Feds file first criminal charges against Par Funding principal in long-running financial fraud probe

Feb. 15—A former official at an embattled Philadelphia-based business lender is expected to admit in court Wednesday that he and the company's other principals defrauded hundreds of investors with promises 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, is expected to plead 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 they 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 investigators against his former business partners, according to sources familiar with the terms of his plea deal who spoke on the condition of anonymity to discuss details of the agreement.

In charging documents in his case, unsealed earlier this month, prosecutors accused — but did not identify by name — at least three other Par Funding officials of conspiring with Abbonizio to bilk investors.

Descriptions of those principals in the filing mirror biographical details of Par Funding's founder, convicted fraudster 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 attorneys for the three did not return calls seeking comment this week.

Abbonizio's lawyer Jeffrey Marcus declined to comment Monday.

A grand jury continues to hear evidence in the case and attorneys 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.

Broadly, the criminal activity alleged in Abbonizio's charging documents — punishable by up to five years in prison — closely resembles that detailed by the U.S. Securities and Exchange Commission in a civil fraud lawsuit. In that case, the defendants were ordered 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 government court filings portray Abbonizio, one of the company's chief pitchmen, as being at the center of many of those misrepresentations.

At swanky solicitation events in King of Prussia and Wildwood, Fla., he told potential backers that investments in Par Funding were insured and that fewer than 1% of the businesses borrowing from the company defaulted on their loans. In fact, many of the loans were uncollectible.

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, due to 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.

The filings also accuse Par's principals of seeking to conceal other negative information about the company from investors by giving false testimony in civil depositions and deploying a lawyer — who was not identified by name in government filings — to send "misleading letters to investors and the media" about the company.

[Last summer, John Pauciulo, a lawyer who formerly headed the Financial Transactions practice in the Philadelphia office of law firm Eckerd Seamans, agreed to pay the Securities and Exchange Commission $125,000 and accept a five-year suspension from practicing before the agency after it found 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, and Barletta had financial incentive to lie.

All three men were paid through commission fees based on the money Par brought in from investors and subsequently 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 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 threated 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 warned another that he would cut off their hands if they didn't pay.

As for the SEC settlement finalized last year, 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.

As part of that agreement, Abbonizio agreed to give up property worth $11.3 million, including Shore homes in Avalon and Stone Harbor.

Prosecutors say they want him to pay a total of $13 million as part of his plea deal, including the money he agreed to pay in the SEC case, plus expenses.

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