PHILADELPHIA, PA — An indictment was unsealed yesterday charging Complete Business Solutions Group, Inc., doing business as Par Funding, and four of its principals with various crimes, 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: Lisa McElhone, 43; Joseph Cole Barleta (“Joe Cole”), 39; and James LaForte, 46.
According to the indictment, from at least 2016 through July 2020, co-conspirators Joseph LaForte, Joe Cole, James LaForte, and others participated in a conspiracy to commit wire fraud and securities fraud in connection with funds that were raised from investors in Par Funding and its affiliates. Par Funding and these affiliates provided funding to businesses through short-term financing transactions, referred to as merchant cash advances (“MCAs”). To fund these MCAs, the defendants raised over $500 million from investors.
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 and Lisa McElhone committed a variety of tax crimes. For instance, it is alleged that the married couple defrauded the Commonwealth of Pennsylvania out of approximately $1.2 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 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. In addition, 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 face the following maximum possible sentences of imprisonment: Joseph LaForte – 796 years; McElhone – 70 years; Cole– 415 years; and James LaForte – 615 years. The defendants also face full restitution, a fine, and a period of supervised release and/or probation.
The case was investigated by the Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigations, 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, Matthew Newcomer, and Alexandra Lastowski. 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.
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