A former Sweetwater business owner plead guilty today to engaging in a $12.3 million wire fraud scheme, announced Acting U.S. Attorney for the Northern District of Texas Prerak Shah.
Stewart Kile Williams, 31, plead guilty to two counts of wire fraud and two counts of engaging in monetary transactions in property derived from unlawful activity.
According to court documents, Mr. Williams committed his crimes in the Northern District of Texas after engaging in another fraud scheme in the Southern District of Texas where he pleaded guilty to four counts of wire fraud. Mr. Williams was sentenced to serve 70 months in federal prison and ordered him to pay $2,071,925 in restitution for his crimes in the Southern District of Texas.
While on pretrial release in the Southern District of Texas, Mr. Williams formed AZS Trenching, an unregistered sole proprietorship. The company provided freight and trenching services in the West Texas Permian Basin.
In January 2019, Mr. Williams and Navarone Capital, LLC, a privately held business in Midland, Texas, entered into an agreement under which AZS Trenching sold its accounts receivable to Navarone in a process called “factoring.” This allowed Mr. Williams to receive cash up front from Navarone for a portion of the value of services listed on his invoices. Under the agreement, Navarone confirmed the invoices with the respective companies for which AZS Trenching was performing work and then paid Mr. Williams for the invoices.
In March 2019, Mr. Williams sought an additional factoring agreement for work AZS Trenching was purportedly preforming for HIS Pipeline Company. Navarone performed due diligence and required assurances from HIS Pipeline. Mr. Williams completely fabricated a relationship with HIS and created bogus invoices for work AZS Trenching did not perform, and never planned to perform, for HIS.
Mr. Williams admitted to fabricating invoices and assuming the identity of an HIS employee. To further his scheme, Mr. Williams acquired a cell telephone with a Louisiana area code where HIS is based. He also acquired an email address under the assumed name. Mr. Williams then communicated with Navarone via telephone and email under the guise of the HIS employee. During each communication, he assured Navarone that AZS Trenching was performing the work on the fabricated invoices. Mr. Williams used the fraudulent pretenses to encourage Navarone to front money for the bogus invoices.
In sum, Mr. Williams created 38 fictitious invoices totaling more than $12.3 million. Using the criminally derived funds, Mr. Williams purchased a number of items, including farm equipment and a new home.
Mr. Williams faces up to 60 years in federal prison for crimes committed in the Northern District of Texas.
Internal Revenue Service-Criminal Investigations, United States Postal Inspection Services, and the Federal Bureau of Investigation conducted the investigation. Assistant U.S. Attorney Ann Howey is prosecuting the case.