Friday August 26 2022
Not to students – A red flag for fraud is someone who is living above what their salary would support. Instead of simply stashing the money overseas and then leaving the country, Wayne lived it up right here, a give away for what he was doing.
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Former bank executive Ronald “Wayne” Schroeder, the mastermind of a fraud scheme that the Bank of San Antonio says cost it more than $13 million, is headed to federal prison for 97 months.
Schroeder, who led the bank’s financing subsidiary, submitted bogus invoices to the bank on behalf of a fake company he created. The bank paid the invoices, resulting in him obtaining nearly $3.2 million. He used the proceeds to buy a beach house, an airplane, a boat, recreational vehicle and cars.
“I’m embarrassed to be standing here before you,” Schroeder told U.S. District Judge Jason Pulliam on Thursday. “It’s not who I am. It’s not how I was raised. I’ve done my family and friends a great amount of harm by my actions.”
In December, Schroeder pleaded guilty to one count of conspiracy to commit bank fraud. Prosecutors dropped three counts of bank fraud and a single count of conspiracy to commit money laundering as part of his plea deal.
On ExpressNews.com: Executive reaches plea deal in $13M ‘Ponzi-style fraud scheme’ involving San Antonio bank
Chip Lewis, one of the former banker’s defense lawyers, argued for his client to receive home confinement and five years of supervised release. Schroeder, 49, of New Braunfels, is the sole care giver for a young son, Lewis said.
But Assistant U.S. Attorney Joseph Blackwell countered that Schroeder could have lived a nice lifestyle just by doing his job and working hard. He earned a monthly salary of $18,500 from Texas Express Funding, the bank subsidiary.
“He made a series of choices over the years to defraud the people he was working for, the financial institutions he was working with,” Blackwell said in seeking prison time for Schroeder.
‘Insidious evil’
J. Bruce Bugg Jr., executive chairman of Texas Partners Bank, which operates the Bank of San Antonio, told the judge Schroeder gave the bank a black eye.
“To be sure, Wayne Schroeder has caused our bank to suffer significant damages by his insidious evil and despicable criminal and fraudulent activities,” Bugg said.
Pulliam sentenced Schroeder to a sentence at the low end of federal guidelines, which ranged up to 10 years and a month in prison. In addition to his time behind bars, he must serve five years of supervised release and pay nearly $9 million in restitution.
Schroeder also agreed to forfeit a beach house, which had an assessed value of more than $466,000, a $200,000 airplane, an $80,000 recreational vehicle and various cars.
He has up to 90 days to turn himself in to begin serving the sentence.
Schroeder and four co-defendants submitted fraudulent invoices for companies they owned and two other financial institutions. Some of the money received went to pay off old invoices owed while some went into the defendants’ pockets.
On ExpressNews.com: 5 indicted in alleged scheme that defrauded San Antonio bank
Also Thursday, Pulliam sentenced one of the co-defendants, Phyllis Jo Martinez, 80, of San Antonio, to time served and five years of supervised release. She also must pay about $290,000 in restitution.
She and her son, Ryan Glenn Martinez, 58, owned a cleaning company called Nerd Factory that participated in submitting fraudulent invoices. His sentencing was continued to a later date so the judge can learn about the circumstances of his release from jail in connection with an earlier crime.
Earlier sentencings
The other two defendants were sentenced in June. Rigo Alvarado, 57, was sentenced to 48 days in jail, while his wife, Jill Martin Alvarado, 60, was sentenced to four months of home confinement. The Irving couple must also serve five years of supervised release and pay about $3.9 million in restitution. They owned Alvy’s Logistics, a trucking company.
Bank of San Antonio records show Alvy’s obtained almost $4.6 million, while Nerd Factory obtained nearly $2.1 million, according Schroeder’s plea agreement. .
The Bank of San Antonio launched Texas Express Funding in 2019 and hired Schroeder, a 30-year industry veteran, as president of the factoring company. Factoring involves advancing cash to companies in return for acquiring, at a discount, the debts owed to them. This allows the companies to get money quickly instead of waiting for customers to pay their bills.
On ExpressNews.com: 3rd defendant enters guilty plea in San Antonio bank fraud case
About a year after Schroeder was hired, in July 2020, the bank disclosed it uncovered a $13.2 million “Ponzi-style fraud scheme” he orchestrated. It also filed a civil lawsuit against Schroeder and others seeking to recover its losses and collect unspecified punitive damages. The case is pending.
Schroeder operated Texas Express Funding as a “fraud from the get-go,” bank attorney Andy Taylor said at the time. “This was never a legitimate business opportunity. We thought it was but it wasn’t. We were buying snake oil.”
The conspiracy began in April 2017 and continued until Schroeder and the four others were indicted by a grand jury in November 2020. It started at SouthWest Bank, then Bank of San Antonio and finally TransPecos Banks, according to Schroeder’s plea deal.
Professor Elam 