Lawsuit filed in fraudulent bond sale scheme

Heather Dawn Thompson

Raycen Raines

Part I of series
RAPID CITY – A lawsuit filed in October in the Wakpamni Lake Community Corporation scandal that defrauded retirement trust funds of $43 million, alleges three law firms and several individuals involved, failed to perform their due diligence in the issuance of “worthless” bonds and is waiting to go to trial.
The Wakpamni Lake Community Corporation, located on the Pine Ridge Indian Reservation, designated by the U.S. Census Bureau as one of the poorest areas in the Nation, was the victim of a complicated scheme orchestrated to use these unsica (poor) people as a front to enrich themselves.
The main perpetrators were caught and are currently serving federal jail time for securities fraud. (See www.justice.gov/usao-sdny/pr/john-galanis-sentenced-10-years-prison-his-participation-scheme-defraud-native-american)
However the trust funds that were bilked out of $43 million believe more individuals and several law firms are culpable in the scheme and have filed suit.
The case, filed by Chicago Transit Authority Retiree Health Care Trust and the Board of Trustees for the Chicago Transit Authority Retiree Health Care Trust (RCHT) is aimed at the law firms Dilworth Paxson, LLP; Timothy Anderson; and Greenberg Traurig, LLP
According to the brief filed on October 18, 2019, in the Circuit Court of Cook County, Illinois County Department, Law Division the “lawsuit arises from the Defendants’ participation in, and assistance with, the issuance of $43 million in worthless bonds (the “Bonds”) to unwitting public pension funds, including RHCT. The Bonds were not part of a legitimate public finance project, but rather a criminal scheme to enrich several individuals connected to the Defendants, including well known fraudster, John Galanis, his son, Jason Galanis (collectively, the “Galanises”), and fly by-night tribal financiers, Steven Haynes and Raycen Raines, the latter allegedly was romantically involved with the Greenberg partner [Heather Dawn Thompson] representing the issuer during the transaction.”
According to the lawsuit Heather Dawn Thompson, a member of the Cheyenne River Sioux Tribe, who once served as a federal prosecutor and currently a partner at Greenberg Affiliated in their Denver office, was hired in 2014 by Raycen Raines the CEO of the WLCC to represent them in bond transaction.
The brief states, “In or about May, 2014, [Timothy] Anderson informed Raines that he would be representing the Galanis’s and their companies in the bond transaction, and not his former client WLCC. As a result, Raines needed to find separate counsel to represent WLCC.
Heather Dawn Thompson (“Thompson”) is a partner with Greenberg affiliated with its Denver office, but lives in South Dakota near or on the Oglala Sioux’s Pine Ridge Reservation.
Thompson, who specializes in matters related to tribal law and economic development, served as Greenberg’s primary client relationship attorney for the bond transaction.
Thompson was allegedly dating Raines, WLCC’s CEO, at the time Greenberg represented WLCC in the Wakpamni bond transactions, and the two are now married.
Thompson was assisted by two partners from Greenberg’s Denver office: Michael McGinnis and Jennifer Weddle. McGinnis is an experienced bond lawyer and member of the National Association of Bond Lawyers.”
According to the lawsuit Raines had previously incurred criticism for being involved in what was termed “predatory lending” practices in the set-up of online payday loan companies which allegedly put him at odds with the leadership of the Oglala Sioux Tribe. (See projects.aljazeera.com/2014/payday-nation/sioux-tribe-payday.html)
Fearing bad publicity might hinder the bond transaction, Anderson drafted two resolutions of support commending Raines’ business practices which were sent to Raines and Thompson via email, to be signed by the leadership of the Wakpamni District and the Oglala Sioux Tribe. “Raycen – this is what I had in mind and will go a long way in calming everyone down and keeping these projects on track,” Thompson allegedly stated.
The lawsuit states, “However, instead, on June 24, 2014, the OST’s Tribal Council passed a resolution stripping Raines of authority to act with respect to tribal economic development matters, including ‘Tribal Economic Development (TED) Bonds,’ but also ‘any other economic development projects.’ (Exhibit C, June 24, 2014 OST Resolution.) The resolution specifically noted that Raines had exerted undue influence over OST’s then-president to gain support for economic development projects.”
The lawsuit alleges that neither Greenberg nor Dilworth disclosed to the bondholders or the Indenture trustee, U.S. Bank, that OST had passed a resolution stripping Raines of authority to issue TED bonds.
The lawsuit also alleges that Greenburg mislead RHCT and other investors by indicating the Oglala Sioux Tribe had issued the bonds and were therefore secure.
Count V of the indictment alleges that on the First Offering as bond council, Greenberg owed RHCT and the other investors a duty of care in preparing the offering documents and opinion letters and had an obligation to decline representation that is known or suspected to be fraudulent or criminal in nature and that it was their obligation to withdraw from council.
The suit alleges that Greenberg breached its duties to RHCT in one or more of the following ways:
• Making false or misleading statements in the opinion letter about the annuity, source of funds, and use of funds for the Bonds;
• Failing to investigate the annuity on which the opinion was based;
• Making false or misleading statements about the economic development projects backing the Bonds; and
• In general, issuing an opinion letter on the validity and enforceability of a bond transaction that a reasonably prudent bond lawyer knew or should have known was a securities fraud or financial crime.
Next week Hunter Biden implicated in Wakpamni Lake scandal. Later in series response from Wakpamni Lake Community Corporation.