PPP, Money Laundering and Robinhood

Criminals got creative and busy during the Coronavirus pandemic. Go figure! Did you hear about the rampant fraud that took place last year in regards to the billions of government aid dollars paid out to small businesses through Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan, or EIDL? As of last April, the amount of money involved in fraudulent PPP cases was nearing $450 million and over 200 people had been charged with crimes. Certainly, it took a good dose of creativity to fraudulently apply for and receive in some cases millions of dollars.

The problem with receiving millions of dollars in illegitimate funds is that they don’t belong to you. If you are a pro, it is likely you stole a small business owner’s identity in order to get the PPP application approved, so you can’t just deposit the PPP check in your bank. Nor is it easy to open a checking account with a stolen identity. Banks have legit security systems in place.

Interviewed by CNBC, Rick McDonell, the executive director of the Association of Certified Anti-Money Laundering Specialists said, “if I were a good criminal, I would avoid banks like the plague.”

Therefore, the money needs to be laundered. That’s where, in this case, criminal creativity during COVID has crossed over into a new and digital realm, with the thieves using online investment platforms like Robinhood, Ameritrade, etc., as the vehicles for cleaning their cash. This is all new. According to the CNBC article, over $100 million has passed through the online investment platforms since congress passed the CARES Act in March, 2020.

Fortunately, crooks are still prone to silly mistakes or outright laziness. They get caught. One guy in particular hails from my hometown of Seattle and is a former engineering director at Microsoft. He even did time at Amazon! But then in July of 2020, Mukund Mohan pleaded guilty to wire fraud and money laundering charges in connection with PPP Loans. What happened?

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Richard Paxton

CEO of the Alacer Group. Sharing the latest news in financial crimes and best practices that enable financial institutions to prevent money laundering.

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