Two brothers from Stockton, California—Hector Perez, 34, and Flavio Perez, 29—have been arrested following a serious federal investigation. A grand jury has officially indicted both men on multiple charges related to wire fraud conspiracy. Hector Perez is also facing extra charges of wire fraud and aggravated identity theft.
The arrests happened on June 17, 2025, and stem from a scheme the brothers allegedly carried out over several years. Court documents state that from May 2018 to November 2020, the Perez brothers defrauded at least four companies out of more than $1.8 million.
These companies offer a service called “invoice factoring”, which means they buy unpaid invoices from businesses to help them get fast cash. The companies then collect the money later from those who owe the invoices. But investigators say the Perez brothers used fake businesses and fake invoices to fool these companies and pocket the money.
How the Alleged Scheme Worked
The federal court documents describe a well-planned scam. The brothers are accused of setting up fake companies that looked like real businesses. These fake companies then “sold” invoices to the factoring companies. But the invoices were not real—they were completely made up.
Because the factoring companies believed the invoices were genuine, they sent money to the fake businesses. These companies thought they were buying the right to collect payments from actual customers, but in reality, there were no real debts to collect.
To make their scam look more real, the Perez brothers sometimes made small payments on the fake invoices using bank accounts opened under fake names. These payments were meant to trick the factoring companies into thinking that everything was running normally. This helped the brothers stay under the radar and continue their scheme for over two years.
Between May 2018 and September 2020, the scam resulted in a loss of over $1.8 million for the affected companies. Investigators say the money went directly into accounts that the Perez brothers controlled. Some companies received partial payments, but these were usually just enough to delay suspicion and were also made from bank accounts under fake names.
Serious Charges and Legal Process
The case is being handled by the Federal Bureau of Investigation (FBI), and two federal prosecutors are leading the legal proceedings. The charges include conspiracy to commit wire fraud, wire fraud itself, and aggravated identity theft.
If convicted, Hector Perez could face up to 20 years in prison for the conspiracy and wire fraud charges. He also faces a mandatory two additional years for aggravated identity theft. Flavio Perez could also face up to 20 years in prison for his role in the conspiracy. Both men may be ordered to pay fines of up to $250,000 each.
However, the final sentence will depend on various legal guidelines and the judge’s discretion. It’s important to remember that these are only accusations at this stage. Both Hector and Flavio Perez are considered innocent unless proven guilty in court.
The indictment marks a significant step in the ongoing investigation. The federal court will now move forward with the legal process, including hearings and potential trial dates.
This case shines a spotlight on the risks faced by financial service providers, especially those dealing in fast-cash solutions like invoice factoring. It also shows how fraud schemes can be cleverly disguised to appear legitimate, even to experienced businesses.