Professor Elam

Wed Nov 3 2021

Ronald Schroeder becomes the fifth and final defendant to plead guilty in a factoring fraud.

Texas Express Funding Factoring was part of the Bank of San Antonio. He took charge in November 2019. but by May 2020 the bank had alerted the FBI about problems.  The other four provided fake invoices for Schroeder to 'factor' through the bank.  Instead he used the funds to buy an airplane, a boat, automobiles, and a beach house. Living beyond one's means is a  classic red flag for fraud.

Factoring involves advancing less than the amount of an account receivable to a firm that needs cash. The factor makes money on the difference in the full amount of the invoice versus what it advanced to the borrower.  The bank had a $10 M policy that paid off so most of the loss was covered. It is hard to see how Schroedder thought he could get away with this given the open way he spent the money. A decent internal audit would have revealed the money was not going to the borrower.