Dean Vagnozzi, founder of A Better Financial Plan, LLC. is under Receivership, which begs the question, who is the better financial plan for, his consumers or himself?
On July 24, 2020 the Securities and Exchange Commission (SEC) filed a lawsuit in United States District Court of the Southern District of Florida against defendants Par Funding, A Better Financial Plan and owner Dean Vagnozzi, along with several other individuals and entities. In the official complaint filed by the SEC, the defendants raised nearly half a billion dollars through alleged fraudulent practices — including lying and misinterpreting information to investors about the security of Merchant Cash Advance investments. Of the 8 cases of fraud outlined against the defendants, 7 of them included Vagnozzi and a Better Financial Plan.
As of July 27, the SEC put in place a receiver, Ryan M. Stumphauzer who is currently running Par Funding and A Better Financial Plan. A receiver’s purpose is to, “administer and manage their [companies under receivership] business affairs, funds, assets, causes of action and any other property of the Companies; marshal and safeguard all of the Companies’ assets; and take whatever actions are necessary for the protection of investors,” according to Document 4, filed on July 24, 2020 in the United States District Court of the Southern District of Florida. Ultimately, a receiver is appointed to take over a company when the suspicion of fraud has occured in an attempt to find and preserve information, assets, documents, and other materials pertaining to the case and company for the “protection of investors” as outlined in Document 4.
As Stumphauzer took over receivership of both Par Funding and A Better Financial Plan, the Federal Bureau of Investigations (FBI) raided Par Funding’s headquarters along with multiple properties belonging to Joseph Laforte, the co-owner of Par Funding. By August 7, 2020, Laforte was arrested by authorities on illegal firearm possession in his Haverford, Pennsylvania home. Laforte, a convicted felon, was indicted on illegal gambling charges in 2009 and therefore was not allowed to own or possess firearms.
After being put under receivership, the federal judge overseeing the case ceased electronic access to Par Funding’s company records on August 15, 2020. Stumphauzer blocked Par employees from their emails, as they had accessed and downloaded more than 100,000 documents pertaining to company information more than two weeks after the judge had ordered their access be taken away. Judge Rodolfo A. Ruiz II overseeing the case gave authority to Stumphauzer to remove Par Funding employees’ access while also ordering that any copies that were made by Par Funding staffers be sent to the receiver for review.
Vagnozzi also came under scrutiny when the receiver uncovered a legal settlement payment made from a bank account to a client who had refused to sign a new deal with Par Funding. Outlined in a separate lawsuit as well as the SEC’s case against Vagnozzi, a Pennsylvania client sued Vagnozzi after refusing to accept a renegotiated promissory note contract from Par Funding. In July of 2020, Vagnozzi’s attorney negotiated a settlement with the client who had purchased a promissory note in March of 2020 for $601,000. The settlement concluded in principle with the client receiving a check for $550,000; however, the actual payment did not transact until after Vagnozzi had been placed under receivership. This information became public when the plaintiff filed a praecipe — an order requesting a writ or legal document — in late August, which showed that the settlement was backdated to July 29, 2020 despite no written agreement being concluded until August 12, 2020. By that date, Vagnozzi was already under receivership.
As a result, Stumphauzer indicated in DE-208 that Vagnozzi was in violation of the receivership order for effectuating an agreement for the transfer of monies without the consent or knowledge of the receiver. The lawyer representing the receiver, Gaetan Alfano, requested that the client return the money that he had been paid in the settlement from Vagnozzi to the receiver as reported by the Philadelphia Inquirer in late August, but no known payment has been returned to date.
In receivership documents DE-227 and DE-238, Stumphauzer outlines findings to the court that claimed Vagnozzi did not include a full and accurate depiction of his finances and omitted a bank account in a July 2020 filing that was used by A Better Financial Plan to collect money paid by Par Funding for the Merchant Cash Advance investments. As outlined in DE-227, this new bank account, MK Corporate Debt at Citizens Bank, was set up for the purpose of paying off investors who rejected the renegotiated 4% note that was released in the late Spring of 2020 amid the COVID-19 pandemic.
When Par Funding and A Better Financial Plan could no longer keep up scheduled payments to investors due to the coronavirus shutting down businesses across the country, Vagnozzi and Par Funding executives renegotiated their promissory notes to offer a reduced return for an extended period of several years. Originally, Merchant Cash Advance promissory notes were issued for periods of 12 – 36 months, with 10% – 14% returns and a full repayment of principal at the end of the contract. The businesses who received these advances were forced to close and could no longer keep up their payments to Par Funding, creating a chain reaction through A Better Financial Plan causing their investors to not receive their monthly payments.
As this process broke down, Par Funding and A Better Financial Plan renegotiated their notes and created a new bank account which, Par Funding funneled more than $4 million into to pay off investors who refused to sign the new extended notes of which there were several, including the client who settled with Vagnozzi for $550,000. In email correspondence to clients during April 2020, Vagnozzi claimed that if investors didn’t sign the new notes they could risk losing all of their investment money or spending thousands in legal fees to fight for what they are owed in court. A few weeks later, Vagnozzi and his attorney at the time, John Pauciulo, created a 16 minute long video on Vimeo explaining the new note to investors and encouraged urgency to get the notes signed and returned quickly so Par could resume the renegotiated payments the first week of June.
As the SEC points out in DE-227, investors were not told about the more than $4 million that was put into a new account for investors who did not want to sign the renegotiated note. Investors who refused were paid back in-part, or in-full and in late July 2020, Vagnozzi removed the remaining funds, which consisted of more than $500,000 in the MK Corporate Debt bank account and placed that money into his personal bank account — this account and transfer was not disclosed in Vagnozzi’s July court filing per the receiver’s orders. Thus, Vagnozzi was then ordered to amend his disclosure to reflect the transfer as well as another transfer he had made moving $60,000 from Victory Bank into his own personal account.
On page 2 of DE-227, the SEC wrote, “We have already identified two significant transfers he [Vagnozzi] made to himself after the Court’s entry of the Orders in this case, and we should not have to investigate to discover additional ones he might have made.” They continued stating, “This was the purpose of the sworn accounting, with which he [Vagnozzi] utterly failed to comply in full.” Despite already receiving orders and being placed under receivership, Vagnozzi attempted to maneuver funds without disclosing them, which placed the safety of investors funds in jeopardy according to the SEC.
Of the more than $4 million that was paid by Par Funding into the MK Corporate Debt account, more than $500,000 remained after settling with several investors. The funds that remained were then transferred into Vagnozzi’s personal account. In DE-238 the SEC ordered that those funds be placed under control of the receiver as they were moved from the MK account at Citizens Bank into Vagnozzi’s personal bank account at the end of July.
As September came to an end, Stumphauzer and the court set in motion requests for a jury trial which would take place in August of 2021 and outlined the schedule and deadlines from September 2020 to August 2021 in DE-279. In DE-256, the SEC also levied a preliminary injunction against Vagnozzi to restrain him from violating multiple sections of the Securities Act of 1933 and Securities and Exchange Act of 1934 by offering or selling securities and destroying any records, documents, or items pertaining to the scope of investigation.
While the case against Par Funding, Vagnozzi, and other defendants looks to be headed to trial, it is unclear what this will mean for A Better Financial Plan’s investors who did and did not sign the renegotiated note. The judge overseeing the case also warned that investors may not have all of their money returned, if any, depending on the outcome of the case and the future of Par Funding. For more information about the SEC case against Vagnozzi and Par Funding, SEC Receiver Ryan Stumphauzer set up a website where concerned citizens, investors, and others can access key documents to stay up-to-date as the case unfolds.