Joseph LaForte, the founder of a Philadelphia cash advance company that raised a half-billion dollars from hundreds of investors before the government called it a fraud, says he isn't asking federal authorities to return his $6 million private jet to him, or the millions in stocks they also seized 2 1/2 years ago.
Instead, he and his wife, Lisa McElhone, maintain that they just want the Cessna 680 and stock proceeds used for a good cause: to help repay losses investors suffered in their former firm, Par Funding, a lender to businesses too risky to borrow from traditional banks.
But the U.S. Securities and Exchange Commission is skeptical of the Haverford couple's purported motivekfks as it tries to collect a $197 million federal court judgment it won from them. Now, a court dispute over those assets has revealed new information about a long-running criminal investigation federal prosecutors have been pursuing against LaForte, McElhone and others for years.
In a Dec. 23 court filing, LaForte and McElhone urged a federal judge in Philadelphia to compel U.S. Attorney Jacqueline C. Romero to turn over the assets to a court-appointed receiver charged with overseeing repayments to investors, or to hold her in contempt of court for "willful refusal" to do so.
Their lawyers included a recent email exchange between them and Matthew T. Newcomer, an assistant U.S. attorney, about those assets that detailed for the first time the potential charges and a possible timeline for an impending indictment.
In the message, Newcomer references possible felony charges of securities fraud, tax evasion and collection of unlawful debts — the most serious of which is punishable by up to 25 years in prison. The prosecutor also suggested a short agreement between the parties to pause the statute of limitations for those crimes while their negotiations over the assets continue, suggesting any indictment could come within months.
But the exchange makes clear that both sides still disagree what to do with those assets in the meantime. And each is now accusing the other of using the plane and stock portfolio, which LaForte's lawyers value at $18 million, as a negotiating tactic in the looming criminal case.
In their motion, LaForte's lawyers suggest the government is using the seized items as leverage to force the couple to strike a potential plea deal in the criminal probe.
"The short answer to the question of whether we'll agree to transfer the seized assets to the receiver is no," Newcomer wrote in the Dec. 6 email attached to the LaForte's recent court motion. "Of course, if we end up re-engaging in plea discussions, it's probably worth revisiting."
For its part, the SEC, in a notice to the court filed the same day as LaForte's and McElhone's petition, called the move "the latest example of their outrageous conduct in this case, their relentless interference with the receivership, and their inability to tell the whole truth."
In suggesting that Philadelphia's U.S. Attorney should be held in contempt, LaForte and McElhone are "improperly seeking to use this court to interfere with a criminal investigation against them" and to strip assets held by the U.S. Attorney under court orders, SEC lawyer Amie Riggle Berlin wrote.
She also questioned "whether LaForte and McElhone are improperly attempting to use this case to apply pressure on the U.S. Attorney during plea discussions, to embarrass the U.S. Attorney," to pry loose information they can't get any other way or for another unnamed purpose.
FBI agents seized the jet from an airport in Florida in 2020, along with $2.5 million in cash, the stocks, and millions more in company and personal assets, and IOUs from small-business borrowers in 2020 — the same year the SEC accused the couple and several associates of fraud in a civil lawsuit and federal prosecutors arrested LaForte in an unrelated gun possession case.
At least some of the property was seized under sealed federal court orders arising from the criminal investigation, as well as by agents assisting the SEC.
Since then, a federal judge in Miami has ordered the couple to give up $197 million — including the value of property seized from them by the government — to make more money available for small investors who helped finance their company. The judge said they'd failed to register the securities and lied about the risks.
Investors have until March 22 to file Proof of Claim requests to get at least some of their money back. (Instructions have been posted online.)
The receiver, Florida attorney Ryan Stumphauzer, hasn't said how much, or when, they should expect to get paid. He's still collecting assets from Par, its borrowers, and others, to fund those payments — and dealing with claims from earlier Par investors, borrowers who say they repaid too much, and others who say they, too, are owed money by the company.
The receiver left the value of the plane and the stocks off its most recent accounting of the property it has collected to pay back investors.
A lawyer for the receiver declined to comment Tuesday on the latest dispute over the assets. Three civil attorneys representing LaForte and McElhone did not return requests for comment.
And neither the U.S. Attorney's Office in Philadelphia nor LaForte's criminal lawyer, Brian McMonagle, were willing to discuss what the email included in LaForte's recent civil filings meant for the future of the ongoing Par Funding criminal probe.
LaForte is also scheduled for trial in April on charges that he illegally kept firearms in his homes after a previous felony conviction and prison stint for separate financial frauds in the 2000s that barred him from owning guns. He has denied breaking the law.
