Par Funding’s founder faces new charges — including one used to prosecute members of the Mafia

The founder of beleaguered Philadelphia-based business cash advance company Par Funding has been hit with new federal charges just weeks before he was set to go to trial on allegations he oversaw what authorities have described as an “astronomical fraud” that fleeced investors out of hundreds of millions of dollars and threatened borrowers with mob-style tactics of intimidation and violence.

In a superseding indictment unsealed Monday, prosecutors charged Joseph LaForte, 53, with a new count of racketeering conspiracy, a law originally passed in the 1970s to target members of the Mafia.

Though the bulk of the new indictment mirrors allegations that authorities first laid out in a sweeping set of charges they filed against LaForte and other company principals last year, the additional racketeering count alone threatens to send him to prison for as long as 20 years.

LaForte’s brother, James LaForte, 47, whom federal prosecutors in Brooklyn have described in a separate case as a soldier for New York’s Gambino crime family, and Par Funding’s chief financial officer, Joseph Cole Barleta, 40, were also named as codefendants in the newly filed charge.

The count is “the most serious charge we could bring against these defendants and the most righteous charge,” Assistant U.S. Attorney Matthew Newcomer said during a Monday court hearing in Philadelphia.

» READ MORE: Par Funding investors are eager for a plan to get some of their money back

Essentially, the new indictment recharacterizes the government’s previous claims about Par Funding, 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.

Before, prosecutors had accused the LaForte brothers and Cole — all three of whom maintain their innocence and have vowed to take their case to trial — of conspiring to defraud investors with “materially false and fraudulent” statements about the business’ leadership and financial health while also bombarding the company owners who borrowed from them with aggressive collection efforts including public shaming campaigns and death threats.

Now, government lawyers maintain that from its inception in 2011, Par Funding was run by its principals as an ongoing criminal enterprise.

» READ MORE: Par Funding threatened violence, trashed reputations after businesses took out loans at brutal interest rates, borrowers say

In addition to bilking investors and intimidating customers, they say, the LaFortes and Cole worked to hide their crimes by suborning perjury in ongoing lawsuits against the company and retaliating against witnesses.

In one instance, newly cited in the superseding indictment, Joseph LaForte allegedly threatened to break the legs of or kill a Vermont-based business owner who owed more than $94 million to the company.

Previously, authorities had accused collectors for the company of threatening at least 11 other victims, telling one they’d cut off her hands if she did not repay her debts and vowing to stick a fork in the head of another.

After the U.S. Securities and Exchange Commission sued Par Funding and its principals in 2020, seeking to recoup the hundreds of millions of dollars it said the company bilked from investors, James LaForte brutally attacked a lawyer representing the court-appointed receiver in the case in broad daylight on a Center City street, prosecutors said.

» READ MORE: How Philly investors were drawn into what SEC alleges is $500 million fraud

They have also accused Joseph LaForte of threatening 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 Joseph LaForte and his wife, Lisa McElhone.

LaForte believed that Feibush had undervalued those assets in reports he submitted to the Florida court overseeing the SEC case.

When one Par Funding borrower sued the company in 2019, LaForte and Cole conspired to recruit company employees and others to lie in depositions about who owned Par Funding and managed its day-to-day operations, prosecutors said in court filings this week.

The goal, according to authorities, was to hide LaForte’s involvement in Par Funding and his extensive criminal record, which included past convictions for grand larceny, money laundering and running an illegal gambling operation.

That assertion forms the basis for a new obstruction-of-justice charge in the superseding indictment — the only other additional count aside from racketeering in the new charging document.

For his own part, LaForte has balked at the allegations, dismissing the extortion claims as “absurd and patently false stories” from “disgruntled” Par Funding borrowers hoping to to escape their debts. He has also denied allegations that he and the company’s other principals defrauded their investors by promising double-digit returns while keeping them in the dark about his own criminal history and the company’s at times dire finances.

Still, his opportunity to challenge prosecutors at a trial previously scheduled for April will be delayed.

In addition to filing the new counts against the LaForte brothers and Cole, prosecutors last week broke off previously indicted charges against Par Funding and additional tax fraud counts against Joseph LaForte and McElhone into separate cases — putting each on its own track for trial.

In an order Tuesday, U.S. District Judge Mark A. Kearney postponed the spring trial date and instead set jury selection to begin in the racketeering case in October. He’s scheduled the tax fraud case against LaForte and McElhone for trial in December.

Newcomer, the prosecutor, also told the judge that new defendants could be charged in the LaForte-McElhone tax case within the coming weeks.

Already, two former Par Funding employees have pleaded guilty, and at least one — Perry Abbonizio, who described himself to investors as a managing partner in the operation — is said to be cooperating with the ongoing investigation.

The LaForte brothers have been held in federal custody since their arrest last year. Cole and McElhone remain free on bail.