MANHATTAN (CN) - The SEC says it obtained an emergency court order Thursday to stop a $26 million Ponzi that a recidivist felon, Eric Aronson, ran with cohorts through his Long Island-based PermaPave companies. In a particularly brazen move, the SEC says, when investors demanded their money, Aronson accused them of usury.
Aronson, with his brother-in-law Robert Kondratick and others, took $26 million from about 140 people in the 4-year scam, the SEC says. They claimed their product, water-filtering natural stone pavers, "had a tremendous backlog of orders for pavers imported from Australia, which could be sold in the U.S. at a substantial mark-up, yielding monthly returns to investors of 7.8 percent to 33 percent," the SEC said in a statement. "In reality, the complaint states that there was little demand for the product, and the cost of the pavers far exceeded the revenue from sales."
The SEC says that Aronson, Kondratick and another crony, Vincent Buonauro Jr., used their suckers' money to make Ponzi payments to earlier investors, but "siphoned off much of the rest for themselves, buying luxury cars, gambling trips to Las Vegas, and jewelry."
The SEC claims that Aronson also "used investors' money to make court-ordered restitution payments to victims of a previous scheme to which he pleaded guilty to conducting in 2000."
The U.S. attorney in Brooklyn filed parallel criminal charges against Aronson, Kondratick and Buonauro, who were arrested on Thursday.
In a brazen move, the SEC says, "when investors began demanding money owed to them, Aronson accused them of committing a felony by lending the PermaPave Companies money at the interest rates he promised them, which he suddenly claimed were usurious. Aronson and his attorney, Fredric Aaron, then allegedly made false statements to persuade investors to convert their securities into ones that deferred payments owed them for several years."
The SEC also sued Aaron. It also sued Interlink-US-Network, a publicly traded company that the defendants allegedly bought with money from the Ponzi scheme.