SEC Charges Arizona Resident and his Company with Fraud
Sept. 27, 2019
File No. 3-19540
September 27, 2019 - The Securities and Exchange Commission today announced settled charges against Gary Pryor of Paradise Valley, Arizona, and his shell company, The Pinnacle Companies, LLC, for the fraudulent offer and sale of over $1.1 million in defaulted Chinese bonds to two investors.
According to the SEC's order, Pryor was a senior advisor to the American Bondholders Foundation, LLC ("ABF"), a Delaware company based in Tennessee that pursues collection of long-defaulted bonds issued by the Republic of China between 1912 and 1942. As a senior advisor to ABF, Pryor was responsible for raising funds from outside investors. According to the SEC's order, ABF uses these investor funds to, among other things, lobby the U.S. government to purchase the defaulted Chinese bonds. The SEC order finds that Pryor used his position as an ABF advisor to defraud two retail investors out of more than $1.1 million in connection with the supposed sale of the bonds. Pryor made multiple material false statements to the investors to entice them to purchase the bonds through his company, Pinnacle, including misstatements about the price of the bonds and about how the investors' funds would be used. As stated in the order, rather than purchasing and transferring the bonds to the investors, Pryor used the investors' money for his own personal use.
The SEC's order finds that Pryor and Pinnacle violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the SEC's findings, Pryor and Pinnacle consented to cease-and-desist orders and have agreed to pay, on a joint and several basis, disgorgement of $1,112,000 with prejudgment interest of $56,584, and a civil penalty of $189,427.
The SEC's investigation was conducted by Emily Rothblatt, Jake Schmidt, Scott Hlavacek, and Timothy Leiman of the Chicago Regional Office, and was supervised by Jeffrey Shank.