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Par Funding, A Better Financial Plan offices taken over by receiver, locks changed

Par Funding and Dean Vagnozzi at A Better Financial Plan helped raise over $492 million from investors; now a receiver's put locks on the doors of their offices.

Joseph W. LaForte is escorted out of Police Headquarters in Mineola, N.Y., Oct. 26, 2005. Members of the LaForte family were charged with running a $14 million money laundering ring. (Photo by Ellis Kaplan)
Joseph W. LaForte is escorted out of Police Headquarters in Mineola, N.Y., Oct. 26, 2005. Members of the LaForte family were charged with running a $14 million money laundering ring. (Photo by Ellis Kaplan)Read moreELLIS KAPLAN / New York Post

After changing the locks on the offices of firms that regulators accused of orchestrating a massive financial fraud, a court-appointed receiver has taken control of the companies while he analyzes their finances.

The receiver, Florida lawyer Ryan Stumphauzer, locked out the principals of Par Funding and of King of Prussia company A Better Financial Plan, among others, over the weekend, court filings show.

The U.S. Securities and Exchange Commission has accused the firms and others of deceiving investors in a recent sweeping civil complaint. Par, after raising $492 million from investors and lending the money to borrowers at high interest rates, has only about $6.9 million left in its accounts, the SEC says.

The King of Prussia firm raised money for Par by telling investors that they would see a return of 10% or more and could reclaim their principal back after a year. It has since retreated from those forecasts, investors have said.

Besides changing the locks, Stumphauzer is now in control of A Better Financial Plan’s computers, offices, and equipment, as well as Par Funding’s operations, according to the receiver’s lawyer, Gaetan Alfano, of Philadelphia.

U.S. District Judge Rodolfo A. Ruiz, of the Southern District of Florida, appointed the receiver and froze spending by Par Funding and A Better Financial Plan, among other businesses. Ruiz acted last week after the SEC leveled a detailed civil complaint about the firms.

No one has been charged with a crime in the matter.

During a hearing Tuesday held on Zoom before Ruiz, Amie Riggle Berlin, the SEC’s lead lawyer, said her agency would deeply probe the firms’ finances.

“As soon as I get an accounting from all of them, we will take a look and see what’s there that’s not ill-gotten gains,” Berlin said.

The SEC harshly criticized Par Funding, saying it had misled investors about the default rates on its loans and hid the criminal past of an owner, Joseph W. LaForte, 50, whom the agency said used aliases to keep investors from knowing about his convictions for two previous financial crimes. LaForte was joined as an owner by his wife, Lisa McElhone, 40, who has owned the Lacquer Lounge beauty salon in Center City; and by Montgomery County businessman Perry S. Abbonizio.

Financial salesman Dean Vagnozzi also is named in the SEC complaint. He also operates A Better Financial Plan, or ABFP. He is known for his free dinners and seminars in the Philadelphia region, social media presence, mass mailings, and, more recently, pitches on Zoom in which he would raise money for Par Funding, among other investment vehicles.

In all, the court froze 35 bank and brokerage accounts associated with various defendants. The asset freeze also applies to A Better Financial Plan and two of its funds that invested in Par Funding. It was said in a court filing to have $24.5 million in one of those funds and $13.3 million in the other.

The freeze also blocked access to a family trust of McElhone’s. The SEC said the trust had “received money from the fraud, estimated at $14.3 million,” the judge wrote.

The freeze doesn’t apply to Vagnozzi personally, his lawyers said in court filings.

The court’s freeze order is available below:

Three aliases

At the center of the allegations are McElhone and her husband, LaForte. LaForte went by several aliases, including Joe Mack, Joe Macki, and Joe McElhone, and served time in prison for running an offshore gambling operation and a $14 million real estate scam, the SEC said.

They founded Par Funding in 2011 after LaForte was released from prison. It had its main office in Philadelphia until 2017, the SEC said. It currently has an office in Palm Beach Gardens, Fla. On Tuesday, the FBI raided its Philadelphia offices one day after a news story revealed the SEC complaint. The complaint, now public, had been filed under seal on July 24 but was unsealed briefly by mistake by a court clerk.

Par Funding worked with various salespeople, called “finders,” including Vagnozzi, who would drum up investors and receive fees in return.

In court filings by Vagnozzi’s lawyers, they said he had stopped recommending Par Funding.

“Vagnozzi and the ABFP defendants with which Vagnozzi is associated are not currently selling any new promissory notes backed by the Par Funding merchant cash advance business — and have not done so for months,” they told the court. “No new money is coming in.”

As for the complaints against Par Funding, they said, “the SEC’s allegations involve disclosure and registration issues. This is not a Ponzi scheme case. Nor has the SEC ever alleged that it is.”

“PAR Funding business appears to be a legitimate business providing financing to small businesses, some of which are now experiencing financial difficulties in the middle of the pandemic and economic downturn,” wrote Brian Miller, a lawyer for Vagnozzi.

“Mr. Vagnozzi hopes the court will allow Par to conduct its operations in a manner to allow it to recover money from borrowers, rather than liquidate and cause losses for everyone.”

With the exception of missed payments to investors in March and April, Vagnozzi’s lawyer wrote, “all ABFP note-holders have been paid everything due to them.” This filing made no mention of the fact that the investors say that note-holders were recently told they would receive a return of 4%, not 10%, and would have to wait a longer period to reclaim their money.

In addition, they wrote, A Better Financial Plan is “one of the largest creditors of PAR Funding and would be one of the largest victims if there was any wrongdoing at PAR Funding.” It also has “a keen interest in maximizing recovery.”

Vagnozzi’s employees “are victims here, too. They did not get paid their wages last week despite our requests. They deserve to get paid. Their money is sitting in the bank account right now.”

Par Funding also protested the closure of its offices.

It said the SEC was “destroying this business and with it, hundreds of millions of dollars in value,” the firm’s lawyer wrote in court filings. “The SEC — not the defendants — are creating hundreds of millions of dollars in potential liability and losses to large and small investors.”