How 'Porn’s New King’ Allegedly Swindled a Native American Tribe Out of Millions

The people of Oglala Sioux Tribe of Pine Ridge Indian Reservation, in the southwest corner of South Dakota, are the poorest of the poor. The average income is $28,701, compared to a state-wide average of $48,947. Forty-nine percent of the population live in poverty, over three times the rate across South Dakota. Substance abuse and alcoholism is rife; life expectancy rates hover around the early 50s. Some describe the living conditions for the estimated 18,000 or so members of this tribe as equivalent to those in developing countries. Which makes it all the more tragic that a community that can so ill-afford it is at the center of a multi-million dollar financial scam.

On Wednesday, the federal authorities laid out new criminal charges against Jason Galanis and six alleged co-conspirators. They are accused of scamming Siouxmembers and others out of more than $60 million. Once dubbed "Porn's New King" by Forbes, Galanis allegedly encouraged tribal elders to invest in sham bonds that were promised to bring increased capital and revenue in the long term. Authorities say that the seven co-defendants instead spent the money on other investments and even designer goods from Gucci and Prada.

Jason Galanis's lawyer and representatives for the Oglala Sioux Nation did not immediately respond to requests for comment.

To find out more about the case, and about the challenges faced by the Native American communities currently living on the reservations in the United States, we spoke to Professor Walter Fleming, who heads up the department of Native American Studies at Montana State University. He is also a member of the Kickapoo Tribe of Kansas.

"Sadly, it's not a big surprise that this kind of scheme has allegedly been perpetrated against the tribe," Fleming says. "You often hear about the financial situations tribes become involved in."

He explains that reservation-based tribal communities are particularly vulnerable to financial abuse: "Tribal governments have only been around since the 1930s, and until the 1970s they were guided by the Bureau of Indian Affairs, so they haven't been exercising their sovereignty for that long. They're new to it, and there's a lot of pressure on them to make great advances on behalf of their communities, which suffer a lot of poverty. So when one of these too-good-to-be-true schemes come along, they're more much vulnerable because of the economic situation they find themselves in."

Fleming highlights how limited educational opportunities render them susceptible to scams. "Reservations like Pine Ridge, out in the Western part of the United States, are isolated. People have to leave the reservation in order to get higher education, which is something they're not necessarily willing to do because they'd be detaching themselves from the cultural ties they have to their own communities." He also points to historic factors, such as the abuse endured by Native children in boarding schools, as another reason why some mistrust formal education. In South Dakota, where the Oglala Sioux are based, Amnesty International reports having interviewed 1,000 alleged victims of this sexual and physical abuse alone.

Financial exploitation of Native American communities is not a new phenomenon, Fleming says. "We've really seen that in the Western tribes, which don't have access to the revenues brought in by casinos." The shameful truth is that corporations and smaller hucksters alike have long preyed on Native American communities."When it comes to non-renewable natural resources like coal or gas, they can be vulnerable to exploitation. In the past, particularly with the Crow Tribe of Montana, they'd agree to contracts that were not necessarily in their favour based on pie-in-the-sky type projections."

As reservation communities are under the jurisdiction of the federal authorities, they're reliant on central government for funds, which can be hugely bureaucratic. "There's not much private industry, and everything is dependent on the ebbs and flows of federal budgeting. They're so dependent on the continuation of these grants that they're always teetering on the brink of disaster when it comes to caring for the needs of the community."

While there are some positive indicators of change—Fleming points to the emergence of local tribal colleges that empower the community whilst responding to its needs—the reality is that life on the Pine Ridge Reservation remains exceptionally tough. "They're the poorest of the poor. You see all the classic indicators of poverty, like high rates of teen pregnancy, suicide, substance abuse, spousal abuse, and all other kinds of neglect."

There's another reason that the Oglala Sioux may well have been the victims of this alleged scam; one full of tragic irony. "When you have so little to hope for, you become more full of hope. That's the irony of it. So when someone comes to you and says, 'We can help you, we can do this for you', you're more inclined to believe it. Because when you have such a level of despair, the hope becomes greater."