ("USAO") with securities fraud arising out of a different and 

umelated scheme. SEC v. Galanis, et. al., 15 Civ. 7547 (VSB) (S.D.N.Y.) ("SEC v. Galanis"); 

and United States v. Jason Galanis, et al., 15 Cr. 0643 (PKC) (S.D.N.Y.) ("US v. Galanis"). 

9. While free on bail, Jason Galanis has continued to further the fraudulent scheme 

described herein by, among other things, orchestrating payments to the Tribal Bond indenture 

trustee to fund the Tribal Bonds ' interest payment obligations as they came due. 

VIOLATIONS 

10. By virtue of the conduct alleged herein, each of the Defendants, directly or 

indirectly, singly or in concert, violated and are otherwise liable for violations of the federal 

securities laws as follows: 

11. Jason Galanis violated: 

4 



Case 1:16-cv-03505   Document 1   Filed 05/11/16   Page 5 of 43

• Sections 17(a)(l) and (3) of the Securities Act of 1933 ("Securities Act") [15 

U.S.C. §§ 77q(a)(l) and (3)]; and, 

• Section 1 O(b) of the Securities Exchange Act of 1934 ("Exchange Act") [15 

U.S.C. § 78j(b)], and Rules 10b-5(a) and (c) thereunder [17 C.F.R. §§ 

240.10b-5(a) and (c)]. 

12. Archer, Cooney, Dunkerley, John Galanis and Hirst violated: 

• Sections 17(a)(l) and (3) of the Securities Act [15 U.S.C. §§ 77q(a)(l) and 

(3)], or, in the alternative, Section 15(b) of the Securities Act [15 U.S.C. § 

77o(b)], by aiding and abetting Jason Galanis's violations of Sections 17(a)(l) 

and (3) of the Securities Act [15 U.S.C. §§ 77q(a)(l) an (3)]; and, 

• Section lO(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rules 10b-5(a) 

and (c) thereunder [17 C.F.R. §§ 240.10b-5(a) and (c)], or, in the alternative, 

Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)] by aiding and 

abetting Jason Galanis's violations of Section lO(b) of the Exchange Act [ 15 

U.S.C. § 78j(b)], and Rules 10b-5(a) and (c) thereunder [17 C.F.R. §§ 

240.10b-5(a) and (c)]; 

13. Morton violated: 

• Section lO(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rules 10b-5(a), 

(b) and (c) thereunder [17 C.F.R. §§ 240.10b-5(a), (b) and (c)]; 

• Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 

("Advisers Act") [1 5 U.S.C. §§ 80b-6(1), (2), and (4)], and Rule 206(4)-8 

thereunder [17 C.F.R. § 275.206(4)-8]; and, 

5 



Case 1:16-cv-03505   Document 1   Filed 05/11/16   Page 6 of 43

• Section 209(f) of the Advisers Act [15 U.S.C. § 80b-9(f)] by aiding and 

abetting Hughes' and AAM's violations of Sections 206(1) and 206(2) of the 

Advisers Act [15 U.S.C. §§ 80b-6(1) and (2)] and aiding and abetting 

AAM's violation of Section 206(4) of the Advisers Act [15 U.S.C. § 80b-

6(4)], and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8]. 

JURISDICTION AND VENUE 

14. The Commission brings this action pursuant to the authority conferred upon it by 

Section 20(b) of the Securities Act [1 5 U.S.C. § 77t(b)], Sections 2l(d)(l) and 21(d)(5) of the 

Exchange Act [15 U.S.C. §§ 78u(d)(l) and 78u(d)(5)] and Section 209(d) of the Advisers Act 

[15 U.S.C. § 80b-9(d)], seeking a final judgment: (a) restraining and permanently enjoining each 

of the Defendants from engaging in the acts, practices and courses of business alleged against 

them herein; (b) ordering each of the Defendants to disgorge all ill-gotten gains and to pay 

prejudgment interest on those amounts; (c) prohibiting Jason Galanis, Archer and Dunkerley 

from acting as an officer or director of a public company pursuant to Section 20( e) of the 

Securities Act [1 5 U.S.C. § 77t(e)] and Jason Galanis, Archer, Dunkerley and Morton from 

acting as an officer or director of a public company pursuant to Section 21 ( d)(2) of the 

Exchange Act [15 U.S.C. § 78u(d)(2)]; and (d) imposing civil money penalties on Jason Galanis, 

Archer, Cooney, Dunkerley, John Galanis and Hirst pursuant to Section 20(d) of the Securities 

Act [15 U.S.C. § 77t(d)]; on Jason Galanis, Archer, Cooney, Dunkerley, John Galanis, Hirst and 

Morton pursuant to Section 2l(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)], and on 

Morton pursuant to Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)]. 

15. This Court has jurisdiction over this action, and venue lies in this District, 

pursuant to Section 22(a) of the Securities Act [15. U.S.C. § 77v(a)], Sections 2l(d) and 27 of 

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the Exchange Act [15. U.S .C. §§ 78u(e) and 78aa], and Section 214 of the Advisers Act [15 

U.S.C. § 80b-14]. The Defendants, directly or indirectly, made use of the means or instruments 

of transportation or communication in interstate commerce, or of the mails, or of a facility of a 

national securities exchange, in connection with the transactions, acts, practices, or courses of 

business alleged herein, certain of which occurred in this District. For example, Burnham 

Securities Inc. ("Burnham Securities"), the placement agent for the sale of the Tribal Bonds, is 

located in New York, New York. 

DEFENDANTS 

16. Jason Galanis, age 45, resides in Los Angeles, California. Jason Galanis was the 

subject of a prior Commission enforcement action, SEC v. Penthouse Int'l, Inc., et al., 05 Civ. 

0780 (S.D.N.Y.), for engaging in accounting fraud and financial reporting violations. On April 

27, 2007, pursuant to a settlement with the Commission, he was enjoined from violating Sections 

lO(b) and 15(d) of the Exchange Act, including Rule lOb-5, and was baned from serving as an 

officer and director of a public company for a period of five years, a bar which expired in 2012. 

In September 2015 , Jason Galanis was sued by the Commission and indicted by a grand jury 

convened by the USAO, based on allegations that he orchestrated a fraudulent and unregistered 

public distribution of millions of dollars of shares of a publicly traded company, Gerova 

Financial Group, Ltd. ("Gerova"). See SEC v. Galanis; US v. Galanis. 

17. John Galanis, age 73 , resides in Oceanside, California. John Galanis is the father 

of Jason Galanis, and has been the subject of numerous prior criminal proceedings, as well as 

enforcement actions by the Commission, dating back to the late 1960s. Most recently, John 

Galanis was charged by the SEC and USAO for his alleged involvement in the Gerova scheme. 

See SEC v. Galanis; US v. Galanis. 

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18. Archer, age 42, resides in Brooklyn, New York. Archer was, at times relevant 

herein, a director, officer and direct or indirect owner of and/or investor in various entities 

connected to the Tribal Bond scheme including Valor Group, Valorlife, COR Fund Advisors 

LLC ("CORF A"), Burnham Financial Group, the holding company for broker-dealer Burnham 

Securities, BAM Holdings, LLC, the holding company for investment management companies 

operating under the Burnham name, including Burnham Asset Management Corporation 

("BAM"), Rosemont Seneca Bohai LLC ("RSB"), a Delaware limited liability corporation that 

he wholly owns, and BOE Capital, LLC, a Delaware limited liability corporation that he wholly 

owned as of August 12, 2014. 

19. Cooney, age 43, resides in Incline Village, Nevada. Jason Galanis has described 

Cooney as his "best friend of 23 years and equity holder in all the businesses." At all relevant 

times herein, Cooney was a direct or indirect owner of CORF A, through which he owned an 

interest in Burnham Securities. 

20. Dunkerley, age 41, resides in Paris, France and Huntington Beach, California. At 

relevant times herein, he served as the Director, President, Executive Vice President and 

Secretary of Valor Group, Director of Wealth-Assurance, Director of Valor life and a Managing 

Director of Burnham Securities. He is currently Sole Director and President of W APCC and 

Managing Member of BFG Socially Responsible Investing Limited ("BFG Investments"), 

having been installed in each of these management positions by Jason Galanis. At all relevant 

times, Dunkerley acted at the direction of Jason Galanis or with his knowledge. 

21. Hirst, age 63, resides in Lake Mary, Florida. He served as Hughes' Chief 

Investment Officer ("CIO") in August 2014 and directed the investment of over $27 million of 

Hughes' clients' funds in Tribal Bonds. Hirst is the Assistant Secretary of W APCC and 

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signatory on its bank account. In September 2015, Hirst was charged by the Commission and the 

USAO along with Jason Galanis and John Galanis in connection with the Gerova scheme. See 

SEC v. Galanis; US v. Galanis. 

