Flamboyant Financier in Fraud Case Known for Zest for the Good Life

John Peter Galanis, the San Diego County resident charged Tuesday in connection with massive tax shelter frauds, is a flamboyant financier known for extravagant parties, huge meals and his taste for $400 bottles of wine.

Curly haired and heavyset, with abundant charm, wit and sophistication, he is sometimes portrayed in media accounts and court documents as a crafty international swindler with few equals.

Galanis’ business deals in recent years are portraits of investor partnerships gone sour on a variety of real estate and petroleum projects throughout the country. They have sparked lawsuits by angry investors, tarred the reputations of accounting and law firms, weakened several financial institutions and spawned a host of investigations by law enforcement agencies.

Galanis was in custody Wednesday and could not be reached for comment. However, in previous public statements, he and his attorneys have insisted that he is innocent of any wrongdoing. “I’m being made a patsy,” he was quoted as saying last year. “It’s as simple as that.”

Served Prison Term

Galanis has always tried to stay out of sight, operating through a maze of companies run by relatives and longtime associates. But he still has plenty of problems with law enforcement authorities.

In the past two decades, Galanis has had run-ins with the Securities and Exchange Commission, served a six-month term in federal prison, fought off extradition to Canada and is currently fighting criminal charges in New York involving loans from Chase Manhattan Bank.

In the latest charges, Galanis and six associates face federal and state charges on the sale of allegedly fraudulent tax-shelter investments in real estate and oil-and-gas properties. Prosecutors estimate that the petroleum investments may have cost the government as much as $172 million in lost tax revenue.

The charges include the allegedly fraudulent takeover of a Utah bank, now in receivership, and the bribery of officials at a small bank in upstate New York. Rudolph W. Giuliani, U.S. attorney in Manhattan, said the allegations represent “one of the largest white-collar schemes the FBI has had.”

Skis Barely Used

Despite his problems, Galanis has maintained a sumptuous life style that has included elegant homes in California, Connecticut and Utah. Known as “Big John” and “Fat John,” Galanis is legendary among associates for his love of fine food, expensive wine and showy parties.

He once threw an Hawaiian-style luau in the ski resort town of Park City, Utah, where he trucked in the sand and plants for the party. The meal consisted of roasted pig and lobster flown in from Maine.

At one business dinner in Washington, Galanis “ordered about everything in the restaurant,” said one of the diners, an attorney from California. After the meal, Galanis took his colleagues back to the Madison Hotel, where he ordered more food brought to his large suite.

“He brought in trays--no carts--of cheeses and fruits and more wine,” the attorney said, his voice still tinged with amazement.

On another occasion, Galanis had a formal dinner party at a tony New York restaurant for the law firms that represent him. More than 100 attorneys, some from New York’s finest firms, showed up.

One businessman who stayed at Galanis’ luxurious home in Park City remembers that the house had a pair of $2,000 skis that were virtually unused. Galanis had apparently bought the skis, tried them once and decided he did not like them.

Furthermore, Galanis’ wife apparently did not like the house, so the family usually stayed at a local lodge, running up huge bills, according to the businessman. Galanis was a favorite of the hotel staff because of his $100 tips.

The 44-year-old Galanis was born in Ipswich, Mass., where his father owned a local diner and ran a tourist motel along with his brothers. The younger Galanis went to prep school in New Hampshire and graduated from Syracuse University in 1965.

He tried law school for a year and then quit to work on Wall Street, where it was not too long before his troubles began, according to court documents and newspaper stories.

Galanis served six months in prison in the early 1970s for his role in looting a mutual fund. Twice, in 1972 and 1980, Galanis entered into consent decrees with the SEC that temporarily prevented him from promoting the sale of securities, including limited partnerships. He was also charged in connection with a $1.6-million fraud in Canada, but he successfully fought extradition in that case.

Galanis also has been charged in the Chase Manhattan case, in which it is alleged that fraudulent bank loans had been funneled into companies controlled by Galanis. The grand larceny charges in that case were dismissed last year, but charges of misapplication of bank funds are pending.

For years, Galanis operated out of Greenwich, Conn., where he lived in splendor on a $2.5-million estate that had a lake, tennis court, pool and a playground for his children. Known as a devoted family man, Galanis moved to California a couple of years ago, buying expensive homes in Rancho Santa Fe and Del Mar.

Though little is known of his activities in Southern California, several Galanis associates last year took over a company in Northern California known as ISI Corp. that managed several mutual funds.

Though small, ISI had some big-name directors on its board before Galanis’ people arrived. They included Robert B. Mathias, two-time U.S. Olympic gold medal winner in the decathalon, and Billy H. Hunt, a well-known entertainment industry attorney in Los Angeles.

The new managers of ISI included John Geanoulis, Galanis’ cousin, and Douglas C. Adams, a former Stanford University football player and a close Galanis business associate.

Both were quickly forced to resign from ISI after their ties to Galanis were revealed, according to board members, but not before $3.5 million in investor funds had been invested in companies run by other Galanis colleagues. ISI wrote those those investments off as a complete loss, Hunt said.

Perhaps Galanis’ most audacious undertaking came two years ago in Atlantic City, N.J., in a project known as Boardwalk Marketplace.

Nearly 1,400 investors put more than $75 million into limited partnerships that were formed to restore a hotel and commercial area in the East Coast gambling city. Comedian Eddie Murphy is said to be among the wealthy investors who poured large sums into the project.

By last year, though, the project had collapsed and the company supervising the undertaking had sought protection in bankruptcy court. It was in the midst of the collapse that the Philadelphia Inquirer identified Galanis as the “mastermind” behind the Atlantic City project, even though his name was not associated with the development in any official capacity.

The events prompted a flurry of investor lawsuits, including several in Southern California.

“The true promoter of the Atlantic City Boardwalk Marketplace,” said one lawsuit in Los Angeles federal court, “was Galanis, a previously convicted swindler with a history of setting up investment deals and then looting them or driving them to the brink of insolvency.”

Prosecutors in New York this week helped buttress those allegations.

“Galanis was the financial organizer and creative mind behind the (Boardwalk Marketplace) scheme,” according to court papers filed in connection with his arrest this week. “He managed the financial and corporate structure of the conspiracy. He was the person who controlled the acquisition of real estate and the syndication of the limited partnerships. He devised the business and marketing concept and supervised its execution.”