Barry Minkow? Jason Galanis? Just When I Thought I Had BOFI Figured Out...There's More!

Oct. 26, 2016 10:00 AM ETAxos Financial, Inc. (AX)34 Comments


  • BOFI's external auditor Gary McCormick previously worked for Barry Minkow and was featured in his book (MUST READ!).
  • Jason Galanis recently made headlines due to Aurelius’ coverage of a different SoCal bank; investors therefore should know that Galanis also has a number of undisclosed ties to BOFI.
  • Not only has BOFI funded an SPE that Galanis has used for financing, but an SPE shareholder of BOFI stock also has potential Galanis ties.
  • Tobin Smith, an accused stock manipulator, has also been directly tied to both Galanis and BOFI’s CEO; the timing of Tobin’s promotion of BOFI shares was “odd”.
  • Given the amount of noise surrounding BOFI, the CEO owes investors more color on Galanis’s relationship with BOFI management.

Aurelius recently exposed purported ties between Banc of California and Jason Galanis, a convicted fraudster who, along with his family members and acquaintances, has been tied to numerous stock frauds over the past few years (find the Gerova conviction here, the Penthouse settlement here, and the current Tribal Bond allegation here). The connections between BANC management and Galanis caused a massive collapse (almost 30%) in BANC's stock price, which speaks to how much fear the market has when it comes to paper-trail connections between Galanis (a serial fraudster) and public companies. I too have been researching Jason Galanis as his name recently came up in a loan that I was researching regarding BofI Holding (BOFI).

In this report, I will show a series of connections between BOFI and Jason Galanis that I believe date all the way back to the original Gerova fraud (2010), and carry on as recently as 2015 as a result of BOFI's involvement in a $7 million loan to Jason Galanis (now delinquent and the subject of messy foreclosure proceedings that involve the Department of Justice). Investors ought to ask/wonder how this loan is being reflected on BOFI's balance sheet and/or if management will speak to said Galanis ties during the next earnings call.

Before I dive into the Galanis discussion, I am also using this article to discuss the two primary reasons I believe BOFI stock has been incredibly strong since the last earnings release.

Part 1: Management's materiality discretion and McCormick's ties to Minkow:

Materiality discretion: BOFI's CEO carefully navigated around having to disclose the existence of any potential SEC investigation on his most recent earnings call, using carefully scripted legal language regarding materiality. I remind readers that Mr. Garrabrants deems a lawsuit that caused a ~30% one day drop in his stock price as not material enough to disclose

This article was written by

Offering the world some REAL TALK when expectations equate to irrational exuberance.

Disclosure: I am/we are short BOFI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am/we are short BOFI. All information for this article was derived from publicly available information. Investors are encouraged to conduct their own due diligence into these factors. Additional disclosure: This article represents the opinion of the author as of the date of this article. The information set forth in this article does not constitute a recommendation to buy or sell any security. This article represents the opinion of the author as of the date of this article. This article contains certain "forward-looking statements," which may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "potential," "outlook," "forecast," "plan" and other similar terms. All are subject to various factors, any or all of which could cause actual events to differ materially from projected events. This article is based upon information reasonably available to the author and obtained from sources the author believes to be reliable; however, such information and sources cannot be guaranteed as to their accuracy or completeness. The author makes no representation as to the accuracy or completeness of the information set forth in this article and undertakes no duty to update its contents. The author may also cover his/her short position at any point in time without providing notice. The author encourages all readers to do their own due diligence.

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