A North Little Rock based factoring company filed a civil suit in US District Court for the Eastern District of Arkansas claiming that a Tennessee company and several of its employees violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO).
Comfac Corp. alleges that The Bradley Factor Inc., a Cleveland, Tenn.-based factor, "hijacked control" of an ongoing scheme that involved "factoring phony invoices and kiting money back and forth" in order "to recoup its own losses."
Factors buy the legal right to collect a company’s outstanding accounts receivable. The factor receives its money when the invoices are paid; the company with the outstanding accounts gets its money, minus a factoring fee, when the invoices change hands.
In its complaint, Comfac says it advanced more than US$1.8m based upon phony invoices and is entitled, under RICO, to triple damages of approximately US$5.7m.
