The United States Department of Justice logo. (Department of Justice via Bay City News)

A Stockton man pleaded guilty to his part in defrauding financial services companies out of $2 million, federal prosecutors said Monday.  

Hector Perez, 35, pleaded guilty to wire fraud and aggravated identity theft stemming from a scheme, allegedly with his brother, to target invoice factoring companies. These companies provide immediate cash to a business in exchange for the business’ outstanding invoices. The factoring company can then attempt to collect the money owed.  

The fraud involved Perez, and allegedly his brother, inventing corporate entities that posed as businesses looking to sell their debt through what were actually fake invoices.  

The defendants then sold these fraudulent invoices to at least four different factoring companies, according to the U.S. Attorney’s Office for the Eastern District of California.  

The victim factoring companies transferred money to bank accounts held under the control of one or both of the defendants, but would never recoup any money because they would either never get paid on the fake invoices that they had purchased or if they did, would get paid much less than they were due.  

According to prosecutors, if the factoring companies were paid, the money generally came from the defendants, most often via bank accounts held in the names of fictitious debtors so as to disguise the fraud.  

From May 2018 through September 2020, the overall loss to the victims totaled more than $2 million. 

Perez is scheduled to be sentenced on Aug. 24 and is facing a maximum statutory penalty of 20 years in federal prison and a $250,000 fine for the wire fraud counts, and a mandatory consecutive two-years in prison for the aggravated identity theft count.  

Katy St. Clair got her start in journalism by working in the classifieds department at the East Bay Express during the height of alt weeklies, then sweet talked her way into becoming staff writer, submissions editor, and music editor. She has been a columnist in the East Bay Express, SF Weekly, and the San Francisco Examiner. Starting in 2015, she begrudgingly scaled the inverted pyramid at dailies such as the Vallejo Times-Herald, The Vacaville Reporter, and the Daily Republic. She has her own independent news site and blog that covers the delightfully dysfunctional town of Vallejo, California, where she also collaborates with the investigative team at Open Vallejo. A passionate advocate for people with developmental disabilities, she serves on both the Board of the Arc of Solano and the Arc of California. She lives in Vallejo.