Former Par Funding CFO Joseph Cole Barleta pleads guilty in racketeering case

The last remaining executive charged in the sweeping criminal investigation against defunct Philadelphia business lender Par Funding pleaded guilty Wednesday, avoiding a trial that threatened to reveal how the company defrauded investors and extorted his clients for years to rake in millions.

As part of a deal reached with prosecutors, the company’s former chief financial officer, Joseph Cole Barleta, admitted to one count of racketeering.

In exchange, government lawyers agreed to drop 29 other counts of conspiracy, fraud, perjury and tax evasion against him and recommended that he spend no more than eight years in prison. when he is sentenced next year.

Barleta’s guilty plea — along with previous settlements reached with Par Funding founder Joseph LaForte and his brother James — resolves a broad set of allegations facing company executives just days before they are prepared to present their case before a jury.

Prosecutors argue that Par Funding — once a leader in the multibillion-dollar 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 who defrauded the lenders out of more than half. billion dollars, while using threats of intimidation and violence to raise funds from its clients.

Joseph LaForte started the company in 2011, after his release from prison following prior convictions for running a $14 million real estate Ponzi scheme in New York and operating an illegal overseas gambling operation.

And Barleta quickly established herself as a central figure.

Despite having no university degree and only limited experience as an accountant for a specialist construction company, he was appointed CFO of Par Funding in 2012. Prior to that he was best known as a competitive food eater who, under the name “Johnnie Excel,” downed 20 grilled cheese sandwiches and a quart of tomato soup in 12 minutes, according to promotional materials for the 2013 Wing Bowl, at which he also participated.

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

They did it, Barleta admitted Wednesday, mostly by peddling lies.

Chief among them: Par executives routinely misled potential investors about LaForte’s involvement in the company. As a felon, he was legally prohibited from trading securities. His wife, Lisa McElhone, was listed as the company’s CEO, although she has since admitted that 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 meteoric success, it was running annual deficits of up to $70 million.

LaForte routinely tampered with the company’s accounts to hide how many of Par Funding’s clients were late on payments and how much of its loan portfolio had been written off as uncollectible. Barleta admitted Wednesday that he remained willfully blind to these deceptions.

When the FBI raided Par Funding’s Old City offices in 2020, investigators found $21,200 in cash stored in Barleta’s office — prosecutors say LaForte gave to him to make false payments on Par Funding’s debts. some of their clients in order to give the impression that overdue accounts were up to par. date.

(Barleta told agents at the time that he put 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 and even death to customers who did not did not respect their payments.

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

Prosecutors say he took more than $5 million from the company through a consulting agreement that set his compensation based on how much the company lent.

LaForte and McElhone earned approximately $95 million from similar deals.

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

One of those men, Kenneth Bacon, pleaded guilty earlier this month to charges of conspiracy, tax evasion and wire fraud. Another, Rodney Ermel, is scheduled to go on trial in the case in December.

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

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

A court-appointed monitor submitted an initial distribution plan in August that would pay them $110 million — nearly half the amount they seek to recover — in hopes of raising more through restitution LaForte, Barleta and other defendants in the case as well as underwriters for the lawyers who helped package the investments by Funding. Separately, the government holds other assets seized from the LaFortes, including a private jet, but has not specified its plans for those assets.

The judge in this case has not yet approved this initial distribution plan.

Staff writer Joseph N. DiStefano contributed to this article.