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DATE: Sunday, June 15, 1986
BYLINE: By George Anastasia and Fen Montaigne, Inquirer Staff Writers

For 16 years, John Peter Galanis, the man behind the Boardwalk Marketplace
project, has engaged in a series of fraudulent or financially troubled
deals, according to court records. He is, in the opinion of attorneys and
prosecutors who have opposed him, a brilliant and charming swindler who
uses a maze of national and foreign corporations to carry out his deals and
shield his assets.

"If somebody told me John Galanis was behind a deal, I'd assume it was a
crooked deal and I wouldn't want any part of it," said John Lowe, a former
assistant United States attorney who worked with Galanis when he became a
government informant in the 1970s. "I wouldn't touch anything involved in
it, because I'd figure either I'll lose my money or wind up in jail."

The Connecticut businessman has faced law enforcement scrutiny, a six-month
jail term, indictments in the United States and Canada, civil suits, and a
lengthy fight in U.S. Bankruptcy Court. Yet he still has managed to live
like a king.

Galanis, 43, resides in affluent Greenwich, Conn., in a $2.5 million estate
that has a tennis court, an indoor swimming pool and a lake. He once said
in a deposition that he owned virtually nothing, but former associates said
that, through corporations and trusts, he has owned luxury automobiles and
boats. Several former associates and acquaintances said that Galanis is a
devoted father of four children who once hired a circus to perform at one
of his sons' birthday parties.

He frequently dines at Lutece, an elegant French restaurant in New York
City, where he drinks $150 bottles of Champagne and $800 bottles of vintage
Bordeaux wine, according to business associates. Recently, he purchased
$22,000 in antique English wine carafes and coasters, according to company
records obtained by The Inquirer.

Galanis arrived in Atlantic City in 1985. And although his name never
appeared on any of the brochures or prospectuses touting Boardwalk
Marketplace, one thing was clear to those who met with him: John Galanis
was the project.

"In describing Boardwalk Marketplace, John Galanis always spoke in the
first person," said Donald R. Tomlin, chairman of U.S. Capital Corp., a
major condominium developer in Atlantic City.

Federal and state securities laws require that all key players be disclosed
to investors in limited partnership offerings such as Boardwalk
Marketplace. Galanis has twice been permanently enjoined by the Securities
and Exchange Commission from engaging in fraudulent deals, and many
investors say that had they known of Galanis' background and role,
they would not have invested in the project.

The accounting firm of Alexander Grant & Co. performed audits for Nashua
Trust Co., which proposed Boardwalk Marketplace. But Alexander Grant
severed its ties to the project after learning that Galanis was behind the
deal, according to Ronald Kidd, the attorney for Alexander Grant.

"The reason we disengaged was we obtained information that Mr. Galanis was
a bad person and a person we did not want to do business with," Kidd said.
''We found out that he was a rogue, a scoundrel."

Milton I. Schwartz, who in 1979 invested $450,000 in a Utah cable
television system that Galanis proposed, but never built, said: "I think
he's brilliant. . . . Someone's got to put him in jail."

Prosecutors have tried on several occasions to do so.

In the early 1970s, he was indicted twice after a joint investigation by
the SEC and the U.S. Justice Department into a series of scams perpetrated
by Galanis and others. They were accused of looting at least $12 million
from domestic and overseas investor funds through stock manipulation and
outright fraud.

He pleaded guilty to conspiracy, served six months in federal prison, and
was sentenced to five years' probation. As a condition of his probation, he
was required to "not engage as an officer, director, agent or other
fiduciary in the discretionary investment or management of the funds or
assets of others." Galanis also became a government witness, providing
information that helped build 20 additional fraud and conspiracy cases
involving investment swindles, according to court records.

In addition to his problems in the United States, he was charged by
Canadian authorities in 1973 with looting $1.6 million from a bank
portfolio of Champion Savings Corp. Ltd. of Montreal. The alleged plot
involved funneling money out of the bank's accounts and into Europe.
Galanis successfully fought an attempt by the Canadian government to
extradite him.

In the mid- to late 1970s, Galanis raised an undisclosed amount of money by
selling limited partnerships in 40 cable television systems that various
companies he controlled were to build and operate, according to federal
court records in Connecticut. Many of the systems were not built, and a
sizable number of those in operation were in financial trouble, according
to court records. The systems were eventually sold.

The Manhattan district attorney's office obtained an indictment of Galanis
in 1983 for his role in an alleged scheme to siphon $9.5 million from Chase
Manhattan Bank through a series of fraudulent loans. Those loans were made
to some of the cable television systems controlled by Galanis. He is
scheduled to go on trial in January.

The indictment alleged that in 1979 and 1980 Galanis transferred funds
through a trust set up for his children, the Galanis Brothers Trust, as
part of a complicated scheme to defraud the bank. Chase Manhattan Bank
filed suit against Galanis, saying he used a St. Vincent, West Indies,
company to transfer money and assets out of the United States. It was all
part of a labyrinthine network of companies used by Galanis, the suit said.

"His transactions are so convoluted that even he cannot keep them
straight," Chase Manhattan said in court papers.

The bank, saying that it was owed $3 million plus interest, forced Galanis
into U.S. Bankruptcy Court in Connecticut in 1980. Chase Manhattan settled
with Galanis in 1984 for roughly $2 million. Other creditors came into the
bankruptcy court with $6.2 million in judgments, and some of them settled
their claims, too.

The cable television deals were similar in structure to a Florida
investment project involving Galanis in 1984 and 1985. More than 400 luxury
condominium units were purchased and then offered to investors through 15
limited partnership deals that raised $79 million. Last year, the deals
collapsed, with banks and developers filing foreclosure actions.

Over the years, Galanis' creditors have had great difficulty collecting
their debts. Galanis, by his own admission in court, plundered a Panamanian
investment fund, Armstrong Capital, in 1970, and the investors are still
trying to collect $3.5 million in principal and interest. John Klotz, a New
York City attorney representing the investors, is now attemping to take
possession of Galanis' Greenwich mansion, which is held by the Galanis
Brothers Trust.

"There is little doubt that in the past 16 years John Galanis has
masterminded the theft and embezzlement of millions upon millions of
dollars and that among his victims is Armstrong," Klotz said in an
affidavit filed in federal court in Connecticut in March. "However,
although Galanis has freely admitted his defalcations from Armstrong, not
one dime has ever been paid to Armstrong on these judgments."

In a recent interview, Klotz said: "He has buried his things so deeply that
it is enormously expensive to try and recover them. The fact that John
Galanis has not paid his legal debts and is still walking the streets and
living the way he does is a reproach to the American legal system."

Copyright 1986 Philadelphia Newspapers Incorporated.
[NOTE: Subsequent to this article's publication, Galanis was indicted and
my clients enforced a lien against his mansion (held in various names).]

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