A former official at a beleaguered Philadelphia-based business lender admitted in court Wednesday that he and the company’s other principals defrauded hundreds of investors by offering the hope of double-digit returns on loans to companies deemed too risky to borrow from traditional banks.
The conspiracy charge to which Perry Abbonizio, 65, of Collegeville, pleaded guilty is the first to emerge against a senior official at Par Funding, the company at the center of a long-running federal fraud probe.
And newly unsealed court filings suggest it likely won’t be the last.
Abbonizio, who ran his own investment firm but also told customers he was a Par Funding managing partner, has agreed to cooperate with federal authorities.
During a court hearing Wednesday to accept Abbonizio’s guilty plea, Assistant U.S. Attorney Patrick J. Murray accused at least three other Par Funding officials of conspiring with him to bilk investors: company founder, Joseph W. LaForte; his wife, Lisa McElhone; and the company’s chief financial officer, Joseph Cole Barletta.
No charges have been filed against them, and lawyers for the three had no comment. But a grand jury continues to hear evidence in the case and lawyers representing Par Funding’s investors, who have been working with federal authorities, said they expected charges against other senior officials to emerge soon.
“If it’s a conspiracy, there have to be coconspirators,” said Eric Lechtzin, who has filed lawsuits against Par officers and salespeople on behalf of investors.
Abbonizio said little during the hearing, confirming to U.S. District Judge Mark A. Kearney that he understood the consequences of his guilty plea. His lawyer Jeffrey Marcus declined to comment afterward.
Broadly, the criminal activity Abbonizio admitted to — punishable by as long as five years in prison — resembles the conduct detailed by the U.S. Securities and Exchange Commission in a civil fraud lawsuit filed in 2020. In that case, a federal judge in Florida ordered the defendants to pay more than $200 million. LaForte, McElhone, and Cole Barletta have appealed.
From its offices in Old City, prosecutors say, the company raised more than half a billion dollars between 2016 and 2021 by making “materially false and fraudulent” statements to investors about the safety of their money, and the true identity of Par Funding’s top management, while they lent it out to small businesses across the country on terms that, if fully paid, would have cost several times what they borrowed.
And as one of the company’s chief pitchmen, Abbonizio was at the center of many of those misrepresentations.
He told potential backers that investments in Par Funding were insured. At swanky solicitation events in King of Prussia and Wildwood, Fla., he promised investors that fewer than 1% of the businesses borrowing from the company defaulted on their loans.
In fact, many of the loans were uncollectible, according to the government. And prosecutors say Abbonizio and the others also kept investors in the dark about who was running Par Funding day to day.
On paper, McElhone was listed as the company’s CEO, but investigators say she rarely set foot in the office and instead served as a proxy for her husband, LaForte. He was legally barred from selling securities because of felony convictions in 2006 for a $14 million real estate Ponzi scheme, and in 2009 for operating an illegal offshore gambling operation.
Abbonizio and the others failed to disclose LaForte’s criminal record to potential investors.
Abbonizio acknowledged with his plea that he and his coconspirators sought to conceal other negative information about the company from investors, by giving false testimony in civil depositions. After The Inquirer reported on issues raised by Par investments in 2019, company officials deployed a lawyer to send what prosecutors called “misleading letters to investors and the media” about the company.
Though that lawyer was not identified in Abbonizio’s plea documents, John Pauciulo, a lawyer who formerly headed the Financial Transactions practice in the Philadelphia office of law firm Eckerd Seamans, agreed to pay the SEC $125,000 after it found that he was either wrong or “reckless” in advising salespeople who sold more than $100 million in Par-related investments that they need not be registered with the SEC.
Part of the reason for Par Funding’s deceptions, prosecutors say, was that Abbonizio, LaForte, McElhone and Barletta had financial incentive to lie.
They were paid through commission fees based on the capital Par brought in from investors and then lent out to businesses — whether or not the loans were repaid or generated any profits for the company.
Though the criminal charges filed against Abbonizio are the first against one of Par Funding’s top officials, they are only the latest in a string of recent legal developments that have augured trouble for him and his colleagues.
The FBI in 2020 raided Par Funding’s Old City offices, along with several properties owned by LaForte and his wife. Those raids uncovered several guns in LaForte’s possession — weapons that he was prohibited from owning as a felon and that prompted a federal firearms case against him.
And in September, a reputed associate of New York’s Gambino crime family pleaded guilty to conspiracy and extortion charges, admitting that while working as a collector for Par, he threatened business owners who had fallen behind on their loan payments.
Renato “Gino” Gioe told a judge he had threatened to stick a fork in the head of one borrower, and threatened to cut off the hands of another if that person didn’t pay.
Related to the SEC civil case, receivers say they have collected assets worth at least $150 million of the $250 million investors hope to recoup. More than 100 have filed claims with the receiver.
He also agreed to forfeit an additional $1.7 million as part of the plea deal he finalized Wednesday.
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