Wife of Par Funding founder pleads guilty to hiding millions in tax fraud case

The wife of embattled Par Funding founder Joseph LaForte admitted this week to helping him hide millions of dollars he earned through the business cash advance company that authorities say operated more like a Mafia-style criminal enterprise.

Lisa McElhone, 44, of Philadelphia, told a federal judge Monday that she dodged taxes owed in Pennsylvania by lying on tax forms about where she and her husband lived. Though they spent most of their time at their $2.5 million Haverford home and, in his case, working out of Par Funding’s Old City offices, the couple claimed to be residents of Florida, which has no state income tax.

All told, federal prosecutors say the couple dodged more than $40 million in taxes owed to Pennsylvania and the IRS between 2013 and 2021.

But as part of a deal McElhone cemented in court Monday, she pleaded guilty to a single count of wire fraud tied to just one of those years, and prosecutors will recommend she spend less than 2½ years in prison when she is set to be sentenced in August.

McElhone’s attorney, Alan S. Futerfas, did not respond to requests for comment following Monday’s hearing. Her plea agreement with prosecutors does not require her to cooperate against her husband or any of their codefendants.

Still, McElhone’s decision to plead guilty marked another significant milestone in the sweeping — and seemingly ever-widening — probe that has prompted Par Funding’s collapse and left LaForte and his former business associates battling criminal prosecution and civil penalties on multiple fronts.

Already, two other Par Funding associates have pleaded guilty — Perry Abbonizio, an investment broker who worked with the company, and Renato “Gino” Gioe, a Gambino crime family associate who moonlighted as a debt collector for the firm.

Meanwhile, LaForte, a two-time convicted felon who launched Par Funding in 2011, has vowed to fight the dizzying array of charges prosecutors have filed against him, including counts spread across multiple indictments of racketeering, extortion, securities fraud, tax evasion, perjury, witness tampering, obstruction of justice, and illegal gun possession.

His brother James and four others also face charges in the probe. At the same time, the company’s principals remain mired in a 2020 civil suit brought by the U.S. Securities and Exchange Commission in federal court in Miami.

For her part, McElhone was always a lesser figure in federal authorities’ sweeping investigation of the company, which raised hundreds of millions of dollars from investors by offering quick loans at low interest rates to businesses deemed too risky by traditional banks.

Though business incorporation documents listed her as Par Funding’s owner, prosecutors say she had next to nothing to do with its day-to-day operations. Her name on the papers was intended only to hide her husband’s involvement.

» READ MORE: Feds target predatory lenders to small business, but Pennsylvania remains a haven for the industry

LaForte, 53, had twice served time in prison — in 2006 for overseeing a $14 million Ponzi scheme in New York and in 2009 for running an illegal offshore gambling operation — which should have barred him from trading securities.

But as Par Funding became wildly successful at raising money, the setup resulted in McElhone — who actually spent her workdays running hip Old City nail salon Lacquer Lounge — amassing an eye-popping collection of assets in her name, including an $8 million jet, a suite of luxury cars, and properties in Pennsylvania and Florida worth a combined $59 million, according to a financial statement made public in 2020.

» READ MORE: From nail salon to near billionaire: How Par Funding owner amassed a fortune

Authorities say that by obscuring LaForte’s involvement and promising wildly inflated returns, the company was able to bilk investors out of hundreds of millions of dollars — even as it was squeezing the small businesses that took advantage of its loans by using mob-style collection tactics, including public shaming campaigns, death threats, and visits from muscled goons to pressure borrowers who failed to cover their debts.

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

But even as the millions from those efforts rolled in, LaForte and McElhone allegedly lay claim to even more by lying about their residence to avoid Pennsylvania’s state income taxes.

At various points between 2014 and 2019, the couple told the IRS they were living at addresses that traced back to a law firm in Miami that had done legal work for McElhone, the offices of a Palm Beach real estate agent, and a $14 million home they had not yet purchased in Jupiter, Fla.

In the specific count to which McElhone pleaded guilty Monday — tied to their 2018 taxes — the couple had been accused of underreporting their income to the state by $26.5 million, resulting in a tax loss to Pennsylvania of nearly $1 million.

McElhone will likely be ordered to pay back that sum plus penalties at her sentencing hearing in August.

Still, in court papers filed this week in connection with McElhone’s plea, prosecutors acknowledged her limited role in her husband’s alleged crimes. They noted she repeatedly told the couple’s accountants, who are also charged in the case, that she did not live in Florida as they claimed on her tax forms.

The accountants ignored those statements and prepared the couple’s tax forms claiming Florida residency.

McElhone, prosecutors said, signed and submitted them anyway.