The wife of the founder of Par Funding, a fraudulent and now-defunct Philadelphia-based lending firm, was sentenced Thursday to one day in jail and 60 days of house arrest for dodging about $1.6 million in taxes she should have paid on income derived from the scheme.
Lisa McElhone apologized for her conduct during a sentencing hearing before U.S. District Judge Mark A. Kearney, saying the spectacular implosion of her husband’s business — and the criminal prosecution of people associated with it — was the “most painful and transformative period of my entire life,” causing her to lose her home and her future, and watch her husband get sent to prison.
“It’s difficult, if not impossible, to express how overwhelming and life-altering this has been,” she said.
Prosecutors acknowledged that McElhone — the owner of an Old City nail salon — had almost nothing to do with Par’s day-to-day operations. And the crimes she was charged with paled in comparison to those of others associated with the business — particularly her husband, Joseph LaForte, who ran the cash-advance firm as a Mafia-style criminal enterprise that defrauded investors out of hundreds of millions of dollars, and resorted to loan shark-style tactics in efforts to collect on debts.
Still, Kearney said, McElhone, 46, did bear some responsibility by failing to question aspects of the life she was afforded that she should have known were too good to be true.
“These things only stop when good people … stop and say, ‘Hey, you’re asking me to go a step too far,’” he said. “That’s the only way these things stop. Because otherwise, if everyone falls in line, everyone goes to jail.”
Kearney said McElhone’s one-day prison stint would be Thursday. She will then serve a three-year term of supervised release, he said, and her 60 days of house arrest will begin in January 2026.
McElhone’s sentencing was notable as the final criminal proceeding for about a half-dozen people charged in connection with Par Funding, which prosecutors have called one of the biggest financial frauds in Pennsylvania history.
LaForte received the stiffest sentence: a 15½-year prison term that Kearney imposed earlier this year. LaForte founded Par to offer quick loans at high interest rates to borrowers deemed too risky to secure financing from traditional banks, but lied to investors about the company’s financial health to raise more money, used thuggish tactics to threaten borrowers who fell into default, and hid tens of millions of dollars from the IRS for his personal use.
Others charged included LaForte’s brother, who also received a lengthy prison term for participating in various aspects of the firm’s crimes. And earlier this week, two financial professionals, Rodney Ermel and Kenneth Bacon, were ordered to serve 2½ years and 6 months, respectively, behind bars for helping devise the fraudulent tax structures connected to the crimes.
Assistant U.S. Attorney Matthew Newcomer said it was perhaps fitting that McElhone’s penalty was the last to be imposed, given her limited connection to the business.
“But I think it does speak to the breadth and severity” of Par’s misdeeds, he said, “that even the least-culpable person is still on the hook for a $1.6 million tax loss.”
Par was founded in 2012 by LaForte, who was legally barred from selling securities because of previous felony convictions for financial crimes.
One way he got around that was to list McElhone as Par’s chief executive on official documents. Then, LaForte and others he recruited to work for him — including experienced financial professionals — ran radio ads and staged fancy solicitation events to raise more than $500 million, all as they portrayed the business as legitimate and lucrative.
In reality, prosecutors said, it was losing tens of millions of dollars a year. But to keep the fraud going, some of Par’s executives lied about the business’ financial health to keep raising money, and others threatened to harm or even kill borrowers who fell into default.
Still, prosecutors said McElhone was effectively uninvolved in the business, spending her workdays instead running the Old City nail salon Lacquer Lounge.
That doesn’t mean McElhone did not benefit from her husband’s grift. LaForte and his partners extracted cash from Par and spent it on things like a private jet, boats, paintings, expensive watches and jewelry, and homes in the Philadelphia area, Florida, and the Poconos.
And in the single count to which McElhone agreed to plead guilty last year, prosecutors said she knowingly signed a tax form claiming she and LaForte were living in Florida — where there is no state income tax — even though they spent most of their time that year in their $2.5 million Haverford home.
That deception led her to avoid paying about $1.6 million in taxes, prosecutors said, an amount she will now be forced to help repay.
Kearney, the judge, said that others might have been more responsible for the wide array of Par’s wrongdoing — but that she needed to be held accountable for failing to stop the wrongs that unfolded before her.
“When you get in a relationship with people,” he said, “make sure you keep your identity. Because you don’t want to be the person going to jail for their crimes.”
