A co-owner of the Los Angeles Football Club has been charged with orchestrating a scheme to gain control over two investment advisory firms so he and a partner could steal $43 million of client funds purportedly to invest in American Indian tribal bonds.
The U.S. Securities and Exchange Commission alleges in a civil lawsuit that Jason Sugarman, a Los Angeles financier who also has ties to the L.A. Dodgers and Golden State Warriors, pocketed about $9 million in the scheme.
“He was the biggest winner from the fraud, ending up with voting control over corporate assets that were acquired with bond proceeds,” according to the complaint filed last week in federal court for the Southern District of New York
Criminal charges have not been filed against Sugarman — the son-in-law of entertainment and sports mogul Peter Guber — but the SEC has requested that the court order him to “disgorge all ill-gotten gains.”
Sugarman, 47, co-owns the Los Angeles Football Club along with other sports and entertainment luminaries, including former Los Angeles Lakers star Magic Johnson and actor Will Ferrell. His financial stake in the Dodgers involves his role as a partner in the teams Triple-A affiliate, the Oklahoma City Dodgers.
Sugarman could not be reached for comment Tuesday.
Officials with LAFC declined to comment on the SEC allegation while Oklahoma City Dodgers executives did not return a phone call.
Alleged co-conspirator in prison[hhmc]
The SEC alleges Sugarman orchestrated the tribal bond scheme along with business partner Jason Galanis and seven other co-conspirators, whom the agency has previously charged with securities fraud.
In January 2017, Galanis 48, pleaded guilty to criminal charges in connection with the tribal bond scheme and is serving a 14-year sentence at the Terminal Island Federal Correctional Institution in San Pedro.
“Sugarman, Galanis and the previously charged defendants divvied up the misappropriated proceeds, either using them to acquire entities, to shore up the operations of their existing companies, to pay back debts, to compensate scheme participants, to buy real estate or to make other investments for their individual benefit,” the lawsuit states.
Galanis and his father, who is among the defendants already charged, allegedly launched the scheme in March 2014 when they convinced the Wakpamni Lake Community Corp., operated by the Oglala Sioux Tribe in South Dakota, to issue bonds the pair had already structured.
Proceeds from the bond sales were suppose to be used by the tribal corporation to purchase an annuity as an investment that could generate sufficient income to pay interest to bondholders, the lawsuit says.
Proceeds used for own purposes[hhmc]
The suit alleges that Sugarman and Galanis, who were referred to by others in the scheme as the “two Jasons,” intended to use proceeds from the tribal bonds for their own purposes.
In April 2014, when an initial issuance of $20 million in bonds seemed imminent, Galanis emailed Sugarman: “We would have discretion over the bond. Lets discuss how it can be allocated,” the complaint says.
After securing the Wakpamni Lake Community Corp. as the issuer, Galanis and Sugarman allegedly set out to identify unwitting investors to buy the tribal bonds, according to the suit. Sugarman and Galanis then devised a plan to obtain control over investor funds by acquiring firms that would use their investment authority to purchase the tribal bonds for their clients.
Controlled advisory firms[hhmc]
Prosecutors allege that, in August 20Read More – Source
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