Thursday, June 6, 2013

Attorney Fredric Aaron of Plainview NY Indicted For PONZI Scheme

Importers Charged with Securities Fraud
Defendants Accused of Defrauding Investors of $26 Million
U.S. Attorney’s Office
April 05, 2012
·         Eastern District of New York(718) 254-7000
Three principals of a company that imported paving stones from Australia were charged with conspiracy, securities fraud, and money laundering in an indictment unsealed today in federal court in Central Islip, New York. The charges against Eric Aronson, Vincent Buonauro, and Fredric Aaron arose from their solicitation of investor money for, and their operation of, Permapave Industries and Permapave USA (“Permapave”). Permapave marketed porous paving stones in the United States that were manufactured in Australia.
The defendants are scheduled to be arraigned this afternoon before United States Magistrate Judge Gary R. Brown at the United States Courthouse at 100 Federal Plaza, Central Islip, New York.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Janice K. Fedarcyk, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office. The criminal case has been assigned to United States District Judge Arthur D. Spatt.
According to the indictment, the defendants issued promissory notes to investors and promised to use the proceeds to finance shipments of Permapave paving stones from Australia to the United States. The indictment and court filings charge that from 2006 to 2010, the defendants operated Permapave as a Ponzi scheme, raising approximately $26 million through false representations and paying back some investors from the investments of other investors because of the minimal revenues Permapave generated. The government’s pleadings also allege that the defendants converted more than $3 million of investor funds for their personal use, including home mortgage payments, down payment on a residence, automobile payments, and credit card purchases for watches, jewelry, clothing, vacation resorts, and air travel.
“The defendants allegedly abused the trust placed in them by their investors by lying and stealing the investors’ money. They promised a sound investment in a quality product but instead shuttled the investors from one deceptive securities offering to another in an attempt to maintain their house of cards. This office is committed to protecting the investing public and will tirelessly investigate and prosecute those who defraud investors who believed they were investing in a legitimate enterprise,” stated United States Attorney Lynch.
FBI Assistant Director in Charge Fedarcyk stated, “The defendants are alleged to have misled investors and, in paying some of them with proceeds from others, engaged in a Ponzi scheme to conceal how flimsy the investment was. The FBI is always at the ready to uncover unscrupulous investment schemes.”
The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, each defendant faces a maximum of 20 years’ imprisonment on the most serious count.
The government’s case is being prosecuted by Assistant United States Attorneys William P. Campos and Karen Hennigan.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The Defendants:
Eric Aronson, age 43
Vincent Buonauro, age 40
Fredric Aaron, age 48
Feds: 3 LI Men Ran $26M Ponzi Scheme
By Timothy Bolger on April 6th, 2012

Three Long Island men have been accused of running a Ponzi scheme that ripped off investors in their paving stone import company to the tune of $26 million.
FBI agents arrested the threesome, who were arraigned Thursday at federal court in Central Islip, where the indictment was unsealed charging them with conspiracy, securities fraud and money laundering. The three men pleaded not guilty.
The suspects include Eric Aronson, 43, of Syosset; Vincent Buonauro, 40, of West Islip; and Fredric Aaron, 48, of Plainview.
 “They promised a sound investment in a quality product but instead shuttled the investors from one deceptive securities offering to another in an attempt to maintain their house of cards,” said Loretta Lynch, U.S. Attorney for the Eastern District of New York.
Prosecutors said the trio promised to repay investors in Permapave Industries, which imported paving stones manufactured in Australia. Instead, more than $3 million of investor funds were allegedly used for personal expenses.
The expenses included home mortgage payments, down payment on a residence, automobile payments and credit card purchases for watches, jewelry, clothing, vacation resorts and air travel, prosecutors said.
Kevin Keating, the Garden City-based attorney representing Aronson, said his client  and never should have been charged.
“He was an attorney who performed legal services and was paid a modest legal fee,” Keating said. “He had no involvement in the alleged underlying fraud and made none of the millions allegedly earned by the others.”
Marc Gottlieb, the Mahattan-based attorney for Buonauro, said he is sorry if any clients lost money, but there are a lot of allegations in the case that he believes are not accurate.
“There are a lot of facts and circumstances that are not contained in the government’s case,” Gottlieb said.
Aaron’s attorney was not immediately available for comment. The three men face up to 20 years’ imprisonment if convicted.

