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Harold Bailey (B.J.) Gallison II and several of his cohorts from Costa Rica, Las Vegas, Miami, and New York have been charged with running an international stock scam, according to the FBI in a news release sent out today (July 14).

Gallison was the son of two La Jolla socialites who were frequently featured in the society columns of Burl Stiff, the late amanuensis of the Beautiful People for the Union-Tribune. Harold Bailey Gallison Sr., former executive director of the La Jolla Town Council, loaned money to his son to start a brokerage, La Jolla Capital, later named Pacific Cortez Securities. It operated in the 1990s.

Dealing heavily in penny stocks, the brokerage was a bucket shop with which Gallison's mother, Janet, was involved, according to a source in the San Diego district attorney's office. The California Department of Corporations in 1999 decreed that the brokerage should be shut down for widespread breaking of securities laws. A court-appointed monitor confirmed that the brokerage's books were cooked. When it was shut down, creditors got 2.5 cents on the dollar.

Gallison and several others went to prison for their roles in manipulating a stock named Natural Born Carvers. Upon getting out, Gallison headed an online brokerage house, based in Costa Rica, named GISBeX. Some suspected he had started it while in prison.

Today, the Justice Department's criminal division in Virginia unsealed an indictment against Gallison, now living in Valley Center. It charges him and several others with running a pump 'n' dump scheme on a stock called Warrior Girl. He is also charged with conspiracy to commit wire fraud and securities fraud in the running of another pump 'n' dump scheme.

According to allegations in the indictment, the market manipulation was facilitated through an offshore brokerage and money-laundering platform controlled by Gallison. Defendants allegedly used the platform to create nominee accounts in the names of shell companies, thereby concealing the source and ownership of the securities.

According to the indictment, Gallison told one of his cohorts that the two could hold private conversations through Gallison's internal phone system that "the Fed cannot get a wiretap on."

One of the other defendants, Anna Hiskey, was working as a stripper when Gallison met her in the mid-1990s, according to a source of mine who gave information to the FBI.

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Comments

AlexClarke July 15, 2015 @ 5:33 a.m.

And the Republicans want us to manage our own retirement accounts and some would like us to be able to invest part of our Social Security.

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Don Bauder July 15, 2015 @ 6:16 a.m.

AlexClarke: Good point. Stock swindles, such as pump 'n dumps, prey particularly on the elderly. Telemarketers pay big bucks for lists of older people suffering from dementia. They are easy to con. Best, Don Bauder

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teribuhl July 15, 2015 @ 4:03 p.m.

Great color and reporting on B.J. and his cohorts Don. I see you have covered these characters for a while and I enjoy your writing style. The DOJ confirmed for us at www.growthcapitalist.com this morning that Anna is still at large and has not been arrested. They also haven't found the Kruse duo who were the issuers of Warrior Girl. B.J. 's detention hearing is Friday in San Diego. I hope you attend and give us a update. It feels like the DOJ is going to ask for no bail.

your new fan from NYC, Teri Buhl

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Don Bauder July 15, 2015 @ 9:39 p.m.

teribuhl: There is also a Securities and Exchange Commission case. Robin Rushing, who was with Gallison at La Jolla Capital, and earlier at Burnett Grey, is named in the SEC suit.

When I was talking to someone at the FBI, I said, "The only thing that would surprise me about Gallison is if he would go straight." When he got out of prison, nobody that I knew expected him to reform. Best, Don Bauder

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teribuhl July 17, 2015 @ 10:04 a.m.

Feels like Robin became a doj informant- or they flipped her in return for no criminal arrest. Doesn't add up she was in the SEC civil suit as a lead conspirator and not arrested. We think others who helped build the DOJ case came from the arrest of awesomepennystock.com owner and fellow microcap promoters last year.

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Don Bauder July 17, 2015 @ 7:52 p.m.

teribuhl: I have been in communication with at least one person who shared information with the FBI. I do not know that Rushing kept herself out of the criminal case by cooperating with the FBI, although that is possible.

Incidentally, I have heard that Gallison was denied bail today (July 17) but I do not know that that is true. I tried through two government officials to get a report and could not. Best, Don Bauder

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teribuhl July 18, 2015 @ 10:54 a.m.

Don - the doj won their motion to keep Gallison in custody for flight risk yesterday. And BJ hired ex sec lawyer Steven Goldsobel who has represented other penny stock bad actors before. Look in pacer in so-cal district court instead of eastern va (where most of the court motions are filed for this case). The court notes under a docket search will show you no bail.

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Don Bauder July 18, 2015 @ 12:45 p.m.

teribuhl: You information is quite helpful. Every time I read about an ex-SEC lawyer defending people like Gallison, I gag. These lawyers probably learned everything they know about securities when they were at the SEC. Then they get wooed for bigger money, defending the fast-buck bandits they used to pursue.

It's called the revolving door. Matt Taibbi recently reported that Eric Holder had a high-paying position in the banking/securities industry before he became Obama's AG. While AG, he made sure Wall Street firms and their partners got off with light wrist slaps, if that. Now he is returning to his old position, which was kept open for him while he was in Washington. Best, Don Bauder

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