UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 20-CV-81205-RAR

SECURITIES AND EXCHANGE 

COMMISSION, 

Plaintiff,

v. 

COMPLETE BUSINESS SOLUTIONS 

GROUP, INC. d/b/a PAR FUNDING, et al.,

Defendants.

_______________________________/ 

ORDER GRANTING IN PART PLAINTIFF’S 

AMENDED OMNIBUS MOTION FOR FINAL JUDGMENT

This case is an enforcement action brought by the Securities and Exchange Commission 

(“SEC”) alleging that Defendants issued, marketed, and sold unregistered, fraudulent securities to 

fund short-term loans to small businesses—known as “merchant cash advances.” Before the Court 

is the SEC’s Amended Omnibus Motion for Final Judgments against Defendants Michael Furman, 

Joseph Cole Barleta, Joseph LaForte, and Lisa McElhone [ECF No. 1252] (“Motion”). The Court 

has carefully reviewed the Motion, Defendant Michael Furman’s Response in Opposition [ECF 

No. 1296] (“Furman Response”), Defendants Lisa McElhone, Joseph LaForte, and Joseph Cole 

Barleta’s Amended Response in Opposition [ECF No. 1329] (“Response”), and Plaintiff’s 

Amended Reply [ECF No. 1341] (“Reply”). Further, the Court held a lengthy evidentiary hearing 

on the Motion on September 14, 2022 [ECF No. 1419] (“Disgorgement Hearing”). Having 

thoroughly reviewed the pleadings, the record, applicable law, and with the benefit of oral 

argument, it is hereby 

ORDERED AND ADJUDGED that the Motion is GRANTED IN PART. Each 

Defendant is ordered to pay disgorgement, prejudgment interest, and civil penalties as set forth 

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herein. Furthermore, a permanent injunction shall issue against Defendant Furman, preventing 

him from committing further violations of the securities laws.

BACKGROUND

I. Procedural Background

The SEC filed this action on July 24, 2020, seeking a temporary restraining order and 

preliminary injunction, an asset freeze, appointment of a receiver, a permanent injunction, 

disgorgement, and civil penalties. See Compl. [ECF No. 1]. The SEC filed its Amended 

Complaint on August 8, 2020. Am. Compl. [ECF No. 119]. The Court appointed a receiver over 

certain Defendant entities and issued several subsequent orders expanding the scope of the 

receivership. See [ECF Nos. 141, 238, 436, 484, 517]. The Court also granted the SEC’s request 

for a temporary restraining order and asset freeze, [ECF No. 42], and held a two-day preliminary 

injunction hearing. [ECF Nos. 170, 192]. Following the hearing, each Defendant consented to a 

preliminary injunction. [ECF Nos. 173, 176, 187, 200, 201, 221, 255, 336]. On the eve of trial, 

between November 23, 2021, and November 28, 2021, the parties stipulated to, and the Court 

entered, consent judgments against Defendants Perry S. Abbonizio, Dean J. Vagnozzi, Lisa 

McElhone, Joseph W. LaForte, and Joseph Cole Barleta. See [ECF Nos. 999, 1006, 1008, 1010, 

1018] (“Consent Judgments”). 

Pursuant to the terms of their Consent Judgments, the parties agreed that the Court would 

determine whether to disgorge ill-gotten gains and/or impose a civil penalty pursuant to Section 

20(d) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77t(d)] and Section 21(d)(3) of 

the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78u(d)(3)]; and, if so, the 

amount(s) of the disgorgement and/or civil penalty. See Consent Judgments at 5. Importantly, for 

purposes of this Motion, the Consent Judgments state that the allegations in the Complaint shall 

be accepted and deemed true by the Court. Id. Since then, Defendants Vagnozzi and Abbonizio 

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have reached agreements with the SEC as to disgorgement, prejudgment interest, and civil 

penalties. See [ECF Nos. 1160, 1169]. 

Separately, Defendant Furman proceeded to a jury trial on December 7, 2021. On 

December 15, 2021, a jury found that Furman violated Section 10(b), Rule 10b-5(a),

Rule 10b-5(b), and Rule 10b-5(c) of the Exchange Act; Sections 17(a)(1), 17(a)(2), 17(a)(3), 5(a) 

and 5(c) of the Securities Act. [ECF No. 1101] (“Jury Verdict”).

Accordingly, the Court is left to determine whether disgorgement, prejudgment interest, 

and/or civil penalties are appropriate for Lisa McElhone, Joseph LaForte, and Joseph Cole Barleta. 

Further, the Court must determine whether permanent injunctive relief, disgorgement, 

prejudgment interest, and/or civil penalties are appropriate for Michael C. Furman.

II. Factual Background

The Court begins by setting forth the facts as described in the SEC’s Amended 

Complaint—with a particular focus on the remaining Defendants subject to disgorgement. 

Defendants McElhone, LaForte, and Cole have agreed that the allegations in the Amended 

Complaint shall be accepted and deemed true by the Court. See Consent Judgments at 5.

Par Funding—a company founded in 2011 by husband-wife duo McElhone and 

LaForte—was engaged in the business of making “opportunistic loans” to small businesses across 

the country. See Am. Compl. ¶ 1. From approximately August 2012 through mid-2020, to fuel 

these merchant cash advances (“MCAs”), Defendants raised nearly half a billion dollars through 

unregistered securities sold to over a thousand investors nationwide. Id. The alleged scheme 

consisted of two primary phases. During the first phase, from August 2012 until around December 

2017, Par Funding primarily issued promissory notes and offered them to the investing public 

directly and through a network of sales agents (“Phase I”). Id. ¶ 2. 

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Then, in early January 2018—after learning it was under investigation by the Pennsylvania 

Department of Banking and Securities for violating state securities laws through the use of 

unregistered agents—Par Funding implemented a new way to raise funds for the MCAs (“Phase 

II”). Id. ¶¶ 3–4. Par Funding began relying on “Agent Funds” that were “created for the purpose 

of issuing their own promissory notes, selling the notes to the investing public through unregistered 

security offerings, and funneling investor funds to Par Funding.” Id. ¶ 4. Par Funding would 

compensate the Agent Funds by offering them promissory notes that had higher rates of return 

than the notes the Agent Funds sold to investors. Id. ¶ 4. 

As outlined in the Amended Complaint, McElhone and LaForte “orchestrate[d] the 

scheme” through Par Funding and McElhone’s company, Full Spectrum Processing, Inc., whose 

employees operated Par Funding. LaForte, Cole (Full Spectrum’s CFO), and Abbonizio (Par 

Funding’s investment director and partial owner) solicited investors to invest in the securities. Id.

¶ 5. Vagnozzi, through his company ABetterFinancialPlan.com d/b/a A Better Financial Plan 

(“ABFP”), recruited individuals to create the Agent Funds and provided them training and other 

materials to assist them with the creation and operation of the funds. Id. ¶ 6. Vagnozzi, Furman, 

and Gissas each operated Agent Funds that raised money for Par Funding through unregistered 

securities offerings. Id. ¶ 7. At trial, the SEC established that Furman, through Fidelis Planning, 

raised approximately $12.1 million from investors, which Furman funneled through his Agent 

Fund to Par Funding in exchange for promissory notes. Mot. at 42. 

The SEC avers that in addition to violating the federal securities laws by selling 

unregistered securities, Defendants also made false or misleading statements and omissions 

concerning the Par Funding offering in violation of the antifraud provisions of the Securities Act 

and Exchange Act. Am. Compl. ¶¶ 154–294. The misrepresentations alleged by the SEC can be 

grouped into seven categories:

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First, Defendants made misrepresentations regarding Par Funding’s underwriting process. 

The Amended Complaint describes a recorded conversation between Abbonizio and an individual 

posing undercover as an investor where Abbonizio touted Par Funding’s underwriting practices. 

Id. ¶¶ 156–57. It also cites a brochure that Furman, Abbonizio, and Vagnozzi distributed to 

investors emphasizing Par Funding’s “Exceptional Underwriting Rigor”; marketing materials 

where Par Funding claimed it conducted on-site merchant inspections prior to loan approval; and 

a solicitation event where Abbonizio told investors that Par Funding does on-site inspections 100

percent of the time before approving any loan. Id. ¶¶ 158–64. The SEC explains that contrary to 

these representations, Par Funding did not always conduct on-site inspections before approving an 

MCA. Id. ¶¶ 167–82. It also asserts that Par Funding funded loans “without obtaining information 

about the merchant’s profit margins, expenses, or debts,” id. ¶ 183, and did not “always assign a 

liaison to small businesses or have a liaison who communicate[d] with the small businesses” as it 

claimed. Id. ¶ 184. 

Second, Defendants made misrepresentations regarding Par Funding’s loan default rate. 

LaForte, Abbonizio, and Vagnozzi represented to prospective investors that Par Funding’s loan 

default rate was around one percent, id. ¶¶ 185–90, when in reality, “Par Funding has filed more 

than 2,000 collections lawsuits against small borrowers for defaulting on the [l]oans Par Funding 

made to them.” Id. ¶ 193. The Amended Complaint asserts that Par Funding claims to have funded 

more than $600 million in loans and the lawsuits seek to recover over $300 million that the small 

businesses have allegedly failed to repay. Id. ¶ 194. According to the SEC, “[a]n analysis of these 

lawsuits reveals that Par Funding’s loan default rate is as high as 10%.” Id. Further, Par Funding 

excluded from its default rate “any [l]oan where the borrower is making even a partial payment or 

is speaking with Par Funding about the loan.” Id. ¶ 202. 

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Third, Defendants made misrepresentations regarding insurance offered on the MCAs. 

The brochure that Par Funding distributed to potential investors allegedly misrepresented that Par 

Funding offered insurance on all its products up to $150,000. Id. ¶ 204. LaForte and Abbonizio 

also told investors that Par Funding had insurance to back up investor funds. Id. ¶¶ 205–06. In 

reality, “Par Funding did not offer small businesses insurance on the [l]oans, and thus investor 

funds were not protected by insurance.” Id. ¶ 207. 

Fourth, Defendants made misrepresentations and omissions about LaForte’s background 

to investors. LaForte, Cole, Abbonizio, and Par Funding touted LaForte’s financial and business 

acumen and success without disclosing that he is a twice-convicted felon who was formerly 

imprisoned and ordered to pay $14.1 million in restitution for grand larceny and money laundering. 

Id. ¶¶ 213–17. Further, Par Funding did not disclose LaForte as a “Related Person” in its Form D 

filing with the SEC, even though LaForte ran the day-to-day operations of Par Funding and 

functioned as one of its executives. Id. ¶¶ 218–19. At trial, the SEC put forth evidence that Furman 

held numerous events for potential investors where he made the material misrepresentations and 

omissions at issue—including discussing Par Funding’s management while omitting LaForte’s 

role and background as a convicted felon. Mot. at 43.

Fifth, Defendants made misrepresentations to investors regarding Defendants’ regulatory 

history. In November 2018, Pennsylvania securities regulators filed a Consent Agreement and 

Order against Par Funding for violating the Pennsylvania Securities Act’s prohibition on the use 

of unregistered agents in the offer and sale of securities and fined Par Funding $499,000 

(“Pennsylvania Order”). Am. Compl. ¶ 228. Then, in December 2018, the New Jersey Bureau of 

Securities issued a Cease-and-Desist Order against Par Funding based on its offer and sale of 

unregistered securities (“New Jersey Order”). Id. ¶ 229. Additionally, in February 2020, the Texas 

State Securities Board issued an Emergency Cease-and-Desist Order against Par Funding and 

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others, alleging fraud and registration violations in connection with its securities offerings through 

an Agent Fund in Texas (“Texas Order”). Id. ¶ 231. The SEC alleges that Par Funding, LaForte, 

Abbonizio, and Vagnozzi promoted Par Funding’s success while failing to disclose to investors 

that Par Funding had been sanctioned several times for violating state securities laws. Id.

