New Jersey Man Admits His Invoice Factoring Company Bilked Lenders of $50M

A New Jersey man admitted Thursday (April 7) to running a decade-long invoice factoring scheme that bilked lenders of $50 million, the U.S. Attorney’s Office in Trenton, New Jersey, announced.

Vincent Galano, 59, of Oceanport, New Jersey, entered the plea after being charged via an information — a process where the target of an investigation concedes to charges and avoids a grand jury.

Factoring is the process of selling invoices that haven’t been paid off yet to third-party companies that collect the funds. The buyers in factoring arrangements usually get discounts from the companies whose invoices they acquire. Factoring companies often rely on outside lenders to provide the short-term capital needed to purchase invoices, then repay the lenders after collecting funds from the debtors.

According to federal prosecutors, Galano did this with a company called Prime Financial Funding that he formed in 1996.

Galano ran into trouble before long, according to the government.

“Galano concealed this bad debt from the factoring lender by misrepresenting the bad invoices as collectible on reports he routinely provided to the factoring lender. In other instances, Galano mischaracterized invoices that had already been paid and collected as outstanding and capable of being factored, in essence double-counting to drive up the outstanding receivables,” the government wrote in an announcement, which was released after Galano plead guilty to a single count of wire fraud.

Galano confessed to the scheme during a May 2020 telephone call with lenders, the government said.

Galano faces up to 20 years in prison and a fine of either $250,000 or twice the amount he stole.