Five individuals and three business entities duped investors into buying historical bonds issued by Germany’s 1920s Weimar Republic and prerevolutionary Russia and China, the Securities and Exchange Commission alleges.
The SEC on Dec. 13 filed charges against the eight defendants for their alleged roles in connection with the fraudulent offer and resale of the bonds and the unregistered offer and sale of securities tied to the bonds. Charged are Historic Asset Placement Services Global, LLC, and Billy Abshier, HAPS operations manager, both of Temple, Texas; Christoper W. Abshier, of Troy, Texas, former managing member of HAPS; Frederic (Fred) A. Gladle of Lakeway, Texas; Ronald Josh Pendley of Toluca Lake, California; Kevin E. Scannell of Santa Monica, California; and two entities Pendley and Scannell controlled, Sovereign Debt Solutions LP and its general partner, Ocean Park Partners, both in Los Angeles. Barbara Gladle, Fred Gladle’s wife, is named as a relief defendant.
The scheme raised more than $3.85 million from at least 85 investors between January 2017 and August 2023, the SEC alleges. HAPS and the Abshiers duped investors into believing that HAPS could redeem historical bonds by working with the federal government, foreign governments and well-known financial and accounting firms, the SEC alleges. When reselling the historical bonds, the Gladles, Pendley, and Scannell made misleading statements regarding their value and repeated HAPS’s allegedly false redemption process claims, according to the SEC.
The historical bonds in the scheme were mostly dollar-denominated bearer bonds issued in the 1920s by the German Weimar Republic and some German utilities. The German government has disavowed responsibility for these bonds since the 1950s.
Other bonds in the scheme include “Super Petchili” bonds issued by the Chinese government in the 1910s, and railroad bonds issued by the Russian government in the late 19th and early 20th centuries. After the 1949 Communist takeover in China and the 1917 Russian Revolution, the governments of those countries have refused to recognize the debts.
The defendants falsely told investors they would get redemption proceeds of up to $15 million for their bonds with an advance payment of $250,000, the SEC says. But the redemption process was a sham, no advance payment of $250,000 was ever made, and no historical bonds were ever redeemed using the HAPS process, authorities allege.
In addition, Pendley, Scannell, Sovereign Debt Solutions and Ocean Park Partners engaged in the fraudulent and unregistered offer of promissory notes and limited partnership interests. The value of those notes and partnership interests was tied to the redemption of historical bonds placed with HAPS, the SEC said. Those defendants raised $103,500 from eight investors between 2017 and 2022, the SEC said.
Abshier and HAPS also impeded their clients from reporting their misconduct to the SEC, the agency alleges. Fred Gladle and Pendley also allegedly acted as unregistered dealers in the scam, authorities allege.
The SEC is seeking a permanent injunction against all the defendants, officer and director bars against Fred Gladle, Pendley, Scannell, and Christopher Abshier, conduct-based injunctions against Pendley, Scannell, Fred Gladle, and the Abshiers, disgorgement plus prejudgment interest from Fred and Barbara Gladle, Pendley, and Scannell, and civil penalties against Fred Gladle, Pendley, Scannell, and the Abshiers.