¶¶ 220–27. Further, at trial, the SEC established that Furman made misrepresentations about the 

New Jersey Order to at least one potential investor—who was an undercover individual—falsely 

claiming that New Jersey had “retracted” its action against Par Funding and that Par Funding was 

“good” and did not face fines or penalties. Mot. at 43. 

Sixth, the Amended Complaint asserts that Par Funding made false statements in its Form 

D filings with the SEC about McElhone and Cole’s receipt of funds and Par Funding’s payment 

of finders’ fees and commissions. Am. Compl. ¶¶ 235–43. Par Funding filed a Notice of Exempt 

Offering of Securities on Form D with the SEC on February 19, 2019, and an amended Form D 

on April 28, 2020. Id. ¶¶ 235–36. These filings stated that none of the gross proceeds of the 

offering had been or were proposed to be used for payments to executive officers or others listed 

on the form as Related Persons. Id. ¶¶ 235–37. The amended Form D, signed by Cole, also stated 

that Par Funding had paid no finders’ fees and commissions. Id. ¶ 237. Contrary to these

statements made on the Form D filings, both McElhone and Cole received money from the 

offering, id. ¶¶ 240–42, and Par Funding paid finders’ fees of at least $3.6 million, as well as $1 

million in commissions. Id. ¶ 243. 

Seventh, the Amended Complaint asserts that LaForte falsely told prospective investors 

that he had personally invested large sums of money in Par Funding. Id. ¶¶ 244–45. This was 

blatantly false, as LaForte had never invested in Par Funding. Id. ¶245. 

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LEGAL STANDARDS 

 Congress has authorized the SEC to enforce the Securities Act and the Exchange Act and 

to punish securities fraud through administrative and civil proceedings. SEC v. Spartan Sec. Grp., 

Ltd., No. 8:19-CV-448, 2022 WL 3224008, at *1 (M.D. Fla. Aug. 10, 2022) (citing Liu v. SEC, 

140 S. Ct. 1936, 1940 (2020)). Once the Court has determined that securities violations have 

occurred, the Court has broad discretion to fashion appropriate remedies. Id. (citing SEC v. Lorin, 

76 F.3d 458, 461–62 (2d Cir. 1996)). Appropriate remedies include injunctive relief, as well as 

monetary remedies—namely disgorgement, prejudgment interest, and civil penalties. The Court 

proceeds by outlining the legal framework applicable for each remedy. 

I. Monetary Remedies

The Supreme Court has made clear that disgorgement is a well-established equitable 

remedy for recovering “ill-gotten gains.” See Liu, 140 S. Ct. at 1942, 1947. Specifically, a 

disgorgement award that “does not exceed a wrongdoer’s net profits and is awarded for victims is 

equitable relief permissible under § 78u(d)(5).” Id. at 1940. Importantly, disgorgement is not a 

punitive remedy—it is simply meant to restore the status quo. Id. at 1942–44; see also SEC v. 

Tayeh, 848 F. App’x 827, 828 (11th Cir. 2021) (“Disgorgement is an equitable remedy intended 

to prevent unjust enrichment from ill-gotten gains and must not be used punitively.”). Shortly 

after Liu, Congress amended the securities remedies statute to expressly permit courts to order 

disgorgement.1

 As a result, current federal law states that “[i]n any action or proceeding brought 

or instituted by the Commission under any provision of the securities laws, the Commission may 

seek, and any Federal court may grant, any equitable relief that may be appropriate or necessary 

1

 Congress amended the securities remedies statute as part of the National Defense Authorization Act of 

2021 (“NDAA”). See Spartan Sec. Grp., 2022 WL 3224008, at *8. The NDAA applies to “any action or 

proceeding that is pending on” January 1, 2021. NDAA § 6501(b). This action was pending on that date.

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for the benefit of investors.” 15 U.S.C. § 78u(d)(5). Further, “[i]n any action or proceeding 

brought by the Commission under any provision of the securities laws, the Commission may seek, 

and any Federal court may order, disgorgement.” 15 U.S.C. § 78u(d)(7). 

To be entitled to disgorgement, the SEC must produce a reasonable approximation of a 

defendant’s ill-gotten gains. SEC v. Calvo, 378 F.3d 1211, 1217 (11th Cir. 2004) (citing SEC v. 

First City Fin. Corp., 890 F.2d 1215, 1231–32 (D.C. Cir. 1989)). “Exactitude is not a requirement; 

so long as the measure of disgorgement is reasonable, any risk of uncertainty should fall on the 

wrongdoer whose illegal conduct created that uncertainty.” Id. (citations and quotation marks 

omitted). Once the SEC produces a reasonable approximation of a defendant’s ill-gotten gains, 

the burden shifts to the defendant to demonstrate that the SEC’s estimate is not a reasonable 

approximation.2

 Id.

Importantly, courts must restrict disgorgement awards to “net profits from wrongdoing 

after deducting legitimate expenses.” Liu, 140 S. Ct. at 1946. The Supreme Court has carved out 

a limited exception to this rule when the “entire profit of a business or undertaking” results from 

the wrongful activity. Id. at 1945. “[W]hen the ‘entire profit of a business or undertaking’ results 

from the wrongdoing, a defendant may be denied ‘inequitable deductions’ such as for personal 

services.” SEC v. Blackburn, No. 15-CV-2451, 2020 WL 10787527, at *2 (E.D. La. Nov. 3, 2020)

(citing Liu, 140 S. Ct. at 1950) (cleaned up). This exception requires a court to determine “whether 

expenses are legitimate or whether they are merely wrongful gains ‘under another name.’” Id.

2

 The parties here—as well as courts around the country—all agree that the “reasonable approximation” 

standard has survived Liu. See Spartan Sec. Grp., 2022 WL 3224008, at *10; SEC v. de Maison, 

No. 21-620, 2021 WL 5936385, at *1–2 (2d Cir. Dec. 16, 2021); SEC v. Camarco, No. 19-1486, 2021 WL 

5985058, at *15-16 (10th Cir. Dec. 16, 2021).

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II. Civil Penalties 

Federal securities law permits the imposition of civil penalties for violations of federal 

securities law. “Civil penalties are intended to punish the individual wrongdoer and to deter him 

and others from future securities violations.” SEC v. Monterosso, 756 F.3d 1326, 1338 (11th Cir. 

2010). “[T]he Commission may bring an action in a United States district court to seek, and the 

court shall have jurisdiction to impose, upon a proper showing, a civil penalty to be paid by the 

person who committed such violation.” 15 U.S.C. §§ 77t(d)(1). The penalties that the SEC can 

seek provide for three tiers of escalating amounts depending on the severity of the violations: 

(A) First tier

The amount of the penalty shall be determined by the court in light of the 

facts and circumstances. For each violation, the amount of the penalty shall 

not exceed the greater of (i) $5,000 for a natural person or $50,000 for any 

other person, or (ii) the gross amount of pecuniary gain to such defendant 

as a result of the violation.

(B) Second tier

Notwithstanding subparagraph (A), the amount of penalty for each such 

violation shall not exceed the greater of (i) $50,000 for a natural person or 

$250,000 for any other person, or (ii) the gross amount of pecuniary gain to 

such defendant as a result of the violation, if the violation described in 

paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless 

disregard of a regulatory requirement. 

(C) Third tier

Notwithstanding subparagraphs (A) and (B), the amount of penalty for each 

such violation shall not exceed the greater of (i) $100,000 for a natural 

person or $500,000 for any other person, or (ii) the gross amount of 

pecuniary gain to such defendant as a result of the violation, if— 

(I) the violation described in paragraph (1) involved fraud, deceit, 

manipulation, or deliberate or reckless disregard of a regulatory 

requirement; and

(II) such violation directly or indirectly resulted in substantial losses or 

created a significant risk of substantial losses to other persons. 

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15 U.S.C. §§ 77t(d)(2). The “Commission need only make ‘a proper showing’ that a violation has 

occurred and a penalty is warranted.” SEC v. Warren, 534 F.3d 1368, 1370 (11th Cir. 2008). 

Beyond setting maximum penalties, the statutes leave the amount to be imposed to the discretion 

of the district judge. Monterosso, 756 F.3d at 1338 (citing Warren, 534 F.3d at 1369); see also

SEC v. Razmilovic, 738 F.3d 14, 38 (2d Cir. 2013), as amended (Nov. 26, 2013) (citing SEC v. 

Kern, 425 F.3d 143, 153 (2d Cir. 2005)). However, courts commonly calculate civil penalties in 

two ways—by assessing the gross pecuniary gain or by multiplying the number of violations by a 

specified dollar amount determined by reference to the applicable tier of offense severity. SEC v. 

Am. Growth Funding II, LLC, No. 16-CV-828, 2019 WL 4623504, at *3 (S.D.N.Y. Sept. 24, 

2019). These penalty amounts are laid out in 15 U.S.C. §§ 77t(d)(2) and adjusted for inflation by 

the Federal Civil Penalties Inflation Adjustment Act of 1990. See 17 C.F.R. §§ 201.1001. Some 

courts look to the number of “violative transactions” or the number of “investors to whom illegal 

conduct was directed,” while others calculate damages based on the number of statutory violations 

committed. Am. Growth Funding, 2019 WL 4623504, at *3 (citation omitted).

Courts also look to the following general factors when imposing penalties under the civil 

penalty provisions of the securities laws: 

(1) the egregiousness of the violations at issue; (2) defendants’ 

scienter; (3) the repeated nature of the violations; (4) defendants’ 

failure to admit to their wrongdoing; (5) whether defendants’ 

conduct created substantial losses or the risk of substantial losses to 

other persons; (6) defendants’ lack of cooperation and honesty with 

authorities, if any; and (7) whether the penalty that would otherwise 

be appropriate should be reduced due to defendants’ demonstrated 

current and future financial condition. 

SEC v. Huff, 758 F. Supp. 2d 1288, 1364 (S.D. Fla. 2010), aff’d, 455 F. App’x 882 (11th Cir. 

2012). The Eleventh Circuit has held that, “[a]t most, ability to pay is one factor to be considered 

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in imposing a penalty” and it is not determinative and does not merit significant weight. Warren, 

534 F.3d at 1370; see also Monterosso, 756 F.3d at 1338. 

III. Injunctive Relief

“The SEC is entitled to injunctive relief when it establishes (1) a prima facie case of 

previous violations of federal securities laws, and (2) a reasonable likelihood that the wrong will 

be repeated.” Calvo, 378 F.3d at 1216. The SEC bears the burden of proving that a recurrent 

violation is reasonably likely to occur. Spartan Sec. Grp. Ltd., 2022 WL 3224008, at *1. There 

are six main indicia that courts look to when determining whether a wrong will be repeated, which 

include the “egregiousness of the defendant’s actions, the isolated or recurrent nature of the 

infraction, the degree of scienter involved, the sincerity of the defendant’s assurances against 

future violations, the defendant’s recognition of the wrongful nature of the conduct, and the 

likelihood that the defendant’s occupation will present opportunities for future violations.” Calvo, 

378 F.3d at 1216 (quoting SEC v. Carriba Air, Inc., 681 F.2d 1318, 1322 (11th Cir. 1982)) (internal 

citations omitted). 

ANALYSIS

The Court begins by addressing three key issues affecting all remaining Defendants: (1) 

whether disgorgement is warranted; (2) whether the SEC has met their burden to provide a 

reasonable approximation for the disgorgement requested of each Defendant; and (3) whether the 

Receivership assets should be used to offset the amount of disgorgement owed by Defendants. 

