Judge orders Par Funding to stay out of seized accounts


Despite a court order locking doors and forbidding access to documents, Par Funding — the firm once based in Philadelphia facing charges of of investment fraud brought by federal regulators — remotely downloaded more than 100,000 company records in recent days and altered some, officials allege.


After hearing of this in an emergency plea from a court-appointed receiver, a federal judge over the weekend issued a new order to make certain electronic access was cut off and ordering Par Funding staff to destroy any information it took.

U.S. District Judge Rodolfo Ruiz in Miami, an area where Par Funding is now in part based, also on Sunday night gave the receiver he has named, lawyer Ryan Stumphauzer, the green-light to suspend Par Funding staff’s Google email and document access.

The legal skirmishing has been fast and furious since the SEC late last month filed a sweeping civil fraud complaint against Par Funding and financial advisers in Montgomery County and Florida, saying they had violated securities laws, hid the risk facing investors and kept secret the criminal past of a key executive and founder. Par suspended payments to investors in April and May and again this month.

Par and the other defendants insist in court papers that the investments were completely legitimate and it is the SEC that is endangering investors’ future returns by taking over the business and expelling more than 70 employees and their lawyers and other professionals.

In all, Ruiz issued three new orders Sunday:

He gave the receiver more authority to shut off Par employees’ remote access “for as long as required … to ensure that the electronic data … is being properly preserved.” He rejected a push by Par Funding’s lawyers interrogate Stumphauzer.He agreed to let Philadelphia law firm Fox Rothschild quit as Par Funding’s lawyer. Fox had asked to bow out after an order from the judge last week week make it plain Stumphauzer now represents the company. Fox had also represented Par owners Joseph LaForte and Lisa McElhone, a married couple, but they have since hired their own, separate lawyers, replacing Fox.The SEC says LaForte used aliases to hide his convictions for a $14 million real estate scam and operation of an illegal gambling operation, He is behind bars awaiting trial on federal charges of illegal possession of guns by a felon. The seven guns — and $2.5 million in cash — were seized by FBI after it raided his homes recently in Lower Merion, the Poconos and Florida. The FBI also searched Par Funding offices in two locations in Old City.

The fight over records broke out after the receiver’s Philadelphia-based lawyer, Gaetan Alfano, told he judge that Par Funding employees had “downloaded over 100,000 files from the Company’s G Suite cloud-based account” and information from the firm’s Quickbook accounting software. Alfano said documents were transferred as recently as Friday — two weeks after the judge’s order cutting off access.



Alfano said at about 10 employees had accessed date, including workers from the collections, accounting and information technology units. One employee, he added, not only downloaded documents, but also edited and changed information, including a spreadsheet titled ‘Leads/Consolidated Data Sheet’.”

In a separate filing, the SEC complained to the judge that a private investigator, Margaret Clemons, owner of a New York City detective agency, had been writing to Par Funding investors urging them to support the firm.

The federal agency said the detective has urged people to join in an attempt by Par Funding investor Alan Candell, a Villanova lawyer, who had filed papers with the court to intervene in the legal brawl, saying he was concerned that the receivership would damage his investment,

The SEC said that Candell had neglected to note he is a lawyer and had done legal work for Par and the business of Dean Vagnozzi, one of the financial advises named in the SEC complaint.

On Friday, Ruiz denied Candell’s petition to intervene in the case.