Lancaster ATM company lays off staff and closes. Pa. Turnpike’s machines reopen.

Paramount Management Group, the troubled Lancaster automated teller machine company financed by more than 2,700 individual investors, including Plain business owners in its home county, has laid off all staff and shut down, according to former employees and investors.

Staff gathered at the company’s offices Dec. 13 and learned from Paramount president Steve Gernes that they were out of a job. The company employed around 50, according to Jorge Fernandez, a former Paramount chief development officer.

The shutdown appeared to doom hopes that the company could be reorganized and resume at least partial payments to investors whose principal and profit payments stopped in April.

“Everyone at Paramount was laid off or quit,” said Matt Haverstick, an attorney hired by the managers of 25 investment funds that financed Paramount ATM machines to represent the funds. “I’m not sure we can salvage anything.”

Paramount customers, including the Pennsylvania Turnpike and the Reading-based Redner’s Markets grocery chain, were left without cash starting Nov. 27, after Paramount’s founder, Lancaster investor Darryl Heller, failed to deliver $138 million in overdue payments to the investors. Key Paramount business partners stopped supplying its ATMs.

The company had been paying investors 8% annual interest — which marketing materials calculated worked out to an after-tax yield of more than 18%, if investors used an equipment-depreciation tax strategy.

Heller, who built a constellation of cash machine, crypto, cannabis, food, and hunting-related businesses, faces financial claims from lenders or investors in at least three states.

Investors in Paramount say they have been contacted by federal investigators attempting to track cash flows among the companies. Heller declined to testify at a hearing in Lancaster County Common Pleas Court earlier this month, citing his Fifth Amendment right against self-incrimination. Two lawyers who represent him declined to comment for this story.

The turnpike commission said in a statement that as of Dec. 13 a new supplier had refilled the 23 ATMs at 17 highway rest areas. Those ATMs charge $3.75 per use, of which the turnpike keeps $2, plus half of any advertising revenues. Two ATMs serve turnpike employees for free.

Revenues from the rest stop machines fell more than two-thirds since the turnpike stopped accepting cash tolls during the COVID pandemic, state records show.

Dave Zook and other Paramount managers, including veteran banker Bill Poole, Jerry Hostetter, and Buck Joffrey, have been paying lawyers including Haverstick to represent the funds. At least some of the managers have separately retained their own counsel.

In his email, Zook blamed Heller’s “gross mismanagement” for the company’s troubles, adding that Paramount’s ATM network was “in a state of disarray” due to failure to pay merchants, cash suppliers, and other services “for months.” He noted the network faced court-imposed fines of $100,000 a day for failing to deliver information on the company’s ATMs.

Zook did not respond to requests for comment regarding his own and his Paramount colleagues’ role in raising hundreds of millions of dollars from small investors for the company and others run by Heller. Haverstick, the funds’ lawyer, said Paramount had assured investors the company at its peak had a total of 38,000 ATMs.

But information collected after Heller was forced out of the company by a Lancaster Common Pleas Court judge last month suggest there may have been fewer than 1,000 ATMs left in service after Heller sold parts of the system last summer, and servicing companies began taking other Paramount ATMs offline, the lawyer added.

Investors and employees of Heller-backed companies said they have been interviewed by Securities and Exchange Commission and FBI agents asking what happened to company funds.