Federal authorities have arrested a former executive and three others indicted in connection with a $13 million “Ponzi-style fraud scheme” to defraud The Bank of San Antonio.
Agents took into custody San Antonio residents Ronald Wayne Schroeder, 48; Jill Martin Alvarado, 58; and Phyllis Jo Martinez, 78, and Del Rio resident Rigo Alvarado, 55, who is Jill’s husband. Also indicted was Martinez’s son, Ryan Martinez, 56, who is currently in state prison on unrelated charges.
The arrests were made Tuesday in San Antonio after the indictment was issued, and over the weekend in Del Rio, according to a statement from U.S. Attorney Gregg Sofer and FBI Special Agent in Charge Christopher Combs of the San Antonio Division.
The six-count federal indictment charges all five with one count of conspiracy to commit bank fraud, and Schroeder, Jill Alvarado, and both Martinezes with one count of conspiracy to commit money laundering. The indictment charges Schroeder and the Martinezes with one count of conspiracy to launder monetary instruments. Schroeder is also charged with three counts of bank fraud.
It was in early May that the bank discovered the alleged fraud. Federal authorities say Schroeder, former president of the bank’s subsidiary Texas Express Funding, had for nine months fraudulently induced the bank to purchase millions of dollars of worthless accounts receivables from various businesses.
Formed by the bank in August 2019, the subsidiary is a business that purchases unpaid accounts receivables, or invoices, from companies at a discounted price. The practice, also referred to as “factoring,” provides a company with immediate cash flow and represents an investment for a third party such as Texas Express and The Bank of San Antonio.
The indictment alleges that Schroeder and the other defendants conspired to defraud financial institutions, including Southwest Bank, The Bank of San Antonio, and TransPecos Bank, through the factoring of false and fraudulent invoices.
Schroeder is alleged to have sent false and fraudulent invoices of companies owned or controlled by the other defendants to be factored by the financial institutions. They would then use that money for their own personal enrichment or to pay off old invoices owed to the financial institutions, according to the U.S. Attorney’s office.
The indictment points to three companies involved in the scheme including Nerd Factory, Alvy’s Logistics, and Republic Logistics, a fake company allegedly created and used by Schroeder to steal money for himself. An investigation revealed Schroeder spent the windfall on cars, RVs, an airplane, boat, and beach house.
If they are convicted, each bank fraud-related charge is punishable for up to 30 years in federal prison; conspiracy to commit money laundering, up to 20 years in federal prison; and conspiracy to launder monetary instruments, up to 10 years in federal prison. The investigation is ongoing.
In July, the bank and Texas Express Funding filed suit against Schroeder and the others alleging fraud and seeking to recover $13.2 million in damages, plus punitive and exemplary damages.
“This is a ‘one-off,’ isolated event, and we have a $10 million insurance policy to indemnify our bank from this loss,” stated J. Bruce Bugg Jr., chairman of the board of The Bank of San Antonio.
The bank’s loan portfolio totals more than $876 million, according to information provided by the bank, and except for the loans related to the fraud case, no loans are more than 30 days overdue.
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