Department of Justice
United States Attorney’s Office
Western District of Texas
FOR IMMEDIATE RELEASE CONTACT: PAO DARYL FIELDS
THURSDAY, DECEMBER 5, 2013 (210) 384-7440
EAGLE PASS BUSINESSMAN PLEADS GUILTY TO BANK FRAUD
In Del Rio today, 41-year-old Jose Flores, III, owner of Eagle Pass-based N5 Group, LLC, (N5) pleaded guilty
to a bank fraud scheme announced United States Attorney Robert Pitman and FBI Special Agent in Charge
Armando Fernandez.
According to court records, the defendant, through N5, attempted to serve as raw materials transportation
providers to businesses in Eagle Pass and to companies operating in the Eagle Ford Shale in South Texas. In
April 2011, N5 established a Large Fleet Accounts Receivable Financing agreement with TAB Bank, Inc in
Utah. The primary purpose of N5's account with TAB was to establish a factoring relationship between the two
entities. In a factoring arrangement, a bank agrees, for a fee, to serve as the recipient of payments that are owed
to a company. Once this agreement is made, the company will assign its accounts receivable to the bank. The
bank will then advance a large percentage of the yet-unpaid accounts receivable to the business expecting
payment. Thereafter, the bank will begin to collect payments from the customer indebted to the business.
Ideally, the company expecting payment will benefit because it will obtain cash from the bank immediately and
thus need not wait for its accounts to come due before receiving payment. The bank benefits as well because it
charges a commission for its service as receiver of the outstanding accounts.
Appearing before U.S. District Judge Alia Moses, Flores pleaded guilty to one count of bank fraud. By
pleading guilty, Flores admitted that in July 2011, he submitted to TAB Bank a forged invoice in the amount of
$51,000 for work N5 was to perform for a customer. Pursuant to the factoring agreement, the defendant
fraudulently received $35,000 from TAB Bank. When TAB subsequently began its efforts to collect payment
from the customer, it found that N5 had never done any work for that customer. In fact, that customer owed N5
no money at all.
Flores faces up to 30 years in federal prison and a maximum $1,000,000 fine as well as $35,000 restitution to
TAB Bank. He remains on bond pending sentencing scheduled for May 12, 2014, before Judge Moses in Del
Rio.
This investigation was conducted by the Federal Bureau of Investigation and the Texas Department of Public
Safety. Assistant United States Attorney Timothy A. Duree is prosecuting this case on behalf of the
Government.
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