URGENT >> BULLETIN >> MOVING: Feds Make 3 Arrests In New York In Alleged ‘Green’ Ponzi Caper; SEC Files Emergency Parallel Action To Halt Alleged $26 Million Swindle Over Which Convicted Felon Presided With Alleged Help From Attorney

URGENT >> BULLETIN >> MOVING: A bizarre case featuring spectacular allegations of Ponzi fraud coupled with verbal strong-arming of victims is unfolding in New York. Three people have been arrested by federal agents, and the SEC has filed an emergency action in federal court to halt what it described as a “green-product themed Ponzi scheme” involving stone pavers imported from Australia.
Arrested by federal agents were Eric Aronson, 43, of Syosset, N.Y.; Vincent Buonauro Jr., 40, of West Islip, N.Y.; and Robert Kondratick, 41, of  Syosset. All three men are executives of a Long Island group of firms known as “PermaPave Companies,” investigators said.
Kondratick is Aronson’s brother-in-law, investigators said.
Aronson is a convicted felon who used proceeds from the emerging scheme to pay restitution to victims of a scheme to which “he pleaded guilty to conducting in 2000″ and was sentenced to 40 months in prison, the SEC said.
The allegation against Aronson that he used fraud proceeds from a new scam to pay restitution to victims of a previous swindle marked the second time today that the SEC made such a claim. This morning, the SEC accused Roger D. Shearer, who is implicated in a separate New York scam, of doing the same thing.
And a separate allegation in the Aronson complaint against an attorney marked the second time today that a member of the bar had been accused of helping fleece investors. In the SEC’s Aronson complaint, attorney Fredric Aaron, 47, of Port Washington, N.Y., is accused of helping Aronson and other co-defendants dupe investors.
“Aaron drafted the agreements used to defraud investors, participated in the solicitations conducted by Aronson, repeated during his extensive dealings with investors many of the misleading statements made by Aronson, and developed strategies for concealing the fraud,” the SEC charged.
Earlier today, the SEC accused Miami attorney Stewart A. Merkin of aiding the alleged Shearer fraud.
In the case against Aronson, Buonauro, Kondratick, Aaron and the PermaPave firms, the SEC said  140 individuals from the construction and landscaping trades became investors between 2006 and 2010 and were bilked out of $26 million.
“Aronson and his associates operated the PermaPave Companies as a classic Ponzi scheme,” said George S. Canellos, director of the SEC’s New York Regional Office. “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.”
Aronson, Buonauro and Kondratick “used new investments to make payments to earlier investors and then siphoned off much of the rest for themselves, buying luxury cars, gambling trips to Las Vegas, and jewelry,” the SEC charged.
U.S. District Judge Jed S. Rakoff  froze the assets of the defendants and eight relief defendants.
“Investors were told that PermaPave Companies 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% to 33%,” the SEC said. “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.”
Moreover, the SEC said, Aronson tried to turn the table on investors by accusing them of felonies when they asked for their money.
“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,” the SEC charged. “Aronson and . . . Aaron then allegedly made false statements to persuade investors to convert their securities into ones that deferred payments owed them for several years.”
Most of the investors “had little or no prior investment experience” and were told that “they were purchasing high-yield instruments that were free of risk,” the SEC charged.
“The PermaPave Entities operated from the same offices, shared the same employees, commingled assets, and purported to sell PermaPave pavers, which are squares comprised of small rocks glued together that purportedly assist with storm drainage,” the SEC charged.
Of the $26 million raised in the scheme, only $600,000 was used to purchase pavers, the SEC charged.
Read the SEC complaint. 

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Full disclosure: I worked with Attorney Aaron on two 3020-a cases at the NYC Department of Education, and when he tried to shake down our clients, I questioned him on his actions. He verbally abused me and threatened me. I found the indictment today, June 6, 2013, and will assist any officer of the law or client of Mr. Aaron in getting this man in jail for a long time.

Betsy Combier

1 comment:

  1. Aronson pleaded guilty to Security Fraud and will be sentenced in Jan to 10 to 15 word on possible restitution.....Fred Aaron was a BIG part of the permapave scam.....I hope he gets what he deserves.....