Additional Information for Prime Financial Group

The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.

TRENTON, N.J.  October 31, 2021 - A former owner of PF Funding was sentenced today to 63 months in prison for defrauding lenders of $50 million dollars in connection with an invoice factoring scheme perpetrated over nearly a decade,

Vincent Galano, of Oceanport, New Jersey, previously pleaded guilty by videoconference before U.S. District Judge  to an information charging him with one count of wire fraud. Judge Quraishi imposed the sentence today in Trenton federal court.

According to documents filed in the case and statements made in court:

Galano formed PF Funding LLC (PF Funding) in 1996 for the purpose of factoring accounts receivables for various corporate clients. In 2007, PF Funding entered into a secured lending relationship with a single purpose entity created to finance PF Funding’s factoring business. Shortly thereafter, thentity created to finance PF Funding’s factoring business. Shortly thereafter, the factoring lender established a line of credit as a means to provide PF Funding capital to grow its receiveables portfolio. Over the next several years, PF Funding grew its factoring business by drawing from the line of credit while maintaining as current its loan obligations to the factoring lender.

However, beginning in 2011, Galano, through PF Funding, purchased increasingly greater numbers of invoices for which he was unable to collect the debt owed on the receivables. To justify PF Funding’s continued draws from the line of credit, 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. In the reports provided to the factoring lender, Galano manipulated the overall value of PF Funding’s portfolio of outstanding invoices in an amount proportional to the funds he needed to draw from the unsecured line of credit to maintain as current the principal and interest payments on his outstanding loans.   

Engaging in this pattern of misrepresentation over nearly a decade, by 2020 PF Funding had ultimately defaulted under its loan obligations, owing approximately $50 million to its lenders by virtue of the scheme. In addition to the prison term, Judge Quraishi sentenced Galano to two years of supervised release and ordered him to pay restitution of $50 million.