Don’t Loot the Scams

Fund.com was, for a while, apparently a scam. It was founded in 2004 as Eastern Services Holdings Inc., “one of many entities that Imran Husain formed and took public to sell to market manipulators.”1 In 2007, it was sold to Jason Galanis, a market manipulator who had recently been banned by the US Securities and Exchange Commission from serving as a public-company officer or director. (Galanis is currently in prison for an assortment of other frauds, and is somehow involved in a Hunter Biden situation.) Under Galanis, the company acquired the web address “www.fund.com,” changed its name to Fund.com Inc., and told people the address was worth $10 million. “The Website Address certainly had some value, but Galanis appears to have manufactured the $10 million figure through fraudulent transactions.”

And then Fund.com went around doing fraud to sell stock to retail investors — “Galanis paid kickbacks to financial advisors to get them to invest their client portfolios in the Company,” etc. — and raised money. With some of that money, Fund.com struck a deal to pay $4 million for a 60% stake in AdvisorShares Investments LLC, a perfectly legitimate active exchange-traded fund manager. I am not sure how that happened, but by 2010 AdvisorShares regretted it: “After the Company’s problems, the ETF Provider had no interest in the Company remaining an investor and sought to cancel the Company’s equity stake.” Meanwhile Fund.com’s stock fell from a high of $570 per share to a low of six cents,2 and it stopped filing its securities reports. And Galanis “created a new entity named Fund Alliance Corporation that purported to buy the Website Address for $1.5 million,” “for use in a crowd-funding scheme.”