22. Morton, age 55, resides in Colonia, New Jersey. She served as the CEO of 

Hughes and AAM, and owned an interest in Hughes' and AAM's parent company, GMT Duncan 

LLC ("GMT"). In her capacity as CEO of Hughes and AAM, Morton oversaw the investment of 

over $43 million of client funds in Tribal Bonds. 

OTHER RELEVANT ENTITIES 

23. Burnham Securities, an SEC-registered broker dealer based in New York, New 

York, served as the placement agent for the Tribal Bonds. At all relevant times, Burnham 

Securities was wholly owned by Burnham Financial Group. Beginning in 2014, Jason 

Galanis, Archer and Cooney gained control of Burnham Financial Group and Burnham 

Securities, through, at least in part, CORF A, a Delaware limited liability company in which 

Jason Galanis, Archer and Cooney held direct or indirect ownership interests at relevant times 

herein. 

24. W APCC was incorporated by Dunkerley in the British Virgin Islands and was 

purportedly the ammity provider in connection with the Tribal Bonds. Dunkerley also 

incorporated a company called W APCC in Florida and opened an associated bank account (the 

"W APCC Account") for which he and Hirst are the only signatories, and to which the net Tribal 

Bond proceeds were sent by the Indenture trustee. 

25. Valor Group was incorporated as Wealth Assurance Holdings Ltd. by Dunkerley 

in the British Virgin Islands in 2013 , and changed its name to Valor Group Ltd. in December 

2014. Through Thorsdale Fiduciary and Guaranty Company Ltd. ("Thorsdale"), a Nevada 

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incorporated family trust company Jason Galanis controls, Jason Galanis holds a significant 

ownership interest in Wealth Assurance Holdings Ltd., and its successor, Valor Group. In 2013, 

Wealth Assurance Holdings Ltd. purchased Wealth-Assurance, and Dunkerley was appointed 

to Wealth-Assurance's Board of Directors. In November 2014, Wealth Assurance Holdings Ltd. 

acquired Valorlife. Jason Galanis became a paid advisor to Valorlife's Board of Directors in 

December 2014. Wealth-Assurance provided the financing for GMT's purchase of Hughes, and 

Valorlife provided the financing for GMT's purchase of AAM. In addition, Wealth-Assurance's 

subsidiary, BFG Investments, became an indirect owner of Hughes and AAM by virtue of an 

ownership interest it acquired in GMT. 

26. AAM is an SEC-registered investment adviser which was principally located in 

Stamford, Connecticut. In April 2015, AAM was purchased by GMT and merged with Hughes, 

an SEC-registered investment adviser, which was principally located in Alexandria, Virginia. 

The merged entity retained AAM' s name. AAM was charged by the Commission in connection 

with its investment of client funds in the Tribal Bonds in December 2015 and is now in 

receivership and in the process of winding down. See SEC v. AAM, 15 Civ. 9764 (WHP) 

(S.D.N.Y). 

FACTS 

27. The Tribal Bond scheme orchestrated by Jason Galanis consisted of four parts: 1) 

pitching WLCC to issue the Tribal Bonds; 2) engineering the Tribal Bond issuances to give 

Jason Galanis and his associates undisclosed control over the Tribal Bond proceeds; 3) securing 

victims to purchase the Tribal Bonds; and 4) misappropriating the Tribal Bond proceeds for the 

benefit of Jason Galanis and his associates, including the Defendants. 

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28. E-mails among Jason Galanis, Archer and Cooney reflect their intent, from the 

outset of the scheme, to control and use the proceeds from the Tribal Bonds for their personal 

benefit. In April 2014, when an initial issuance of $20 million bonds appeared imminent, Jason 

Galanis e-mailed Archer and Cooney: "$20 mm bond approved. Proceeds are $15 mm to us and 

5 mm to them." In July 2014, after WLCC had approved issuing the bonds, Jason Galanis e-

mailed Archer and Cooney: "My primary objective is to get us a source of discretionary 

liquidity. Sick of begging." 

A. The Pitch: John Galanis Finds a Bond Issuer. 

29. John Galanis handled the initial efforts to find a bond issuer for the scheme. In or 

about March 2014, John Galanis attended a Native American economic development conference 

in Las Vegas, Nevada and made a presentation to several tribes regarding a prospective Native 

American bond issuance. John Galanis purported to be representing Burnham Securities, even 

though he had no official connection to Burnham Securities. 

30. John Galanis ' s presentation to prospective Native American bond issuers had all 

the necessary players (except the issuer) in place, including Burnham Securities as the Placement 

Agent. During the conference, a representative of WLCC indicated to John Galanis that WLCC 

would be interested in participating in the issuance. John Galanis was WLCC's primary point of 

contact regarding the Tribal Bonds throughout the scheme and induced WLCC to issue each 

tranche of Tribal Bonds. 

B. The Tribal Bonds Are Structured to Allow Jason Galanis and Dunkerley to 
Control the Bond Proceeds. 

31. Jason Galanis and John Galanis arranged for WLCC to issue three tranches of 

Tribal Bonds: a) $27,077,436 in August 2014; b) $20,000,000 in September 2014; and c) 

$16,200,000 in April 2015. The first and last issuances defrauded investment adviser clients of 

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Hughes and AAM. The middle issuance did not represent an additional capital raising event; 

instead, bond proceeds from the first issuance were used to purchase newly issued Tribal Bonds, 

so that Jason Galanis, Archer, Cooney and Dunkerley could obtain $20 million worth of bonds 

for their own use without any capital outlay on their part. 

32. To Jason Galanis, the Tribal Bonds were simply a source of cash, providing him 

with the liquidity he needed to expand the corporate empire he sought to assemble with Archer, 

Cooney and Dunkerley. In one revealing email to Archer and Cooney from August 2014, Jason 

Galanis proposed an acquisition of a European fund of funds - brought to him by Dunkerley -

and identified the source of funds for the acquisition as proceeds from a Tribal Bond issuance. 

After describing the deal, Jason Galanis wrote: "Hugh [Dunkerley] [has] locked it up and came 

to me for the money, which i have agreed to arrange/provide (probably Indians)." 

33. Each Tribal Bond issuance was governed by an indenture that provided for the 

vast majority of proceeds to be invested in an annuity that was supposed to generate income 

sufficient to pay interest to the bond investors, plus a smaller annual sum to WLCC for use in 

various development projects. The interest payments and ultimate repayment of the principal of 

the bond issuance depended on the success of the investments held by the annuity in which the 

proceeds of the issuances were to be invested. 

34. In June 2014, Burnham Securities' counsel provided WLCC with a summary of 

the bond program that listed Wealth-Assurance as the Annuity Issuer and Investment 

Management Company A as the Portfolio Manager. 

35. In May 2013, Jason Galanis had arranged Valor Group's purchase of Wealth-

Assurance, purportedly a Liechtenstein-based life insurance and annuity provider with €1.5 

billion in assets under management, and soon after installed Dunkerley on its Board of Directors. 

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Ultimately, Wealth-Assurance never provided any annuity contracts in connection with any of 

the bond issuances. 

36. In August 2014, when WLCC issued its first bonds, Investment Management 

Company A nominally became the investment manager for the bond proceeds. The trust 

indenture and a separate investment management agreement with WLCC tasked Investment 

Management Company A with selecting an annuity provider and placing the bond proceeds in a 

variable annuity. Galanis Associate signed the trust indenture and investment management 

agreement on behalf of Investment Management Company A as its Managing Director. 

37. However, Galanis Associate was not an independent investment manager but 

simply a shill for Jason Galanis. In return for a $150,000 fee (ultimately paid to him out of bond 

proceeds that were supposed to be invested in the annuity), Galanis Associate agreed to act on 

behalf of Investment Management Company A in signing the annuity contracts associated with 

the bond issuances. 

38. Although the annuity contracts named Investment Management Company A as 

the independent manager of the monies held by the annuity provider in a separately managed 

account, Galanis Associate exercised no authority over any such account and made no 

investment decisions regarding the funds. 

39. The annuity provider was not chosen by Galanis Associate, but by Jason Galanis. 

Instead of selecting Wealth-Assurance, Jason Galanis selected WAPCC. The annuity contract 

between WLCC and W APCC identifies W APCC as a British Virgin Islands ("BVI")­

incorporated entity that is "part of the Wealth-Assurance Group of companies." 

