“There’s no question the invoices we purchased from SouthWest Bank were fake, severely aged and uncollectable,” said Andy Taylor, a lawyer representing the Bank of San Antonio. “But whether SouthWest Bank knew that or not is still up in the air.”
Bank of San Antonio Seeks to Recover $13M Lost in Alleged Fraud Scheme
“It’s really quite breathtaking … the outright fraud, how bold he was in perpetuating the fraud,” said attorney Andy Taylor, who is representing The Bank of San Antonio. “But maybe he figured he’d never get caught.”
Local bank sues former exec alleging "shocking" Ponzi-like scheme
By Jessica Corso – Reporter, San Antonio Business Journal
Jul 30, 2020, 6:55pm EDT
The Bank of San Antonio is suing the former head of one of its subsidiaries, accusing him and others of defrauding the bank out of a "shocking" amount of money in a Ponzi-like scheme.
Wayne Schroeder — former president of bank subsidiary Texas Express Funding LLC, or TEF — is accused in a Comal County lawsuit of buying outdated and, in some cases, fake invoices in an effort to defraud the bank of $13.2 million. The Bank of San Antonio became aware of the alleged fraud on May 6, less than a year after Schroeder was brought on board to head the newly created subsidiary, according to the lawsuit. He has since been fired, Bank of San Antonio attorney Andy Taylor told the Business Journal.
Schroeder declined to comment.
TEF buys customer invoices at a discount from companies seeking quick cash. The line of business, known as factoring, often earns more money for banks than loans do, Taylor said. Prior to working for TEF, Schroeder worked at the factoring subsidiary of Odessa-based SouthWest Bank.
It was from that subsidiary that Schroeder allegedly bought the outdated debt, recording in TEF's books false dates for the invoices. He also stands accused of writing fake invoices for TEF to buy and using that money to repay some of the previously purchased debt. Though the lawsuit doesn't use the term, Taylor said Schroeder's activities amounted to a Ponzi scheme.
"It's blatant, it's bold, and frankly, it's shocking how much fraud he engaged in," Taylor said.
The rules of factoring require that banks sell overdue invoices back to the companies that created them or else write the losses down in their federally mandated financial reports, Taylor said. An invoice becomes outdated when it is 120 days overdue, according to the lawsuit. The suit alleges that some of the invoices Schroeder bought and falsified were more than a year past due.
Besides Schroeder, seven others were named as alleged co-conspirators to the fraud. SouthWest Bank wasn't accused of fraud but is accused of breach of contract and negligent misrepresentation for selling the old invoices. Taylor said he plans to find out what executives at SouthWest Bank knew about the scheme.
"I’m going to take depositions of top officials at that bank and find out, under oath, once and for all, whether they were in on this fraudulent Ponzi scheme or not," he said.
SouthWest Bank said it hadn't heard anything about the allegations until the San Antonio Express-News wrote about the case on Wednesday. The accused bank hasn't been served with a lawsuit or been contacted by The Bank of San Antonio, SouthWest Bank CEO Dewey Bryant said.
"The allegations made against our bank by the plaintiff’s attorney in the San Antonio newspaper article are outrageous, and we categorically deny them," Bryant said in a statement. "The matter will be reviewed by our attorneys when we receive the suit, and hopefully our attorneys will allow us to comment further at a later date. Until that review, we will have no further comment
San Antonio bank reports a $13.2 million ‘Ponzi-style fraud’
The Bank of San Antonio disclosed Wednesday that it uncovered a $13.2 million “Ponzi-style fraud scheme” involving a former employee of a subsidiary who’s accused of inducing the bank to purchase worthless receivables from various businesses.
Eight years and $775M in fees later, voters to get a do-over on ReBuild Houston
“If a majority of Houston voters want to tax themselves, that’s their right to do so, but if the voters are misled into taxing themselves I’ve got a major problem with that,” Taylor said Wednesday. “The whole reason the Supreme Court invalidated the last election on the drainage fee was because the city in the ballot language failed to inform the voters that they would be paying for the drainage fee if they supported it.”
Harris County lawsuit for concealing voter registration maintenance records
Election Law expert Andy Taylor files a major lawsuit in federal court against the Harris County Voter Registrar. The Public Interest Legal Foundation is claiming Ann Harris Bennett’s Office is refusing to make voter registration maintenance records available for inspection under federal law.
Montrose Management District to Dissolve
The Montrose Management District’s board voted March 22 to dissolve the district, according to reports.
Montrose Management District to dissolve operations
The Montrose Management District board members voted Thursday to dissolve operations, following legal action and a petition challenging its authority to collect assessments.
