Par Funding’s LaForte brothers could spend more than a decade in prison under a deal cut with prosecutors — if a judge accepts it

The brothers behind the now-defunct Philadelphia business lender Par Funding agreed Wednesday to each potentially serve more than a decade in prison as part of an agreement to avoid trial on the federal racketeering and fraud charges that hastened their company’s collapse.

But the fates of Joseph LaForte, 53, and his brother James, 47, aren’t cemented just yet.

The judge overseeing their case warned he still had significant reservations that could prompt him to reject one of their deals before they face sentencing next year.

U.S. District Judge Mark A. Kearney took issue with the sentencing range agreed to by prosecutors and James LaForte, who agreed to serve anywhere from nine to roughly 11½ years in prison after pleading guilty Wednesday to counts including racketeering conspiracy, securities fraud, extortion, retaliation, and obstruction of justice.

As part of his deal, he admitted to brutally attacking a Center City lawyer tasked with recovering assets from his brother to repay Par Funding’s defrauded investors and acknowledged he had separately threatened the family of a witness cooperating in the case.

Kearney questioned whether a sentence as low as nine years was enough to punish a defendant who had exhibited such blatant disrespect toward the authority of the courts.

“It sends the wrong message about the protection of the judicial system … and witnesses,” the judge said.

That warning set off a scramble in the courtroom as prosecutors and defense lawyers huddled to consider the ramifications should the judge throw out the agreement they had negotiated over months.

Under its terms, both Joseph LaForte, Par Funding’s founder and functional CEO, and his brother had agreed to plead guilty contingent upon the judge accepting the prison sentences recommended by both parties.

Kearney said Wednesday he was ready to accept the 13½- to 15½-year sentencing range outlined in Joseph LaForte’s deal after he pleaded guilty to counts including racketeering, securities and tax fraud, perjury, and obstruction of justice.

But should the judge ultimately reject the plea agreement for James LaForte, prosecutors have reserved the right to withdraw the deals of both men. Even if they chose not to, James LaForte could still opt to withdraw his guilty plea and take his case to trial should Kearney refuse to accept his deal.

Nevertheless, prosecutors expressed confidence Wednesday they would ultimately be able to convince the judge that the plea deals they’d proposed represent the best possible outcome of the case.

Should they succeed, the deals Kearney conditionally accepted Wednesday would resolve a sprawling array of criminal charges lodged against the LaFortes in a series of indictments over the last four years.

“The LaFortes’ corrupt enterprise was built on a foundation of lies, threats, and incredible greed,” U.S. Attorney Jacqueline Romero said in a statement Wednesday. “The breadth of the criminal activity here is astounding — from financial fraud to physical violence, obstruction of justice, and more. On behalf of those victimized, justice demands that these perpetrators be held accountable.”

Essentially, prosecutors maintain Par Funding, once a leader in the multibillion-dollar merchant cash advance industry, operated as a criminal enterprise, defrauding its investors, extorting its customers, and raking in millions in profits on which its principals failed to pay taxes.

Joseph LaForte launched the business — offering quick loans at high interest rates to businesses deemed too risky to borrow from traditional banks — after his release from prison in 2011 on convictions for a $14 million real estate Ponzi scheme and operating an illegal offshore gambling operation.

But despite raising more than a half-billion in investments, Joseph LaForte admitted Wednesday that his company’s reputation had largely been built on fraud.

Legally barred from securities trading as a felon, he hid his involvement — and his criminal record — from investors. Instead, his wife, Lisa McElhone, was listed as the company’s CEO, though she had little to do with its day-to-day operations.

And even as Par Funding boasted of its profitability and the low default rate on its loans, the business was actually operating at yearly deficits as high as $70 million between 2016 and 2020 — a fact Joseph LaForte acknowledged Wednesday he’d hidden from company backers.

Meanwhile, the company deployed aggressive tactics — from public shaming campaigns to death threats — to collect on the outstanding debts owed by its loan customers.

One customer told authorities Joseph LaForte threatened to break his legs over more than $94 million in debts he owed the company. Another in Miami accused James LaForte of threatening to kill him and his family if he did not pay.

And all the while, Joseph LaForte admitted, he and McElhone were hiding millions of dollars they had collected from the company from the IRS and state taxing authorities.

By 2020, though, it was clear that federal authorities had caught on. That year, the U.S. Securities and Exchange Commission filed suit against the business and its principals, and a federal judge in Florida had appointed a receiver to take over the company and mine its assets to for millions to repay defrauded investors. A series of raids on Par Funding’s Old City offices and Joseph LaForte’s Haverford home revealed prosecutors were also building a criminal case.

But the threat of civil and criminal penalties did little to chasten the LaFortes.

As part of their plea agreements Wednesday, the brothers admitted to plotting an attack last year on one of the lawyers involved in the SEC’s civil case.

Gaetan Alfano, a partner at the Center City firm of Pietragallo, Gordon, Alfano, Bosick, & Raspanti LLP, had been working to identify assets for possible seizure to repay the company’s investors.

James LaForte sneaked up behind him as he left a contentious court hearing in 2023 and bashed Alfano in the head with a metal object, inflicting injuries that required seven staples to the head and an MRI scan to treat.

Then, after one of Par Funding’s securities salesmen, Perry Abbonizio, pleaded guilty that same month and agreed to cooperate with prosecutors in their case against the brothers, James LaForte anonymously threatened in a series of phone calls to harm Abbonizio’s daughters.

Both brothers have remained in custody since their arrests last year and said little in court Wednesday as they agreed with prosecutors’ summation of their crimes.

“Is everything you’ve told me the truth?” Kearney, the judge, asked Joseph LaForte at the conclusion of his hearing.

The Par Funding founder, seated next to his attorney, Joseph Corozzo, in an olive prison jumpsuit, responded with a terse: “Yes.”