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Par Funding founder Joseph LaForte arrested on weapons charges amid ongoing SEC probe of $500 million fraud

Investigators found seven loaded guns — including four handguns, two shotguns and a rifle — in the home of Joseph W. LaForte Jr., 50, who launched Par Funding after his release from prison.

Investigators found seven guns – including four handguns, two shotguns and a rifle -- in the home of Joseph LaForte, who launched Par Funding with his wife after his release from prison in 2011.
Investigators found seven guns – including four handguns, two shotguns and a rifle -- in the home of Joseph LaForte, who launched Par Funding with his wife after his release from prison in 2011.Read moreELLIS KAPLAN / New York Post

A convicted scammer and the founder of a Philadelphia lending company at the center of an alleged $500 million financial fraud was arrested by FBI agents on Friday on weapons charges tied to a search of his Haverford home last week.

Investigators found seven loaded guns — four handguns, two shotguns, and a rifle — in the home of Joseph W. LaForte Jr., 50, who launched Par Funding with his wife after his release from prison in 2011.

Because he has been convicted of felonies in New Jersey and New York, it is illegal for him to possess firearms.

Authorities would not say Friday whether the July 28 search of LaForte’s residence was connected to an ongoing FBI and U.S. Securities and Exchange Commission investigation regarding his company.

But according to court documents in the weapons case, the guns were discovered by agents on the same day that the FBI raided the lending firm’s Old City offices last week. He was arrested “without incident” at his residence Friday morning, a spokesperson for the FBI’s Philadelphia office said.

LaForte’s attorney, Michael Engle, declined to comment. LaForte remained in federal custody with a bail hearing scheduled for next week.

Sources familiar with the matter said a federal judge in Newark, N.J. had authorized the arrest of another man with ties to Par Funding, though few details were available about this.

LaForte’s arrest comes two weeks after the SEC sued him and his wife and company cofounder, Lisa McElhone, 41, in federal court in Miami along with several other people whom the agency accused of gulling 1,200 investors who put money into Par Funding.

The suit alleges that the company raised funds by misleading investors about the safety of their money while lending it to small businesses across the country at interest rates sometimes as high as 400%.

LaForte and his partners lied about the default rate on Par Funding’s loans, SEC lawyers said, and kept investors in the dark about LaForte’s criminal record, stemming from separate convictions in a $14 million real estate Ponzi scheme in 2006 and for operating an illegal offshore gambling operation in 2009.

The federal agency also alleged that Par Funding threatened borrowers who failed to pay up. In 2018, Bloomberg News reported that a felon who collected debts for Par insinuated that harm could come to a debtor’s family. “These are the kind of things which strongly affect wives and children,” the collector was quoted as saying.

Though LaForte and McElhone have not been charged with crimes related to the fraud, the SEC’s sweeping civil complaint references an FBI confidential source and undercover operatives who spoke with the network’s pitchmen while posing as investors.

Shane Heskin, an attorney with White & Williams in Center City, said several of his clients who are small company borrowers from Par received threats of violence.

“Two of my clients said [a collector] threatened to blow up their houses,” Heskin said. “They will be sleeping a lot safer tonight.”

In the 2006 case, LaForte and his brother, and their father were convicted in what authorities said was a $14 million real estate ripoff that defrauded three dozen clients involved in home sales and lending institutions. The father was the son of a reputed crew leader in the Gambino crime family. LaForte has never been accused by prosecutors of having mob ties.

While serving a sentence in a New York state prison for that crime, LaForte pleaded guilty in federal court in New Jersey in 2009 to helping direct an illegal offshore internet-based gambling operation.

After serving more than two years in prison terms for the two offenses, LaForte and his wife founded Par Funding.

According to the SEC complaint, LaForte used aliases — one was “Joe Mack” — to hide his past from investors.

In a 2018 article, Bloomberg News quoted LaForte as saying: “It’s unfair that this stuff stays around forever. Google my name. Look what comes up: mugshots.”

In charging LaForte on Friday, federal authorities said they found two Beretta 12-gauge shotguns, a Smith & Wesson rifle, a .380-caliber Beretta handgun, and three Smith & Wesson handguns of various calibers.

The agents found them at a house purchased by McElhone in 2016 for $2.4 million, records show.

Read LaForte’s indictment: