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What's happening

Shares of Banc of California, Inc. (BANC) closed down by about 29% as of 4:00 p.m. EDT after a blog post drew links between the bank and a serial fraudster, Jason Galanis.

So what

Banc of California may have some very troubling ties to a family known for fraud.

Jason Galanis is the son of John Galanis, whole stole millions of dollars from banks and investors in the 1970s and 1980s, and even fraudulently took control of the Columbia Federal Savings Bank.

Fraud appears to be a family business, as both men have lengthy histories of involvement in white-collar crime. The father and son duo recently plead guilty to charges stemming from their role in taking control of Gerova Financial, a reinsurance company, and later defrauding shareholders.

As recently as May, Jason and John Galanis were charged by the Securities and Exchange Commission and Department of Justice for their involvement in a Ponzi scheme. The blog post points to evidence that the Ponzi scheme was run out of the same office building as Banc of California's headquarters.

The post draws a number of links between Jason Galanis and Banc of California's CEO, Steven Sugarman. Perhaps the most troubling involves an entity known as COR Capital. In 2010, COR Capital led a major investment in the bank that would become Banc of California, and Sugarman was installed as CEO. The author details evidence suggesting that Galanis controlled COR Capital, drawing a direct link between Banc of California's CEO and a serial fraudster known for financial industry crimes.

Now what

With so many Galanis-related entities proving to be vehicles for fraud, any relationship between Banc of California and the Galanis family is cause for deep concern. The market seems to think so, too.

After trading down by about 20% for most of afternoon, shares of the bank took a nosedive in the last 30 minutes of trading to close down by 29%. It seems likely that selling picked up as Wall Street came to realize that the bank, which hasn't put out a statement on any relationship with the Galanis family, wouldn't address the matter before market close.

Skeptical investors would have plenty of reason to conclude that Banc of California's silence may foreshadow even more problems.