MANHATTAN (CN) – A federal judge entered default judgment against PermaPave Industries and affiliates, which the SEC accused of running a $26 million Ponzi scheme.
PermaPave, PermaPave USA Corp., PermaPave Distributions, and Verigreen were sternly ordered not to do it again.
Interlink-US-Network Ltd. was also ordered not to break securities laws.
The SEC sued PermaPave in October 2011, claiming it had raised more than $26 million from selling promissory notes and “use of funds” agreements to more than 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,” the SEC said in a statement. “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.”
U.S. District Judge Jed Rakoff ordered the defendants to disgorge $7.73 million and pay $281,000 in prejudgment interest and $7.7 million in civil penalties. Interlink was fined $275,000 in civil penalties.
The judgment 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 more than $4.44 million in ill-gotten gains.
The SEC says its civil action against defendants Eric Aronson, Vincent Buonauro, Robert Kondratick, Fredric Aaron, and Permeable Solutions Inc. and relief defendants Caroline Aronson and Deborah Buonauro continues.