Jose Flores III, Bank Fraud, Texas 2011

BANK FRAUD SCHEME ROCKS EAGLE PASS COMMUNITY

A local businessman has pleaded guilty to a bank fraud scheme that has left many in the community stunned.

According to court records, 41-year-old Jose Flores III, owner of Eagle Pass-based N5 Group, LLC, pleaded guilty to one count of bank fraud on July 12, 2011. The crime was committed in Del Rio, Texas.

Flores, through N5, attempted to serve as raw materials transportation providers to businesses in Eagle Pass and to companies operating in the Eagle Ford Shale in South Texas. In April 2011, N5 established a Large Fleet Accounts Receivable Financing agreement with TAB Bank, Inc in Utah.

The primary purpose of N5's account with TAB was to establish a factoring relationship between the two entities. In a factoring arrangement, a bank agrees, for a fee, to serve as the recipient of payments that are owed to a company. Once this agreement is made, the company will assign its accounts receivable to the bank. The bank will then advance a large percentage of the yet-unpaid accounts receivable to the business expecting payment.

Flores pleaded guilty to submitting a forged invoice in the amount of $51,000 for work N5 was to perform for a customer. Pursuant to the factoring agreement, the defendant fraudulently received $35,000 from TAB Bank. When TAB subsequently began its efforts to collect payment from the customer, it found that N5 had never done any work for that customer. In fact, that customer owed N5 no money at all.

Flores faces up to 30 years in federal prison and a maximum $1,000,000 fine as well as $35,000 restitution to TAB Bank. He remains on bond pending sentencing scheduled for May 12, 2014, before U.S. District Judge Alia Moses in Del Rio.

This investigation was conducted by the Federal Bureau of Investigation and the Texas Department of Public Safety. Assistant United States Attorney Timothy A. Duree is prosecuting this case on behalf of the Government.

Source: https://www.justice.gov/usao-wdtx/pr/eagle-pass-businessman-pleads-guilty-bank-fraud