Most of Eddie Contreraz's clients either didn't work or didn't earn enough money to qualify for loans, authorities say.
But that didn't stop them from getting bank loans, credit cards and lines of credit with his help. Contreraz did so by studying lending patterns at various banks to find out what information was required, according to federal prosecutors in Dallas. Then he had his customers submit faked documents like pay stubs, tax records and utility bills to qualify for the loans, prosecutors say.
Contreraz, 48, of Frisco created "consistently high-quality fraudulent documents" that tricked lenders into thinking they were valid, according to plea documents in the case. More than 95 percent of his clients agreed to submit them, according to the documents.
"For some loans, Contreraz modified an electronic version of the client's actual pay stubs and tax documents," the court documents said.
Others lied about having jobs as company managers. If bank loan officers needed to verify employment and income, Contreraz told his customers to give them family and friends' contact numbers.
Contreraz last week agreed to plead guilty to bank fraud and now faces up to 30 years in federal prison for his trickery, as well as a maximum fine of $1 million and restitution to his victims, court records show. His schemes resulted in about $30 million in loans being dispersed, according to plea documents.
The Dallas bank fraud case exposes internal weaknesses at some banks such as lack of verification of customer information, said Catherine A. Ghiglieri, the former Texas banking commissioner who is now a bank consultant in Austin. Banks typically pay vendors to confirm a loan applicant's employment, income and other information, she said.
"There are ways to double-check the information, and that's part of a bank's policies," Ghiglieri said. "Maybe the internal controls are flawed ... there could be many reasons why this falls through the cracks."
Many loans in the case were relatively small, roughly between $5,000 and $20,000. As a result, the loan applications may not have received as much scrutiny as mortgages or larger loans, which can take longer to approve, Ghiglieri said. She said the case "will be a nice wake-up call for the banks."
Problems occur, she said, when a bank appears to primarily be interested in writing as many loans as possible.
The court record doesn't say how many of the Contreraz loans defaulted or how much money the banks lost in the scam. But Ghiglieri said it's likely the banks caught the fraud at some point after the fact and reported it to authorities.
The defrauded lenders include such large and well-known institutions as Bank of America, Wells Fargo, Citibank, Capital One Bank, JP Morgan Chase Bank and Comerica Bank, court records show.
Contreras was arrested in September and remains free on bond. A sentencing date has not been set. His lawyer declined to comment.
Five of the six co-defendants in the case, including Contreras' daughter, also have recently agreed to plead guilty to bank fraud charges, court records show.
Contreraz ran the scheme from 2011 through March 2016 using his Dallas company, Preferred Marketing Group, also known as PMG Business Solutions, the indictment says.
"By studying lending patterns of various banks, Contreraz determined which banks would most likely lend a particular client the most money," plea documents said.
He also had clients apply for multiple loans over a "short time period" so lenders wouldn't know about the other loans.
It's a growing practice called loan stacking, which is disrupting the lending industry. By taking advantage of quick loan approvals, borrowers can obtain multiple loans before their credit files are updated to reflect the increased debt load. The result: they can borrow more than they would otherwise be eligible for.
Four of Contreraz's employees, who are co-defendants in the case, took clients on a "bank tour" so they could obtain the "maximum number of loan approvals in a short period of time on the same day," the indictment said.
The employees took clients to meet with specific lender representatives with whom Contreraz had established relationships and who agreed to help his clients, according to the indictment.
Another service Contreraz offered was credit repair, although that consisted of having clients file bogus police reports claiming to be identity theft victims, prosecutors say. The police reports resulted in debt being removed from their credit reports, according to court records.
One of the defendants, Ima Maria Isham, 21, of The Colony, formed a fake company in 2015 called My Rhino Financial, which was used to dupe lenders into thinking borrowers worked there, the indictment said.
Isham also was one of Contreraz's clients who fraudulently took out multiple loans totaling about $92,000 that she put into his investment fund, according to the indictment. Her attorney could not be reached.
A simple Google search or check of Texas corporation records would have exposed that particular ruse, Ghiglieri said.
"Banks can do some due diligence to make sure the customer is giving them the correct information," she said.
