Man Pleads Guilty In $3.4M Scheme

An Old Westbury man pleaded guilty yesterday to a scheme in which he defrauded investors of about $3.4 million by fraudulently selling securities in two private placements issued by two Long Island businesses.

Eric Aronson, 29, pleaded guilty yesterday in U.S. District Court in Manhattan to three counts of a federal criminal information containing fraud charges before District Court Judge Deborah Batts.

According to the criminal information and Aronson's statements yesterday, between 1997 to 1998 he and other brokers at Creative Capital Management Inc., a Plainview broker-dealer, raised about $2.4 million from investors for the private placement making false claims about the two businesses-Satellite Recovery Network Inc., or SRNI, of Plainview and TradeandSwap.com Inc. of Old Westbury.

Aronson is the chairman and chief executive of SRNI, which purportedly is in the business of selling satellite-tracking devices to be installed in cars. He is also the president of TradeandSwap.com of Old Westbury, purportedly an online bartering site.

The complaint charges that Aronson and other brokers at Creative Capital made false and misleading statements claiming: that an SRNI investment was risk-free or guaranteed; that it had already sold tens of thousands of units when it had sold none; that all paperwork concerning SRNI's stock had been submitted for federal approval when it had not; and that all the proceeds of the private placement were in an escrow account when none existed.

Aronson also admitted that he and his co-conspirators failed to tell SRNI investors that they had diverted $1.7 million in investors' funds to pay for more than $130,000 in renovation, landscaping and furniture for his Old Westbury mansion. He also admitted spending $400,000 at a jewelry company and paying SRNI employees and Creative Capital salesmen more than $460,000 for marketing SRNI common stock.

Aronson continued in these activities although he had been specifically ordered by a federal magistrate to refrain from selling securities or raising money.

He also claimed that about 99 percent of the private placement's proceeds were to be invested in TradeandSwap.com when all the checks had been deposited into Aronson's personal account. He admitted taking more than $72,000 for his personal use.

He faces up to 5 years' imprisonment and fines equal to either $250,000 or twice the gain for each of the three fraud counts. Judge Batts set sentencing for Jan. 10, 2000.