Days before their scheduled civil trial on fraud charges, the owners of Par Funding lending and King of Prussia financial salesman Dean Vagnozzi agreed Wednesday to stop fighting the case against them and to pay back 1,200 investors who federal regulators said were seduced with a stream of lies about the lender.

In a sweeping lawsuit brought in 2020, the U.S. Securities and Exchange Commission said Par Funding, Vagnozzi, and other defendants hid the fact that one of the lending firm’s founders, Joseph W. LaForte, had served prison time for past financial crimes.

The SEC said Par Funding, Vagnozzi, and the others raised nearly $500 million by misleading investors about the lender’s reckless loan underwriting, high defaults on the money it lent, lack of business insurance, and history of regulatory trouble.

Now LaForte, 50, and his wife, Lisa McElhone, 42 — the owner of a nail salon from South Philadelphia who told the court at one point that she was worth nearly $800 million — “shall pay disgorgement of ill-gotten gains,” as will Vagnozzi, 53, according to settlement papers signed by all three. A fourth defendant, Perry Abbonizio, 63, has also settled.

Precisely how much they will all pay is still to be determined. The deal calls for the SEC to come up with a figure to be approved after a hearing by U.S. District Judge Rodolfo A. Ruiz II, who has presided over the case from a federal courtroom in Miami. Though Par Funding operated mainly out of Philadelphia, the SEC filed its case in Florida, where Par Funding had moved its office in 2017.

LaForte and his wife bought a $5.8 million home in Jupiter, Fla., in 2019, in addition to a $2.4 million home they already owned in Lower Merion and a $2.6 million lodge in the Poconos.

LaForte also faces federal firearms charges. In that case, federal prosecutors disclosed there is an ongoing FBI and IRS criminal investigation into Par Funding. In August, Philadelphia lawyer Gaeton Alfano, who represents the court-appointed receiver in the civil fraud case, told Ruiz during a hearing that he had turned over “massive amounts of data and documents” and made witnesses available in response to subpoenas from a criminal grand jury investigating Par Funding.

Ruiz appointed receiver Ryan K. Stumphauzer to wrest control of $150 million in assets from LaForte and his wife and from Vagnozzi and the other defendants. So far, the receiver has control of $93 million in cash and property worth $53 million, including about 40 expensive buildings scattered throughout Philadelphia. Stumphauzer also took control of art worth $2 million and a stable of luxury cars and boats from LaForte and McElhone.

Days before the SEC filed suit, the couple made one last big purchase — a pair of Patek Philippe watches for themselves, for a total of $154,000. The receiver has seized them, too.

» READ MORE: As SEC crackdown loomed and business fell, Par Funding’s founders bought watches — for $154,000

In total, Par Funding took in about $480 million from investors. Of that, according to documents in the case, Par Funding paid them back about $230 million over the years. Once you back that out and take into account the $150 million in assets held by the receiver, there remains about a $100 million shortfall.

Receiver Stumphauzer is still seeking to collect some of that from Par Funding’s borrowers. As a group, about 1,500 merchants owe Par Funding about $350 million, but much of that appears to be non-collectible.

Days after the SEC filed its civil suit, the FBI raided LaForte’s and McElhone’s houses and seized seven loaded guns and $2.5 million in cash. They also seized the Cessna 6800 corporate jet owned by McElhone, valued at $6 million.

Prosecutors criminally charged LaForte with illegal possession of firearms — four handguns, two shotguns, and a rifle — as a twice-convicted felon. His criminal history includes a fraud conviction in which he and other family members set up a phony law firm to steal $14 million in home escrow money and a subsequent conviction involving an offshore gambling operation. His trial in Philadelphia in the guns case is scheduled for April.

LaForte and McElhone founded Par Funding in Philadelphia in 2011, shortly after LaForte’s release from prison. The firm was in the “merchant cash business.” It lent money at extremely high interest rates — a punishing 50% or more — to small businesses and promised investors high returns as well.

Investors were happy to collect returns of 14% for a time. But the firm cut back returns to just 4% in early 2020. Par Funding blamed the reductions on the onset of COVID-19, but court data showed that the firm had filed nearly 1,500 lawsuits against defaulting borrowers in 2019, before the virus surfaced. All payments to investors halted once the SEC brought its case.

Despite the firm’s sheen of professionalism at its Old City offices, borrowers say they were harassed by aggressive collection efforts that included almost instant withdrawals from their bank accounts — and even outright threats.

Key to Par’s approach was that it required borrowers to sign what are known as “confessions of judgment” — legal documents that compel the debtors to forfeit up front any right to defend themselves in court when accused of missing loan payments. This provided Par with the legal hammer for the quick withdrawals.

In lawsuits against Par Funding, plaintiffs have claimed that the firm used Renato “Gino” Gioe, a bodybuilder and purported member of the Gambino crime family, to dun borrowers with threats. Gioe is facing pending federal criminal charges related to a personal loan, not one made by Par. He has pleaded not guilty. Borrowers have also alleged they were threatened by LaForte, with one merchant asserting LaForte threatened to “blow your house up.” LaForte’s lawyers deny those allegations.

While four defendants in the case have now dropped their opposition, two others have chosen to go to trial. They are Joseph Cole Barleta, 38, a Philadelphia man who was Par Funding’s chief financial officer, and Michael Furman, 39, a Florida businessman who the SEC said raised $6 million for Par Funding. The trial in Miami is to start Dec. 3.

The SEC’s senior trial counsel in the case, Amie Riggle Berlin, declined to comment Wednesday‚ as did Eric Bustillo, director of the SEC’s Miami regional office. Lawyers for the defendants declined to comment or did not respond to calls.

As for Vagnozzi, he was once a ubiquitous presence on Philadelphia media, spending heavily on ads to urge people to put money into his alternatives to the stock markets. In depositions with the SEC, Vagnozzi argued that his radio ads and the rest didn’t run afoul of SEC restrictions on the hawking of unregistered securities though “general solicitation” because his pitches were at a “high level” and avoided the nitty-gritty of the financial instruments he was recommending.

Even before the SEC lawsuit, Vagnozzi has agreed to pay $1.1 million since 2018 to resolve complaints from federal and state financial regulators about his sales techniques.

According to a document filed in response to the suit, Vagnozzi’s businesses reported more than $8 million in profits between 2018 and 2020. In that time, his firms took in $17 million in revenue.

In April, Vagnozzi sued his longtime lawyer, John Pauciulo, of the Philadelphia firm of Eckert Seamans, blaming him for bad advice.

“He never pulled me aside and told me what I was saying was wrong, or was a violation of securities law,” Vagnozzi said in an email to The Inquirer. “He never told me to change my message. Never.” Pauciulo, for his part, said that Vagnozzi had not followed his counsel.

In his initial pleading before the SEC, Vagnozzi contended that he, too, had been in the dark about LaForte’s criminal past. He said he only learned about it in late 2018, two years after he began boosting Par Funding to investors. He said he became aware of it through an investigative news report.

In his lawsuit against his former lawyer, Vagnozzi told a different story. He said Pauciulo had informed him about LaForte’s criminal record in 2017, but advised him he didn’t have to tell investors. A spokesperson for Vagnozzi’s lawyer, George Bochetto, said Vagnozzi’s memory had gotten mixed up.