U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23331 / September 2, 2015
Securities and Exchange Commission v. Eric Aronson, Vincent Buonauro, Jr., Robert Kondratick, Fredric Aaron, PermaPave Industries, LLC, PermaPave USA Corp., PermaPave Distributions, 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)
District Court Rules Eric Aronson, Fredric Aaron, and Vincent Buonauro Must Pay Millions for Roles in Ponzi Scheme
The Securities and Exchange Commission today announced that U.S. District Court Judge Jed S. Rakoff has ordered that Defendants Eric Aronson, Fredric Aaron, and Vincent Buonauro must each disgorge all money received from the fraud and pay substantial civil penalties.
The Commission's Complaint, filed in October 2011, alleged that, from 2006 to 2010, PermaPave Industries and its affiliates raised more than $26 million from the sale of promissory notes and "use of funds" agreements to over 140 investors. Eric Aronson, Vincent Buonauro, and others told investors that there was a tremendous demand for the product - permeable paving stones - and that investors would be repaid from the profits generated by guaranteed product sales. In reality, there was little demand for the product, and defendants used investors' money to make "interest" and "profit" payments to earlier investors and to fund management's lavish lifestyles. In addition, shortly after an affiliate of PermaPave Industries acquired a majority stake in Interlink-US-Network, Ltd., Eric Aronson, Fredric Aaron - who was the attorney for Eric Aronson and the entity defendants and also an officer and director for several of the entity defendants - and others issued a press release stating that a company that had never heard of Interlink intended to invest $6 million in Interlink.
On August 24, 2015, the Court granted the Commission's motion for monetary relief. Finding that the entity defendants "were nothing more than a vehicle for fraud," the Court ruled that Aronson, Aaron, and Buonauro must disgorge all of the funds they received as part of the fraud and made them jointly and severally liable for all of the funds that went to unidentified persons through cash withdrawals. The Court also imposed substantial civil penalties against Aronson for his lead role in the fraud and Aaron for his "blatant abuse of his position and knowledge as a lawyer," and also imposed civil penalties against Buonauro.
On September 1, 2015, the Court issued a final judgment ordering Aronson, Aaron, and Buonauro to pay the amounts set in its August 24 ruling. Specifically, the Court ordered that Aronson must pay $18,248,270 in disgorgement and prejudgment interest and a civil penalty of $1,385,816. Aaron must pay $1,822,861 in disgorgement and prejudgment interest and a $250,000 civil penalty. Buonauro must pay $12,623,860 in disgorgement and prejudgment interest and a $10,000 civil penalty.