A federal judge ordered Joseph LaForte, cofounder of the besieged Philadelphia lender Par Funding, released from prison Thursday on a $2.5 million bond secured by his relatives’ and friends’ homes to await his trial later this month on firearms charges.
LaForte, 49, will remain under house arrest with electronic monitoring, according to the order by U.S. District Judge Petrese B. Tucker.
For the last two months, he has been behind bars at the Federal Detention Center in Philadelphia since the FBI discovered seven loaded guns — four handguns, two shotguns, and a rifle — at his $2.4 million home in Lower Merion while searching it in a criminal investigation of Par Funding. As a twice-convicted felon, LaForte is barred from possessing guns.
In Lower Merion, agents discovered two handguns in a primary bedroom nightstand, a military-style rifle under the bed there, two more handguns in an office, and two shotguns in a closet. They also seized $2.5 million in cash in the place and at LaForte’s $5.8 million house on the Gold Coast of Florida and $2.6 million lodge in the Poconos.
LaForte and his wife, Lisa McElhone, 41, among others, are defendants in a separate civil lawsuit brought by the U.S. Securities and Exchange Commission in Florida, alleging that they defrauded Par Funding investors. They dispute the allegations.
Immediately after LaForte’s arrest in the gun case, a U.S. magistrate judge jailed him, ruling that he was a flight risk and a potential danger to the community.
That decision was urged by prosecutors, who said LaForte had told undercover FBI agents that he might flee in his private plane and hide his money beyond the government’s reach in the Caribbean tax haven of Nevis.
Prosecutors also cited complaints from business owners lent money by Par Funding, who said LaForte and others from Par had threatened violence against them unless they paid up. One businesswoman has accused him of threatening to blow up her house. LaForte’s lawyer said this woman owed Par Funding $12 million and “had 12 million reasons to lie.”
In a court hearing this week, LaForte’s defense team maintained that he had no desire to flee. It was the undercover FBI agents, and not LaForte, who first raised the idea of using his plane to flee to the Caribbean, his lawyer Brian McMonagle said Tuesday, citing a transcript of a recorded conversation his client had with the agents.
In letters made public in court filings, two of LaForte’s sisters and his wife’s parents all appealed for his release. One sister, Jennifer LaForte, called it a matter of “life and death,” given the high rate of the coronavirus in prisons and her brother’s asthma — though prosecutors noted that LaForte routinely smokes cigars and was smoking one when he met with the undercover agents.
His in-laws, James and Margaret McElhone, described him as a “good family man.” Their daughter, McElhone, joined LaForte in founding Par Funding a decade ago shortly after he had served time for a $14 million mortgage fraud and a gambling conviction.
In a document made public Wednesday in the SEC civil case, McElhone put her net assets at nearly $800 million. That included her $8 million jet, dozens of properties worth $59 million, and businesses — most notably Par Funding, worth $250 million.
The $2.5 million bond set Thursday was secured by six homes: the in-laws' rowhouse in South Philadelphia, the homes of cousins in Keansburg, N.J., and Staten Island, N.Y., and the homes of friends in Staten Island and Lackawaxen Township, Pa., near his Poconos home.
LaForte could not put up his own residences, all of which are in his wife’s name, because the judge in the civil case has frozen their assets.
In court Tuesday in Philadelphia, prosecutors told Judge Tucker that they are building a larger criminal case against LaForte and others. Assistant U.S. Attorney Jonathan Ortiz said charges could include financial and securities fraud as well as making the threats.
“In his private life and in his business life, Mr. LaForte has indicated he is willing to take any means necessary to get what he wants,” Ortiz said in court. “He relies on intimidation as part of his actual business model. For him to [claim] that he has this legitimate practice … isn’t what’s going to be borne out when he’s eventually brought to charge.”
Still, neither LaForte nor anyone connected to Par Funding has been charged with criminal counts in connection with that probe.
LaForte is to stand trial Oct. 26 on the gun charges. If convicted, he could face up to 10 years in prison.