Par Funding Principals Plead Guilty to RICO Conspiracy, Securities Fraud, Obstruction of Justice, Related Charges

PHILADELPHIA - United States Attorney Jacqueline C. Romero announced that Joseph LaForte, 53, of Philadelphia, Pennsylvania, and his brother James LaForte, 47, of New York, New York, entered pleas of guilty today before United States District Court Judge Mark A. Kearney to racketeering conspiracy, securities fraud, and related crimes in connection with their operation of a fraudulent investment vehicle known as Complete Business Solutions Group Inc. d/b/a Par Funding ("Par Funding"), which is alleged to have generated over $100 million in illegal proceeds for the defendants to the detriment of Par Funding's numerous investors, many who live in the Philadelphia region.

Joseph LaForte operated Par Funding's day-to-day operations and functioned as its president and CEO, while his younger brother James LaForte worked in sales and collections and had managerial authority. In July 2020, the Securities and Exchange Commission ("SEC") intervened and replaced the LaFortes with a court-ordered receivership that has operated Par Funding since that time.

Joseph LaForte, who has prior felony convictions including for a financial fraud, also pleaded guilty to tax crimes, perjury, and obstruction of justice for his role in aiding and abetting James LaForte's violent assault on one of the Par Funding receivership's Philadelphia attorneys who was helping to seize LaForte family assets. In addition, Joseph LaForte pleaded guilty to a gun possession charge for firearms that were found in his former residence during the execution of a search warrant.

James LaForte also pleaded guilty to the extortionate collection of credit from a Par Funding merchant customer, as well as obstruction of justice for assaulting the Philadelphia attorney and retaliation for threatening several government witnesses.

The government and the defendants have agreed that defendant Joseph LaForte will serve between 13½ to 15½ years' imprisonment and defendant James LaForte will serve 110 to 137 months' (~9 to 11½ years') imprisonment, provided those ranges are accepted by the district court at the time of sentencing. Defendant Joseph LaForte has also agreed to pay millions of dollars in restitution to the Internal Revenue Service in connection with his tax conviction, and to forfeit his rights to a private jet and an investment account seized by the government. At the plea hearing, Judge Kearney accepted the guilty plea for Joseph LaForte and conditionally accepted the guilty plea for James LaForte.

In February, the defendants had been charged with violating the Racketeer Influenced and Corrupt Organizations Act (RICO) in a second superseding indictment, which also charged various other crimes included in a previous superseding indictment, including securities fraud, wire fraud, extortionate collection of debt, obstruction of justice, witness tampering, and witness retaliation, tax crimes, and perjury.

Per the indictment, as part of their fundraising efforts, these defendants and their conspirators caused false and misleading information to be conveyed to investors regarding various issues, including:

• Joseph LaForte's true name, his role at Par Funding, and his criminal history;
• Par Funding's underwriting process;
• the diversity of the company's MCA portfolio;
• Par Funding's default rate;
• Par Funding's financial success and profitability;
• the company's insurance; and
• the defendants' self-dealing.

For instance, although Joseph LaForte operated Par Funding and referred to it as his business, he concealed this ownership and control by using his wife as his nominee. Joseph LaForte also used several aliases, such as "Joe Mack," while working at the company. It is alleged that Joseph LaForte, James LaForte, and their conspirators engaged in this deception to conceal Joseph LaForte's true role as the person operating the company and his significant criminal history from investors.

The indictment also alleged that Par Funding's principal means of generating income was to "advance" money to businesses that were in need of short-term financing at high rates of return. The indictment alleged that the enterprise, including James LaForte, used threats of violence to collect money from customers whose payments were overdue. James LaForte has pleaded guilty to threatening one particular Par Funding customer, telling him that he must repay the company immediately because James LaForte was not to be messed with and had previously torched people's cars and kicked people's teeth in.

The indictment also alleged that Joseph LaForte and James LaForte engaged in obstruction of justice in late February 2023 in connection with James LaForte's physical assault of one of the Par Funding receivership's attorneys outside of the attorney's office in Center City Philadelphia, sending the attorney to the hospital and causing serious bodily injury. Several days later, defendant James LaForte is alleged to have made threatening phone calls to several government witnesses and their family members, including Perry Abbonizio, who James LaForte knew had recently pleaded guilty to conspiring with Joseph LaForte in connection with the fraudulent operation of Par Funding.

Finally, Joseph LaForte and others were also charged with committing a variety of tax crimes involving the proceeds he received from Par Funding, including hiding tens of millions of taxable income via false entries on business and personal federal tax returns and pretending to live in Florida to avoid paying Pennsylvania income tax. In April 2024, LaForte's wife, Lisa McElhone, pleaded guilty in connection with the Florida residency scheme. It was further alleged that Joseph LaForte failed to report millions of dollars in cash kickbacks that he personally received from a Par Funding merchant customer, and by regularly paying cash wages to Par Funding employees but not withholding taxes from these wages or reporting them to the IRS.

"The LaFortes' corrupt enterprise was built on a foundation of lies, threats, and incredible greed," said U.S. Attorney Romero. "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."

"Investigating complex financial crimes has been a priority of the FBI since our beginning," said Wayne A. Jacobs, Special Agent in Charge of FBI Philadelphia. "The defendants ran their purported business as a criminal enterprise, conducting securities fraud, extortion, and obstruction of justice, all to further their financial gain. This case exemplifies the FBI and our partners' continued commitment to vigorously pursue these criminals who orchestrate these schemes and bring them to justice."

"IRS-Criminal Investigation is proud to have provided its financial expertise in this investigation," said Amy MacNeely, Acting Special Agent in Charge of IRS-Criminal Investigation. "We, along with our law enforcement partners and the Department of Justice, will continue to aggressively investigate individuals who engage in money laundering, tax fraud, or other types of white-collar crimes."

"The guilty pleas in this case hold the defendants accountable for operating a fraudulent investment vehicle that allegedly generated over $100 million illegally, and caused financial harm to numerous investors," said Patricia Tarasca, Special Agent in Charge of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG), New York Region. "The FDIC OIG is pleased to join our law enforcement colleagues in announcing this guilty plea, and we remain committed to investigating and bringing to justice those who commit such egregious acts that threaten investors and the safety and soundness of our Nation's financial system."

The case was investigated by the FBI, Internal Revenue Service-Criminal Investigation, and the Federal Deposit Insurance Corporation Office of Inspector General and prosecuted by Assistant United States Attorneys Matthew Newcomer, Samuel Dalke, Eric Gill, Patrick J. Murray, and former Assistant U.S. Attorney Alexandra Lastowski, as well as Assistant U.S. Attorney John J. Boscia and DOJ Trial Attorney Ezra Spiro on the tax portion of the prosecution.

The SEC in Florida investigated and litigated the civil securities fraud charges, which formed the basis of a portion of the criminal prosecution.