Operator of Fraudulent Investment Vehicle Sentenced to Over 15 Years in Prison for Securities Fraud, Tax Fraud and Other Charges

A Pennsylvania man was sentenced to 15 and a half years in prison yesterday for defrauding investors, conspiring to defraud the IRS, filing false tax returns, employment tax fraud, wire fraud, obstruction, and other charges.

According to court documents and statements made in court, Joseph LaForte, of Philadelphia, engaged in a scheme to defraud investors using a fraudulent investment vehicle known as Par Funding. In total, LaForte and his co-conspirators caused an actual loss to investors exceeding $288 million.

LaForte also engaged in a series of federal tax crimes. LaForte and co-conspirators diverted approximately $20 million in taxable income from Par Funding to another entity controlled by LaForte and nominally owned by another, then filed false tax returns that did not report this income. He also received more than $9 million in cash kickbacks from a customer of Par Funding and did not report this income to the IRS on his individual tax returns. As a result, LaForte’s individual tax returns for the years 2016 through 2018 were false. He also paid off-the-books, cash wages to some employees of Par Funding. He did not report these wages to the IRS and did not pay employment taxes on wages paid to employees in cash. The total federal tax loss stemming from LaForte’s crimes exceeds $8 million. He also caused $1.6 million in state tax loss to the Pennsylvania Department of Revenue by falsely reporting that he and his wife were residents of Florida from 2013 through 2019, when in fact they resided in Pennsylvania.

Acting Deputy Assistant Attorney General Karen E. Kelly of the Justice Department’s Tax Division and U.S. Attorney David Metcalf for the Eastern District of Pennsylvania made the announcement.

The FBI, IRS Criminal Investigation, and the Federal Deposit Insurance Corporation Office of Inspector General investigated the case.

Assistant U.S. Attorneys Matthew Newcomer, Sam Dalke, Eric Gill, and Patrick J. Murray for the Eastern District of Pennsylvania prosecuted the case. Trial Attorney Ezra Spiro of the Tax Division and Assistant U.S. Attorney John J. Boscia for the Eastern District of Pennsylvania assisted with the prosecution.