40. In fact, Dunkerley is the sole shareholder of W APCC and it has no known 

affiliation with Wealth-Assurance. At Jason Galanis ' s instruction, or with his knowledge, 

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Dunkerley incorporated W APCC in the BVI on August 22, 2014, just four days before Jason 

Galanis selected W APCC as the annuity provider for the first issuance of the Tribal Bonds. 

W APCC' s unaudited financial statements reflect that through the end of December 2014, WLCC 

was WAPCC's only annuity "counterparty." 

41 . Also contrary to the annuity contract between W APCC and WLCC, the bond 

proceeds were not directed to a W APCC account at a bank "without any offices and/or branches 

in the United States." Instead, the indenture trustee was instructed to send the bond proceeds to a 

bank account at a Florida branch of a US bank, in the name of an identically named company 

that had been incorporated in Florida on July 7, 2014. 

42. In its Florida incorporation papers, W APCC listed Dunkerley as its sole officer, 

and gave its mailing address as a post office box in Florida used by Hirst. As described below, 

the misappropriation of the bond proceeds all flowed from the W APCC Account associated with 

W APCC in Florida. 

C. Jason Galanis Secures Victims to Purchase the Tribal Bonds by Obtaining Control 
over Hughes and AAM. 

43. In order to secure victims to purchase the Tribal Bonds, Jason Galanis and his 

associates arranged to obtain control over two investment advisers, thereby gaining access to 

captive client funds. First, in August 2014, Jason Galanis, Archer, Cooney and Dunkerley 

obtained control over Hughes, and Jason Galanis, Morton and Hirst arranged for Hughes to 

invest $27 million of its clients ' funds in Tribal Bonds. Second, in April 2015, Jason Galanis, 

Archer, Cooney and Dunkerley obtained control over AAM, and Jason Galanis and Morton 

arranged for AAM to invest $16.2 million of its clients ' funds in Tribal Bonds. 

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1. Hughes 

44. In May 2014, Jason Galanis was introduced to Morton, the half-owner of GMT, 

which had the stated business purpose of providing socially responsible fixed income investment 

management and advisory services as a minority business enterprise. Together, Jason Galanis 

and Morton began negotiating to purchase Hughes, an investment adviser with approximately 

$900 million under management, based in Alexandria, Virginia. 

45. On June 3, 2014, Jason Galanis provided Morton with a document to provide to 

Hughes' then-owner to "demonstrate who [Morton's] financial sponsors are." The document 

described a private equity control investor that owned several businesses, including Wealth­

Assurance and Burnham Securities. On June 5, 2014, Jason Galanis sent Morton a term sheet 

outlining the terms by which CORF A - a corporation owned in part by Jason Galanis, Archer 

and Cooney - would directly or indirectly (through a subsidiary) finance GMT's purchase of 

Hughes. Archer and Cooney knew that their agreement to finance the Hughes' acquisition with 

CORF A funds was a necessary part of the plan to place the Tribal Bonds and obtain "liquidity" 

for themselves and their corporate expansion projects. 

46. Jason Galanis kept Archer and Cooney in the loop regarding the negotiations to 

acquire Hughes. On July 16, 2014, he sent them a copy of the executed term sheet for the 

acquisition of Hughes. He proclaimed: "I believe they will take $28 million of the [Tribal] 

issue." Cooney and Archer expressed their enthusiasm, with Cooney replying: "West Coast 

Offense charging down the field!" Archer added: "This is very encouraging! " 

47. On August 1, 2014, Jason Galanis sent Morton a text message stating that he 

would form BFG Investments - the entity through which the contribution to the acquisition 

would be made - the next day. On August 5, 2014, at the direction of Jason Galanis, Dunkerley 

formed BFG Investments and became its managing member. 

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48. One week later, GMT entered into an amended and restated operating agreement 

with its members, pursuant to which BFG Investments became a "Preferred Member." The 

agreement was signed by Dunkerley on behalf of BFG Investments, and stated that notices to 

BFG Investments were to be sent to Archer. After the merger closed, Hughes became GMT's 

subsidiary and Morton and her business partner became officers of Hughes. 

49. On August 12, 2014, Jason Galanis arranged for Wealth-Assurance to fund BFG 

Investments' initial capital contribution of $2,660,618 to GMT, which GMT used to finance its 

purchase of Hughes. 

50. As Morton knew, Jason Galanis, Archer, Cooney and Dunkerley's agreement to 

finance the acquisition of Hughes was contingent on her agreement to invest Hughes' client 

funds in Tribal Bonds. In July 2014, even before the purchase of Hughes had been completed, 

Morton e-mailed Jason Galanis "an update on how we will place the bonds in a portfolio" and 

promised him via text message, "I will make sure you make a TON of money and smile all the 

way to the bank." On August 12, 2014, Morton sent Jason Galanis a text message noting, "You 

invested because of the bonds not me," to which he responded: "The bonds are only possible 

because of you my dear." 

51. Pursuant to GMT's amended operating agreement, BFG Investments was 

accorded certain privileges, including the right to approve the CIO for GMT and Hughes, and to 

appoint members to Hughes' board. 

52. Before GMT completed its purchase of Hughes, Jason Galanis introduced Morton 

to Hirst as a potential CIO. On August 12, 2014, Hirst sent Morton a draft employment contract. 

Hirst and Morton executed the contract and related paperwork that same day. 

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53. However, a few days later, Hirst informed Morton that he did not want Hughes to 

disclose his name in its Form ADV, a form that investment advisers registered with the 

Commission are required to file upon registration and annually thereafter. For that reason, Hirst 

decided to resign as Hughes' CIO and agreed to act as a paid independent investment consultant 

instead, a position that he understood would not require disclosure on Hughes' Form ADV. As 

Mo1ion told Jason Galanis, "In regard to Hirst, he opted to be a consultant because as an 

employee he would have been required to make certain disclosures for our ADV ... If we want 

to follow the contract which has him as CIO its [sic] no problem, we just have to change the title, 

but he has to make the disclosures per regulations." 

54. By August 14, 2014, just two days after the purchase of Hughes was completed, 

Jason Galanis and Hirst worked to invest Hughes client funds in the Tribal Bonds. Hirst quickly 

undertook an analysis of Hughes' clients' accounts and investments to determine what could be 

liquidated to generate funds to purchase Tribal Bonds. 

55. Morton asked Hughes' compliance officer to conduct an analysis of the 

investment guidelines of seven of Hughes' clients to determine whether they allowed for 

purchase of the Tribal Bonds. The compliance officer concluded that most of the clients' 

guidelines prohibited privately-placed, unrated bonds like the Tribal Bonds, and that in no case 

could the investment be made without consulting the client first. 

56. On August 17, 2014, Jason Galanis, using a Burnham-affiliated e-mail address 

(burnhamequitypartners.com), e-mailed Morton a copy of the draft trust indenture for the Tribal 

Bonds. It provided that the bond proceeds would be invested in an annuity that would be issued 

and managed by Wealth-Assurance. In addition, pursuant to a Placement Agency Agreement for 

the Tribal Bonds, Burnham Securities was entitled to a $250,000 fee from the bond sale 

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proceeds. The agreement stated that notices to Burnham Securities should be sent to Jason 

Galanis (spelled "Galanos" in the agreement) and was signed by Dunkerley. Morton knew that 

Burnham Securities would be acting as the Placement Agent for the Tribal Bonds. 

57. On August 17, 2014, Morton e-mailed Jason Galanis, acknowledging the conflicts 

of interest presented by her investment of client funds in a transaction in which affiliated 

companies - Wealth-Assurance and Burnham Securities - stood to benefit. She complained that 

she was spending much time performing due diligence regarding the Tribal Bonds "because of 

the multiple views I had to take." She explained: "For instance, since many of the accounts are 

ERISA funds, I had to consider those guidelines and regulations, I have a fiduciary duty to 

Burnham, and a fiduciary duty to the clients." 

58. In another e-mail dated August 17, 2014, Morton sent Jason Galanis a memo 

articulating concerns regarding the Tribal Bonds. Among other things, Morton's memo 

questioned whether the tribe affiliated with the issuer-a tribal corporation operating in an 

impoverished region-would be legally or financially accountable for the Tribal Bonds and 

whether institutional clients would fire Hughes if they were dissatisfied with the investment. 

