Wife of Par Funding founder strikes deal to plead guilty while two others charged in new indictment

Lisa McElhone, spouse of company founder Joseph LaForte, is the third defendant to admit guilt in the sprawling — and seemingly ever-widening — probe of the merchant cash advance business.

Joseph LaForte, left and his wife Lisa McElhone.Read moreHandout, left, Sean Murray

by Jeremy Roebuck

Published Mar. 22, 2024, 6:21 p.m. ET

The wife of embattled Par Funding founder Joseph LaForte has agreed to plead guilty in a case alleging she helped him hide more than $40 million he earned through the business cash advance company that authorities say operated more like a Mafia-style criminal enterprise.

Court filings Friday indicated that Lisa McElhone, 44, of Philadelphia, will enter a guilty plea at an April 16 hearing before U.S. District Judge Mark A. Kearney.

The specific charges to which she has agreed to admit guilt as well as the terms of any deal she may have struck with prosecutors remain unclear. Her attorney Alan S. Futerfas did not return requests for comment Friday.

Still, McElhone’s decision marks a significant milestone in the sweeping — and seemingly ever-widening — probe that has prompted Par Funding’s collapse and left her husband and his former business associates battling criminal prosecution and civil penalties on multiple fronts.

Already, two other Par Funding associates have pleaded guilty — Perry Abbonizio, a senior official at the company, and Renato “Gino” Gioe, a Gambino crime family associate who moonlighted as a debt collector for the company.

Also on Friday, prosecutors filed charges against two new defendants — LaForte and McElhone’s accountants — for purportedly aiding the couple in an array of tax fraud schemes.

According to the new indictment, Rodney L. Ermel, 70, and Kenneth Bacon, 58, both of Colorado, designed the complicated tax structure that helped LaForte and McElhone hide the millions he was raking in through his business, which offered quick loans at high interest rates to businesses deemed too risky to borrow from traditional banks.

Between 2013 and 2021, the accountant’s work allegedly helped LaForte and McElhone dodge millions they owed to the IRS and an additional money owed in state income taxes.

That fraud was achieved, prosecutors say, by arranging for LaForte’s Par Funding earnings to be paid to entities registered in McElhone’s name, understating the true value of those earnings, and lying on tax forms about where the couple lived.

For instance, though LaForte and McElhone lived mostly in Pennsylvania during that period, including in a $2.5 million Haverford home they bought in 2016, they filed their taxes as residents of Florida, which has no state income tax.

At various points, the couple told the IRS they were living at addresses that traced back to a law firm in Miami that had done legal work for McElhone, the offices of a Palm Beach real estate agent, and a $14 million home they purchased in Jupiter, Fla., after they first claimed it as their primary residence.

Those falsehoods, prosecutors say, helped the couple avoid more than $1.7 million in state taxes they owed to Pennsylvania between 2014 and 2019.

Meanwhile, McElhone was listed as the owner of Par Funding and various associated entities through which her husband was paid even though she had little involvement in their day-to-day operations.

The accountants allegedly set up that structure to hide LaForte’s role in the company. But it resulted in McElhone — whose spent her workdays operating Lacquer Lounge, a hip nail salon in Old City — amassing assets worth almost $800 million in her name, including an $8 million jet, a suite of luxury cars, and properties in Pennsylvania and Florida worth a combined $59 million, according to a financial statement made public in 2020.

LaForte and McElhone were so pleased by the money that Ermel and Bacon saved them that they showered the accountants with additional benefits including commissions for referring investors to Par Funding and a pair of Rolex watches worth $14,000, according to the indictment.

Attorneys for Ermel and Bacon did not immediately return requests for comment Friday. Both the accountants face charges including conspiracy, tax and wire fraud, and preparing a false tax return that could send them to prison for up to 20 years on the most serious count.

The new indictment also hit LaForte, 53, and Par Funding CFO Joseph Cole Barleta, 40, with counts related to that tax fraud, further complicating the increasingly dire legal predicament they’ve found themselves in over the past five years.

In 2020, the U.S. Securities and Exchange Commission sued Par Funding and its principals alleging they’d bilked investors in the company out of hundreds of millions of dollars by promising false returns and hiding LaForte’s past as a two-time felon.

He’d previously served prison time in 2006 in New York for overseeing a $14 million Ponzi scheme and in 2009 for running an illegal offshore gambling operation — convictions that should have barred him from publicly trading securities.

LaForte and Cole were then criminally charged in 2023 in an indictment that mirrored the SEC allegations and lodged new claims against them and LaForte’s brother, James, alleging they used mob-style tactics to collect debts from Par Funding clients who had fallen into default.

Prosecutors have accused the company of bombarding borrowers with aggressive collection efforts including public shaming campaigns, death threats and visits from muscled goons when they failed to pay up.

They’ve also charged the LaForte brothers with plotting to frustrate efforts to investigate their crimes — including by attacking an attorney working on the SEC case.

In a superseding indictment filed last month, the LaForte and Cole were hit with racketeering conspiracy charges, alleging they ran their company as a criminal enterprise since its inception.

Meanwhile, LaForte is awaiting trial in a separate gun possession case filed after FBI agents discovered four handguns, two shotguns , and a rifle while executing a search warrant at his home in 2020.

As a convicted felon, it is illegal for LaForte to own firearms, though he has maintained that his wife was the true owner of those weapons.

LaForte has entered not guilty pleas to all the charges against him.

He and his Par Funding business associates are set to stand trial on the racketeering charges in October.

Kearney, the judge overseeing all the Par Funding-related cases, has scheduled a December trial date for LaForte, Cole, Ermel, and Bacon in the tax fraud case.