First, the Court finds that disgorgement is appropriate in this case. Here, three Defendants 

have admitted to significant wrongdoing and one Defendant was found liable by a jury of his peers 

on seven counts of securities violations. See Consent Judgments, Jury Verdict. The Court need 

not belabor the point—Defendants violated the securities laws numerous times over several years, 

and the SEC is entitled to disgorgement of their ill-gotten gains. See 15 U.S.C. § 78u(d)(7); Liu, 

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140 S. Ct. at 1948–49. Further, these ill-gotten gains will be distributed to the victim investors by 

the Receiver at a later time. Mot. at 29. Therefore, the disgorgement requests at issue are 

consistent with the applicable statutory provisions and the Supreme Court’s admonition that 

disgorgement should be distributed to harmed investors where feasible. Liu, 140 S. Ct. at 1948–49.

Second, the SEC has satisfied its burden to provide a reasonable approximation of the 

requested disgorgement. The SEC relies on a variety of evidence—including the Amended 

Complaint (accepted as true by Defendants via their Consent Judgments for the purposes of this 

Motion), the Receiver’s sworn declaration, the underlying books and records of Par Funding 

analyzed by a credentialed accounting firm, and evidence admitted at Furman’s jury trial. See

Mot. at 30, 34, 42.3

 Thus, although the Court is compelled to adjust the amount of disgorgement 

owed by Defendants as explained below, the SEC has met its initial burden.

Last, Defendants argue that the Court should offset or reduce the amount of disgorgement 

owed by each Defendant to account for the Receivership assets. Resp. at 27–29. Defendants are 

mistaken. The sole purpose of disgorgement is to deprive “wrongdoers of their ill-gotten gains.” 

Liu, 140 S. Ct. at 1942. Accordingly, the current amount of Receivership assets has no bearing on 

the Court’s disgorgement analysis. The Court is charged with determining the profits Defendants 

received as part of their involvement in the fraudulent scheme and restoring the status quo. See 

id. at 1942–44; see also Tayeh, 848 F. App’x at 828. Any other claims or set-offs Defendants may 

assert as to the Receivership estate will be decided later at the claims handling stage of the 

litigation. With these preliminary rulings in mind, the Court now turns to the SEC’s requests for 

disgorgement, prejudgment interest, civil penalties, and injunctive relief. 

3

 Throughout the pendency of this litigation, Defendants have refused to produce a sworn accounting and 

fulsomely respond to discovery requests. Mot. at 24, 27, 42. As a result, the SEC has no better basis by 

which to calculate Defendants’ net profits for purposes of disgorgement.

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I. Disgorgement 

The SEC seeks to disgorge the following amounts from each Defendant: (A) $226,471,877 

from McElhone and LaForte; (B) $13,247,011 from Cole; and (C) $1,834,000 from Furman. Mot. 

at 1. Given that McElhone and LaForte, Cole, and Furman played differing roles in the Par 

Funding operation, the SEC has employed different methods to calculate disgorgement for each 

Defendant. The Court will address each Defendant in turn.4

A. Lisa McElhone and Joseph LaForte

To begin, the Court must address the SEC’s contention that an adverse inference may be 

drawn against McElhone and LaForte given their repeated invocation of the Fifth Amendment 

throughout this litigation—as well as the SEC’s request that the Court preclude them from 

introducing previously withheld evidence. Mot. at 24. The Court agrees that McElhone and 

LaForte cannot be permitted to use the Fifth Amendment as a sword and a shield. See SEC v. 

Zimmerman, 854 F. Supp. 896, 899 (N.D. Ga. 1993) (explaining it is well-settled that “[t]he Fifth 

Amendment cannot be invoked to oppose discovery and then tossed aside to support a party’s 

assertions”). In civil actions, the Fifth Amendment does not forbid adverse inferences against 

parties when they “refuse to testify in response to probative evidence offered against them.” Baxter 

v. Palmigiano, 425 U.S. 308, 318 (1976). However, McElhone and LaForte are “free . . . to use

any other outside discovered evidence.” Zimmerman, 854 F. Supp. at 899. And here, to the extent 

Defendants wish to “present documentary evidence that the SEC and the Receiver have had from 

4

 McElhone and LaForte will be addressed together as the SEC seeks to hold the two (who are married) 

joint and severally liable. Mot. at 30. In Liu, the Court found that the SEC could seek joint and several 

liability for partners engaged in wrongdoing. See Liu, 140 S. Ct. at 1949. And McElhone and LaForte do 

not dispute the SEC’s request to find the two joint and severally liable. Resp. at 14.

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the outset of this case or the testimony of other witnesses who did not assert their Fifth Amendment 

rights,” Resp. at 10, they may do so. See Zimmerman, 854 F. Supp. at 899.

In their opposition to the SEC’s disgorgement calculations, McElhone and LaForte argue 

that the SEC’s disgorgement calculation should start with the Quarterly Status Report’s figure of 

$246.4 million provided by the Receiver to the Court on May 2, 2022, [ECF No. 1223], because it 

is allegedly a “more reliable” snapshot of Par Funding’s finances. See Resp. at 14. The SEC, by 

contrast, derives its disgorgement figure of $250,217,479 from an in-depth analysis of Par 

Funding’s QuickBooks5 records memorialized in the sworn declaration of the Receiver, [ECF No. 

1214-1] (“Receiver’s Declaration”), and the SEC’s expert report, [ECF No. 774-1] (“SEC Expert 

Report”). Reply at 3.6 The Court is compelled to begin with the SEC’s starting figure for several 

reasons. 

The SEC’s figure is derived from an its Expert’s intensive and multi-year analysis of Par 

Funding’s QuickBooks records.7

 The SEC’s Expert, Melissa Davis, took two years to forensically 

analyze and reconcile Par Funding’s QuickBooks records, bank account records, and promissory 

note records when issuing her report. SEC Expert Report ¶ 131; Disgorgement Hr’g at 14:12–25. 

Melissa Davis is a Certified Public Accountant, Certified Insolvency and Restructuring Advisor, 

and Certified Fraud Examiner. SEC Expert Report ¶ 131. Both parties had access to these records 

for nearly two years and both parties produced expert reports based on them. Disgorgement Hr’g 

5

 QuickBooks is an accounting software that businesses use to manage and track their financial health. 

6

 Defendants’ and the SEC’s proposed starting figures are roughly $3.8 million apart. See also Resp. at 

14–15. 

7

 Throughout the pendency of this litigation, Par Funding’s books and records have been in the hands of 

the Receiver. The Receiver has relied on these records to update the Court quarterly on Par Funding’s 

finances. Resp. Ex. 12 at 10–11.

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at 14:12–25. The Receiver’s Declaration was also based on these same QuickBooks records that 

the SEC Expert Report relied on. Id. at 14:16–17

By contrast, the May 2, 2022 Quarterly Status Report was produced by Bradley Sharp of 

Development Specialists, Inc.8

 [ECF No. 1223-1]. Exhibit 3 of this report contains a one-page 

cash summary of Par Funding. [ECF No. 1223-3] (“PF Cash Summary”). While the Quarterly 

Status Report and PF Cash Summary might have been produced later in time than the SEC’s Expert 

Report, they did not undergo nearly the same level of scrutiny as the SEC Expert Report. See 

Reply at 3–4. The Quarterly Status Report and PF Cash Summary are Brad Sharp’s unsworn 

analysis. These documents have not been reviewed by an accountant; they contradict the 

QuickBooks figures that both the SEC and Defendants’ expert9 reports relied on; and were 

produced after the close of discovery in this case. Reply at 4–5; Disgorgement Hr’g at 14:5–16:4. 

These facts make it uncertain at best as to whether the Quarterly Status Report and PF Cash 

Summary provide a “more reliable” snapshot of Par Funding’s finances than the Receiver’s 

Declaration and SEC Expert Report. Because binding caselaw in this Circuit compels resolution 

of uncertainty against the defrauding party, the Court will begin its disgorgement analysis with the 

SEC’s figure. Calvo, 378 F.3d at 1217; see also SEC v. Owings Group, LLC, No. RDB-18-2046,

2021 WL 1909606, at *4 (D. Md. May 12, 2021). 

Using the SEC’s starting figure, the Court now turns to McElhone and Laforte’s arguments 

for deductions from the total sum of $250,217,479. The Court arrives at this number by subtracting

8 Development Specialists, Inc. (“DSI”) is a provider of management consulting and financial advisory 

services.

9

 Defendant’s Expert, Joel Glick, also produced a report that relied on the QuickBooks figures [ECF No. 

727-2] (“Defendants’ Expert Report”). The figures in the Quarterly Status Report and PF Cash Summary 

are inconsistent with the numbers in Defendants’ Expert Report as well. Reply at 5.

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the total amount the company repaid to investors, including the Agent Funds ($300,108,117), from 

the total sum that Par Funding raised from investors ($550,325,596). See Receiver’s Decl. ¶¶ 6–7.

i. Deductions for Other Disgorgement Awards

McElhone and LaForte ask the Court to deduct the disgorgement amounts from all other 

Defendants in this case from their own. Resp. at 16. The SEC has only deducted the disgorgement 

attributed to Abbonizio and Cole from McElhone and LaForte’s requested disgorgement. Id. 

McElhone and LaForte contend they are entitled to a reduction for any disgorgement sought or 

obtained from Furman, Gissas, and Vagnozzi. Id. The SEC explains that it deducted all amounts 

paid by Par Funding to Furman, Gissas, and Vagnozzi in its initial deduction. See Mot. at 30, n.3; 

Reply at 6. 

Based on the allegations in the Amended Complaint, Furman, Gissas, and Vagnozzi were 

compensated through their Agent Funds. Am. Compl. ¶¶ 6–7. The SEC deducted all distributions 

made to Agent Funds from their initial calculation. Therefore, Defendants are not entitled to any 

disgorgement offset because the “ill-gotten” gains of Furman, Gissas, and Vagnozzi have not been 

attributed to McElhone and LaForte. Any disgorgement sought or obtained from Furman, Gissas, 

and Vagnozzi is based on their net profits—the difference between the payments Par Funding 

made to the Agent Funds and the amount the Agent Funds disbursed to their investors—in other 

words, “the spread” from the fraudulent scheme. Id. ¶ 4. Because payments to the Agent Funds 

have been subtracted from the SEC’s calculation of McElhone and LaForte’s requested 

disgorgement, they are not entitled to any further reduction on this point.10

10 This situation is distinguishable from that of Cole and Abbonizio. Cole and Abbonizio were paid through 

commissions and consulting fees. Am. Compl. ¶¶ 20–21. As a result, the SEC did not previously deduct 

their disgorgement from the ill-gotten gains of McElhone and LaForte because their compensation was not 

a disbursement to investors. See generally Mot. at 30 n.4.

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This same analysis applies to McElhone and LaForte’s request to obtain an offset for any 

disgorgement the SEC seeks from A.G. Morgan Financial Advisors, LLC, Vincent J. Camarda, 

and James McArthur. Reply at 6–7. The SEC has already deducted the investor funds sent to 

those individuals from its calculation of McElhone and LaForte’s disgorgement. Id. Accordingly, 

the Court will not make any additional deductions for disgorgement sought from A.G. Morgan 

Financial Advisors, LLC, Vincent J. Camarda, and James McArthur. 

ii. Deductions for Balance of Notes to Other Profit Participants

Next, McElhone and LaForte ask the Court to deduct the balance of notes from a specific 

subset of note holders. Resp. at 18. Currently, Par Funding owes a family of investors—the 

Chehebars—$56,600,000 in unpaid notes (i.e., the Chehebars invested $56,600,000 in Par 

Funding). Id. McElhone and LaForte profited from this investment; however, they argue they 

should not have to disgorge the monies owed to the Chehebars because the family was well aware

of the risks of investing in Par Funding, had consulting agreements with Par Funding, and were 

profit participants in the company. Id. at 19. While this may be true, it does not change the fact 

that McElhone and LaForte profited from their investments and those profits are ill-gotten gains 

ripe for disgorgement. Accordingly, McElhone and LaForte are not entitled to the $56,600,000 

deduction they seek.

iii. Deductions for Consulting Fees Paid to Outsiders

McElhone and LaForte claim they are entitled to deduct consulting fees paid to 

outsiders—consultants who are not parties to this lawsuit. Resp. at 19. Because this request 

warrants a larger discussion regarding whether Par Funding is entitled to deductions for legitimate 

business expenses, the Court takes the opportunity to address that issue here.

