The Securities and Exchange commission moved yesterday to stop an allegedly fraudulent scheme operated by Paul G. Merklinger and his company, Encore Associated Leasing LLC of Novi, Mich.
The SEC alleges that Mr. Merklinger and his son, Brian, raised more than $7.2 million from investors who thought they were investing in a tire-shredding and recycling business.
However, the SEC claims that the tire-shredding equipment was not operational, and that there was “no reasonable basis” for Mr. Merklinger’s income.
Mr. Merklinger “used more than $950,000 of investor funds for his own personal benefit, including payments for rent, back taxes and the purchase of luxury automobiles and watercraft and extravagant landscaping and furnishings for his home,” the SEC said in a statement.
Mr. Merklinger also failed to disclose that he has been banned from securities markets in Ontario, Canada, for 10 years, the commission said.
The SEC is seeking a complete disgorgement of all investor funds or assets, injunctive relief and civil penalties.
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