John Galanis, Market Manipulation, New York 2011

John Galanis, a/k/a ‘Yanni,’ has pleaded guilty to manipulating the market for Gerova Financial Group, Ltd. (“Gerova”) in a Manhattan federal court. The crime unfolded from 2009 to 2011.

According to the indictment, Galanis, along with his co-conspirators Jason Galanis, Jared Galanis, Gary Hirst, Derek Galanis, Ymer Shahini, and Gavin Hamels, engaged in a scheme to defraud the shareholders of Gerova Financial Group and the investing public by obtaining secret control over millions of shares of Gerova stock and then manipulating the market for the stock as the defendants caused their secretly held shares to be sold. As part of the scheme, the defendants fraudulently generated demand for Gerova stock by bribing investment advisers to purchase for client accounts the Gerova stock that was sold by the defendants, thereby enabling the defendants to cash out from the scheme and make millions in illegal profits.

U.S. Attorney Preet Bharara stated, ‘John Galanis helped develop and execute an elaborate plan to secretly obtain undisclosed control of millions of shares of Gerova Financial Group stock, falsely pump up the demand, and then cash out, making millions in ill-gotten profits. For John Galanis, this is just the latest chapter in a lifetime of fraud that has included three prior convictions, including one that resulted in a prison sentence of 27 years.’

John Galanis pled guilty to conspiracy to commit securities fraud and securities fraud before U.S. Magistrate Judge Sarah Netburn.

The indictment details that Jason Galanis obtained control over Gerova so as to be able to cause Gerova to enter into transactions of his design, and for his benefit, including the issuance of Gerova stock. Jason Galanis obtained this control without identifying himself as an officer or director of Gerova to avoid the SEC-imposed bar that prohibited him from holding such positions at publicly traded companies.

As a part of the scheme, Jason Galanis, with the assistance of Hirst, caused more than 5 million shares of Gerova stock, which represented nearly half the company’s public float and which were intended for Jason Galanis’s ultimate benefit, to be issued to and held in the name of Shahini, who knowingly served as a foreign nominee for Jason Galanis.

John Galanis, a/k/a ‘Yanni,’ will face the consequences of his actions. His guilty plea marks a significant step in the prosecution of his crimes. The case serves as a reminder of the importance of transparency and accountability in the financial sector.

Mandatory facts: Defendant/respondent – John Galanis, exact criminal charges – conspiracy to commit securities fraud and securities fraud, city and state – New York, exact date – 2011, sentence or outcome – prison time, dollar amounts – millions in ill-gotten profits.

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