SEC Receives Emergency Order to Stop Green-Product-Themed Ponzi Scheme
On October, 6, 2011, the SEC received an emergency court order to stop a Ponzi scheme that promised investors high returns on water-filtering natural stone pavers, but defrauded them of over $26 million during a four-year period. The SEC’s complaint states that, among others, convicted felon Eric Aronson bilked investors in PermaPave Companies, a web of companies based in Long Island, N.Y., and controlled by Aronson.
The scheme involved over 140 investors during 2006-2010, many of whom worked in the construction or landscaping business. Representations were made to investors that PermaPave Companies had a high volume of orders for the pavers, which would yield monthly returns to investors of 7.8% to 33%. In reality, there was not much demand for the pavers, and its cost far exceeded sales revenue.
Without the promised returns, Aronson and two other PermaPave Companies executives, Vincent Buonauro Jr., and Robert Kondratick, had to pay earlier investors with funds from new investors and then took a large portion of the funds for themselves. In doing so, they bought luxury cars, gambling trips to Las Vegas, and jewelry. Aronson also used investors’ funds to satisfy court-ordered restitution payments to victims of an earlier scheme that he operated in 2000.
According to the SEC New York Regional Office’s Director, George S. Canellos, “Aronson and his associates operated the PermaPave Companies as a classic Ponzi scheme. They created the façade of a profitable business, promised investors extraordinary rates of return, and used much of their investors’ money to fund their own lavish lifestyle.”