We all know there are dirty players in the market…
It may shock you, but it helps to learn from their actions.
Not only so you can avoid their schemes and scam, but also these cases can be applied to trading.
Today, I want to reveal one of the wildest cases I’ve seen.
It involves a married couple who scammed investors out of a whopping $500M… and they also had ties to the mob.
This married couple committed a number of crimes, spun a web of lies, and kept some crazy secrets.
Who are they and what can we learn from their actions?
The Married Couple That Stole Half A Billie
There are a lot of things married couples do.
Date nights. Buying a home. Couples retreats. Wine tastings. Opening a business. Scamming investors out of half a billion dollars.
One of these things stands out. But it is exactly what this couple is accused of doing. Their actions caused the SEC to jump into action in hopes of stopping this supposed devious scheme.
So, buckle up this gonna be a wild ride of crime, lies, and mob ties.
Lisa McElhone and Joseph W. LaForte are the couple at the heart of this scandal.
The couple had an “opportunist” loan business.
Loans that sometimes had an interest rate of over 400% would be given to small businesses in the U.S.
How They Did It
Their company called Complete Business Solution would do business as Par Funding. This is how they would supply these loans with interest rates from hell.
But they had a special way of obtaining money to make these loans. They would raise funds from investors through an unregistered securities offering.
And this lasted from 2012 to the very end of 2017. With a whole network of sales agents soliciting the public to invest in the company’s promissory notes.
But everything changed in 2018. Par Funding became aware that it was under a probe by the Pennsylvania Department of Banking and Securities. The reason behind it was that the company used unregistered agents. Breaking securities laws.
Just a few months later Par Funding told the state that it had let go of all its unregistered sales agents.
End of story? Hell no!
What the state’s securities regulators did not know was after the company learned it was being investigated it would not change its ways… it changed its hustle.
They branched out. Creating so-called Agent Funds with the drive to issue their OWN promissory notes. Notes that would be sold to the public by way of an unregistered securities offering. Then the money would be funneled right to Par Funding.
Now they “Agent Funds” did not get cut checks. They would receive the same notes that investors did. The only difference being the agent funds received much higher rates of return.
As of right now, over 40 of Par Funding linked Agent Funds are running today.
In early 2020, one Agent Fund owner described investing in Par Funding as “like the crack-cocaine” of investment deals. Colorfully wording that he had the misfortune of telling some undercover as a possible investor.
Now on to the couple action.
Lisa and Joseph at the helm worked this scheme through more businesses than Par Funding.
But they would go WAY beyond this to keep things under wraps.
The couple allegedly created this scheme with so many layers it would have made Shrek the king of “Ogres have layers” proud.
But unlike Shrek hiding his feelings the couple was hiding their shady dealings. So here are just a few layers within their scheme.
- Hiding the true drive behind Par Funding so-called loan loans.
- Hiding the company’s real record of issuing “loans” and how often those loans went into default.
- Hiding just how unsafe investing in the company was.
- Hiding the many cease and desist orders Par Funding had been slapped with for violating securities laws.
- Hiding the results of the New Jersey Division of Securities’ dive into the company.
- Hiding where some of the investors’ funds were going…. Like their pockets.
- Hiding Joseph’s notorious past and mob ties.
So, what was it about Joseph that he bearing an insane number of aliases?
In 2006, Joseph was convicted of grand larceny and money laundering as part of a real estate scam. By 2007 he received prison time and was ordered to pay back $14.1 million.
But this would not be his last conviction.
In 2009, he pleaded guilty to having run an illegal gambling business.
Then there was the simple issue of his family.
Joseph had mob ties. His grandfather and uncle made names for themselves as part of NYC’s infamous Gambino family. A family that was made a household name to us regular folks thanks to John Gotti.
With a seemingly endless list of hidden secrets and quite a few violations, the SEC came into play.
Filling an emergency action, placing a temporary restraining order, and an asset freeze on those involved in the scheme.
The goal being to stop this very suspicious and suspected to be a fraudulent scheme. A scheme that so far has raised over half a billion dollars from over 1,200 investors.
And Par Funding also has over 2,000 lawsuits against the small businesses it loaned to. Seeking $300 million in defaulted loans and missed payments.
Sure it’s entertainment and all, but there is a purpose to f when you start to follow these cases… I believe it’s easier to put the pieces of the puzzle together, and start thinking as if you’re a “smart money” trader.
The most shocking thing about all these stories and cases is that I see some wild trades go off in the options market… and sometimes, this unusual options activity signals someone may know something.
That’s why I worked with a team of quants to help me create the Dollar Ace Scanner.