Federal officials say a convicted felon with mob ties and his wife fraudulently raised more than half a billion dollars from investors for their company, which loaned cash to small businesses at interest rates as high as 400 percent.
Convicted felon Joseph LaForte, who goes by the name Joe Mack, and his wife Lisa McElhone founded Par Funding in 2011 — the same year he was released from prison for stealing $14 million in a real estate scam and, in a separate case, for running an illegal gambling operation.
Par Funding issued $600 million in loans to small businesses across the U.S. since its inception, according to a Securities and Exchange Commission’s complaint filed July 24 in a Florida federal court.
The company raised the funds from more than 1,200 investors by “scheming and lying” — including making the false claim that their loans had a default rate of less than one percent when it was actually more than 10 percent, the complaint alleges.
“The fraudulent scheme operates behind multiple veils of secrecy built on the defendants’ lies,” the complaint charges.
The couple, based in Philadelphia, used unregistered sales agents to raise cash for which they were investigated by Pennsylvania securities regulators in 2018.
LaForte, whose grandfather, nicknamed “Joe the Cat,” and his uncle “Buddy,” were made men in the Gambino crime family, went to great lengths to hide his criminal past from potential investors using several aliases, according to Bloomberg and court papers.
The complaint accuses the couple and their agents of violating federal securities law and wants the court to freeze their assets, impose civil fines and appoint a receiver to protect investors.
LaForte and McElhone couldn’t immediately be reached for comment.
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