Restraining order obtained against wood-pellet company

Nick Rees Jan. 4, 2010, 12:00pm

Andrew Cuomo (D)

BUFFALO, N.Y. (Legal Newsline) - A temporary restraining order has been obtained by Attorney General Andrew M. Cuomo against a western New York wood-pellet fuel company that failed to deliver any products or refunds after he had previously sued for the company for taking over $200,000 for consumers.

The temporary restraining order signed by Erie County Supreme Court Justice Sheila A. DiTullio bans Allegany Pellets LLC, and owners Paul and Iasia Ceglia, from accepting advance payments from consumers, destroying business records or property, and transferring any of their assets.

Consumers were encouraged by Allegany Pellets and the Ceglias in Spring 2009 to pre-order wood-pellets, eventually taking in approximately $200,000 in advance payments from dozen of consumers. The company promised to deliver 1,900 tons of the pellets in subsequent months to allow homeowners to prepare for the 2009-2010 winter season. Allegany, however, failed to deliver the pellets or to issue refunds.

"This company and its owners repeatedly lied to consumers and continued to solicit new orders despite an inability to deliver wood pellets that were bought and paid for months before the winter heating season began," Cuomo said. "My office is seeking restitution, penalties, and additional financial safeguards to ensure this company cannot scam anyone in the future."

An investigation by Cuomo revealed that Allegany Pellets sent customers who pre-paid for pellets a letter in September that informed that that products would not be delivered until the end of the year. The letter also said that Allegany had incurred significant layoffs and, as a result, asked consumers to "dig deep" while the company attempted to make good on their orders.

The investigation revealed that, in reality, Paul and Iasia Ceglia were the only employees at Allegany Pellets and, despite their requests for consumers to "dig deep," were themselves owners of extensive real estate holdings. The Ceglias were found to own 75 acres of oceanfront property in Novia Scotia, 30 acres and 70 rental properties in Wellsville and their own residence on two acres in Wellsville.

The Ceglias, rather than using the properties as collateral to provide refunds, only offered a vague promise that they would deliver the pellets to consumers at a future date.

Allegany Pellets also continued to solicit pre-order sales and accept payments from consumers following the issuing of the letter detailing the company's dire situation.

Restitution is sought on behalf of all impacted consumers by Cuomo's lawsuit, which also seeks penalties and costs to the state. The suit also seeks to bar the Ceglias and Allegany Pellet from operating in New York state unless a $200,000 performance bond is posted.

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