The SEC contends that Par Funding, and therefore McElhone and LaForte, are not entitled 

to deduct any business expenses from their disgorgement amount because the entire profit of the 

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business resulted from wrongful activity. Mot. at 33; see Liu, 140 S. Ct. at 1945. The SEC tries 

to characterize Par Funding as the type of exception case described in Liu by arguing that the entire 

“business resulted from wrongful activity,” and therefore “business expenditures are not deducted 

from the disgorgement figure.” Mot. at 33 (citing the portion of Liu enumerating the exception to 

the general rule that courts sitting in equity may order disgorgement of ill-gotten gains after 

deducting legitimate business expenses). The SEC further suggests that it would be impossible to 

determine if Par Funding had “value independent of fueling a fraudulent scheme.” Id. 

In the Response, McElhone and LaForte state that Par Funding was a profitable business 

that incurred legitimate expenses. Resp. at 20. Par Funding generated substantial profits from its 

MCA operations, employed over 75 employees, and for a time paid hundreds of millions of dollars 

in principal and interest to noteholders. Id. While the Court will not go so far as to say that Par 

Funding was always a profitable business—after all, forensic analysis of its QuickBooks records 

shows that it was often breaking even or in the red, see SEC Expert Report ¶¶ 71–73—the Court 

does not find that Par Funding had absolutely no value apart from the fraudulent scheme. Par 

Funding lent money to legitimate businesses (in addition to some illegitimate ones as well) and 

collected on some of the loans it made. See Resp. at 20; see also PF Cash Summary (detailing 

advances to merchants and payments from merchants). As a result, the Court finds McElhone and 

LaForte have met their burden to show that the SEC’s disgorgement figure is not reasonable insofar 

as it does not deduct any legitimate business expenses.

11

11 Moreover, even if Par Funding had no value independent from the fraudulentscheme, the SEC misapplies

Liu. The SEC interprets Liu to say that the deduction of business expenses is not required when the entire 

profit of a business or undertaking results from the wrongdoing. Reply at 11. But that interpretation ignores

the entirety of the Court’s analysis in Liu. See Liu, 140 S. Ct. at 1945–46. The Court explained that “when 

the ‘entire profit of a business or undertaking’ results from the wrongdoing, a defendant may be denied 

‘inequitable deductions’ such as for personal services.” Blackburn, 2020 WL 10787527, at *2 (quoting 

Liu, 140 S. Ct. at 1945–46). This exception requires the court to determine “whether expenses are legitimate 

or whether they are merely wrongful gains ‘under another name.’” Id. (quoting Liu, 140 S. Ct. at 1945–46) 

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The SEC filed a Notice of Supplemental Authority on October 24, 2022, analogizing SEC 

v. Fisher, No. 21-60624, 2022 WL 13650848, at *1 (S.D. Fla. Oct. 21, 2022), to the instant case. 

[ECF No. 1431]. The SEC contends that Fisher––a case where the court denied any deductions 

for business expenses––bolsters the SEC’s arguments here because the defendant in Fisher “(1) 

failed to prove the expenditures had value independent of fueling a fraudulent scheme . . . and (2) 

operating costs appeared to be costs that would have existed whether or not Defendants sold the 

securities.” Id. The supplemental filing illustrates an aspect of the SEC’s argument prone to 

opacity and fluctuation. The Court will take a moment to explain.

The SEC maintainsthat Par Funding should fit into the exception enumerated by Liu, which 

would prohibit any deductions for business expenses because the “entire profit of [Par Funding]

results from [] wrongful activity.” Mot. at 33 (quoting Liu, 140 S. Ct. at 1945). Defendants 

rebutted this assertion in part by demonstrating that Par Funding’s profits did not result entirely

from wrongful activity, thereby entitling Defendants to certain legitimate business expense 

deductions. Resp. at 19–23, 30–45. Faced with this partial rebuttal, the SEC reframed its argument 

in its Reply, moving away from the Liu exception. The SEC now avers it does not seek to disgorge 

profits from the MCA business—the legality of which is not in dispute—just profits derived from 

the fraudulent promissory notes. See Resp. at 33; Reply at 10–11. And because the SEC has 

alleged that “investor funds were used to pay investors” via the fraudulent promissory notes,

legitimate business expenses should not be deducted. Reply at 13. At the Disgorgement Hearing,

(citations omitted). Here, the SEC has failed to demonstrate that the entire profit of Par Funding resulted 

from wrongful activity or that Defendants, in requesting deductions for legitimate business expenses, are 

making “unconscionable claims for personal services or other inequitable deductions.” Liu, 140 S. Ct. at 

1945 (internal quotations omitted). 

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the SEC further pursued this argument, and lead trial counsel for the SEC appeared to concede that 

this theory of disgorgement was not adequately framed in the Motion.

12

There are both procedural and substantive problems with the SEC’s position. 

Procedurally, the SEC did not raise this argument on business deductions in its underlying Motion, 

so Defendants were unable to fulsomely respond to it. Courts have consistently held that “a reply 

memorandum may not raise new arguments or evidence.” Lage v. Ocwen Loan Servicing LLC, 

145 F. Supp. 3d 1172, 1181 (S.D. Fla. 2015), aff’d, 839 F.3d 1003 (11th Cir. 2016) (internal 

quotations and citations omitted); see also Kellner v. NCL (Bahamas), LTD., 753 F. App’x 662, 

667 (11th Cir. 2018) (“[I]t is by now clear that we cannot consider arguments raised for the first

time in a reply brief.” (internal citation omitted)). Though the Court benefitted from oral argument 

on the SEC’s Motion in many respects, the SEC cannot expect the Court to adopt a transformed 

argument at a hearing without having adequately briefed it.

Substantively, the SEC’s argument draws an illusory distinction regarding the business of 

Par Funding. The promissory notes brought in funds that fueled the MCA portion of Par Funding’s 

business model. It was all intertwined, which the SEC suggests “sound[s] in fraud.” Reply at 12

(internal quotations and citation omitted). But instead of attempting to draw out distinctions and 

propose a business expense deduction calculation that considers the intertwined structure of Par 

Funding, the SEC opted for an all or nothing approach in its briefing. The Court finds that based 

on the record, a portion of Par Funding was a lawful business, and therefore legitimate business 

expenses must be deducted in accordance with Liu. The Court’s viewpoint was further confirmed 

12 Counsel for the SEC stated, “if you look at our motion, the SEC does not seek any—it’s just not there. 

I guess I should have written it. We are seeking—the basis of our disgorgement is related to the notes 

only.” Disgorgement Hr’g at 86:3–7. Notably, in its Notice of Supplemental Authority, the SEC is only 

able to cite to arguments raised at the Disgorgement Hearing, as opposed to anywhere in its Motion or 

Reply.

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by the Receiver at oral argument, whose review of the Par Funding records demonstrates that the 

amount Defendants seek to deduct are operational in nature. Disgorgement Hr’g at 125:12–126:1. 

Such deductions contrast sharply with the extravagant dinners and travel expenses that the 

defendant in Fisher attempted to deduct as legitimate business expenses. [ECF No. 1431-1] at 5.

Having cleared the threshold to be able to consider legitimate business expenses, the Court 

must now determine whether these consulting fees paid to “outsiders” qualify for this deduction. 

The Court finds that they do. McElhone and LaForte present a breakdown of consulting fees taken 

from Par Funding’s QuickBooks. Resp. at 21. These consultants include financial firms, 

marketers, promotional product companies, and more. See SEC v. Almagarby, No. 17-62255, 2021 

WL 4461831, at *2 (S.D. Fla. Aug. 16, 2021), report and recommendation adopted, No. 17-62255, 

2021 WL 4459439 (S.D. Fla. Sept. 29, 2021), report and recommendation adopted, No. 17-62255, 

2022 WL 832279 (S.D. Fla. Feb. 15, 2022) (deducting brokerage commissions, fees paid to 

finders, fees paid for legal opinion, and fees paid to transfer agents from disgorgement award based 

on gross proceeds from defendant who was found to have violated Section 15(a) of the Securities 

and Exchange Act of 1934).

While the SEC continues to attack the reliability of McElhone and LaForte’s evidence, said 

evidence is derived from the same books and records that the Receiver has reviewed. Reply at 16; 

see also Receiver Declaration [ECF No. 1214-1] ¶¶ 4, 8–10. Moreover, the SEC has not made a 

sufficient showing that the entire undertaking of Par Funding resulted from wrongdoing such that 

it would fit into the narrow exception articulated in Liu precluding any deductions for legitimate 

business expenses. Liu, 140 S. Ct. at 1945. Because the Court views these arms-length consulting 

fees as legitimate business expenses, the Court deducts $8,620,102.26 from the SEC’s requested 

disgorgement award. See Resp. at 19.

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iv. Deductions for Par Funding’s Other Legitimate Business Expenses 

McElhone and LaForte ask the Court to deduct $54,441,665.65 worth of legitimate 

business expenses from the SEC’s requested disgorgement award. Resp. at 22. In support, they 

attach a profit and loss statement showing Par Funding’s annual expenses by category, as well as 

Par Funding’s QuickBooks files and other books and records that backup these expenses. Id. 

McElhone and LaForte acknowledge that the Receiver in his Quarterly Status Report estimated 

these operating costs at a lower amount. Resp. at 23 n.31. The Receiver identified $42,600,000 

worth of operating costs in the PF Cash Summary. These operating costs excluded all 

commissions and consulting fees (which are included as a separate line item in the PF Cash 

Summary). But given the arguments enumerated above by the SEC that the numbers derived from 

the QuickBooks records are more reliable and thoroughly reviewed, the Court declines to rely on 

the PF Cash Summary and Quarterly Status Report here as well.13 Instead, the Court will rely on 

Defendant’s profit and loss statement, based in the QuickBooks records, which provides an 

itemized list of legitimate business expenses. See Resp. at 21, [ECF No. 1330-7] (“Profit and Loss 

Statement”). While the SEC contests the validity of deducting legitimate business expenses in 

general, it does not propose an alternative calculation for this figure. See Reply at 9–14. 

Accordingly, the Court deducts $54,441,665.65 from McElhone and LaForte’s total disgorgement.

13 McElhone and LaForte describe their legitimate business expenses in their Response—expenses such as 

banking fees, computer and internet expenses, insurance costs, janitorial services, legal fees, other 

professional fees, payroll to non-insiders, and utilities costs. Resp. at 24. While the Court is not relying on 

the Receiver’s PF Cash Summary for this calculation, the Court had occasion to question the Receiver at 

the Disgorgement Hearing about his views on the business expenses that he reviewed. The Receiver 

confirmed that the operating expenses he saw were everything from “janitorial supplies to computer 

stuff . . . . and [he thought] most of what you see in there is [sic] fairly routine expenses.” Disgorgement 

Hr’g at 125:12–126:1.

