The U.S. Attorney's Office in the Eastern District of California has announced the indictment of two Stockton brothers for their role in a wire fraud conspiracy spanning over two years. Hector Perez, 34, and Flavio Perez, 29, were both charged with conspiracy to commit wire fraud, while Hector also faces additional charges of wire fraud and aggravated identity theft. The pair was arrested on June 17, following an FBI investigation.
From May 2018 to November 2020, the brothers allegedly defrauded at least four invoice factoring companies out of more than $1.8 million. Details released by the U.S. Attorney's Office reveal that the Perez brothers created fake corporate entities and sold fictitious debt to these companies, allowing them to easily receive immediate cash flow. These factoring companies operate by purchasing outstanding invoices from businesses, allowing them cash upfront, while assuming the responsibility for collecting the owed debts—a standard practice in business financing.
Acting U.S. Attorney Michele Beckwith's office outlined how Hector and Flavio Perez constructed an elaborate scheme where they would provide fraudulent invoices to the factoring companies. These companies would then wire money to bank accounts controlled by one or both brothers, expecting to collect on these invoices, only to find that the debts did not truly exist or were far less valuable than represented.
Assistant U.S. Attorneys Denise N. Yasinow and Matthew Thuesen, to prosecute the case, said in a statement, "These payments were designed to disguise the fraud so that the defendants could avoid detection and continue the fraudulent enterprise." They explained that the scam ran from May 2018 through September 2020, and any payments made to the factoring companies often came from the defendants themselves, a move apparently calculated to throw investigators off their trail.
If convicted, Hector Perez could face up to 20 years in prison and a $250,000 fine for each count of wire fraud and conspiracy, with an additional mandatory consecutive two-year sentence for aggravated identity theft. His brother, Flavio, also faces a maximum of 20 years in prison and a $250,000 fine for the conspiracy charge. It is important to note, these charges are allegations; the defendants maintain their right to be presumed innocent until proven guilty in a court of law.
