.jpg)
The U.S. Attorney’s Office in Philadelphia provided the below information on February 27th:
PHILADELPHIA
– A second superseding indictment was filed yesterday charging a violation of
the Racketeer Influenced and Corrupt Organizations Act (RICO) by three
principals of Complete Business Solutions Group, Inc. d/b/a Par Funding (“Par
Funding”) and also charging various other crimes included in a previous
superseding indictment, including securities fraud, extortionate collection of
credit, tax crimes, perjury, obstruction of justice, witness retaliation, and
witness tampering, announced United States Attorney Jacqueline C. Romero. These
principals are Joseph LaForte, 52, Joseph Cole Barleta (“Joe Cole”), 39, and
James LaForte, 46.
A separate indictment was filed charging Joseph LaForte, and his
wife, Lisa McElhone, 43, with tax evasion, a conspiracy to avoid paying taxes,
and a scheme to avoid paying approximately $1.6 million in income taxes due to
the State of Pennsylvania by fraudulently claiming that their residence was
Florida, when in fact they resided in Pennsylvania.
According to the second superseding indictment, codefendants
Joseph LaForte, Joe Cole, and James LaForte, and others, were part of an
association-in-fact RICO enterprise that conspired to commit a number of
predicate crimes, including crimes related to the fleecing of Par Funding’s
many investors and the extortionate collection of credit from Par Funding’s
many merchant-customers. The indictment alleges that when the defendants were
sued civilly by the SEC in July 2020, which resulted in a receivership taking
over control of Par Funding, the enterprise took various illegal steps to
attempt to regain control of Par Funding and to “defeat” the government,
including through acts of obstruction of justice, witness tampering, and
retaliation. The enterprise was structured with Joe LaForte as its leader and
final decisionmaker, and it operated through various family members and close
associates.
The
indictment alleges that the principal purposes of the LaForte Enterprise were
as follows:
1.
to generate money for its leadership, members,
and associates through the commission of various criminal acts, such as
securities fraud, wire fraud, the extortionate collection of debt, obstruction
of justice, and retaliation;
2.
to conceal from investors, auditors, the
government, and law enforcement that its members were self-dealing and
enriching themselves to the detriment of Par Funding’s investors;
3.
to conceal Joseph LaForte’s identity, criminal
history, and role as the leader of the enterprise and the functional Chief
Executive Officer of Par Funding from Par Funding’s investors, customers, and
auditors, and from the government and law enforcement, including through
misrepresentations, false statements, and other means;
4.
to use extortionate means, including threats
of violence, to collect money owed to Par Funding by its merchant-customers;
5.
to maintain control over Par Funding after Par
Funding was put under the control of a court-appointed receiver, including by
acts of obstruction and retaliation intended to frustrate and interfere with
the receiver’s efforts to control Par Funding; and
6.
to protect the enterprise and its members from
detection, apprehension, and prosecution by law enforcement.
It is alleged that 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, the indictment alleges that although Joseph
LaForte operated Par Funding and referred to it as his business, he concealed
this ownership and control by using his wife, Lisa McElhone, as his nominee.
Joseph LaForte also used several aliases, such as “Joe Mack,” while working at
the company. It is alleged that Joseph LaForte, Joe Cole, 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 alleges that Joseph LaForte and James
LaForte conspired with an individual named Renato “Gino” Gioe to participate in
the extortionate collection of credit. It is alleged that during the course of
Par Funding’s operations, these individuals made hostile, threatening, and
intimidating communications to Par Funding’s customers in person and over the
telephone in order to collect on delinquent MCAs. For example, the indictment
alleges that Joseph LaForte threatened to “blow up” a delinquent customer’s
home in May 2019 and asked another delinquent customer in August 2019 whether
the customer had heard of “cement shoes.” In addition, the indictment alleges
that in May 2018, James LaForte told one customer that he was a “soldier for
the family” who had torched people’s cars and kicked people’s teeth in.
Furthermore, the indictment alleges that Joseph LaForte
committed a variety of tax crimes. It is alleged that Joseph LaForte committed
tax crimes by failing to report millions of dollars in cash kickbacks that he
personally received from a Par Funding customer, and by regularly paying cash
wages to Par Funding employees but not withholding taxes from these wages or
reporting them to the IRS.
It is further alleged that Joseph LaForte and Joe Cole each
committed perjury twice during depositions in federal lawsuits against Par
Funding, making misrepresentations regarding various matters. For instance, the
indictment alleges that Joseph LaForte lied under oath about his knowledge of
his wife’s role at Par Funding, Joe Cole’s role at the company, and the
company’s default rate. The indictment alleges that Joe Cole lied under oath
about who was on Par Funding’s credit committee (which Joseph LaForte ran) and
who ran Par Funding.
Finally, the indictment alleges that Joseph LaForte and James
LaForte engaged in obstruction of justice, witness tampering, and retaliation.
Specifically, it is alleged that in late February 2023, on the streets of
Center City Philadelphia, James LaForte, with the assistance of and in
coordination with Joseph LaForte, physically assaulted counsel for the receiver
for Par Funding in a lawsuit brought by the U.S. Securities and Exchange
Commission in the Southern District of Florida. Moreover, in connection with
the same lawsuit, the indictment alleges that Joseph LaForte threatened to
cause serious bodily injury to another individual in November 2022. Lastly, it
is alleged that James LaForte made threats of violence to multiple parties in
early 2023, in an effort to interfere with the SEC lawsuit, a federal grand
jury investigation, and an anticipated federal prosecution, as well as to
retaliate against these parties.
If convicted of all counts charged against them, the defendants
are facing decades or more of imprisonment, and they also face full
restitution, a fine, and a period of supervised release and/or probation.
In a separate indictment, it is alleged that Joseph LaForte and
Lisa McElhone committed several tax crimes. For instance, it is alleged that
the married couple defrauded the Commonwealth of Pennsylvania out of more than
approximately $1.6 million of state taxes by falsely claiming to be residents
of Florida, even though they worked, lived, and spent more than 300 days per
year in Pennsylvania. Furthermore, the indictment alleges that Joseph LaForte
and Lisa McElhone worked together to evade the payment of over half a million
dollars of employment taxes that had been imposed on Joseph LaForte in
connection with companies that he had operated in the mid-2000s.
An indictment charging Complete Business Solutions Group, Inc.,
doing business as Par Funding, with wire fraud, securities fraud, and
conspiracy, was also filed.
The case was investigated by the Federal Bureau of
Investigation, Internal Revenue Service-Criminal Investigation, the Federal
Deposit Insurance Corporation-Office of Inspector General, and Pennsylvania
State Police and is being prosecuted by Assistant United States Attorneys
Patrick J. Murray, Alexandra Lastowski, and Matthew Newcomer. The SEC in
Florida investigated and litigated the civil securities fraud charges, which
formed the basis of a portion of the criminal prosecution.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
No comments:
Post a Comment