(HedgeCo.Net) The Securities and Exchange Commission today announced that it has filed an emergency action and obtained a temporary restraining order and an asset freeze to stop an alleged fraudulent scheme that has raised nearly half a billion dollars from an estimated 1,200 investors nationwide.
According to the SEC’s complaint, spouses Lisa McElhone and Joseph W. LaForte orchestrated a scheme to raise investor funds through unregistered securities offerings for the cash advance company they control, Complete Business Solutions Group Inc., doing business as Par Funding. According to the complaint, McElhone and LaForte made opportunistic loans, some of which charged more than 400% interest, to small businesses across America. The complaint alleges that, to fuel the loans, McElhone and LaForte, with the assistance of other Par Funding personnel, allegedly used a network of unregistered sales agents and affiliated entities to sell promissory notes to the public while lying to or misleading investors about Par Funding’s business, how investor funds would be used, and LaForte’s role and criminal history.
On July 28, 2020 the U.S. District Court for the Southern District of Florida granted the SEC’s request for emergency relief and ordered a temporary asset freeze against Par Funding, McElhone, and LaForte; a related company McElhone and LaForte control, Full Spectrum Processing Inc.; and others, including various companies affiliated with certain unregistered sales agents who participated in the scheme. The court granted the SEC’s request to appoint a receiver for the 11 entity defendants and scheduled a hearing for August 4 to determine whether a preliminary injunction should be granted against the defendants for the pendency of the litigation.
The SEC’s complaint, filed on July 24 and unsealed today, charges the defendants with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act. The SEC seeks disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.