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v. Deductions for Legitimate Business Expenses of Full Spectrum 

Processing

Next, McElhone and LaForte ask the Court to deduct the legitimate business expenses of 

Full Spectrum Processing (“FSP”) in the amount of $12,216,749.13. Since 2017, Par Funding has 

been operated by FSP. Am. Compl. ¶ 42. Par Funding relied on FSP to perform all their 

back-office functions—including payroll, in-house accounting functions, IT, HR services, and 

maintaining office space for the operations of Par Funding. Resp. at 24. Once again, the SEC 

counters that McElhone and LaForte present no credible evidence that these were legitimate 

business expenses, Reply at 16–17, while McElhone and LaForte rely on the records in the hands 

of both the SEC and the Receiver. Resp. at 24 n.33. Upon reviewing the evidence advanced by 

the parties and questioning the Receiver about the matter at oral argument, the Court is satisfied 

that FSP represented a legitimate business expense for Par Funding and the amount disbursed to 

FSP does not contain payments to personal entities of McElhone or LaForte that would represent 

ill-gotten gains. See Disgorgement Hr’g at 71:5-72:17 (Receiver confirming his understanding 

that FSP was a service provider to Par Funding and undertook tasks such as listing emails, 

processing collections, and updating records). Thus, the Court will deduct $12,216,749.13 in 

FSP’s business expenses from McElhone and LaForte’s total disgorgement amount.

vi. Deductions for Taxes

McElhone and LaForte ask the Court to deduct income taxes paid on behalf of (1) Par 

Funding and (2) McElhone and her entities incurred on income earned from Par Funding. Resp. 

at 25. The Court finds that income taxes paid on behalf of Par Funding should be deducted from 

McElhone and LaForte’s disgorgement amount. However, any income tax paid by McElhone as 

to income she or her various entities earned from Par Funding is not subject to deduction.

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Unlike income tax paid on personal income earned, the taxes paid on behalf of Par Funding 

constitute a legitimate business expense—particularly since the company did do some legitimate 

business. These taxes are akin to deductions the district court made in Liu. See SEC v. Liu, No. 

SACV 16-00974-CJC(AGRx), 2021 WL 2374248, at *6 (C.D. Cal. June 7, 2021), aff’d sub nom.

SEC v. Liu, No. 21-56090, 2022 WL 3645063 (9th Cir. Aug. 24, 2022). There, District Judge 

Carney found that tax payments associated with the construction of a building were legitimate 

business expenses. Id. Like Judge Carney, the Court takes a conservative approach in calculating 

legitimate business expenses given the Liu Court’s emphasis that disgorgement is not meant to be 

punitive. To determine the deductible amount of business taxes, the Court relies on the evidence 

presented by McElhone and LaForte—a reconstruction of tax payments made by Par Funding 

based on its books and records—and finds that evidence to be credible. 

However, McElhone and LaForte’s request to deduct personal income taxes from their 

disgorgement amount is markedly different from income taxes related to Par Funding. On this 

point, the Court finds the reasoning in SEC v. Huff to be instructive: 

The idea behind doing so [requiring defendants to disgorge sums 

equal to ill-gotten gains used to pay income taxes] comports with 

the premise of disgorgement not to allow an individual to enjoy 

ill-gotten gain in that where a person receives income, payment of 

the income tax on that income bestows a benefit upon the person 

who received the income: but for the use of the improperly-obtained 

monies to pay the tax liability on the income, the person receiving 

the income would have had to have paid the taxes on the sum. In 

other words, it matters not how the ill-gotten gains were ultimately 

expended, so long as the spending of the ill-gotten gains bestowed a 

benefit on the person from whom the monies are to be disgorged. 

No. 08-60315, 2011 WL 1102777, at *6 (S.D. Fla. Mar. 23, 2011). Post Liu, courts around the 

country have found that defendants are not entitled to a deduction for personal income taxes paid 

on their ill-gotten gains. See SEC v. New, et al., No. 18-cv-03975, slip. op. at 8 (S.D. Ind. Apr. 26, 

2022); see also SEC v. Arias, No. 12-cv-2937 (MKB)(SIL), 2021 WL 7908041, at *6 (E.D.N.Y. 

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Nov. 11, 2021) (collecting cases). Therefore, McElhone and LaForte are only entitled to a 

deduction for taxes paid as to Par Funding in the amount of $11,854,776.23. 

In sum, after incorporating deductions for Cole and Abbonizio’s disgorgement amounts, 

legitimate business expenses, fees paid to outside consultants, and income taxes paid on behalf of 

Par Funding, McElhone and LaForte are ORDERED to disgorge $163,084,186. 

B. Joseph Cole Barleta

The SEC seeks an award of disgorgement in the amount of $13,247,011 against Cole. Mot. 

at 1. Cole entered into a Consent Judgment with the SEC. [ECF No. 1016-1]. As a threshold 

matter, the SEC argues that Cole should be precluded from introducing evidence about his receipt 

and use of funds because he refused to provide a sworn accounting after the Court compelled him 

to do so. Mot. at 27. But Cole does not seek to submit such evidence, and therefore, the Court 

need not address the SEC’s concerns. 

The SEC supports its requested disgorgement award in two ways: (1) with allegations in 

the Amended Complaint (accepted as true) and (2) with “records available to the SEC and the 

Receiver.” Mot. at 34; see also Reply at 29. While this evidence is sufficient to meet the SEC’s 

burden of “reasonable approximation”, the Court must engage in a more fulsome analysis to 

determine Cole’s appropriate disgorgement amount. 

The Court begins by first referring to the Amended Complaint. The Amended Complaint 

alleges that Par Funding transferred funds, which included investor funds, to “companies in which 

Cole has an ownership interest or otherwise receives financial benefits.” Am. Compl. ¶¶ 19, 240. 

Those companies included ALB Management, Beta Abigail, and New Field Ventures, LLC. Id. 

Based on the exact language used in the Amended Complaint, Cole did not admit to owning 100

percent of each entity. Therefore, any presumption by the SEC that all funds disbursed to those 

three entities can be solely attributed to Cole’s ill-gotten gains appears misplaced. See Mot. at 27. 

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In the Response, Cole admits he had a significant ownership interest in and received 

distributions through ALB Management and Beta Abigail. Resp. at 28. As explained supra at 

15–16, the Court relies on the SEC Expert Report as the most reliable source from which to 

determine Par Funding’s disbursements. ALB Management and Beta Abigail received 

approximately $8,063,304 in total distributions from Par Funding. SEC Expert Report ¶ 128. 

Further, Cole acknowledges that he received approximately $751,000 in salary and bonus 

payments from Par Funding. Resp. at 29. Thus, based upon a review of the distributions and 

salary, the Court is satisfied that a reasonable approximation of Cole’s liability is $8,814,304 worth 

of disgorgement. Again, “[e]xactitude is not a requirement; so long as the measure of 

disgorgement is reasonable, any risk of uncertainty should fall on the wrongdoer whose illegal 

conduct created that uncertainty.” Calvo, 378 F.3d at 1217 (citations and quotation marks 

omitted).

Less clear is the issue of what portion of the funds received by New Field Ventures are 

attributable to Cole’s ill-gotten gains. Resp. at 28. As stated in the Amended Complaint, 

Abbonizio co-owned New Field with Cole. Am. Comp. ¶ 20. To the Court’s best understanding, 

Abbonizio did not own any other company or entity which received disbursements from Par 

Funding. It is Cole’s contention that he did not receive distributions from New Field. Resp. at 28. 

His evidentiary support for this contention consists of his own deposition testimony and a 

purported agreement between Par Funding and New Field. Id. The agreement shows that 

Abbonizio was the manager of New Field. See [ECF No. 1330-13] at 6. However, that agreement 

is not signed and thus provides no probative value to the Court. While the Court cannot say with 

certainty that Cole received zero distributions from New Field, the Court is persuaded that Cole 

did not receive 100 percent of the distributions from New Field because it was “Abbonizio’s 

company with Cole.” See Am. Compl. ¶¶ 19–20; Disgorgement Hr’g at 54:23–56:9 (discussing 

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the SEC’s calculations related to Cole’s connection to New Field Ventures). Defense counsel 

maintained that Cole did not profit at all from New Field. Given the allegations in the Amended

Complaint, however, some percentage of the New Field distributions must be allocated to Cole. 

See id.

Given the foregoing, the Court must make the following inferences based on the Amended 

Complaint, the SEC’s Expert Report, and the Receiver’s analysis of the books and records. 

Abbonizio was a part-owner of New Field Ventures. Am. Comp. ¶ 20. The Amended Complaint 

lacks any other suggestion that Abbonzio received additional funds from Par Funding. See 

generally Am. Comp. New Field received $11,739,902 from Par Funding. SEC Expert Report 

¶ 13. Abbonizio entered into a settlement with the SEC, agreeing to disgorge $10,498,581.00. 

[ECF No. 1169] at 5. Based on the Amended Complaint (which alleges that New Field Ventures 

received approximately $9,500,000), as well as the Receiver’s Quarterly Status Report, the Court 

infers that Abbonizio’s disgorgement of ill-gotten gains is reflective of payments made to New 

Field. As such, the SEC cannot seek to disgorge all disbursements made to New Field from Cole. 

Thus, the Court seeks to disgorge from Cole (in relation to his beneficial interest in New Field) the 

difference between Abbonizio’s disgorgement ($10,498,581.00) and the total funds disbursed to 

New Field Ventures ($11,739,902). That difference is $1,241,321. 

In addition, Cole argues that he should be permitted to deduct the amount he paid in income 

taxes from his disgorgement amount. Resp. at 29. However, for the reasons stated above, the 

Court declines to deduct personal income taxes from Cole’s disgorgement. See SEC v. Merch. 

Cap., LLC, 486 F. App’x 93, 96 (11th Cir. 2012) (rejecting argument that the district court was 

required to consider the amount of income taxes paid). Accordingly, the Court calculates that the 

appropriate disgorgement amount from Cole is equal to the undisputed $8,814,304 disbursed from 

Par Funding to Beta Abigail, ALB Management, and Cole personally, in addition to the funds 

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attributable to New Field Ventures in the amount of $1,241,321. Cole is therefore ORDERED to 

disgorge a total amount of $10,055,625.

C. Michael C. Furman

The SEC seeks an award of disgorgement totaling $1,834,000 against Furman. Mot. at 1. 

Unlike McElhone, LaForte, and Cole, Furman proceeded to trial and a jury handed down a verdict 

in favor of the SEC on all counts. As a result, Furman is in a different procedural posture than the 

other Defendants discussed herein. The Court does not have a consent judgment to rely on in 

assessing the SEC’s requested monetary relief. Instead, the Court relies on the evidence submitted 

at trial—evidence the jury considered when finding Furman liable on all counts.

As an initial matter, Furman argues that the SEC has not met its burden to establish a 

reasonable estimate of his ill-gotten gains. See Furman Resp. at 1. Furman contends the trial

testimony of Bradley Sharp and the corresponding trial exhibit, Exhibit 205 [ECF No. 1121-26], 

are not reliable pieces of evidence. Given their use and admittance at trial, the Court disagrees. 

Furthermore, given that Furman wholly “failed to produce any financial documents in response to 

discovery requests and failed to file the Court-ordered sworn accounting of the funds he received 

in connection with the violations,” the Court is inclined to find that the evidence put forth by the 

SEC is sufficient to establish a reasonable approximation of damages. See Reply at 32. The burden 

now shifts to Furman to demonstrate that the SEC’s estimate is not a reasonable approximation. 

For the reasons that follow, Furman definitively fails to do so.

Similar to McElhone, LaForte, and Cole, the SEC argues that Furman should be precluded 

from submitting any new evidence in these disgorgement proceedings because he previously failed 

to produce any type of sworn accounting to the SEC, and repeatedly stated that he did not know 

how much he profited from the scheme. Mot. at 42; Reply at 32. However, distinct from 

McElhone, LaForte, and Cole, Furman seeks to submit new evidence for the Court’s 

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consideration—namely, a declaration presenting his own calculations as to the amount he profited 

from the scheme; a collection of bank statements; and a few pieces of correspondence between 

him and his legal counsel. [ECF No. 1296-1] (“Furman Declaration”). But it is well-established 

that “[t]he Fifth Amendment privilege cannot be invoked to oppose discovery and then tossed 

aside to support a party’s assertions.” See Zimmerman, 854 F. Supp. at 899 (citing McGahee v. 

