U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22231 / January 23, 2012
Securities and Exchange Commission v. Eric Aronson, Vincent Buonauro, Jr., Robert Kondratick, Fredric Aaron, PermaPave Industries, LLC, PermaPave USA Corp., PermaPave Distributions, Inc., Permeable Solutions, Inc., Verigreen, LLC, and Interlink-US-Network, Ltd., Defendants, and Caroline Aronson, Deborah Buonauro, DASH Development, LLC, Aron Holdings, Inc., PermaPave Construction Corp., Dymoncrete Industries, LLC, Dymon Rock LI, LLC, and Lumi-Coat, Inc., Relief Defendants, Civil Action No. 11 Civ. 7033 (S.D.N.Y. filed Oct. 6, 2011)
Court Enters Default Judgment Against PermaPave Industries, LLC and Other Related Companies in Ponzi Scheme Case
The Securities and Exchange Commission today announced that, on January 19, 2012, the Honorable Jed S. Rakoff of the United States District Court for the Southern District of New York entered a default judgment that imposes a permanent injunction against future violations of the registration and antifraud provisions of the federal securities laws against PermaPave Industries, LLC, PermaPave USA Corp., PermaPave Distributions, Inc., and Verigreen, LLC (the PermaPave Entities) and that also imposes a permanent injunction against future violations of the reporting and antifraud provisions of the federal securities laws against Interlink-US-Network, Ltd.
As to monetary relief, the judgment orders the PermaPave Entities to pay disgorgement, prejudgment interest, and civil penalties and orders Interlink to pay civil penalties. The judgment also orders relief defendants DASH Development, LLC, Aron Holdings, Inc., PermaPave Construction Corp., Dymoncrete Industries, LLC, Dymon Rock LI, LLC, and Lumi-Coat, Inc. to disgorge the ill-gotten gains they received from defendants.
This judgment resolves the Commission’s claims and grants all relief sought against the PermaPave Entities, Interlink, DASH, Aron Holdings, PermaPave Construction, Dymoncrete Industries, Dymon Rock, and Lumi-Coat in a civil action filed on October 6, 2011.
The Commission’s Complaint alleged that, from 2006 to 2010, the PermaPave Entities raised more than $26 million from the sale of promissory notes and “use of funds” agreements to over 140 investors. Their management told investors that there was a tremendous demand for the product that the PermaPave Entities ostensibly sold – permeable paving stones – and that investors would be repaid by the profits generated by the guaranteed sales of this product. In reality, however, there was little demand for the product, and defendants used investor proceeds to make “interest” and “profit” payments to earlier investors and to fund management’s lavish lifestyles. The management of the PermaPave Entities also caused Interlink to issue a Form 8-K stating that a company that had never heard of Interlink had agreed to invest $6 million in Interlink.
The judgment (i) permanently enjoins the PermaPave Entities from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5, (ii) permanently enjoins Interlink from future violations of Sections 10(b) and 13(a) of the Exchange Act and Exchange Act Rules 10b-5, 12b-20, and 13a-11, (iii) orders the PermaPave Entities to pay $7,734,983 in disgorgement, $281,268 in prejudgment interest, and $7.7 million in civil penalties, (iv) orders Interlink to pay $375,000 in civil penalties, and (v) orders relief defendants DASH, Aron Holdings, PermaPave Construction, Dymoncrete Industries, Dymon Rock, and Lumi-Coat to disgorge ill-gotten gains received from defendants totaling $4,236,252 and prejudgment interest totaling $214,233.
The Commission’s civil action continues against Defendants Eric Aronson, Vincent Buonauro, Robert Kondratick, Fredric Aaron, and Permeable Solutions, Inc. and Relief Defendants Caroline Aronson and Deborah Buonauro.
For further information, see Litigation Release No. 22117 (Oct. 6, 2011).