SEC defeats only Par Funding defendant to stand trial

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The only businessman who chose to bring a civil lawsuit in the Par Funding financial scandal has been found liable by a jury of fraudulent investors and must join all defendants in disgorging ill-gotten profits.

After just four hours of deliberation on Wednesday, the six-member jury ruled unanimously against Florida financial adviser Michael C. Furman, 39, on six counts of fraud in a civil case brought against him by the United States Securities Commission. Furman, who the SEC said raised money for au pair funding, was also found guilty of a seventh count for selling an unregistered security.

Furman will now join the founders of Par Funding and famed Prussian King financial salesman Dean Vagnozzi and other defendants in having to repay millions to 1,200 investors who have invested nearly $ 500 million in lender Par Funding.

Soon, U.S. District Court Judge Rodolfo Ruiz III, sitting in Fort Lauderdale, will decide just how much each defendant will have to pay in investor money, interest, and fines. Ruiz is expected to split the money in March.

The other defendants agreed late last month to drop their opposition to the SEC lawsuit and go straight to calculating how much they will have to pay.

In a massive lawsuit filed in 2020, the United States Securities and Exchange Commission said Par Funding, Vagnozzi, Furman and others hid the fact that one of the loan company’s founders, Joseph W. LaForte, had served a prison sentence for past financial crimes.

SEC trial attorney Amie Riggle Berlin said she also misled investors over Par Funding’s reckless lending, high defaults on loaned money, lack of business insurance and the history of regulatory issues and fines. The company has loaned money to small businesses at high interest rates, claiming this in turn allows it to promise generous payments to investors.

A court-appointed receiver has already stepped in to take control of around $ 150 million in cash, cars, boats, artwork and high-end real estate belonging to Par Funding defendants, grabbing them for a big return on investment.

In addition, Par has paid over $ 200 million to investors. In addition, the receiver also tried to continue to pressure Par Funding borrowers to repay their loans. Yet at some point there may be a calculation day in which investors will know the magnitude of the losses.

Furman, based in West Palm Beach, was one of the smaller fundraising drummers. The SEC said it had helped channel $ 10 million toward au pair funding; his lawyers put the figure at $ 6 million.

Berlin, the SEC attorney, declined to comment on his victory. Gurbir S. Grewal, the SEC’s director of enforcement in Washington, DC, said in a statement that “the verdict underscores that the commission will continue to prosecute those who violate federal securities laws and victimize investors.” .

Zachary Hyman, one of Furman’s attorneys, said Furman was considering appealing.

“We are disappointed with the results of the trial,” Hyman said, adding: “The court limited what we could present to the jury in a very significant way.”

Par Funding was partly owned by Joseph LaForte and his wife, Lisa McElhone. LaForte was convicted of two financial crimes before starting Par Funding and served two prison terms. LaForte is also awaiting a criminal trial for illegal possession of firearms by a criminal.

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