PHILADELPHIA, PA — Complete Business Solutions Group Inc., doing business as Par Funding, pleaded guilty Monday to conspiracy to commit wire fraud and securities fraud tied to a scheme that defrauded investors of hundreds of millions of dollars, federal prosecutors said.
The plea was entered in U.S. District Court before Judge Mark A. Kearney by a court-appointed receiver controlling the Philadelphia-based company as part of a Securities and Exchange Commission civil enforcement action, according to the U.S. Attorney’s Office for the Eastern District of Pennsylvania.
Federal prosecutors said the merchant cash advance company raised hundreds of millions of dollars from investors while making false and misleading statements about its leadership, underwriting practices, financial condition, and risk profile.
Court filings state that the fraud scheme caused approximately $404,737,299 in losses. The court later reduced that figure to about $288,395,088 after crediting collateral seized by federal authorities when the investigation became public in July 2020 following the SEC’s move to place the company in receivership.
According to the indictment and statements made in court, Par Funding operated from Center City Philadelphia and provided short-term financing to small businesses nationwide.
Prosecutors said the company and its principals concealed the identity and criminal history of founder Joseph LaForte while misrepresenting underwriting standards, portfolio performance, default rates, profitability, insurance coverage, and self-dealing by insiders.
Authorities said the misrepresentations were used to solicit and retain investor funds used to finance merchant cash advances. Prosecutors said the business did not generate enough profit to sustain operations without a continued influx of new investor money.
Several executives and associates connected to Par Funding have previously pleaded guilty and received prison sentences.
Founder Joseph LaForte pleaded guilty to racketeering conspiracy and related offenses and was sentenced to about 15½ years in prison. His brother, James LaForte, a senior executive involved in collections, pleaded guilty and received roughly 11½ years in prison.
Former Chief Financial Officer Joseph Cole Barleta pleaded guilty to racketeering conspiracy and was sentenced to 5½ years in prison.
Perry Abbonizio, Renato Gioe, Lisa McElhone, and tax professionals Rodney Ermel and Kenneth Bacon also pleaded guilty to felony offenses related to the scheme and each received prison sentences, prosecutors said.
The investigation was conducted by the Federal Bureau of Investigation, the Federal Deposit Insurance Corporation Office of Inspector General, IRS Criminal Investigation, and the Pennsylvania State Police.
Assistant U.S. Attorneys Matthew Newcomer, Samuel Dalke, and Eric Gill are prosecuting the case. The SEC in Florida pursued related civil securities fraud charges that formed part of the criminal prosecution, prosecutors said.
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