Par Funding’s ex-CFO pleads guilty in racketeering case

The last remaining executive charged in the criminal probe of defunct Philadelphia business lender Par Funding pleaded guilty Wednesday, averting a trial that had threatened to lay bare just how the business fleeced investors and extorted clients over years to rake in millions.

As part of a deal struck with prosecutors, the company's former CFO, Joseph Cole Barleta, admitted to one felony count of racketeering. In exchange, government lawyers agreed to drop dozens of remaining counts of conspiracy, fraud, perjury and tax evasion filed against him and recommend he spend no more than eight years in prison when he is sentenced next year.

Barleta's guilty plea — along with earlier deals struck with Par Funding founder Joseph LaForte and his brother James — resolves a sprawling set of allegations faced by the company's principals just days before they'd been set to take their case before a jury.

Prosecutors maintain Par Funding — once a leader in the multibillion merchant cash advance industry, which offers quick loans at high interest rates to businesses deemed too risky to borrow from traditional banks — operated as a criminal enterprise that defrauded backers out of more than a half-billion dollars, while using threats of intimidation and violence to collect from its customers.

Joseph LaForte launched the business in 2011, after his release from prison on earlier convictions for running a $14 million real estate Ponzi scheme in New York and operating an illegal offshore gambling operation.

And Barleta quickly emerged as a central figure.

Despite having no college degree and only limited experience working as an accountant for a specialty construction company, he was appointed Par Funding's CFO in 2012. Before that, he was more well-known as a competitive food eater who, under the name "Johnnie Excel," downed 20 grilled cheese sandwiches and a liter of tomato soup in 12 minutes, according to promotional material from the 2013 Wing Bowl , in which he also competed.

Still, over the next eight years, he, LaForte and others managed to solicit more than $550 million in investments for their venture.

They did that, Barleta acknowledged Wednesday, mostly by peddling lies.

Chief among them: Par's principals routinely misled potential investors about LaForte's involvement in the business. As a felon, he was legally barred from securities trading. His wife, Lisa McElhone, was listed as the company's CEO, though she's since admitted she had little to do with its day-to-day operations.

They also lied to investors about Par Funding's profitability and the default rate on its loans. Prosecutors say that even as they boasted of the company's wild success, the business was operating at yearly deficits as high as $70 million.

LaForte routinely cooked the company's books to hide just how many of Par Funding's clients had fallen into arrears and just how much of its loan portfolio had been written off as unrecoverable. Barleta acknowledged Wednesday he remained willfully blind to those deceptions.

When the FBI raided Par Funding's Old City offices in 2020 , investigators found $21,200 in cash stored in Barleta's desk — money prosecutors say LaForte had given him to make fake payments on some of their customers' debts to create the appearance that delinquent accounts were up to date.

(Barleta told agents at the time that he'd set that money aside to order a Grubhub delivery lunch.)

Others charged in the case — including James LaForte and Renato "Gino" Gioe, both of whom prosecutors have linked to New York's Gambino crime family — have admitted to threatening violence, or even death, to customers who failed to keep up with their payments.

Barleta, meanwhile, worked behind the scenes to hide details of Par Funding's leadership and financial health from lawyers, auditors, and financial regulators while working with accountants on a complex payment structure that obscured just how much he and the LaFortes were making.

Prosecutors say he took home more than $5 million from the company through a consulting agreement that set his compensation based on how much money the business was loaning out.

LaForte and McElhone earned roughly $95 million through similar arrangements, according to court filings.

All three were charged in a separate case in May, accusing them of hiding those proceeds from state and federal taxing authorities with the help of two Colorado-based accountants.

One of those men, Kenneth Bacon, pleaded guilty earlier this month to charges including conspiracy, tax evasion, and wire fraud. Another, Rodney Ermel, is slated for trial in that case in December.

Prosecutors said Wednesday they'd agreed to drop the tax charges against Barleta as part of his plea deal in the racketeering case. LaForte and McElhone pleaded guilty to charges from that case earlier this year.

Meanwhile, efforts to repay more than 1,000 Par Funding investors with reported losses of about $226 million continue under the oversight of a federal court in Florida.

A court appointed monitor submitted an initial distribution plan in August that would pay them $110 million — nearly half the sum they are seeking to recover — with hopes of collecting more through restitution from the LaFortes, Barleta and others charged in the case as well as from insurers for lawyers who helped package Par Funding investments. Separately, the government holds some other property seized from the LaFortes, including a private jet, but has not made clear its plans for these assets.

The judge overseeing that case has not yet signed off on that initial distribution plan.