59. In her e-mail transmitting the memo to Jason Galanis, Morton wrote, in reference 

to BFG Investments ' investment in Hughes: "The decision regarding what should be done is 

yours, not mine ... To be fair to both of us, if you made the investment with this in mind, I do 

not have the moral right to stand in the way and everything is in place to move forward .. .. " 

She reiterated in a text message to Jason Galanis: "Let's be clear, if you want the bonds to go in, 

I have no say. I am not sitting in the position of making a judgement [sic] . If you invested in 

Hughes for this sole purpose than it is your call not mine ... If you're thinking that I can or would 

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stop this then I have totally screwed up my communication." Jason Galanis told Morton to let 

Hirst "make the decision." 

60. Between August 22 and 26, 2014, Hirst signed trade tickets purchasing 

$27,077,436 of Tribal Bonds on behalf of nine of Hughes' clients. The funds were sent to a trust 

account at US Bank for the benefit of WLCC. Neither Morton nor Hirst informed any of those 

clients about the investments beforehand. As one of the costs of issuance associated with the 

bonds, WLCC paid Burnham Securities a $250,000 placement agent fee out of the bond 

proceeds, of which $125,000 was then paid to Dunkerley as his share of the fee. 

61. Morton and Hirst knew that Morton's "financial sponsors," including Jason 

Galanis and Dunkerley, were associated with Wealth-Assurance and Burnham Securities, which 

had been described to her as the annuity provider and placement agent, respectively-entities 

that would financially benefit from Hughes' clients' purchases of the Tribal Bonds. 

Nevertheless, neither she nor Hirst disclosed to Hughes' clients that Hughes was investing their 

funds in investments that would financially benefit its undisclosed part owners and financiers. 

62. Upon learning of the investments in the bonds, several Hughes clients expressed 

concerns regarding the bonds ' valuation and suitability and demanded that the investments be 

unwound. Morton assured them that Burnham Securities, as the placement agent, had other 

clients interested in the bonds and was in the process of arranging purchases. However, despite 

repeated promises, Burnham Securities never produced buyers for the bonds, and none of 

Hughes' clients was able to liquidate its position in the bonds. 

2. AAM 

63. In the fall of 2014, Jason Galanis began searching for additional investors to 

purchase another tranche of Tribal Bonds. Morton identified AAM, an investment manager with 

$11 billion in assets under management, as a potential target for Hughes. 

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64. During the course of Morton's negotiations to acquire AAM, on October 30, 

2014, Morton e-mailed Jason Galanis that she had had a conversation with AAM's Chief 

Strategist "about our SRI [Socially Responsible Investing]/Native American Initiative" and that 

"he is so on board with this." According to Morton, AAM's Chief Strategist told her that if she 

made him aware of the details of the bonds ahead of time, he would do his "damndest to get it 

placed within a day after the acquisition." Jason Galanis forwarded the e-mail to Cooney and 

Archer, with the note "working on more liquidity and sources for the various projects ... see 

below. Promising." Cooney replied: "Very promising Greco!!" 

65. With the backing of Jason Galanis, Archer, Cooney and Dunkerley, Morton 

continued to negotiate with AAM. On December 1, 2014, at Jason Galanis's direction or with 

his knowledge, Dunkerley provided AAM' s General Counsel a letter on behalf of the "Cor 

Group of Companies, Inc.," a CORF A affiliate, confirming its agreement to provide financing to 

capitalize the purchase of AAM. On February 2, 2015, Jason Galanis sent Archer and Cooney a 

"consultant report" directed to the "Board of Valorlife" regarding the financing of the proposed 

acquisition of AAM. Valorlife was a foreign insurer that Valor Group had acquired in 

November 2014. 

66. On April 2, 2015, at the direction of Jason Galanis, Valorlife financed the 

purchase of AAM through BFG Investments with an upfront capital contribution of $6, 120,398. 

In addition to the upfront capital contribution, the purchase of AAM also included an agreement 

to make a deferred payment of $4,854,420, payable pursuant to two Reset Notes. The deferred 

payment was guaranteed by Valor Group and the guaranty was signed by Dunkerley as Valor 

Group 's President. 

20Case 1:16-cv-03505   Document 1   Filed 05/11/16   Page 21 of 43

67. On March 30, 2015, Jason Galanis forwarded copies of the executed AAM 

acquisition documents to Cooney, Archer and Burnham Financial Group's President, and 

Cooney replied: "18 Balloons!!! Fantastic J!! !" The terms of the purchase were memorialized 

in an Amended and Restated Liability Company Agreement for GMT ("Restated Agreement"), 

entered into as of April 2, 2015 . Dunkerley signed the agreement on behalf of BFG Investments 

as its Managing Member. 

68. Pursuant to the Restated Agreement, AAM became GMT's wholly owned 

subsidiary. The Restated Agreement provided that AAM's Board of Managers was to consist of 

four persons, comprised of two Class A Holders (Morton and her business partner) and two 

persons selected by BFG Investments as the Class B Holder. Together, the Board of Managers 

was granted the exclusive right to control AAM. In addition, GMT was required to appoint a 

CIO that was acceptable to BFG Investments. 

69. Immediately after the acquisition of AAM was completed, and in furtherance of 

his pledge to Archer and Cooney to obtain more "liquidity" for their "various projects," Jason 

Galanis instructed Motion to identify investors to purchase additional Tribal Bonds. By that 

point, Morton was aware that there was no active market for the bonds. Since at least November 

2014, she had been dealing with client complaints, including threatened litigation, regarding the 

original bond investments by Hughes' clients and had been unsuccessful in her efforts to an-ange 

for Burnham Securities to find buyers or purchase them itself. Indeed, in January 2015, she e­

mailed Jason Galanis: "I thought that if necessary B[urnham] would bid on the bonds if the 

clients wished . It appears not to be the case. We have received one formal communication and I 

expect we will receive others in the coming days." 

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70. As before, Morton learned that entities affiliated with her "financial sponsors," 

including Jason Galanis, Archer, Cooney and Dunkerley, would financially benefit from the sale 

of this tranche of Tribal Bonds. On April 9, 2015, Burnham Securities' counsel sent Morton a 

private placement memorandum for the new issuance of Tribal Bonds. Like the August 2014 

Tribal Bonds issuance, it provided that the proceeds of the new issuance would be used for 

transaction costs, including a placement agent fee, and to purchase an annuity. It identified 

"Wealth Assurance Private Client Corporation, a subsidiary of Valor Group" as the underwriter 

and issuer of the annuity contract. It also disclosed that pursuant to a placement agreement 

entered into between the issuer, WLCC, and Burnham Securities, "Burnham Securities will 

receive an $80,000 fee from the Issuer for the sale of the Bonds by the Issuer." 

71. On April 10, 2015, Jason Galanis sent Morton a "Class A board member 

communication request," in which he demanded a conference call to discuss a number of 

business related items. In the e-mail, Jason Galanis expressed frustration regarding AAM's lack 

of support for a potential investment in additional Tribal Bonds: "On the Native American 

initiative, this was and has been a fundamental part of the business plan since we met. .. "and 

"[i]t is in everyone's interest to maintain their word." In the e-mail, Jason Galanis stated: "I am 

not a member of the board. However, I was responsible for arranging the financing for the 

company and have been requested to continue to be the lead in liaising with the investors." 

72. On April 14, 2015, Morton e-mailed Jason Galanis explaining that they "had a 

challenge regarding bond placement," and proposing that they could "mitigate the challenge of 

restrictive investment policies by going directly to our client base (which numbers over 40 

clients) and introduce the concept. Exceptions to investment policies occur all of the time, the 

key is to have the relationship necessary and begin the discussions in advance of the placement." 

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In the same e-mail, Morton also requested a $500,000 loan, explaining that AAM was suffering 

from financial difficulty and was struggling to pay its operating costs. Jason Galanis replied to 

Morton's message, "Let's talk, I don't like e-mail." 

73. The next day, Morton texted Jason Galanis: "I would really like to have clarity on 

the working capital as soon as possible. The trade will go through in the am." Jason Galanis 

replied: "Will wire 305 on Friday. Worst Monday." On April 16, 2015, Morton directed the 

investment of $16.2 million of an AAM client's funds in the new issuance of Tribal Bonds. One 

week later, AAM received a $305,000 payment, funded by bond proceeds from the WAPCC 

Account in Florida and authorized by Dunkerley at Jason Galanis's direction or with his 

knowledge. 

74. Morton arranged for AAM to use funds maintained in one of its managed funds 

(the "HY Fund") for the bond purchase. HY Fund implements a strategy of making diverse, high 

yielding, liquid investments through designated investment managers. HY Fund's only investor 

was Pension Fund 1, an existing client of AAM' s for which AAM managed other investments in 

addition to its investment in the HY Fund. 

