Daily News | SEC demands $360 million in Par Funding “Ponzi scheme”
Federal financial regulators are demanding that four remaining defendants in the Par Funding scandal pay $360 million to investors who lost money in a plot that the regulators for the first time have flatly labeled a “Ponzi scheme.”
The firm promised generous returns, saying it made money lending cash to smaller merchants at high-interest rates — as punishingly high as 400%, the SEC said. Par boasted to investors of its rigorous underwriting standards even as it lent money with reckless abandon, falsely told investors their money was insured, and lied about its supposedly low default rates while suing thousands of borrowers for non-payment, the agency said.
A finding by Ruiz deeming the business a Ponzi scheme would bar the defendants from reducing the money they must pay by citing Par Funding’s operating costs. Ruiz’s courtroom is in Fort Lauderdale, where the SEC brought its sweeping lawsuit. Par Funding set up an office in Florida in 2017. Once Ruiz imposes a final figure, investors would see some money. In total, the investors are now short about $250 million, putting aside what they might have made by investing elsewhere. The receiver in the case, assisted by Philadelphia lawyer Gaetan J. Alfano, has gained control of about another $150 million in cash and real estate related to Par Funding. That leaves a $100 million gap, one that the receiver is still seeking to close.
“I’m happy that it is coming to a conclusion hopefully, and that the principals will have some kind of punishment,” Cohen said.
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