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Yesterday I started a re-examination of a federal securities fraud prosecution involving a Sioux Nation Indian Tribe in South Dakota that was defrauded out of more than $64 million as part of a phony bond scheme engineered by Devon Archer and Jason Galanis, among others.
Devon Archer was a long-time friend and business associate of Christopher Heinz, step-son of John Kerry, and heir to the Heinz Ketchup (Catsup?) family fortune. Archer and Heinz were roommates at Yale. Archer, Heinz, and Biden were the three founding partners in a company called Rosemont Seneca Partners. “Rosemont” is the name of the Heinz family estate in Pennsylvania, and it’s attached to most business ventures that are connected to the Heinz family foundation, or members of the Heinz family.
Archer also became a fledgling Democrat Party bundler of campaign contributions coming out of his experiences as National Finance Chairman for John Kerry’s 2004 Presidential campaign.
Archer is also Hunter Biden’s primary business partner on matters involving Ukraine and China — at least.
Jason Galanis is a career white-collar criminal who now has multiple felony convictions for securities fraud and other white-collar crimes. His father, John Galanis has a criminal record of white-collar crime going back to the 1970s and is currently serving his second federal prison sentence of ten years or more.
A third player in the group was a guy named Bevan Cooney, a part-owner of the Hollywood hangout “The Viper Room”. Cooney is described by Galanis as his “best friend” for more than 20 years.
In my story yesterday I went through an email string dated October 5, 2013, in which Archer, Galanis, and Cooney go over changes to be made in Archer’s “bios” as part of some business organizational affairs. At one point in the three-way discussion there is a reference to bringing Hunter Biden into the group, and “putting a little honey in his pocket.”
How did Devon Archer get into bed with Jason Galanis and Bevan Cooney? That is the $64,000 question.
Galanis, Archer, and Cooney were all indicted by prosecutors in the Southern District of New York for securities fraud in connection with the Indian Tribe bond fraud that I touched on in my story yesterday. Galanis pled guilty, while Archer and Cooney took the case to trial and were convicted by a jury. Archer’s conviction was initially set aside by the trial court judge, but two weeks ago it was reinstated by the Second Circuit Court of Appeals.
There is a little nugget of information tucked away inside that opinion which gives some insight into what was happening with Archer in 2013-14, and I suspect — and it is only a suspicion at this point — that political operatives of the Democrat party establishment are working feverishly to prevent Hunter Biden from being connected to what Archer was doing. But given everything else that was going on, it defies credulity to claim that Hunter Biden was unaware of, and uninvolved in the Indian Tribe bond fraud scheme.
When Judge Ronnie Abrams vacated Archer’s conviction for securities fraud, she relied in part on the absence of any evidence that Archer had financially benefitted from the fraud. According to Judge Abrams, the evidence showed that Archer did not personally receive any of the proceeds (not entirely true) from the bond sales in the same fashion that other conspirators did. In addition, she noted that Archer actually put some of his own money into the enterprise — money that he ended up losing.
But as noted in the Appeals Court opinion, the prosecution theory was that Archer’s involvement had more of a long-term vision.
The district court was further troubled “by the government’s inability throughout trial to articulate a compelling motive for Archer to engage in this fraud,” noting that “Archer never received money from the purported annuity provider, nor did he profit directly from the misappropriation of the bond proceeds.” Id. And while the district court acknowledged that the government’s theory regarding Archer’s motive – his“admitted interest in the roll up being successful” – could not be “dismiss[ed] . . . entirely,” it nevertheless concluded that this motive was not “compelling” and mitigated by the fact that Archer lost a significant portion of the funds that he himself had invested into the scheme.
The reference to the “roll-up” is important. Earlier in the opinion, recounting the scheme as laid out at trial, the Court wrote:
In early 2014, Jason Galanis, Archer, Bevan Cooney, and others were working together to acquire financial services companies that they could “roll up”into a large financial conglomerate with Archer at the helm. They began by investing in Burnham Financial Group (“Burnham”), a well-established financial services company with a prominent name that they sought to leverage in building their own conglomerate. But to purchase additional so-called “roll-up”companies, they needed capital.
Devon Archer was in bed with Jason Galanis trying to build something — a “financial services conglomerate.” As part of the Indian Tribe bond fraud scheme, they acquired control of a few businesses and then used those businesses in the execution of the fraud — which brought them the proceeds from the sale of the Indians’ bonds — $28 million in the first sale.
Earlier today, records released by Bevan Cooney — currently serving a 30-month prison sentence for securities fraud, included minutes of a meeting of the Board of Trustees of Burnham Investors Trust were made public. The Trust was the owner of Burnham Asset Management, Inc., (BAM) which Archer and others were seeking to acquire from the Trust. BAM was owned by Burnham Financial Group, also part of the Trust. Based on some later records it appears that Archer and the others ended up acquiring Burnham Financial Group, which included the subsidiaries BAM and Burnhame Securities, Inc.
These minutes are dated August 21, 2014, just about the same time the Indian Tribe made their first bond offering, which was purchased in its entirety by an investment advisory business that Archer and Galanis had acquired for that very purpose.
