Par Funding founder Joseph LaForte and brother, James, strike deal to plead guilty
A hearing was set for cash advance company founder Joseph LaForte and his brother James. Terms were not disclosed.
The brothers behind Par Funding, the Philadelphia-based business cash advance company that authorities say fleeced investors out of more than a half-billion dollars and threatened customers with Mafia-style threats of intimidation and violence, have agreed to plead guilty, averting a trial set to begin next month.
Court filings indicate Joseph LaForte — a two-time felon who founded the company after his release from federal prison in 2011 — and his brother James, a purported soldier in the Gambino crime family, are scheduled to enter their pleas Wednesday during a hearing before U.S. District Judge Mark A. Kearney.
The exact terms of the deals they have struck with prosecutors remain unclear. Government lawyers declined to describe the agreements Monday, and lawyers for the two men did not immediately respond to requests for comment.
But describing Joseph LaForte’s deal in court papers Friday, Assistant U.S. Attorney Matthew T. Newcomer said it resolves three separate sets of charges he is facing — one for his alleged crimes at Par Funding; a 2020 gun case; and another involving millions in income he and his wife, Lisa McElhone, allegedly hid to avoid paying taxes.
“The parties have agreed that a specific sentencing range is appropriate disposition for all three cases,” Newcomer wrote.
The document did not elaborate on what that range might be.
A guilty plea from Joseph LaForte, 53, of Philadelphia, would mark the most significant development to date in the long-running, multipronged criminal and civil probes that led to Par Funding’s collapse and have mired the brothers in court in the years since.
Three others — McElhone; Renato “Gino” Gioe, a Gambino associate who acted as a debt collector and enforcer for the company; and Perry Abbonizio, who held himself out as a managing partner in the operation — have pleaded guilty to various crimes and are awaiting sentencing.
Essentially, prosecutors have accused the company — once a leader in the multibillion-dollar merchant cash advance industry, which offers quick loans at high interest rates to businesses deemed too risky to borrow from traditional banks — of operating as a criminal enterprise from its office in Old City.
Between 2016 and 2021, authorities say, it raised more than a half-billion dollars from investors by making “materially false and fraudulent statements” about the business’ leadership and financial health.
It then lent that money to borrowers who, when they failed to pay back those debts, were allegedly bombarded with aggressive collection efforts including public shaming campaigns, death threats, and visits from muscled goons that investigators say amounted to extortion.
Those tactics proved exceedingly lucrative.
The business paid Joseph LaForte and McElhone more than $95 million between 2016 and 2020, much of which they were separately charged with funneling through other businesses they owned and failing to fully report on their personal income taxes.
McElhone admitted her role in those tax charges in April.
Before his agreement to plead guilty, Joseph LaForte had repeatedly pushed back on the fraud allegations against him and dismissed the extortion claims from ex-borrowers as “absurd and patently false stories” from “disgruntled ex-customers.”
Prosecutors say he should never have been running the business in the first place.
While McElhone served as Par Funding’s CEO on paper, she has acknowledged she rarely set foot in the office and instead served as a proxy for LaForte.
He was legally barred from selling securities because of earlier felony convictions in 2006 for a $14 million real estate Ponzi scheme and in 2009 for operating an illegal offshore gambling business.
None of that was disclosed to investors, authorities say, nor was the truth about the financial health of the business. At swank solicitation events, LaForte often boasted of the low default rate on Par Funding’s loans and the company’s profitability.
In reality, prosecutors say, the business operated at yearly deficits between 2016 and 2020 as high as $70 million — losses driven by the company’s failure to properly underwrite loans it was issuing to borrowers. The need to collect on those loans was what drove Par Funding’s aggressive collection efforts.
One customer told authorities that Joseph LaForte allegedly threatened to break his legs over more than $94 million in debts he owed the company. Another in Miami accused James LaForte, 47, of Staten Island, N.Y., of threatening to kill him and his family if he did not pay.
And when the federal dragnet began to envelop the company in 2020 — first with a lawsuit from the U.S. Securities and Exchange Commission, then with a joint investigation by the FBI and IRS — the violence only increased.
Last year, prosecutors accused James LaForte in a brutal assault on a Center City street of an attorney tasked with recouping money for Par’s investors.
They have also said Joseph LaForte threatened to kill South Philadelphia real estate broker and developer Ori Feibush, who had been hired to manage and value more than 20 properties the government had seized from the Par Funding founder and his wife as part of the SEC case.
He believed Feibush had undervalued those assets in reports submitted to the Florida court overseeing the matter.
Last month, the court-appointed receiver overseeing efforts to repay more than 1,000 Par Funding investors as part of that civil case presented a plan to reimburse them roughly $150 million, which was recovered from the sale of those properties and other assets to more than 1,000 Par investors. He said he hopes to raise more from insurers, tax refunds, and collections on outstanding debts to pay back a remaining $100 million owed to company investors and creditors.
Both LaForte brothers have remained in federal custody since their arrests.
Joseph LaForte has separately been indicted in a 2020 case over four handguns, two shotguns, and a rifle FBI agents found in his homes while executing search warrants. As a felon, he is prohibited from owning firearms, though he has maintained that his wife was the true owner of those weapons.
James LaForte remains charged in a separate federal racketeering case in Brooklyn, where he is accused, among other things, of laundering about $1.5 million of Par Funding’s proceeds through payments to a superior in the New York mob.
Wednesday’s guilty plea is not expected to resolve that case.