Massey, 667 F.2d 1357, 1362 (11th Cir. 1982)). Thus, while it is clear the Court need not consider 

Furman’s new evidence—it will do so anyway in order to illustrate the deficiencies in his 

evidentiary submissions.

Furman fails to provide any evidence (new or otherwise) that the business records 

presented at trial—and admitted into evidence—were incorrect. Reply at 32; see generally Furman 

Dec. Next, Furman argues that if the Court finds the SEC’s disgorgement approximation 

reasonable, he is entitled to deductions for legitimate business expenses. Furman Resp. at 3–5. 

However, Furman fails to present concrete and credible evidence to support any legitimate 

business expenses whatsoever.

The Court has carefully reviewed Furman’s Declaration and attached exhibits. Indeed, the 

Court attempted to match the business expenses claimed by Furman with the bank statements he 

submitted. It was impossible to do so. At best, Furman’s bank records contain line items with 

descriptions such as “Direct Pay” or “Bills.com Payables.” See Furman Dec. Ex. A at 38, 61, 63. 

Those descriptions do not indicate what bills were being paid. See id.

14 As such, the Court cannot 

verify the expenses alleged in Furman’s Declaration and any risk of uncertainty falls on the 

14 There is one line item which contains a notation under the Bill.com payables description which reads, 

“Palm Beach Tax Group” for $333.33. Furman Dec. Ex. A at 63. However, this item does not align with 

the expense attributed to Palm Beach Tax Group in Furman’s Declaration. Id. at ¶ 10. The expense 

attributed to Palm Beach Tax Group is listed as $3,326.00—a far cry from $333.33. Id.

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“wrongdoer whose illegal conduct created that uncertainty.” See Calvo, 378 F.3d at 1217; see also 

Blackburn, 2020 WL 10797527, at *5 (“Defendants must bear the burden of any uncertainty in 

disgorgement awards.”). Moreover, many of the expenses listed in Furman’s Declaration—such 

as business travel expenses, dental expenses, and certain payroll and healthcare expenses—do not 

qualify as legitimate business expenses. See Liu, 140 S. Ct. at 1945–46 (explaining that a 

defendant will not be allowed to diminish net gains through the showing of expenses such as 

unconscionable claims for personal services, deductions for personal or living expenses, or other 

expenses that are shown to be merely dividends of profits under another name).15

Accordingly, the Court cannot deduct any legitimate business expenses from the SEC’s 

requested disgorgement award for Furman. See Tayeh, 848 F. App’x at 829–30 (holding the 

district court did not abuse its discretion when it set defendant’s disgorgement award equal to 

defendant’s ill-gotten gains where defendant failed to present concrete and credible evidence on 

purported business expenses and kept inadequate records). Therefore, Furman is ORDERED to 

disgorge $1,834,000.

II. Prejudgment Interest

A. Lisa McElhone, Joseph LaForte, and Joseph Cole Barleta

The Consent Judgments signed by McElhone, LaForte, and Cole state that “[t]he Defendant 

further understands that, if disgorgement is ordered, Defendant shall pay prejudgment interest 

15 To the extent Furman requests an additional opportunity for discovery, that request is denied. Furman 

Resp. at 2. Furman previously raised this concern before Magistrate Judge Reinhart. [ECF No. 1263]. 

Magistrate Judge Reinhart held a hearing and issued an Order on Defendant Michael Furman’s Request to 

Take Depositions. See [ECF No. 1276]. In the Order, he explained that discovery closed on September 

10, 2021 and unlike Defendants McElhone, LaForte, and Cole, Furman did not enter into a consent 

agreement which allowed him to take additional discovery past that deadline. Id. at 2. Importantly, 

Magistrate Judge Reinhart denied Furman’s request to undertake additional discovery without prejudice,

allowing Furman to seek leave from this Court to extend the discovery deadline. Id. at 3. Furman did not 

do so.

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thereon, calculated from August 1, 2020 based on the rate of interest used by the Internal Revenue 

Service for the underpayment of federal income tax as set forth in 26 U.S.C. § 6621(a)(2).” See

[ECF Nos. 1002-2, 1003-2, 1016-1]. The Court has calculated the appropriate prejudgment 

interest amounts up through the date of this Order and determines that Defendants McElhone, 

LaForte, and Cole are ORDERED to pay prejudgment interest in the following amounts: 

• McElhone and Laforte: $12,237,046.14

• Cole: $754,525.32

B. Michael C. Furman

The SEC requests that Furman pay $88,691.74 in prejudgment interest. Mot. at 1. Along 

with disgorgement, the district court may also award prejudgment interest, and has wide discretion 

in making that calculation. SEC v. Lauer, 478 F. App’x 550, 557 (11th Cir. 2012) (citing SEC v. 

Carrillo, 325 F.3d 1268, 1269 (11th Cir. 2003)). In a conclusory fashion, Furman states that the 

SEC has no basis to impose prejudgment interest. Furman Resp. at 12. However, the Eleventh 

Circuit has noted that awards of prejudgment interest are “compensatory, not punitive, and that the 

district court should make its interest decision through ‘an assessment of the equities.’” Lauer, 

478 F. App’x at 557–58 (citing Osterneck v. E.T. Barwick Indus., Inc., 825 F.2d 1521, 1536 (11th 

Cir. 1987)). 

Based on an assessment of the equities, including treatment of other Defendants in this 

action, the Court finds that an award of prejudgment interest is appropriate. Moreover, the SEC 

specifically asks for “prejudgment interest based on the IRS rate for unpaid taxes.” See Mot. at 

42. Courts in this Circuit regularly apply this rate in calculating prejudgment interest on 

disgorgement awards. See Spartan Sec. Grp., Ltd., 2022 WL 3224008, at *12 (citing Lauer, 478 

F. App’x at 557–58). Accordingly, the Court has calculated the appropriate prejudgment interest 

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up through the date of this Order and determines that Furman is ORDERED to pay prejudgment 

interest in the amount of $137,614.46.

III. Civil Penalties 

The Court begins its assessment of civil penalties by addressing each Defendant’s relevant 

conduct. In its Motion and Reply, the SEC includes additional facts, evidence, and conclusions

regarding LaForte, McElhone, and Cole’s misconduct. See Mot. at 21–24. However, pursuant to 

the Consent Judgments, the Court will focus its analysis on the allegations found within the

Amended Complaint in determining the proper civil penalties for LaForte, McElhone, and Cole. 

See Consent Judgments. Where necessary, and as agreed to by Defendants in their Consent 

Judgments, the Court determines “issues raised in the Motion on the basis of affidavits, 

declarations, excerpts of sworn deposition or investigative testimony, and documentary evidence, 

without regard to the standard for summary judgment contained in Rule 56(c) of the Federal Rules 

of Civil Procedure.” [ECF No. 1002-2] ¶ 5; [ECF No. 1004-1] ¶ 5; [ECF No. 1016-1] ¶ 5.

The SEC seeks Tier 3 Civil Penalties against each remaining Defendant—$50,000,000 

from McElhone, $50,000,000 from LaForte, $5,000,000 from Cole, and $1,834,000 from Furman. 

Mot. at 1. Defendants McElhone, LaForte, and Cole dispute that Tier 3 penalties are appropriate 

in this case—arguing for, at most, Tier 2 penalties. Resp. at 47. Furman contends that civil 

penalties are not appropriate at all. Furman Resp. at 6. Accordingly, the Court will first address 

whether the SEC has made a proper showing that civil penalties are appropriate.

As to all Defendants, the SEC has established multiple violations occurred, and penalties

are warranted. SEC v. Warren, 534 F.3d 1368, 1370 (11th Cir. 2008). Defendants McElhone, 

LaForte, and Cole have admitted to selling unregistered securities and making a litany of serious

misrepresentations to investors in violation of the antifraud provisions of the Securities Act and 

the Exchange Act. Am. Compl. ¶¶ 154–294. Further, a jury found Furman liable for committing

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seven counts of securities violations. See Jury Verdict. This showing is more than sufficient to 

warrant civil penalties. The Court thus turns to address the appropriate tier of civil penalties. 

Tier 3 penalties require violations involving “fraud, deceit, manipulation, or deliberate or 

reckless disregard of a regulatory requirement” that also “directly or indirectly resulted in 

substantial losses or created a significant risk of substantial losses[.]” Am. Growth Funding, 2019 

WL 4623504, at *3. Defendants argue that Tier 3 penalties are not appropriate because the specific 

misrepresentations in the Amended Complaint are not causally related to any loss. Resp. at 29–30. 

But that is not what the statute requires—the statute requires only that the individual’s conduct 

created a “significant risk of loss.” Id. 

Defendants here participated in unregistered securities offerings and made multiple serious 

misrepresentations to investors—notably, misleading investors as to Par Funding’s actual default 

rate, concealing Par Funding’s sordid regulatory history, and concealing LaForte’s criminal 

history—and have left hundreds of millions of investor returns unpaid. See generally Am. Compl. 

These misrepresentations alone create a significant risk of substantial losses to investors. For 

example, the “low” default rate touted by Defendants was information investors depended on in 

deciding whether to invest in Par Funding. See Am. Compl. ¶¶ 185–203.16 Further, in deposition 

testimony, Cole admitted that Par Funding had collected roughly what it had lent out—meaning 

Par Funding was barely breaking even. Pl. Ex. 4 [ECF No. 1213-4] at 97:18–25. This evidence, 

in conjunction with the numerous other misrepresentations made by Defendants, convinces the 

Court that Tier 3 penalties are appropriate for all Defendants in this matter.

16 The Amended Complaint specifically ties LaForte, Barleta, and Furman to either (a) affirmatively 

making false statements surrounding the default rate or (2) failing to correct the misrepresentations made 

by other Defendants in this matter. And again, Furman was found liable for making misrepresentations to 

investors. See Jury Verdict.

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Having established the appropriate tier of civil penalties, the Court will proceed by 

considering (1) the egregiousness of the violations at issue; (2) Defendants’ scienter; (3) the 

repeated nature of the violations; (4) Defendants’ failure to admit to their wrongdoing; (5) whether 

Defendants’ conduct created substantial losses or the risk of substantial losses to other persons; (6) 

Defendants’ lack of cooperation and honesty with authorities, if any; and (7) whether the penalty 

that would otherwise be appropriate should be reduced due to each Defendants’ demonstrated 

current and future financial condition. See Huff, 758 F. Supp. 2d at 1364. 

A. Lisa McElhone and Joseph LaForte

The SEC asks the Court to impose civil penalties of $100,000,000—$50,000,000 for 

McElhone and $50,000,000 for LaForte. Mot. at 36. The SEC argues that McElhone and LaForte

engaged in hundreds of separate violations “in connection with their investor solicitations, and 

they orchestrated this multi-year massive fraud, operated Par Funding with Cole in a fraudulent 

scheme, controlled Par Funding and its unregistered and fraudulent offerings, and profited 

handsomely to the tune of at least $100 million.” Id. Further, they contend that a total of $100 

million is less than McElhone and LaForte’s pecuniary gain and is less than the penalty would be 

if the SEC counted each statutory violation committed by McElhone and LaForte. Id. at 39. 

Under the SEC’s proposal, the Court should count as one statutory violation a single 

misrepresentation made to one investor. Id. So, at an event with 300 investors, LaForte committed 

300 statutory violations when he made misrepresentations while speaking on-stage. Id. With Tier 

3 penalties amounting to $190,000 per violation, see Mot. at 36, multiplying this amount by 300 

guests who heard LaForte’s fraudulent investment solicitation at one dinner event would generate

$57 million in civil penalties. The Court does not find this to be an equitable approach, especially 

because the SEC has not proven how many of the fraudulent solicitations turned into transactions. 