These minutes do not provide a complete picture of the nature of the transaction. But the Trustees expressed concerns — which Archer tried to respond to — regarding the post-acquisition structure and control of BAM if the Trust were to sell. One subject mentioned in a few places in the minutes is the possible involvement — and role — of a gentleman named Jason Sugarman. The Trustees seemed suspicious of the nature of Sugarman’s involvement and seemed to be seeking assurances and answers from Archer on the question of who would really be controlling BAM — Archer or Sugarman. Why they were concerned is not spelled out.
But Jason Sugarman played a significant role in the Indian Tribe bond scheme — but for reasons unknown, at this point, the prosecutors in New York did not charge him with securities fraud along with the others.
But the SEC did. They filed a civil enforcement action against Sugarman in 2019 that includes all the defendants named in the criminal case where Archer and others were convicted, and the allegations of the SEC complaint detail Sugarman’s role.
Basically, in the early days of trying to put together their “roll up”, when Galanis and Archer needed capital to fund their acquisition of various businesses to make the fraud scheme work, they turned to Sugarman for the money to make those acquisitions.
Acher and Galanis purchased Hughes Capital Management LLC, in August 2014, which they then used to buy the first $28 million in Indian Tribe bonds. Sugarman provided the funding to purchase a controlling interest in Hughes. A year later, in preparation for purchasing the third set of bonds, Sugarman assisted in financing the purchase of Atlantic Asset Management LLC, which purchased the third set of bonds for $16 million.
Jason Sugarman is a Los Angeles businessman and investor who holds minority ownership interests in the Golden State Warriors, Los Angeles FC MLS soccer franchise, and the Oklahoma City Dodgers — the AAA Minor League franchise team of the Los Angeles Dodgers.
But more importantly for Archer and Galanis, Sugarman was part owner and had control of an insurance company, Valor Group Ltd. (“VGL”), a Bermuda-based insurance conglomerate. He was also Director and an indirect owner of then-SEC-registered broker-dealer and investment adviser Burnham Securities.
Archer had convinced the Burnham Trust to sell Burnham Financial Services, which was the parent company of both Burnham Asset Management and Burnham Securities — and Sugarman had funded those acquisitions as well, which is why the SEC called him an “indirect owner”. For whatever reason, the Trustees had been concerned about that outcome. Archer convinced them it would not be the case as is reflected in the minutes of that meeting, yet that is what eventually came to happen.
It was Sugarman’s insurance company that was supposed to issue the annuities that were going to be purchased with the proceeds from the bond sale, but were instead diverted to individuals involved in the fraud scheme. A significant amount of the money made its way to Sugarman.
Sugarman was close with Galanis. Various people involved in the scheme told SEC investigators that the group referred to them as “The two Jasons”, and viewed them as 50-50 partners in everything that happened with the Indian Tribe bond scheme. They were in regular communication as the deal came together, and even had paperwork prior to the deal being formalized laying out where they would divert the proceeds from the bond sales.
So how did the duo of “The Two Jasons” end up a trio with Devon Archer involved?
Jason Sugarman, in addition to being an LA-based entrepreneur, investor, and businessman, is also the husband of Elizabeth Guber.
Elizabeth Guber is the daughter of Hollywood uber-Producer Peter Guber, who along with his former partner, Barbara Streisand paramour Jon Peters, produced such Hollywood hits as The Color Purple, Flashdance, Rain Man, Batman, Witches of Eastwick, Midnight Express, and at least a dozen more box office hits and Hollywood awards winners.
Remember that part earlier about Devon Archer becoming a very successful “bundler” of campaign contributions for Democrat party candidates?
Who do they give money to in Hollywood? Where did Obama get his campaign money? Who was Obama’s Vice President?
Here is a version of “Six Degrees of Separation from Kevin Bacon” for the whole crew:
Bevan Cooney and Jason Galanis are friends for the past 20 years.
Cooney and Sugarman have a shared financial interest in The Viper Room in Hollywood.
Sugarman runs around in Hollywood circles with lots of people who like to write big checks to put Democrats like Joe Biden into office.
Devin Archer gets into the “bundling” trade to cement his connections to big-time moneyed operators of the Democrat persuasion who he hopes to lure into being in business with him — Chris Heinz is too risk averse, and he’s already got his billion.
Galanis and Archer get put together by Sugarman, and they start planning the formation of a financial services conglomerate they can use ….. well, Archer probably wants to create something like a Wall Street boutique venture capital firm, whereas Galanis just wants to defraud investors because it’s faster and allows more time for partying and women.
Cooney is just driving — he’s Turtle in the Entourage.
And they size up Hunter as being too drug-addled and stupid to ask too many questions, but valuable nonetheless because he’s the son of a Vice President with absolutely no ethics or scruples when it comes to cashing in on his office.
More to come in Part 3.
PS — yes, I know the minutes of the Burnham Trustee meeting refer to $200 million received for investment purposes by Archer from the wife of the former mayor of Moscow, which confirms the claim made by Senators Johnson and Grassley about Hunter Biden getting money from her — a Russian Government official.