75. The purchase of the Tribal bonds was inconsistent with HY Fund's investment 

strategy, and notwithstanding her previous e-mail to Jason Galanis suggesting that AAM 

"introduce the concept" to Pension Fund 1 prior to making the investment, Morton did not 

discuss the purchase of the bonds with Pension Fund 1 prior to making the investment. 

76. After the purchase, on April 23, 2015, Morton informed Pension Fund 1 about the 

investment in the bonds and the fact that there was a potential conflict of interest because the 

individuals who controlled the annuity provider and the placement agent were also AAM's 

financiers. Morton did not tell Pension Fund 1 that those same individuals were also AAM's 

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part-owners, and the largest source of AAM's capital. Nor did Morton disclose that Jason 

Galanis had promised her additional funding for AAM in connection with her approval of the 

bond purchase. 

77. The next day, Pension Fund 1 's Executive Director informed AAM that it 

"strongly disagree[d]" with the purchase of the bonds and that Pension Fund 1 "should have been 

' 
provided advance notice of this questionable purchase, pmiicularly due to the fact that a conflict 

of interest exists in the purchase." Pension Fund 1 demanded that the bonds be liquidated 

immediately. 

78. Once again, Burnham Securities promised to find a purchaser for the bonds. 

However, neither Burnham Securities nor AAM was able to find any purchaser for the Tribal 

Bonds. 

79. Pension Fund 1 sent AAM a notice of redemption of all of its funds in HY Fund 

on September 24, 2015 and, on October 29, 2015, it notified AAM that it was redeeming the rest 

of its funds under AAM' s management. Pension Fund 1 explained that its decision to end its 

relationship with AAM was based on Morton's "unilateral actions (which [were not yet] 

reversed) to violate investment guidelines and purchase inappropriate securities with the money 

contributed by the hard working members of [Pension Fund 1]." 

80. In October 2015, Dunkerley, on behalf of Burnham Securities, e-mailed AAM 

acknowledging the lack of a market for the bonds, and admitted that they could not even be 

priced: "You may want to refer to the risks section of the PPM where it clearly says there is 'no 

market for these and none is expected to develop in the future' .... This situation is clearly true 

at the moment and given the current investigation any price attributed to these bonds may not be 

appropriate for accounting or even misleading for any other purposes." 

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81. At the time, Dunkerley knew that, contrary to the annuity contract he had signed, 

none of the bond proceeds had been sent to a separate account held by W APCC BVI and 

managed by Investment Management Company A, but, in accordance with the scheme, had 

instead been sent to the separately incorporated W APCC in FL and misappropriated from there. 

D. Jason Galanis, John Galanis, Dunkerley, Hirst, Archer and Cooney Misappropriate 
the Tribal Bond Proceeds. 

82. Based on the documents governing the sale of the $43.2 million in Tribal Bonds 

to Hughes and AAM clients, and after the deduction of various issuance costs and up-front 

payments to WLCC, $40.1 million of the bond proceeds were to be invested by Investment 

Management Company A in annuities issued by W APCC in BVI. The bonds issued to Hughes 

investors were to pay 5.62% interest annually and mature in 10 years; the bonds issued to 

AAM's HY Fund were to pay 6.02% interest annually and mature in 7 years. The payment of 

the interest and return of the full $43.2 million in principal upon maturity of all the bonds was 

dependent on the successful investment of the proceeds by W APCC, under the direction of 

Investment Management Company A. 

83. As set out in the two separate annuity contracts governing the bond issuances to 

Hughes and AAM clients (both signed by Dunkerley on WAPCC's behalf), WAPCC promised 

that the initial proceeds received would be kept in a "segregated asset account" that would be 

"unique to this Contract" and would be "segregated from the Company's other assets." The 

annuity contract governing the Hughes clients' bond proceeds also explicitly provided that the 

annuity purchase payment was to be made by wire transfer to "a bank without any offices and/or 

branches in the United States" (a provision that was apparently edited out of the subsequent 

annuity contract used for the bond issuance sold to the HY Fund). 

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84. As described above, instead, all of the bond proceeds were sent to the WAPCC 

Account in Florida, held in the name of an identically named entity (W APCC) incorporated and 

based in Florida rather than in the BVI, and were never managed by Investment Management 

Company A, which, as noted earlier, was a fake entity. 

85. In furtherance of the scheme, with Jason Galanis 's knowledge, Dunkerley 

misappropriated the Tribal Bond proceeds from the W APCC Account by authorizing wires to a 

number of other entities, at least on some occasions doing so based on written instructions he 

received from Jason Galanis. 

86. Dunkerley wired the largest portion of the proceeds to Thorsdale, an entity Jason 

Galanis controlled, from which they were further misappropriated by Jason Galanis for his own 

benefit and that of his associates. According to its operating agreement, Thorsdale was 

incorporated in Nevada as a "Family Trust Company" for "members of the Berger family and its 

Family Affiliates." Berger is the maiden name of Jason Galanis's wife. Jason Galanis had 

signing authority over Thorsdale's bank account, held its only debit card, and directed all the 

wires that Thorsdale sent that were funded by bond proceeds from the W APCC Account. 

87. The misappropriation of Tribal Bond proceeds by WAPCC and Thorsdale 

included the following: 

1. Payments to Hughes and AAM 

88. Morton's decisions to invest Hughes' and AAM's clients ' funds in the Tribal 

Bonds were driven in part by her expectation that Jason Galanis would continue to arrange 

financial backing for the firms. Not only were her expectations met, but they were met by 

Hughes' and AAM's receipt of a portion of the very proceeds that WAPCC was supposed to be 

investing on behalf of the bond issuer and for the ultimate benefit of Morton's clients. 

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89. At the direction of Jason Galanis, Hughes and AAM received at least $655,000 of 

Tribal Bond proceeds: 1) a $350,000 payment on September 8, 2014, that Jason Galanis had 

Dunkerley wire from W APCC to Thorsdale and then to Valor Group, which then wired it to 

Hughes; and 2) a $305,000 payment (matching the amount that Jason Galanis had expressly 

promised to Morton the day before she effected the April 2015 bond purchase by the HY Fund) 

that Dunkerley wired to AAM directly from the WAPCC Account on April 23, 2015. 

2. $2,350,000 to John Galanis 

90. The closing documents for the sale of the first issuance of Tribal Bonds in August 

2014 did not reflect any payments to John Galanis for the work he did in presenting the 

transaction to WLCC and securing its participation as issuer. Nor was WLCC informed by John 

Galanis, or anyone else, that John Galanis would earn any fees in connection with the Tribal 

Bonds, although John Galanis knew that proceeds from the issuance would be directed to him by 

his son. 

91. Yet, after WAPCC received the bond proceeds in August 2014, all of which it had 

received as purchase money for the bogus annuity contract it signed, at Jason Galanis's direction, 

Dunkerley sent $2.35 million from WAPCC to an entity controlled by John Galanis called 

Sovereign Nations Development Corp. From Sovereign Nations Development Corp ' s bank 

account, John Galanis directed several further distributions to another account in his name. 

3. Jason Galanis and Dunkerley Misappropriate Millions to Benefit 
Jason Galanis, Dunkerley, Hirst, Cooney and Archer. 

92. Jason Galanis arranged to have W APCC and Thorsdale transfer over $3 million to 

lenders and others for the mortgage on and maintenance of his estate in Los Angeles, California. 

He also arranged to have money wired from W APCC and Thorsdale to his criminal defense 

attorneys ($497,210) and to his mother, wife and father-in-law (totaling $214,000). 

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93. In addition, Jason Galanis used his Thorsdale debit card to spend thousands more 

at restaurants and luxury retailers such as Valentino, Yves Saint Laurent, Barneys, Prada and 

Gucci. 

94. Dunkerley, Hirst, Cooney and Archer all benefited from their participation in the 

scheme as well through transfers directed by Jason Galanis out of the Thorsdale account that 

they receiyed individually or through entities that they controlled, including but not limited to: 

a) $700,513 to Archer between November 2014 and April 2015; b) $4,370,000 to Cooney 

between August 2014 and April 2015; c) $20,485 to Dunkerley in September 2014; and d) 

$1,300,000 to Hirst in August 2014. 

4. Jason Galanis, Archer and Cooney Recycle Tribal Bond Proceeds to 
Acquire New Tribal Bonds for Burnham's Use. 

95. In August 2014, the Independent Trustees of an asset manager affiliated with 

Burnham Securities sought "iron-clad assurance(s)" from Archer (representing CORFA and 

BAM Holdings, LLC) that Jason Galanis would "not be involved with any of the Burnham 

entities" or have an "interest of any kind, direct or indirect, in any of the Burnham entities or 

their successors, that he will not source deals to the Burnham entities and that the Burnham 

entities will not invest with or in, directly or indirectly, any business or enterprise in which Mr. 

