Par Funding founder jailed until trial for threatening witnesses and aiding attack on lawyer

Jun. 1—A federal judge on Thursday described Joseph LaForte — founder of besieged Philadelphia business lender Par Funding — as a "menace" and ordered him jailed until his trial in a $550 million fraud and extortion case.

U.S. Magistrate Judge Richard A. Lloret said he'd been convinced by prosecutors that LaForte, 52, of Philadelphia, had attacked, threatened, or induced others to commit violence against several witnesses in the case against him.

Over the last six months alone, government lawyers alleged, LaForte threatened to kill one witness and his wife, kicked and slapped another man he believed to be informing on him to the FBI, and helped to orchestrate a broad-daylight attack on a lawyer investigating his assets and those of his company.

"He's repeatedly proven that he's a danger to the community," Lloret said at the conclusion of a lengthy hearing Thursday in federal court. "I'm clearly convinced that he's a menace who can't be safely released" on bail.

The detention order comes a week after LaForte; his company; his wife, Lisa McElhone; his brother, James; and his former business associate, Joseph Cole Barleta, were charged in a long-awaited indictment with counts including conspiracy, extortion, fraud, tax crimes, perjury and obstruction of justice.

The group stand accused of raising more than a half-billion dollars from investors between 2016 and 2021 by making what prosecutors have described as "materially false and fraudulent statements" about who was running the company and Par Funding's financial health.

According to the indictment, company executives hid from investors that LaForte — a felon who had twice before served federal prison time for financial frauds, including another investment scheme — was running the operation and that it was losing millions of dollars a year.

Meanwhile, federal investigators say, Par Funding lent out that money to small-business owners with exorbitant fees and bombarded them with aggressive collection efforts including public shaming campaigns, death threats, and visits from muscled goons when they failed to pay up.

Prosecutors have characterized Par Funding as little more than an old-school Mafia loan-sharking operation dressed up in a business suit.

And as if in response, LaForte — who has been held in custody since his arrest last week — showed up to Thursday's hearing with a new lawyer: noted mob attorney Joseph R. Corozzo

Federal authorities have previously described Corozzo — son of the former reputed consigliere to New York's Gambino crime family — as "house counsel" to that criminal organization.

Of his newest client, Corozzo balked at the notion that LaForte had threatened anyone, dismissing the numerous altercations prosecutors had cited as reasons for him to be jailed as innocent "arguments."

"I deny that there were threats," he said. "I don't deny that there was an argument."

Prosecutors, however, viewed the conflicts as cause for alarm.

As multiple federal investigations have tightened the dragnet around LaForte, his family and his company over the last four years, he has consistently lashed out in more brazen and brutal ways, Assistant U.S. Attorney Matthew Newcomer said.

"His entire way of doing business — his entire M.O. — is to use violence and threats of violence to get his way," Newcomer said. "These are the tools in the LaForte toolbox and there's no reason to believe he's going to do anything different now."

The U.S. Securities and Exchange Commission sued Par Funding and its principals in 2020, saying they defrauded investors by raising nearly $600 million to cover loans they doled out while hiding the company's considerable losses and the fact that LaForte was running the operation despite his criminal record.

That same year, federal authorities raided his Haverford home as part of a parallel criminal investigation and seized his private plane, $2.5 million they discovered in cash stored in bundles across his residential holdings, and seven guns they found on his property, which, as a felon, he was prohibited from owning.

(LaForte was charged with firearms violations in 2020 but had been released from custody on house arrest until his arrest in the new case last week.)

Still, his legal fortunes had grown even dimmer in recent months.

Last year, a federal judge in Miami overseeing the SEC civil case ordered LaForte and McElhone to pay back roughly $197 million in ill-gotten gains with penalties and interest — a decision the couple is appealing but which has already resulted in their eviction from their home and efforts by a court-appointed attorney charged with investigating LaForte's assets to sell off another 20 properties he owns.

It was against that backdrop, Newcomer said Thursday, that LaForte's most recent threats occurred.

He allegedly threatened the property manager who'd been charged with appraising those seized properties, believing the valuations the man had come up with were too low.

"He threatened to have [the appraiser] and his wife 'clipped' if [they] did not increase the property valuations," Newcomer said in court filings.

Two months later, prosecutors maintain, LaForte attacked a 76-year-old man and former Par customer in a South Philadelphia cheesesteak restaurant because he believed the man had been cooperating with federal authorities against him.

"You ratted me out. You called the cops on me!" LaForte allegedly shouted as he kicked the man and slapped him on the back of the head — an attack which prosecutors say was caught on camera.

A month later, investigators believe, LaForte helped plan a Feb. 28 attack on one of the attorneys looking to identify assets that could be seized and sold off to satisfy the judgment he and his wife owe the Miami court.

LaForte's brother, James, was charged earlier this year with stalking and attacking lawyer Gaetan Alfano with a flashlight as he left his offices near 18th and Market Streets — an assault that left the attorney bleeding profusely and required seven staples to the head.

Newcomer said Thursday that while Joseph LaForte was not present for the attack, government evidence would show at trial that he helped plan it with his brother.

"It's hard for us to describe the brazenness and the audacity of this conduct," Newcomer said. "It paints a picture of a man who is literally willing to do or say anything to stop this investigation and the SEC case."

Despite Thursday's detention order, a date has not yet been set for LaForte's trial on the fraud and extortion case.

James LaForte, meanwhile, also remains behind bars facing charges in both that case and for the attack on Alfano.

McElhone and Barleta, Par Funding's former CFO, have both been released on bond.

All four have pleaded not guilty and vowed to take their case to trial.

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