Joseph W. LaForte, the convicted scammer and founder of a Philadelphia cash advance company at the center of an alleged $500 million financial fraud, threatened to flee the country in his private plane and hide millions in untouchable offshore accounts, federal prosecutors said Tuesday.
Speaking unknowingly to undercover FBI agents, LaForte allegedly laid out his plan to fly bulk shipments of cash earned through his business, Par Funding, to the tiny Caribbean island of Nevis. There, they said, he hoped to buy himself citizenship and keep his money out of the reach of investigators in the United States.
Prosecutors made the allegations during a federal court hearing Tuesday in which they successfully sought to keep the 49-year-old financier behind bars until his trial on unrelated weapons charges. FBI agents arrested him Friday at his Lower Merion home after finding four handguns, two shotguns, and a rifle that he was barred as a felon from owning.
LaForte has not been charged in connection with the alleged massive financial fraud, described by the U.S. Securities and Exchange Commission in a lawsuit filed last month in Florida. That lawsuit alleges that he, his company, and others defrauded 1,200 investors whose money Par Funding lent out in short-term, high-interest loans to small businesses across the county.
But Tuesday’s hearing in federal court in Philadelphia revealed details for the first time of a “long-running and ongoing” criminal probe targeting LaForte and the firm. The proceedings also shed new light on the wealth LaForte has managed to accumulate in the nine years since he launched his company after his release from two prison terms for running a real estate scam and an illegal gambling operation.
While raiding three multimillion properties LaForte owned in Pennsylvania and Florida two weeks ago, agents seized LaForte’s private plane, $2.5 million in cash hidden in bundles, and a $10 million bank account controlled by him and his wife, prosecutors said.
“The defendant, who has been used to a lifestyle of having several homes, multiple expensive cars, vast sums of money, a private jet and near limitless resources, now is a person facing not only a loss of that entire lifestyle but near certain conviction for [a firearms] offense that will result in incarceration,” Assistant U.S. Attorney Jonathan B. Ortiz wrote in court filings in advance of Tuesday’s proceedings. He “has a significant motivation, therefore, to flee.”
LaForte’s lawyers scoffed Tuesday at attempts to label their client a flight risk, saying he couldn’t have fled even if he wanted to: His assets are frozen, he has no passport, and he has never traveled abroad.
When agents came to arrest him, “did they find any travel bags packed by his door?” lawyer James R. Froccaro Jr. asked in court. “Did he drain all his bank accounts, hop onto a plane, and head to Havana? No, he didn’t. He hired a lawyer to defend him against any charges that might be brought by the government.”
U.S. Attorney William M. McSwain said Tuesday that U.S. Magistrate Judge Marilyn Heffley had declined to release him.
“Joseph LaForte is where he belongs — in prison,” McSwain said in a statement. “And [he] will now face the consequences of his alleged criminal behavior.”
As prosecutors described it in court filings Tuesday, LaForte and Par Funding’s professional sheen masked a business that operated for borrowers more like a mob-style loan-shark operation. The company allegedly lent money at high interest rates that on occasion hit 400%.
The SEC said that LaForte and others misled investors about the relatively high rate of default on the loans.
And LaForte, whose grandfather was named by federal prosecutors in past congressional testimony as a capo for the Gambino crime family in New York, personally threatened some borrowers who fell behind, Ortiz said.
He allegedly told one small-business owner that he would “blow up your house,” and purportedly asked another whether she “had ever heard of cement shoes.” He warned her that if she didn’t pay up, one day she would start her car and “go poof.”
Other witnesses referenced in government filings described a “large, muscular man” who showed up at their workplaces and threatened them with physical harm if they failed to pay what they owed.
LaForte’s lawyers dismissed those claims Tuesday as lies made up by deadbeat borrowers. Local authorities investigated each allegation and found them groundless, Froccaro said.
Nevertheless, those claims helped secure search warrants for several Par Funding offices in Philadelphia and other LaForte properties, including the $2.4 million house in Lower Merion, a $2 million five-bedroom cabin on Lake Wallenpaupack, outside of Scranton, and a $5.8 million vacation home on the Florida coast.
Froccaro argued Tuesday that the guns found at LaForte’s Lower Merion property — including an AR-15 under his bed, handguns in each drawer of his nightstand, and in a desk in a first-floor office — belonged to his wife. Lisa McElhone, 41, is a cofounder of Par Funding and a licensed gun owner.
But again, LaForte’s conversations with undercover FBI agents undermined his defense’s assertions in court.
Prosecutors said that just days before authorities raided his home, LaForte bragged to the agents about the small arsenal he kept in a dedicated room at his lake house and invited them to go shooting with him.
“We’ve got everything,” he allegedly said. “AR-15s. We’ve got sawed-off shotguns, rifles. We’ve got, I don’t know, what do you want?”