Galanis has any association, affiliation or investment, pecuniary or otherwise, directly or 

indirectly." Archer provided the requested assurances to the Independent Trustees via a letter 

dated September 26, 2014, but nonetheless continued to significantly involve Jason Galanis in 

Burnham's business activities, not only by allowing Jason Galanis to solicit Burnham Securities' 

involvement as the private placement agent for the Tribal Bonds and underwriter for at least one 

initial public offering, as described below, but also by accepting his direction and guidance on 

how to use the Tribal Bonds to benefit Burnham Securities and its affiliates. 

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96. On October 1, 2014, Jason Galanis used $15 million of the $27 million that 

Hughes' clients invested in the August 2014 issuance of the Tribal Bonds to fund the acquisition 

of a new $15 million issuance of Tribal Bonds by RSB, an entity wholly owned by Archer. In 

other words, instead of having WAPCC invest the first bond issuance's proceeds in an annuity 

and assure repayment of the bonds' principal and interest, Jason Galanis used $15 million of 

those proceeds to invest in more Tribal Bonds, causing WLCC to issue $15 million more in 

obligations even though it was not, in actuality, receiving any additional proceeds to fund an 

annuity that would be the only source for repayment of the bonds. The point of this recycling 

scheme was to allow Jason Galanis to use the bonds as currency in various transactions, 

including to bolster Burnham Securities' net capital. 

97. To coordinate Archer's purchase of the $15 million Tribal Bonds, Jason Galanis 

arranged for $15 million to be sent from Thorsdale to RSB. RSB then wired $15 million to the 

indenture trustee for the benefit of WLCC to purchase the newly issued Tribal Bonds. Most of 

the funds received in this issuance were sent again to WAPCC as purchase money supposedly 

for a new annuity. Prior to receiving these funds, RSB's account balance was about $2 million. 

In the course of paying for the Tribal Bonds, Archer's bank asked him to identify the source of 

the funds. Archer facilitated the recycling of the bond proceeds by telling his bank in a client 

representation letter he signed on October 20, 2014: "The funds used to purchase the bonds were 

from real estate sales through my business, Rosemont Seneca Bohai LLC," a statement Archer 

knew was untrue when he made it. 

98. Jason Galanis then recycled a portion of the funds again, this time to fund the 

acquisition of a new $5 million issuance of Tribal Bonds by Cooney. Between October 2 and 6, 

2014, Dunkerley, at Jason Galanis's direction or with his knowledge, sent back to Thorsdale a 

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large portion of the funds W APCC had received from WLCC in connection with the $15 million 

sale of Tribal Bonds to RSB. On October 8, 2014, Jason Galanis sent $5 million of the money 

that Thorsdale received to Cooney, who used it to purchase Tribal Bonds. By twice recycling a 

po1iion of the proceeds from the initial bond issuance, Jason Galanis and his coh01is caused 

WLCC to issue $47 million of Tribal Bonds in exchange for $27 million (minus transaction­

related fees) in proceeds. 

99. Archer and Cooney then used their illegitimate Tribal Bonds to benefit Burnham 

Securities, an entity in which they each held an ownership interest. In April 2015, Archer used 

RSB's Tribal Bonds to purchase shares of Valor Group with Dunkerley signing the documents 

on Valor Group's behalf. In May 2015, one of Valor Group's wholly-owned subsidiaries 

transferred $2.6 million of the Tribal Bonds to Burnham Securities to boost its net capital in 

order to meet regulatory requirements. 

100. Similarly, in May 2015, Cooney transferred his $5 million Tribal Bonds to 

Burnham Securities in a transaction devised by Jason Galanis "to get Cooney some reliable 

income while getting Burnham Net Cap it can commercialize." In an e-mail dated April 24, 

2015, to Cooney, Archer and Burnham Financial Group's President, Jason Galanis instructed 

them: "if we hustle, we can get the $5 mm on to Burnham's balance sheet this month. This 

would require Bevan [Cooney] getting the physical bond delivered to US Bank for transfer into 

Burnham's name." 

101. Eventually, on May 29, 2015, Cooney directly transferred the $5 million Tribal 

Bonds, on Burnham Securities' behalf, to Broker Dealer 1 in partial consideration of Burnham 

Securities' purchase of an interest in Broker Dealer 1. Cooney received nothing in exchange 

from Burnham Securities for transferring the Tribal Bonds to Broker Dealer 1 on Burnham 

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Securities' behalf, and no documents evidence the contribution by Cooney as either an 

investment or loan in Burnham Securities. In response to inquiries from FINRA regarding the 

specifics of the bonds and Cooney's contribution of them, Jason Galanis told Broker Dealer 1 's 

President to tell FINRA that Cooney had been an investor in Burnham Securities since 2013 and 

"agreed to make a follow-on investment in 2015 in support of Burnham's business plan to 

diversify." 

5. Jason Galanis, Hirst, and Dunkerley Use Tribal Bond Proceeds to 
Support an IPO Underwritten by Burnham. 

102. At the direction of Jason Galanis and Hirst, W APCC used a significant portion of 

the proceeds from the sale of the April 2015 Tribal Bonds to support the successful initial public 

offering of Technology Company, in which Jason Galanis, Hirst, Archer, Cooney and Dunkerley 

all held shares, and for which Jason Galanis served as an "advisor." 

103 . In February 2014, Jason Galanis sent Dunkerley the first draft of an S-1 for 

Technology Company in connection with a potential discussion regarding "Burnham West 

handling the IPO" but asked him to "not distribute to Burnham colleagues until later drafts." 

Jason Galanis also told Dunkerley that "Burnham will not be expected to raise any real money, 

rather will act as an IPO sponsor." Jason Galanis forwarded the e-mail to Archer and Cooney to 

include them in his plans. 

104. In May 2015, Jason Galanis and Hirst coordinated the success of Technology 

Company's IPO, which was underwritten by Burnham Securities, with Dunkerley taking a lead 

on the deal. Technology Company's stock was initially offered on the NASDAQ on May 19, 

2015 at $5/share. 

105. Between April 29th and May l8t11, 2015, Dunkerley, acting at Jason Galanis's 

direction or with his knowledge, authorized wires totaling $4,336,000 from the W APCC 

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Account to two brokerage accounts at Burnham Securities, in the names of IPO Participant 1 and 

IPO Participant 2. Both accounts were opened by Galanis Associate, at the direction of Hirst. 

106. IPO Participant 1 and IPO Participant 2 used $4,335 ,000 of the funds that they 

received from WAPCC to purchase 867,000 shares of Technology Company during the IPO. 

The shares purchased by IPO Participant 1 and IPO Participant 2 represented 87% of the shares 

offered during Technology Company's IPO. The remaining 13% was also sold to friendly 

accounts, including accounts controlled by Hirst. 

107. IPO Participant 1 and IPO Participant 2 liquidated at least a portion of the shares 

immediately on the open market at prices ranging from $14 to $36 per share, above the IPO 

purchase price of$5 per share. As of October 15, 2015, IPO Participant 1 and IPO Participant 2 

liquidated 324, 120 shares of Technology Company for proceeds of $4,523 ,312. 

108. Despite IPO Participant l's and IPO Participant 2's profitable trading with money 

furnished by W APCC, WAPCC did not recoup the $4.3 million it had sent to their accounts. 

Instead, IPO Participant 1 and IPO Participant 2, acting at Jason Galanis's direction, sent 

millions of dollars to a variety of other transferees, including Jason Galanis 's criminal defense 

attorneys, Burnham Financial Group and RSB. 

E. In September 2015, Jason Galanis and Hirst Were Charged and Arrested in a 
Separate Matter. 

109. In September 2015, the Commission charged Hirst, John Galanis, Jason Galanis, 

and two of Jason Galanis's brothers, with defrauding investors in Gerova, whose shares once 

traded on the New York Stock Exchange. The USAO filed parallel criminal charges. 

110. John Galanis, Jason Galanis and Hirst are currently free on bail, pending the 

resolution of the Gerova criminal charges. As a condition of his release, Jason Galanis is 

required to disclose whether he serves as an officer, director, consultant, advisor or investment 

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banker as to any company. To evade detection by law enforcement authorities of his ongoing 

activities with respect to Burnham Securities, GMT and W APCC, Jason Galanis directed Galanis 

Associate to create a new internet domain, colarisventures.com, along with the e-mail address, 

[email protected], immediately after his arrest. Using this new e-mail address, Jason 

Galanis has continued to correspond with Dunkerley, Archer, Cooney and others, going so far as 

to dictate correspondence Dunkerley should send to third-parties. And he has continued to direct 

business decisions and transactions, including coordinating an interest payment due on the Tribal 

Bonds, as described in the section below. 

