Par Funding founder Joseph LaForte sentenced to more than 15 years in prison

The former head of a now-defunct Philadelphia-based lending company was sentenced Wednesday to 15½ years in prison for running the business as a criminal enterprise — fooling retirees and others into giving him more than $500 million to invest but diverting much of the money to fund his own lavish lifestyle, then using threats of violence against those who might imperil his ill-gotten gains.

Joseph LaForte, who founded Par Funding with his wife and brother in 2012, agreed last year to plead guilty to charges including racketeering, securities and tax fraud, perjury, and obstruction of justice. Prosecutors said he committed an “astounding” array of crimes to prop up one of the biggest financial frauds in Pennsylvania history — and LaForte on Wednesday said he had belatedly come to realize the scale of his misdeeds.

“It took me a lot of time to go through the process,” LaForte, 54, testified, adding that over time, “my thought process did start to change. I had to take accountability, because I was the leader of Par Funding — period.”

Still, he insisted he never meant to steal anyone’s money. He said he was simply obsessed with growing the business. “It was my ego,” he said. “I wanted to be the biggest and the best.”

U.S. District Judge Mark Kearney told LaForte that his crime was not simply being a bad businessman. It was resorting to “street crimes” to fuel his fraudulent empire.

“Every time I see cases like this,” Kearney said, “it’s frustrating, because people are so talented and they use it for the wrong reasons.”

The reflections LaForte offered Wednesday stood in stark contrast to the brazen crimes LaForte and his business partners had committed for nearly a decade while running Par Funding, which offered quick loans at high interest rates to borrowers deemed too risky to secure financing from traditional banks.

In a series of indictments filed in recent years against LaForte and partners including his wife, Lisa McElhone, and his brother, James LaForte, prosecutors said they and others involved in the business lied to investors about its financial health to raise more money, used thuggish loan shark tactics to collect on debts, and hid tens of millions of dollars from the IRS for their personal use.

LaForte was legally barred from selling securities for Par Funding because of previous felony convictions for a $14 million real estate Ponzi scheme and running an illegal offshore gambling operation. But he didn’t disclose that to investors as he and other Par pitchmen used free steak dinners and promises of lucrative returns to raise more than half a billion dollars between 2012 and 2020.

And when Par needed to collect on loans, prosecutors said, LaForte and others, including his brother, a reputed associate of New York’s Gambino crime family, told borrowers they would be physically harmed — or even killed — if they didn’t pay up.

One borrower testified Wednesday that when she fell behind on her payments, she reached out to LaForte for help, and he responded by threatening to place a bomb in her car, kidnap her kids, or give her “cement shoes.”

“‘You’ll go to the bottom of the Hudson [River], so figure it out,’” she said LaForte told her. “‘I want to be paid.’”

LaForte’s brother also assaulted a Center City lawyer tasked with recovering assets to repay Par Funding’s defrauded investors, a crime prosecutors say LaForte helped coordinate.

Kearney, the judge, told LaForte that his drive and ego pushed him to skirt boundaries that could have kept him in check.

“You just blew by every stop sign,” he said in imposing his sentence, which also included three years of supervised release after he’s let out of prison, including one year on house arrest.

“That tsunami of ‘go get it,’” the judge added, “has created a lot of victims.”

LaForte founded Par in an Old City office building with his wife in 2012. Because of his inability to sell securities due to his convictions, he listed his wife, McElhone, as the company’s chief executive on official documents. But prosecutors said McElhone had little to no role at Par Funding, effectively serving as a clean name to use on the company’s paperwork — something LaForte admitted during Wednesday’s hearing.

“Her only crime was marrying me,” he said.

The business portrayed itself as a legitimate cash-advance lender, running radio ads and staging elaborate solicitation events to attract investors looking for better returns than the stock market. Par raised around $500 million over the course of eight years, with LaForte saying the money would be lent to make high-interest-rate “cash advance loans,” mostly to small businesses that didn’t qualify for bank loans, and promising yearly returns of 10% or more. Very few customers, he said, failed to repay.

But federal authorities said that simply was not true.

Between 2016 and 2020, officials said, the business was operating with yearly deficits as high as $70 million — often hidden by false representations in its books.

Par also falsely claimed the investments were insured against financial risk, authorities said; failed to register the investments as securities, which would have required detailed warnings about their true risk levels; and failed to warn investors about the LaForte brothers’ prior convictions for financial crimes.

The conspiracy began falling apart in April 2020, when Par was unable to pay investors their monthly dividends. In July 2020 the Securities and Exchange Commission persuaded federal Judge Rodolfo Ruiz in Florida to put Par under the control of a court-appointed receiver, who began managing Par properties and seizing assets from the LaFortes.

Around the same time, federal prosecutors in Philadelphia were building a criminal case against the company’s leaders, and they conducted a series of raids on Par Funding’s offices and LaForte’s Haverford home.

But the LaFortes continued their criminal conduct, prosecutors said. After a 2023 court hearing on the seizure and potential sale of some of Joseph LaForte’s assets, James LaForte sneaked up behind a lawyer assigned to the case, Gaetan Alfano, and struck him in the head with a flashlight as he walked down 19th Street — an attack that required seven staples to the head.

Days later, James LaForte threatened to harm the daughter of one of Par’s securities salesmen, Perry Abbonizio, who had pleaded guilty and agreed to testify against the brothers.

By then, however, the conspiracy was in its final stages. In May 2023, the LaForte brothers and McElhone were among those criminally charged.

As the cases have progressed through the courts over the years, judges have continued to issue damning findings against the LaFortes and the company they ran.

Kearney, the judge overseeing the criminal case in Philadelphia, found earlier this year that the brothers and Par chief financial officer Joseph Cole Barleta had “enriched themselves” and other insiders by taking more than $150 million out of the company for personal use, even as the business lost money. He concluded that the trio had caused investors losses totaling a net $288 million.

And a federal judge in Florida separately ruled that Par was a Ponzi scheme, in which LaForte and his partners extracted cash to support their luxury lifestyle, spending funds on a private jet, Florida and Poconos resort homes, boats, paintings, fancy watches, jewelry, and investments in dozens of Philadelphia properties. When they were unable to repay existing investors with profits, the judge found, they instead used new investors’ cash to keep the conspiracy running.

Most of the criminal cases against people connected to Par are now drawing to a close. James LaForte was sentenced earlier this month to more than 11 years in prison for his role in the Par scheme. He apologized for his actions, but has denied any association with the Gambino crime family or any other organized crime organization.

Abbonizio, a former Montgomery County securities broker who worked closely with the LaFortes to lure investors, is scheduled to be sentenced in April, as is Renato Gioe, a debt collector who admitted threatening to physically injure Par borrowers, sometimes at LaForte’s direction.

Rodney Ermel, an accountant for the LaFortes and the only defendant who hasn’t pleaded guilty, is scheduled for a trial May 14.

Barleta, Par’s chief financial officer, is scheduled to be sentenced in June. The government has said it won’t seek more than an eight-year sentence.

McElhone, meanwhile — who pleaded guilty to wire fraud — is also scheduled for sentencing in June. An agreement between prosecutors and her lawyers could end up with her receiving no prison time.