A Stockton man pleaded guilty this week to wire fraud and aggravated identity theft for his role in a scheme to defraud companies of $2 million, U.S. Attorney Eric Grant announced.
Federal prosecutors said Hector Perez, 35, and his brother Flavio Perez, 30, carried out a fraudulent scheme targeting invoice factoring companies between May 2018 and November 2020.
Hector Perez is set to be sentenced by U.S. District Judge William B. Shubb on Aug. 24.
He could face a maximum statutory penalty of 20 years in prison and a $250,000 fine for the wire fraud counts, as well as a mandatory consecutive two-years in prison for the aggravated identity theft count, prosecutors said.
According to federal prosecutors, the Stockton brothers created corporate entities posing as businesses seeking to sell fabricated debt in the form of fraudulent invoices.
The brothers, federal prosecutors said, then sold the fraudulent invoices to at least four different factoring companies, which resulted in the factoring companies transferring money to bank accounts held under the control of one or both of the defendants.
Invoice factoring is a financial service that provides immediate cash flow to a business in exchange for the business’s outstanding invoices.
The invoice factoring company, which has bought the outstanding invoices, then has the right to collect the money owed by the debtors on those invoices.
Prosecutors said the victims — the factoring companies — would either never get paid on the fake invoices they had purchased, or if they did, they would get paid much less than they were due.
“If they were paid, the money generally came from the defendants, most often via bank accounts held in the names of fictitious debtors,” the U.S. Attorney’s Office said in a news release. “These payments were designed to disguise the fraud so that the defendants could avoid detection and continue the fraudulent enterprise.”
The overall loss to the victims totaled more than $2 million, according to prosecutors.
The brothers were arrested on June 17, 2025 following an investigation by the FBI.
Last year, the two brothers were indicted by a federal grand jury on multiple charges. The grand jury returned an eight-count indictment against both men.
A status conference is set for Flavio Perez on July 13, 2026.
He could face a maximum statutory penalty of 20 years in prison and a $250,000 fine for the conspiracy count.
However, the U.S. Attorney’s Office said any sentence would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Record reporter Victoria Franco covers public safety in Stockton and San Joaquin County. She can be reached at vfranco@gannett.com. Support local news, subscribe to The Stockton Record at https://www.recordnet.com/subscribenow.
This article originally appeared on The Record: Stockton man admits to $2 million fraud scheme
Reporting by Victoria Franco, The Stockton Record / The Record
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