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Prosecutors may allege both fraud and money laundering occurred

On Behalf of | Sep 1, 2021 | Financial And White Collar Crimes

Additional felony charges for money laundering could result from allegations of financial misconduct. Allegations of fraud, for example, may also result in a money laundering charge if a prosecutor shows the proceeds went into a bank account.

In one such case reported by the United States Attorney’s Office, a 43-year-old Pennsylvania resident applied for a loan for his trucking company, which prosecutors allege did not exist. He obtained approval for a government-guaranteed loan and received $467,000.

Fraud requires proof of falsified information

Federal officials claim the business owner falsified the loan application by stating his company employed 26 workers. The application also stated he needed approximately $125,000 per month to meet employees’ paycheck expenses.

Prosecutors, however, allege that the application contained forged documents. Purportedly, the company was not in operation and did not have employees during the two years that his application covered.

Money laundering requires three steps

Instead of using the loan to pay employees, prosecutors claim that the business owner spent it on vehicles, a house and stock trades. As a result, the prosecution alleges both fraud and money laundering took place. As noted by Claims Journal and according to the Financial Crimes Enforcement Network, the money laundering process includes three steps.

The first step involves placing money purportedly obtained fraudulently into a financial account. Once deposited, the funds transfer or move through several transactions. The individual then spends the commingled money and makes legitimate purchases.

Prosecutors may combine money laundering charges with financial offenses. Individuals allegedly engaged in an unlawful action may face an additional charge for laundering if the resulting funds transferred through a U.S. financial account. A conviction, however, requires evidence of wrongful conduct generating the funds and the three steps of placing, commingling and spending.