After serving jail time for a Ponzi scheme, a New York man became a self-help guru and contrived a new scam to repay the victims of his first crime, according to the SEC.
Eric J. Aronson and his two cohorts have to repay millions in ill-gotten gains for operating the massive Ponzi scheme, for which he also faces criminal charges, the SEC announced Wednesday.
Aronson, of New York City, was ordered by a federal judge, ruling on lawsuit brought by the SEC last week, to disgorge $18.2 million and pay a penalty of nearly $1.4 million for his part in a Ponzi scheme that raised more than $26 million from investors. In addition to using the money to fund a lavish lifestyle of gambling trips, luxury cars and jewelry, part of the money from this scheme was used to make court-ordered restitution payments to victims of a previous financial scheme to which Aronson pled guilty in 2000, serving over three years in prison, according to the SEC.
After he was let out of prison, Aronson became a self-help guru and published a book, "Dash," that supposedly teaches people how to make the most of their lives. Aronson also created Dash Systems LLC, a motivational and coaching company. He appreared on CNN, Fox, NBC, CBS and ABC as a motivational coach. According to a New York Times profile on him, Aronson said he was transformed in prison and decided to focus on helping people after he was released.
The most recent penalties were imposed by U.S. District Court Judge Jed S. Rakoff in the Southern District of New York on August 24. Along with the penalties for Aronson, Vincent Buonauro, his partner, must pay $12.6 million in disgorgement and a $10,000 civil penalty, and Fredric Aaron, his former lawyer, must pay $1.8 million in disgorgement and a civil penalty of $250,000.
The second Ponzi scheme, carried out between 2006 and 2010, involved the sale of promissory notes and “use of funds” agreements with more than 140 investors, who thought they were investing in PermaPave Industries, a group of companies that produced water permeable paving stones imported from Australia, according to the SEC. Investors were promised returns of 33 percent.
The three partners told investors there was a tremendous demand for the product and that they 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 for themselves and to make payments to earlier investors, the SEC says.