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Further, in support of its request for $100 million in penalties, the SEC cites SEC v. 

Shapiro, No. 17-24624, 2018 WL 7140669 (S.D. Fla. Dec. 27, 2018). However, in that case, 

Defendant Robert Shapiro, who operated a $1.2 billion Ponzi scheme, consented to the 

$100,000,000 penalty with a disgorgement amount of $18,546,643. Id. This is factually distinct 

from the case at hand, given that the Amended Complaint does not contain allegations of a Ponzi 

scheme; Defendants have not consented to a civil penalty; and the amount of money raised by 

investors is less than half of $1.2 billion.

Thus, in order to arrive at an equitable civil penalty supported by the facts of this case, the 

Court begins by addressing the seven factors often used as guidance for the imposition of penalties 

under the securities laws, before outlining its methodology and calculations. See Huff, 758 F. 

Supp. 2d at 1364.

1. Egregiousness of the Violations at Issue. McElhone and LaForte founded Par Funding. 

See Am. Compl. ¶ 1. McElhone is Par Funding’s President, CEO, and sole formal employee, and 

has ultimate decision-making authority for Par Funding. Id. ¶¶ 11, 16, 37, 42. Defendants raised 

nearly half a billion dollars through unregistered securities sold to over a thousand investors 

nationwide. Id. LaForte solicited investors to invest in the securities. Id. ¶ 5. McElhone and 

LaForte violated the federal securities laws by selling unregistered securities, and Defendants also 

made false or misleading statements and omissions concerning the Par Funding offering in 

violation of the antifraud provisions of the Securities Act and the Exchange Act. Id. ¶¶ 154–294. 

Specifically, Defendants made misrepresentations regarding Par Funding’s underwriting 

process. While marketing materials sent to investors emphasized Par Funding’s “Exceptional 

Underwriting Rigor,” Par Funding did not live up to those expectations. Id. ¶¶ 158–64. Par 

Funding did not always conduct on-site inspections nor obtain information about a merchant’s 

profit margins, expenses, or debts before approving a merchant loan. Id. ¶¶ 167–84. 

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LaForte made misrepresentations regarding Par Funding’s loan default rate—namely, that 

it was one percent. Id. ¶¶ 185–90. Analysis done by the SEC reveals that the loan default rate was 

as high as ten percent. Id. ¶ 194. LaForte also misrepresented to investors that Par Funding had 

insurance to back up investor funds. Id. ¶¶ 205–06. In reality, “Par Funding did not offer small 

businesses insurance on the [l]oans, and thus investor funds were not protected by insurance.” Id.

¶ 207. Moreover, LaForte touted his own financial and business acumen and success without 

disclosing that he was a twice-convicted felon formerly imprisoned and ordered to pay $14.1 

million in restitution for grand larceny and money laundering. Id. ¶¶ 213–14. And Par Funding 

did not disclose LaForte as a “Related Person” in its Form D filing with the SEC even though 

LaForte ran the day-to-day operations of Par Funding and functioned as one of its executives. 

Id. ¶¶ 218–19. 

LaForte also promoted Par Funding’s success while failing to disclose to investors that Par 

Funding had been sanctioned several times for violating state securities laws. Id. ¶¶ 220–27. 

Further, Par Funding made false statements in its Form D filings with the SEC about McElhone 

and Cole’s receipt of funds and Par Funding’s payment of finders’ fees and commissions. 

Id. ¶¶ 235–243. The amended Form D, signed by Cole, also stated that Par Funding had paid no 

finders’ fees and commissions. Id. ¶ 237. Contrary to the statements made on the Form D filings, 

both McElhone and Cole received money from the offering, id. ¶ 240–42, and Par Funding paid 

finders’ fees of at least $3.6 million, as well as $1 million in commissions. Id. ¶ 243. And LaForte 

falsely told prospective investors that he had personally invested large sums of money in Par 

Funding. Id. ¶¶ 244–45. 

In short, there is no doubt that these violations are egregious. At every turn, LaForte and 

McElhone (the ultimate decisionmaker at Par Funding) materially misled investors. They withheld 

or lied about critical information that investors rely on in making investment decisions, thereby 

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placing the money of the investing public at risk. Without question, the frequency and severity of 

their misrepresentations and omissions warrant significant penalties.

2. Scienter. Scienter is “a mental state embracing intent to deceive, manipulate, or 

defraud.” SEC v. Ginsburg, 362 F.3d 1292, 1297 (11th Cir. 2004) (internal quotations and citation 

omitted). Scienter can be established by a showing of knowing misconduct or severe recklessness. 

Monterosso, 756 F.3d at 1335. As the Court explained in its Order denying Defendants’ Motion 

to Dismiss, the SEC has alleged enough plausible facts in their Amended Complaint to support a 

finding of scienter. [ECF No. 583] at 23–28, 33–38. McElhone and LaForte acted with knowing 

misconduct or, at minimum, extreme recklessness when they engaged in their egregious conduct. 

To give one example, LaForte’s use of a business card and email with a pseudonym is indicative 

of knowing misconduct. Am. Compl. ¶ 214. And the Court is not persuaded by LaForte’s 

argument that he used this pseudonym to protect his family from possible threats. Resp. at 43. 

Ultimately, the record is replete with similar examples of a deliberate intent to deceive the 

investing public through material misrepresentation and omissions. 

3. Repeated Nature of the Violations. The violations at issue were undoubtedly recurrent, 

taking place over the course of five years. Mot. at 38. McElhone and LaForte continually 

participated in their unregistered securities offering and engaged or condoned the making of many 

material misrepresentations over the life of the company.

4. Defendants’ Failure to Admit to their Wrongdoing. The SEC suggests that Defendants 

have failed to admit their wrongdoing. Id. However, McElhone and LaForte both signed Consent 

Agreements with the SEC, and for purposes of this Motion, have agreed acquiesce to the

allegations in the Amended Complaint and take them as true. Resp. at 46–47. Moreover, 

McElhone and LaForte have acknowledged they could have made additional disclosures—such as 

including LaForte’s real name on their marketing materials. Resp. at 43–44. While these types of 

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concessions fall short of accepting full responsibility for their actions, McElhone and LaForte have 

admitted some wrongdoing.

5. Whether Defendants’ Conduct Created Substantial Losses or the Risk of Substantial 

Losses to Other Persons. As explained supra at 33–34, the Court finds that McElhone and 

LaForte’s conduct clearly created the risk of substantial losses to other persons.

6. Defendants’ Lack of Cooperation and Honesty with Authorities. The SEC contends 

that McElhone and LaForte have “utterly refused to cooperate.” Mot. at 38. However, McElhone 

and LaForte have invoked their Fifth Amendment rights and mounted a vigorous defense. The 

Court does not penalize them for exercising their rights—but also does not credit them for any 

purported cooperation. Resp. at 47. It is a factor that ultimately has no bearing on the Court’s 

civil penalty decision.

7. Defendants’ Demonstrated Current and Future Financial Condition. Neither 

McElhone nor LaForte have provided the Court with a sworn accounting of their assets. Mot. at 

39. Given this failure to provide an accurate picture of their financial condition, they avoid 

advancing any argument for reducing their civil penalties due to financial hardship. See generally

Resp. Accordingly, the Court does not consider this factor in calculating the appropriate amount 

of civil penalties for McElhone and LaForte.

In sum, having carefully considered all seven factors listed above, the Court concludes that 

a $100,000,000 civil penalty is not appropriate against McElhone and LaForte. Specifically, the 

Court is not persuaded that the proper way to calculate penalties in this case is to count one 

misrepresentation made at a single event as 300-plus statutory violations. See, e.g., SEC v. 

Pattison, No. C–08–4238, 2011 WL 723600, at *5 (N.D. Cal. Feb. 23, 2011) (holding that “[t]he 

Court may assess a penalty for each distinct violation, e.g., each time Defendant falsified a record” 

but exercising discretion to impose a lesser penalty) (internal quotations and citation omitted)).

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Importantly, while the imposition of civil penalties based on the number of statutory violations 

may be appropriate in some cases, “the plain language of the statute does not call for such a result.” 

SEC v. Pentagon Cap. Mgmt. PLC, No. 08 Civ. 3324, 2012 WL 1036087, at *3–4 (S.D.N.Y. Mar. 

28, 2012), aff’d in part, vacated in part, 725 F.3d 279 (2d Cir. 2013). Ultimately, “the amount of 

civil penalty rests squarely in the discretion of the court.” Id. at *4 (internal quotations and citation 

omitted). 

Here, “[t]he exact number of violations committed by the Defendants is nearly impossible 

to determine.” SEC v. Invest Better 2001, No. 01 Civ. 11427, 2005 WL 2385452, at *5 (S.D.N.Y. 

May 4, 2005). Indeed, the SEC does not tether its proposal of $100 million in penalties for 

McElhone and LaForte to anything other than a rough comparison to the Shapiro case. 2018 WL 

7140669 at *3; See Mot. at 39. Accordingly, the Court finds the calculation proposed by the SEC 

to be inequitable. As a means of grounding its penalty calculations in the facts of this case, the 

Court instead opts to calculate the civil penalty for McElhone and LaForte by looking to the 

number of investors who hold unpaid Par Funding promissory notes. This approach is similar to 

the one employed in SEC v. Kenton Capital Ltd., where the court calculated the proper penalty by 

“multiplying the maximum third tier penalty for natural persons ($100,000) by the number of 

investors who actually sent money to [defendant] (12).” 69 F. Supp. 2d 1, 17 & n.15 (D.D.C.

1998). Here, the Court will multiply the Tier 3 penalty by the number of investors who hold unpaid 

Par Funding promissory notes for both McElhone and LaForte. The Court believes this method 

of computation more equitably captures the nature and scope of McElhone and LaForte’s 

wrongdoing.

At the commencement of this action, there were 115 notes outstanding on the Investor Log 

provided to the SEC. See Mot. at 36; Def. Ex. 28 [ECF No. 1330-28]. The maximum statutory 

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penalty for a single violation during the time period at issue, according to the SEC, is $190,000.

17 

See Mot. at 36 n.9. Defendants did not challenge the calculation of this penalty amount in their 

Response nor at oral argument. Thus, the Court elects to multiply the statutory penalty by the 

number of unpaid investors (115) for McElhone and LaForte respectively. Utilizing this method, 

it is ORDERED that McElhone and LaForte are each assessed $21,850,000 in civil penalties for 

a total penalty of $43,700,000. McElhone and LaForte are to be held jointly and severally liable 

for this amount. 

B. Joseph Cole Barleta

The SEC asks the Court to impose civil penalties in the amount of $5,000,000 as to Cole

because “Cole’s pecuniary gain . . . far exceeds this amount.” Mot. at 40. Once again, the Court 

turns to the factors set forth in Huff to evaluate the appropriateness of the SEC’s request. Supra at 

32.

1. Egregiousness of the Violations at Issue. Cole was the Chief Financial Officer for Full 

Spectrum Processing, Inc., whose employees operated Par Funding. Am. Compl. ¶ 5. The SEC 

avers that in addition to violating the federal securities laws by selling unregistered securities, Cole

also made false or misleading statements and omissions concerning the Par Funding offering in 

violation of the antifraud provisions of the Securities Act and Exchange Act. Id. ¶¶ 215, 238, 

Notably, McElhone and Cole signed the Par Funding Notes on behalf of Par Funding. Id. ¶ 52. In 

addition, Cole signed contracts with sales agents to locate and solicit investors for Par Funding. 

Id. ¶ 55.

