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There were annual returns of 336 percent, more than $2 billion raised in just 60 days and a list of investors that included a well-known owner of a professional sports team, authorities said.
Phillip Galles, 57, also took a page from George Santos’s book, claiming that he’d graduated from a prominent university in the Midwest, they said.
Galles’s “outlandish claims of experience, expertise and success” were all BS, a complaint on file in Washington, DC, says: He was actually running a Ponzi scheme that fleeced victims out of more than $6 million.
It turns out the investment manager whom Galles bragged to was bogus, as well. He was an undercover agent with the U.S. Postal Inspection Service in Newark.
Federal authorities arrested Galles on wire fraud charges in Chicago on Thursday, May 11, U.S. Attorney for New Jersey Philip R. Sellinger said.
They brought him before a judge there who ordered the former commodities trader detained pending trial.
Galles allegedly told his victims that he’d invest their money in commodity futures through a Chicago-based company called Tyche Asset Management.
According to Galles and some people who worked for him, Sellinger said, Tyche had “a history of success using proprietary trading strategies, with extraordinary annual rates of return exceeding 100 percent."
No, it didn’t, the U.S. attorney said. Tyche also didn’t legitimately invest in anything other than Galles’s lavish lifestyle, Sellinger said.
Galles guided a traditional Ponzi scheme, using some investor money to pay back others while living large on the rest, he explained.
In addition to the criminal case, the Commodity Futures Trading Commission filed a complaint against Tyche, Galles and eight other entities that he allegedly controlled. It charges him and the Tyche entities with defrauding more than 50 people throughout the U.S. out of more than $6 million.
Galles “falsely promoted himself as a managed futures hedge-fund magnate with billions of dollars under management,” the commission said in a release on Thursday.
Galles and Tyche “used almost none of the funds received from participants to place any trades,” the release says. “Instead, Galles has used the money to fund his lavish lifestyle, and to promote his fabricated image of a hedge fund tycoon.”
He also lied to federal regulators, it says.
The commission is seeking restitution to the victims, as well as “disgorgement of any ill-gotten gains, civil monetary penalties, permanent trading and registration bans,” and a permanent injunction against further violations.
Meanwhile, Assistant U.S. Attorney Carolyn Silane of Sellinger’s Economic Crimes Unit is handling the criminal prosecution in New Jersey.
Sellinger credited special agents of his Newark office and the postal inspectors with the investigation leading to the charges. He also thanked the Commodity Futures Trading Commission and the National Futures Association for their assistance.
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