F. The Aftermath: Jason Galanis, Archer and Dunkerley Continue to Mislead WLCC 
and Scramble to Fund WAPCC's Interest Payment Obligations under the Annuity 
Contracts 

111. Pursuant to the annuity contracts in connection with the August and September 

2014 issuances of Tribal Bonds, W APCC was obligated to make respective interest payments in 

September 2015 and in October 2015. Since W APCC had misappropriated the proceeds from 

the Tribal Bonds instead of investing them in annuities, Jason Galanis scrambled to ensure that 

W APCC had sufficient funds from other sources to pay the interest payments that were due in 

order to protect the Tribal Bond scheme from exposure, calling on associates for contributions as 

needed. 

112. In September 2015, Dunkerley authorized WAPCC to forward $1.5 million to the 

indenture trustee as interest due on the August 2014 bonds. That amount covered the interest 

payments due to investors, but failed to cover an additional $277,182.87 in amrnal income that 

WAPCC was obligated to pay WLCC. Based on the sources of funds held in WAPCC's bank 

account at the time, the $1.5 million payment that it did make was funded by a small portion of 

Technology Company stock sale proceeds it received from IPO Participant 1 and IPO Participant 

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2 ($1.3 million), amounts contributed by Archer ($250,000), and/or amounts received from 

another associate of Jason Galanis ($250,000). 

113. After he had been arrested, using his new [email protected] e-mail 

address, Jason Galanis orchestrated the $1, 197 ,311 interest payment due on the October 2014 

Tribal Bonds - bonds that Archer and Cooney had "bought" using recycled proceeds from the 

first Tribal Bond issuance, and at least a portion of which Burnham Securities now held after 

they had been contributed by Valor Group's subsidiary in May 2015. First, on September 30, 

2015, Jason Galanis instructed Dunkerley to tell Burnham Financial Group's President to have 

Burnham Financial Group wire $903,000 to the indenture trustee on behalf of WLCC. That 

same day, in order to make that payment, Burnham Financial Group received the necessary funds 

from a wholly-owned subsidiary of Valor Group in a transaction Archer coordinated. The next 

day, RSB sent Burnham Financial Group an additional $1 ,098,000, a portion of which Burnham 

Financial Group used to send an additional $294,311.11 interest payment to the indenture trustee. 

In other words, Burnham Financial Group (through funds provided by Valor Group's subsidiary 

and RSB) ended up paying for the interest on the Tribal Bonds that it controlled. But as with the 

August 2014 Tribal Bonds, W APCC failed to make the additional income payment ($250,000) 

due to WLCC under the annuity contract. 

114. On October 8, 2015, WLCC sent Dunkerley a letter expressing concern regarding 

information it had recently learned about Burnham Securities and the ongoing difficulty it was 

experiencing in receiving funds due it under the Annuity contracts. In the letter, WLCC 

requested that Dunkerley immediately provide valuations on all three annuity contracts. 

115. On October 15, 2015, at Jason Galanis's direction or with his knowledge, 

Dunkerley responded to WLCC's letter and attached fabricated annual account statements on 

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W APCC letterhead (reflecting an address in the BVI) for the annuity contracts purportedly 

purchased in connection with the August 2014 and September 2014 Tribal Bonds. On 

November 5, 2015, also at Jason Galanis 's direction or with his knowledge, Dunkerley provided 

a similar fabricated annual account statement for the annuity contract purportedly purchased in 

connection with the April 2015 Tribal Bonds. None of the statements contained any information 

regarding the underlying investments and each indicated that the value of the accounts had not 

changed one penny from the initial amount of money that had purportedly been invested in the 

annuities. 

116. On February 17, 2016, after the Commission filed its complaint in SEC v. AAM, 

Jason Galanis sent WLCC a letter to rebut the Commission's allegations and to assure WLCC of 

the Tribal Bonds' validity and W APCC' s appropriate investment of the bonds' proceeds. In the 

letter, Jason Galanis pointed to the timely payment of interest on the bonds as evidence of their 

legitimacy, noting, "WLCC bond interest of over $2.72 million was already paid by these 

distributions precisely as contemplated in the Indenture and related agreement," and falsely 

stated: "These annuity distributions will continue from the assets owned in the annuities. 

Therefore, the WLCC bonds will continue to be paid." Among other things, Jason Galanis 

concealed the fact that the two interest payments had been funded by sources other than annuity 

investments. 

117. More recently, and with an interest payment due date for the April 2015 bond 

issuance fast approaching, Jason Galanis changed tacks. In an April 4, 2016 letter to WLCC, 

Dunkerley, writing on behalf of W APCC, declared that W APCC had suspended its interest 

payments on the Tribal Bonds. In his letter, written at the direction or with the knowledge of 

Jason Galanis, Dunkerley notified WLCC that W APCC would "withhold Annuity distribution 

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payment to WLCC until such time as WLCC provides a satisfactory financial surety" to 

indemnify WAPCC for the costs it and its "agents" incurred in defense of the Commission's 

investigation, among other matters. 

G. The Commission's Action Against AAM 

118. On December 15, 2015, the Commission filed an emergency action charging 

AAM with investment adviser fraud for investing over $43 million in Tribal Bonds without 

disclosing the conflicts of interest inherent in the transactions arising from the benefits the bond 

sales generated for entities related to AAM' s parent company and financiers. The Commission 

obtained a TRO appointing a monitor to oversee AAM, in order to protect AAM's clients from 

further inappropriate investments. 

119. On January 8, 2016, based on concerns identified by the Court-appointed monitor, 

the Commission obtained an order expanding the monitor 's powers to that of a receiver. The 

receiver is in the process of winding down the company. By consent of the receiver, the 

Commission has obtained a bifurcated judgment as to liability against AAM. 

FIRST CLAIM FOR RELIEF 
Violations of and Aiding and Abetting Violations of Section 17(a)(l) and (3) of the 

Securities Act 
(Against Jason Galanis, Archer, Cooney, Dunkerley, John Galanis and Hirst) 

120. The Commission realleges and incorporates by reference herein each and every 

allegation contained in paragraphs 1 - 119. 

121. Jason Galanis, Archer, Cooney, Dunkerley, John Galanis and Hirst each, directly 

or indirectly, singly or in concert with others, by use of the means or instruments of 

transportation or communication in interstate commerce or by use of the mails in the offer or sale 

of securities, with scienter, employed devices, schemes or artifices to defraud or engaged in 

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transactions, practices or courses of business which operated or would operate as a fraud or 

deceit upon a purchaser. 

122. By virtue of the foregoing, Jason Galanis, Archer, Cooney, Dunkerley, John 

Galanis and Hirst each, directly or indirectly, violated, and unless restrained and enjoined, will 

continue violating, Sections 17(a)(l) and (3) of the Securities Act [15 U.S .C. §§ 77q(a)(l) and 

(3)]. 

123. In the alternative, Archer, Cooney, Dunkerley, John Galanis and Hirst each, 

directly or indirectly, knowingly or recklessly provided substantial assistance to Jason Galanis, 

who, directly or indirectly, singly or in concert with others, in the offer or sale of a security, with 

scienter, used the means or instruments of transportation or communication in interstate 

commerce or used the mails to employ devices, schemes or artifices to defraud or to engage in 

transactions, practices or courses of business which operated or would operate as a fraud or 

deceit upon a purchaser. 

124. By virtue of the foregoing, Archer, Cooney, Dunkerley, John Galanis and Hirst 

aided and abetted, and unless restrained and enjoined, will continue aiding and abetting, 

violations of Sections 17(a)(l) and (3) of the Securities Act [15 U.S.C. §§ 77q(a)(l) and (3)] in 

violation of Section 15(b) of the Securities Act [15 U.S.C. § 77o(b)] . 

SECOND CLAIM FOR RELIEF 
Violations of and Aiding and Abetting Violations of Section IO(b) of the Exchange Act 

and Rules lOb-S(a), (b) and (c) Thereunder 
(Against Jason Galanis, Archer, Cooney, Dunkerley, John Galanis, Hirst and Morton) 

125. The Commission realleges and incorporates by reference herein each and every 

allegation contained in paragraphs 1 - 119. 

