Philly small-business lender was never a viable or profitable business, but merely used new investors' funds to fool old investors, Judge Ruiz found.
Philly small-business lender was never a viable or profitable business, but merely used new investors' funds to fool old investors, Judge Ruiz found.
LaForte, McElhone, Par chief financial officer Joseph Cole Barleta, and investment salesmen who ran their own firms promoting Par investments earliercontest SEC allegations that they failed to warn investors about LaForte’s criminal past, falsely claimed the investments were insured, and exaggerated loan payment rates from Par’s risky borrowers, who typically could not get loans from mainstream lenders.
The fraudulent payments began when Par started doing business in 2012, and ended in 2020, the judge found. Par stopped making interest payments and sending back principal as promised, in March of that year. While Par claimed it was profitable before the government stepped in, and even paid income taxes, the company’s actual loan collections were “insufficient to cover expenses,” and it lost money every year, leaving it with a net cash deficit of $301 million, Ruiz wrote in his order.
The majority of Par investors, including those whose investments were made in funds overseen by fund servicer Camaplan, have filed valid claims worth $223 million.
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