17 The SEC arrived at this figure by looking to the Federal Civil Penalties Inflation Adjustment Act of 1990, 

which adjusts the potential penalty amounts to account for inflation based on violation dates. 17 C.F.R. § 

201.1001; see also SEC, Inflation Adjustments to the Civil Monetary Penalties Administered by the SEC 

(as of January 15, 2022), https://www.sec.gov/enforce/civil-penalties-inflation-adjustments (last visited 

October 24, 2022).

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Cole signed and filed with the SEC an April 2020 Form D for Par Funding that failed to 

identify LaForte in the “Related Persons” section, even though the form 

required identification of “[e]ach executive officer or director of the issuer and person performing

similar functions (title alone is not determinative) for the issuer . . .” and “[e]ach person who has

functioned directly or indirectly as a promoter of the issuer . . . .” Id. ¶¶ 218–19, 238. The Form

D also falsely stated that Par Funding: (1) did not pay McElhone or Cole any of the gross proceeds

from the securities offering, and (2) did not pay any commissions. Id. ¶¶ 237–43. Further, Cole 

knew LaForte had been convicted of crimes involving dishonesty and actively helped conceal 

LaForte’s identity from investors. See Am. Compl. ¶ 215. Cole touted the financial health of Par 

Funding at a dinner with 300 investors and potential investors. Id. ¶¶ 95, 104. And Cole did not 

correct misrepresentations made to investors that Par Funding’s default rate was one percent. Id. 

¶¶ 198–99.

Thus, like the Court’s findings regarding McElhone and LaForte, Cole’s

misrepresentations, omissions, and failures to disclose were egregious in nature. There is no doubt

that Cole’s behavior impacted information available to investors and negatively affected the 

investing public’s ability to make sound investment decisions.

2. Scienter. As noted in the Court’s Order on Defendants’ Motion to Dismiss, the SEC 

has set forth sufficient facts, accepted as true, to support a finding of scienter as to Cole. [ECF 

No. 583] at 23-28; 33-38. Cole acted with knowing misconduct or, at minimum, extreme 

recklessness when he engaged in this egregious conduct. The Amended Complaint and Motion 

are replete with examples of Cole’s scienter. In one glaring example, Cole actively assisted in 

concealing LaForte’s criminal background by “providing LaForte with a Par Funding email 

address bearing the name of his alias, joemack@parfunding.com, and a Par Funding business card 

for his alias, Joe Macki.” Am. Compl. ¶ 214.

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3. Repeated Nature of the Violations. Cole’s violations were recurrent, beginning at the 

start of his employment in 2017. Am. Compl. ¶ 19. Cole ran many of the day-to-day operations 

at Par Funding and executed promissory notes for the unregistered offering for years. Mot. at 41. 

4. Defendant’s Failure to Admit to his Wrongdoing. The SEC suggests that Cole has 

failed to admit his wrongdoing. Id. However, Cole signed a Consent Agreement with the SEC, 

and for purposes of the Motion, has conceded that the allegations in the Amended Complaint are 

true. Resp. at 46–47. Accordingly, Cole has admitted some wrongdoing.

5. Whether Defendant’s Conduct Created Substantial Losses or the Risk of Substantial 

Losses to Other Persons. As explained supra at 33–34, the Court finds that Cole’s conduct related 

to Par Funding created a risk of substantial losses to other persons. 

6. Defendant’s Lack of Cooperation and Honesty with Authorities. The SEC contends 

that Cole has “utterly refused to cooperate.” Mot. at 41. However, Cole invoked his Fifth 

Amendment right and mounted a vigorous defense. The Court will not penalize him for doing so. 

Nor will the Court award Cole any credit for purportedly endeavoring to cooperate early on in this 

case. Resp. at 47. This factor ultimately has no bearing on the Court’s civil penalty decision as to 

Cole.

7. Defendant’s Demonstrated Current and Future Financial Condition. Cole has failed 

to provide the Court with a sworn accounting of his assets. Mot. at 41. Rightly, he mounts no 

argument for a reduction in civil penalties due to financial hardship. See generally Resp. 

Accordingly, the Court does not consider this factor in calculating the appropriate amount of civil 

penalties for Cole.

In sum, having carefully considered all seven factors listed above, the Court finds Cole’s 

conduct worthy of civil penalties. In an effort to equitably calculate those penalties while tying its 

calculations to the facts of this case, the Court looks to the Amended Complaint. Specifically, the 

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Amended Complaint asserts seven statutory violations against Cole. Am. Compl. ¶¶ 268–289. 

Thus, utilizing the maximum statutory penalty for a single violation during the time period at 

issue—$190,000—and multiplying that amount by the seven statutory violations in question, it is 

ORDERED that Cole is assessed $1,330,000 in civil penalties. This sum, when compared to the 

civil penalties imposed above against McElhone and LaForte, accurately captures Cole’s role in 

the Par Funding scheme. Notably, it reflects the fact that Cole profited far less from the scheme

than McElhone and Laforte, as made clear by their respective disgorgement amounts, thereby 

reflecting Cole’s relative culpability when compared to his fellow Defendants. 

C. Michael C. Furman 

The SEC asks the Court to impose on Furman civil penalties in the amount of $1,834,000, 

which is “equal to his pecuniary gains.” Mot. at 42. Once again, the Court turns to the factors set 

forth in Huff to evaluate the appropriateness of the SEC’s request. Supra at 34. 

1. Egregiousness of the Violations at Issue. On December 15, 2021, a jury found that 

Furman violated Section 10(b), Rule 10b-5(a), Rule 10b-5(b), and Rule 10b-5(c) of the Exchange 

Act; and Sections 5(a), 5(c), 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act. Jury Verdict. 

At trial, the SEC established that Furman held numerous events for potential investors where he 

made the material misrepresentations and omissions at issue—including discussing Par Funding’s 

management while omitting LaForte’s role and background as a convicted felon. Mot. at 43. The 

SEC also established that Furman made misrepresentations about the New Jersey Order to at least 

one potential investor—who was an undercover individual—falsely claiming that New Jersey had 

“retracted” its action against Par Funding and that Par Funding was “good” and did not face fines 

or penalties. Mot. at 43. These examples demonstrate flagrant and egregious disregard for the 

securities laws. 

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2. Scienter. The jury found Furman liable for four securities violations that required a 

finding of scienter. Mot. at 43; see Jury Verdict. The Court, therefore, relies on the jury’s 

determinations in this regard.

3. Repeated Nature of the Violations. Furman, via United Fidelis, engaged in repeated 

securities violations beginning in at least 2017 through the imposition of the receivership in this 

case. See Am. Compl. ¶ 269; Jury Verdict.

4. Defendant’s Failure to Admit to his Wrongdoing. Furman concedes in his Response 

that he is “unable to accept responsibility for what he has done without losing” significant rights 

on appeal. Furman Resp. at 11. Furman has since withdrawn his appeal, [ECF No. 1430], and has 

not made any further admissions of wrongdoing. Furman did, however, accept responsibility for 

the risk he created for investors. Furman Decl. ¶ 26.

5. Whether Defendant’s Conduct Created Substantial Losses or the Risk of Substantial 

Losses to Other Persons. As explained supra at 33–34, the Court finds that Furman’s conduct 

related to Par Funding created a risk of substantial losses to other persons. Furman concedes in 

his Declaration that he holds himself accountable “for the risk to investors.” Furman Decl. ¶ 26. 

6. Defendant’s Lack of Cooperation and Honesty with Authorities. Furman has 

demonstrated a lack of cooperation. He failed to file a sworn accounting in accordance with this 

Court’s orders and did not produce any documents requested in discovery. Mot. at 44. 

7. Defendant’s Demonstrated Current and Future Financial Condition. Although the 

Court denied Furman’s Motion to proceed in forma pauperis at the beginning of this litigation, the 

Court is cognizant that Furman has very few assets and a limited ability to pay a large penalty. See 

Furman Resp. at 11. Furman represented himself pro se in this matter for a period of time. The 

Court is also mindful of the relatively small role that Furman played in the overall Par Funding 

scheme as compared to his co-defendants, McElhone, LaForte, Cole, and others. In sum, having 

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carefully considered all seven factors listed above, the Court concludes that a $1,834,000 civil 

penalty is not appropriate against Furman. See SEC v. Universal Exp., Inc., 646 F. Supp. 2d 552, 

567 (S.D.N.Y. 2009), aff’d, 438 F. App’x 23 (2d Cir. 2011) (“[T]he amount of any civil penalty 

rests squarely in the discretion of the court.”).

Furman raised fewer funds than Defendant Vagnozzi and was significantly less involved 

in Par Funding than either Vagnozzi or Abbonizio. See generally Am. Compl. Both Vagnozzi 

and Abbonizio negotiated civil penalties in the amount of $400,000. [ECF No. 1165] at 5; [ECF 

No. 1169] at 5. Accordingly, based on his financial situation, his relative culpability, his 

disgorgement amount, and the equitable nature of these proceedings, it is ORDERED that one 

Tier 3 penalty of $190,000 shall be imposed on Furman.

IV. Injunctive Relief Against Furman

In addition to the monetary relief discussed above, the SEC seeks permanent injunctive

relief against Furman. Mot. at 44. Furman is currently subject to the preliminary injunction the 

Court put in place at the onset of this action. See [ECF No. 182]. The jury’s verdict against 

Furman on all counts sufficiently meets the requirement that the SEC put forth a prima facie case 

that previous violations have occurred. See Spartan Sec. Grp. Ltd., 2022 WL 3224008, at *1. 

Therefore, the Court is left to determine whether the SEC has satisfied its burden to show a

recurrent violation is likely to occur. The Court turns to the six factors laid out in Calvo to make 

its determination. See supra at 11–12. 

The Calvo factors related to egregiousness, scienter, repeated violations, and admission of

wrongdoing overlap with the Huff factors for civil penalties outlined above. Compare Calvo, 378 

F.3d at 1216 with Huff, 758 F. Supp. 2d at 1364. The Court need not repeat that analysis here. 

See supra at 42–45. The Court will, however, address the remaining two Calvo factors—the 

sincerity of Defendant’s assurances against future violations and the likelihood that defendant’s 

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occupation will present opportunities for future violations. Calvo, 378 F.3d at 1216. Furman 

highlights in his Response that he “will accept the [final decision of the Court], whatever it may 

be.” Furman Resp. at 11. Moreover, he states that he “holds [himself] accountable for the risk to 

investors,” Furman Decl. ¶ 26, and he “will be extraordinarily cautious” to avoid violating 

securities laws in the future, id. ¶ 27. The SEC argues that, at a minimum, Furman’s past illegal 

conduct is highly suggestive of the likelihood of future violations. Mot. at 44–45. Additionally, 

the SEC asks the Court to consider that Furman has worked in the securities industry for years—

namely, selling investments to investors. Id. 

Furman presents no argument as to why he should not be subject to a permanent injunction. 

See generally Furman Resp. However, even if he had presented a rebuttal argument, the Court 

would still find that a permanent injunction is necessary to deter Furman from any future securities 

law violations. Furman’s conduct was egregious; it was recurrent over several years and a jury 

found he had the requisite scienter for four securities violations. Further, while the Court 

appreciates Furman’s commitment to helping “as a whistleblower for the SEC in cases” moving 

forward, Furman Decl. ¶ 21, Furman’s assurances that he will be “extraordinarily cautious” to not 

commit future violations of the securities laws do not sufficiently persuade the Court that an 

injunction should not issue, id ¶ 27. Accordingly, Furman shall be permanently enjoined from 

committing further violations of the securities laws.

CONCLUSION

For the foregoing reasons, it is ORDERED AND ADJUDGED that Plaintiff’s Amended 

Omnibus Motion for Final Judgment [ECF No. 1252] is GRANTED IN PART as follows: 

• Defendants McElhone and LaForte are found jointly and severally liable to the SEC 

for $163,084,186 in disgorgement, $12,237,046.14 in prejudgment interest, and 

$43,700,000 civil penalties.

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