126. Jason Galanis, Archer, Cooney, Dunkerley, John Galanis, Hirst and Morton each 

directly or indirectly, singly or in concert with others, in connection with the purchase or sale of 

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a security, with scienter, used the means or instrumentalities of interstate commerce or of the 

mails or of a facility of a national securities exchange to employ devices, schemes, or artifices to 

defraud; and to engage in acts, practices, or courses of business which operated or would operate 

as a fraud or deceit upon others. 

127. By virtue of the foregoing, Jason Galanis, Archer, Cooney, Dunkerley, John 

Galanis, Hirst and Morton each violated, and unless restrained and enjoined, will continue 

violating, Section lO(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) [17 

C.F.R.§§ 240.10b-5(a) and (c)]. 

128. Morton directly or indirectly, singly or in concert with others, in connection with 

the purchase or sale of a security, with sci enter, used the means or instrumentalities of interstate 

commerce or of the mails or of a facility of a national securities exchange to make an untrue 

statement of a material fact or to omit to state a material fact necessary in order to make the 

statements made, in the light of the circumstances under which they were made, not misleading. 

129. By virtue of the foregoing, Morton violated, and unless restrained and enjoined, 

will continue vio lating, Section IO(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-

5(b) [17 C.F.R. § 240.10b-5(b)]. 

130. In the alternative, Archer, Cooney, Dunkerley, John Galanis and Hirst each 

directly or indirectly, provided knowing and substantial assistance to Jason Galanis, who, 

directly or indirectly, singly or in conce1i with others, in connection with the purchase or sale of 

a security, with scienter, used the means or instrumentalities of interstate commerce or of the 

mails or of a facility of a national securities exchange to employ devices, schemes, or artifices to 

defraud; and to engage in acts , practices, or courses of business which operated or would operate 

as a fraud or deceit upon others. 

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131. By virtue of the foregoing, Archer, Cooney, Dunkerley, John Galanis and Hirst 

each aided and abetted, and unless restrained and enjoined, will continue aiding and abetting, 

violations of Section lO(b) of the Exchange Act (15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) 

thereunder [17 C.F.R.§§ 240.10b-5(a) and (c)] in violation of Section 20(e) of the Exchange Act 

(15 U.S.C. § 78t(e)]. 

THIRD CLAIM FOR RELIEF 
Violations of Sections 206(1), 206(2) and 206(4) of the Advisers Act, and Rule 206(4)-8 

thereunder 
(Against Morton) 

132. The Commission realleges and incorporates by reference herein each and every 

allegation contained in paragraphs 1 - 119. 

133. Morton, while acting as an investment adviser, by use of the mails, or the means 

and instrumentalities of interstate commerce, directly or indirectly, singly or in concert with 

others: (a) employed devices, schemes, or artifices to defraud her clients or prospective clients 

with sci enter; and (b) knowingly, recklessly or negligently engaged in transactions, practices, 

and courses of business which operated as a fraud or deceit upon her clients or prospective 

clients. 

134. Morton, while acting as an investment adviser to a pooled investment vehicle, (a) 

made untrue statements of material fact or omitted to state a material fact, necessary to make the 

statements made, in the light of the circumstances under which they were made, not misleading, 

to an investor in the pooled investment vehicle; and (b) engaged in acts, practices, or courses of 

business that were fraudulent, deceptive, or manipulative with respect to an investor or 

prospective investor in the pooled investment vehicle. 

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135. By virtue of the foregoing, Morton violated, and unless restrained and enjoined, 

will continue violating, Sections 206(1), (2) and (4) of the Advisers Act [15 U.S.C. §§ 80b-6(1), 

(2) and (4) ] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8]. 

FOURTH CLAIM FOR RELIEF 
Aiding and Abetting Violations of Sections 206(1), 206(2) and 206( 4) of the Advisers Act 

and Rule 206( 4)-8 Thereunder 
(Against Morton) 

136. The Commission realleges and incorporates by reference herein each and every 

allegation contained in paragraphs 1 - 119. 

137. Morton, directly or indirectly, knowingly or recklessly provided substantial 

assistance to Hughes and AAM, which, while acting as investment advisers, by use of the mails, 

and the means and instrumentalities of interstate commerce, directly or indirectly, singly or in 

concert with others: (a) employed devices, schemes, or artifices to defraud their respective 

clients or prospective clients with scienter; and (b) knowingly, recklessly or negligently engaged 

in transactions, practices, and courses of business which operated as a fraud or deceit upon their 

respective clients or prospective clients. 

138. Mo1ion, directly or indirectly, knowingly or recklessly provided substantial 

assistance to AAM which, while acting as an investment adviser to a pooled investment vehicle, 

(a) made untrue statements of material fact or omitted to state a material fact necessary to make 

the statements made, in the light of circumstances under which they were made, not misleading, 

to an investor in the pooled investment vehicle; and (b) engaged in acts, practices, or courses of 

business that were fraudulent, deceptive, or manipulative with respect to an investor or 

prospective investor in the pooled investment vehicle. 

139. By virtue of the foregoing, Morton aided and abetted, and unless restrained and 

enjoined, will continue aiding and abetting, violations of Sections 206(1 ), (2) and ( 4) of the 

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Advisers Act [15 U.S.C. §§ 80b-6(1), (2) and (4)], and Rule 206(4)-8 thereunder [17 C.F.R. § 

275.206(4)-8], in violation of Section 209(f) of the Advisers Act [15 U.S.C. § 80b-9(f)]. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that the Court enter a Final 

Judgment: 

I. 

Permanently restraining and enjoining Jason Galanis, Archer, Cooney, Dunkerley, John 

Galanis and Hirst, their agents, servants, employees and attorneys and all persons in active 

concert or participation with them who receive actual notice of the injunction by personal 

service or otherwise, and each of them, from violating, directly or indirectly, Sections 17(a)(l) 

and (3) of the Securities Act [15 U.S .C. §§ 77q(a)(l) and (3)]; 

II. 

Permanently restraining and enjoining Jason Galanis, Archer, Cooney, Dunkerley, John 

Galanis and Hirst, their agents, servants, employees and attorneys and all persons in active 

concert or paiiicipation with them who receive actual notice of the injunction by personal 

service or otherwise, and each of them, from violating, directly or indirectly, Section 1 O(b) of 

the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) [17 C.F.R.§§ 240.10b-5(a) 

and (c)] ; 

III. 

Permanently restraining and enjoining Morton, her agents, servants, employees and 

attorneys and all persons in active concert or participation with them who receive actual notice 

of the injunction by personal service or otherwise, and each of them, from violating, directly or 

indirectly, Section lO(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 10b-5(a), (b) and 

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(c) thereunder (17 C.F.R.§§ 240.10b-5(a), (b) and (c)] and Sections 206(1), (2) and (4) of the 

Advisers Act (15 U.S.C. §§ 80b-6(1), (2) and (4)] and Rule 206(4)-8 thereunder (17 C.F.R. § 

275.206(4)-8]; 

IV. 

Permanently barring Jason Galanis, Archer and Dunkerley from acting as an officer or 

director of a public company pursuant to Section 20(e) of the Securities Act (15 U.S.C. § 77t(e)] 

and Section 2l(d)(2) of the Exchange Act (15 U.S.C. § 78u(d)(2)]; and permanently barring 

Morton from acting as an officer or director of a public company pursuant to Section 21 ( d)(2) of 

the Exchange Act (15 U.S.C. § 78u(d)(2)]; 

v. 

Directing each of the Defendants to disgorge all ill-gotten gains, plus prejudgment 

interest thereon; 

VI. 

Directing Jason Galanis, Archer, Cooney, Dunkerley, John Galanis, Hirst and Morton to 

pay civil money penalties pursuant to Section 21 ( d)(3) of the Exchange Act [ 15 U.S. C. § 

78u( d)(3)]; 

VII. 

Directing Morton to pay civil money penalties pursuant to Section 209(e) of the Advisers 

Act (15 U.S.C. § 80b-9(e)]; and 

VIII. 

Granting such other and fmiher relief as this Court deems just and appropriate. 

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JURY DEMAND 

Pursuant to Rule 3 8 of the Federal Rules of Civil Procedure, Plaintiff demands that this 

case be tried to a jury. 

Dated: New York, New York 
May 11, 2016 

By: 

43 

Andrew M. Calamari 
Sanjay Wadhwa 
Adam S. Grace 
Nancy A. Brown 
Tejal D. Shah 
H. Gregory Baker 
Attorneys for the Plaintiff 
SECURITIES AND EXCHANGE 

COMMISSION 
New York Regional Office 
Brookfield Place 
200 Vesey Street, Suite 400 
New York, New York 10281 
(212) 336-1023 (Brown) 
Email: [email protected]