The U.S. Securities and Exchange Commission on Tuesday buttressed its civil fraud charges against Philadelphia-based Par Funding, detailing how the firm rejected an auditor’s report showing it was losing money and swapped it with one showing a profit.

In a lengthy federal court hearing watched on Zoom by a virtual audience of 150 that included defendants, numerous lawyers, and many worried investors, SEC senior trial counsel Amie Riggle Berlin castigated Par Funding and its network of financial advisers, accusing it of building a “sham” and “egregious” operation with “no respect for the truth ... no respect for the law.”

In rebuttal, lawyers for the defendants in the case dismissed Berlin’s arguments as “wild statements” that had hyped the threat to investors.

They pleaded with U.S. District Judge Rodolfo Ruiz, presiding from a courtroom in Florida, to relax his freeze on the finances of Par Funding and others, saying the SEC action threatened to snuff out their businesses and cost investors hundreds of millions of dollars. Over the weekend, the judge had tightened controls even more after learning that people from the frozen firms had been remotely accessing and altering computer records against the judge’s order.

Ruiz promised to decide by Sept. 4 whether to extend the temporary order that he issued on July 31, putting a receiver in charge of the defendants’ firms and locking them and their 70 employees out of their offices.

Also last month, the FBI searched Par Funding’s Old City offices and the homes of Joseph W. LaForte and Lisa McElhone, the husband-and-wife team who founded the company in Philadelphia in 2011. They arrested LaForte on weapons charges, citing a criminal record that they say barred him from owning guns, and he remains in prison.

Federal authorities also recently disclosed another arrest, that of Renato Gioe, 52, a New Jersey man who has worked as a debt collector for Par Funding. Gioe was charged under seal in New Jersey on Aug. 5 with loansharking after the FBI accused him of threatening to kill a client of his employer’s. Gioe threatened the man after making a personal loan to him, the FBI said. The FBI described Gioe as a Gambino crime family associate and didn’t identify his employer in the criminal complaint, but its description matched Par Funding.

In a nearly four-hour PowerPoint presentation, the SEC’s Berlin sought to highlight what she said was fresh information gathered since her agency filed its sweeping complaint on July 24 against Par Funding, its owners, and several other financial players and firms.

She noted that Par’s finances were audited by the accounting firm Friedman LLP, with offices in Philadelphia, New York City, and elsewhere. In its initial review, Friedman found that Par lost $6.7 million in 2017 after taking into account credit losses.

But according to Berlin, LaForte — who founded Par Funding after serving time for two felonies, including a $14 million mortgage rip-off involving a fake law firm — wasn’t having it.

At his insistence, she said, Friedman prepared a second audit, showing a $1.2 million profit.

Still, the accounting firm attached an “adverse opinion” to the rewrite, saying that Par Funding had “not accounted for its provision for credit losses, in accordance with accounting principals generally accepted in the United States of America.” The second report’s results “do not present fairly” Par’s financial position, Friedman cautioned.

Berlin told the judge that the swapping out of the audit report was emblematic of an operation shot through with deception. Among other criticisms, she said that Par Funding and its sales agents kept investors in the dark about LaForte’s criminal past, and failed to disclose the “massive profits” extracted by the defendants.

The firm took its investors’ money and lent it to smaller merchants as high-interest cash advances. While Par Funding promised that Par’s borrowers had a default rate of only about 2%, a far higher share of the company’s clients were behind, prompting the firm to file hundreds of lawsuits to collect its money, Berlin said.

In another new disclosure, Berlin quoted a Par Funding executive as saying that the firm’s owners and top officers would annually take 10% of their investment cash for loans to merchants and distribute it among themselves as “profit-sharing.” In the first quarter of 2019, for instance, the sum distributed totaled $9.8 million of the $98 million that Par had raised from investors.

The SEC complaint was also highly critical of a group of financial advisers who urged people to put their money into Par as an alternative to the stock market.

Among these business people, she said, the “biggest and most successful salesman was Dean Vagnozzi.” Well-known in the Philadelphia region for his heavy radio advertising and free steak dinners provided to potential investors, Vagnozzi, based in King of Prussia, operates a business he calls A Better Financial Plan.

Berlin sharply criticized Vagnozzi over his payment system for his sales force. By her account, the agents would strike deals with clients under which the investors would receive a 10% return on their money — but so would the agents.

“Not disclosed is that the agent makes up to the same amount as the investor for forwarding the investment to Par Funding,” Berlin said, calling it a large, undisclosed commission.

And in a side agreement, she said, the agents agreed to give Vagnozzi a quarter of their profits.

Vagnozzi is to appear Friday at a hearing before Judge Ruiz to make his case.

Challenging the SEC’s argument, Alan Futerfas, a lawyer for Par founder McElhone, said larger corporations accused of much more serious offenses — he cited Wells Fargo bank had not been thrown into receivership.

In their rebuttals, he and other defense lawyers repeatedly pointed out that no investor had lost principal, even as Par has raised almost $500 million.

“It’s really not in dispute that investors have been paid back like clockwork” until the pandemic, Futerfas said.

Over the years, Par Funding promised investors an annual return of 10%, or more for larger investments, with money back on demand after a year.

This spring, though, it suspended payments for two months, a rupture that Vagnozzi and others have blamed on the coronavirus shutdown of businesses. Payments resumed in June, but at just 4% interest, with principal returns stretched over seven years. This month, Par Funding halted its payment once more — a stoppage it blamed on the SEC’s demand that a receiver take charge of its operation.