Money Laundering Charges in PPP Fraud Prosecutions

Thanks for visiting Spodek Law Group – a second-generation law firm managed by Todd Spodek, with over 40 years of combined experience defending federal criminal cases. If you’re facing PPP fraud charges, you need to understand that prosecutors routinely add money laundering counts under 18 USC §1956. These charges carry up to 20 years per count and dramatically increase your prison exposure – even in cases involving relatively small fraud amounts.

Money Laundering Adds 20 Years Per Count

Money laundering under 18 USC §1956 carries a maximum penalty of 20 years imprisonment per violation and fines up to $500,000 or twice the value of the laundered funds, whichever is greater.

If you laundered $200,000 in fraudulent PPP funds, the maximum fine is $400,000 – double the laundered amount. If you laundered $1 million, the fine can be $2 million.

Prosecutors charge money laundering in addition to the underlying fraud, not instead of it. You’ll face wire fraud charges (20-30 years max), bank fraud charges (30 years max), false statements charges (30 years max) and money laundering charges (20 years max per count). The statutory exposure adds up fast.

In March 2025, a Des Moines man was sentenced to 54 months in federal prison for wire fraud and money laundering charges related to fraudulently obtaining nearly $2 million in PPP loans. The money laundering charges added years to his sentence.

A Nevada man got over 15 years in prison in August 2025 for obtaining more than $11 million in fraudulent PPP loans and laundering the funds through real estate purchases, gambling and luxury items. The money laundering counts substantially increased his prison time.

What Qualifies as Money Laundering in PPP Cases

Money laundering requires three elements: conducting a financial transaction, involving proceeds of specified unlawful activity, with intent to promote the unlawful activity or conceal the nature, source, location or ownership of the proceeds.

In PPP fraud cases, the specified unlawful activity is the fraud itself – wire fraud, bank fraud or false statements. Once you’ve obtained fraudulent PPP funds, almost any financial transaction involving those funds can be charged as money laundering.

Depositing the PPP funds into your personal bank account? That’s money laundering. Transferring the funds between accounts? Money laundering. Withdrawing cash? Money laundering. Buying a car, house or luxury goods with the funds? Money laundering.

Prosecutors argue that these transactions are designed to conceal the source of the funds or to promote the continuing fraud scheme. The concealment prong is particularly easy to prove – any transaction that makes it harder to trace the funds qualifies.

Promotional Money Laundering

Promotional money laundering under §1956(a)(1)(A)(i) applies when you conduct a financial transaction with intent to promote the carrying on of the unlawful activity. This covers transactions designed to further the fraud scheme.

If you used fraudulent PPP funds to pay for fake business expenses that made your business appear legitimate, that’s promotional money laundering. If you used the funds to pay accomplices or finance additional fraudulent applications, that’s promotional money laundering.

Say you obtained $50,000 in fraudulent PPP funds, then used $10,000 of it to pay someone to create fake payroll records for another PPP application. That $10,000 transaction is promotional money laundering because you used fraud proceeds to promote additional fraud.

Concealment Money Laundering

Concealment money laundering under §1956(a)(1)(B)(i) applies when you conduct a financial transaction designed to conceal or disguise the nature, location, source, ownership or control of the proceeds.

Moving PPP funds through multiple accounts to make them harder to trace is concealment. Buying assets in someone else’s name using PPP funds is concealment. Structuring cash withdrawals to avoid reporting requirements is concealment.

The Nevada defendant laundered his $11 million in PPP fraud proceeds through real estate transactions – buying properties to convert cash into legitimate-looking assets. That’s classic concealment money laundering.

Prosecutors Stack Money Laundering Counts

Each financial transaction involving fraud proceeds can be charged as a separate money laundering count. If you deposited the PPP funds, then transferred them to another account, then withdrew cash, then bought a car – that’s four potential money laundering counts, each carrying 20 years maximum.

In practice, prosecutors charge multiple counts to increase your sentencing exposure and create leverage in plea negotiations. A defendant facing one wire fraud count (20 years max) and five money laundering counts (100 years max combined) has enormous incentive to plead guilty to reduced charges.

The money laundering guidelines under USSG §2S1.1 base the offense level on the value of the laundered funds, similar to fraud guidelines. But money laundering cases often result in higher offense levels because prosecutors can argue for enhancements based on sophisticated laundering techniques.

Spending PPP Funds Triggers Laundering Charges

You might think that if you spent the fraudulent PPP money quickly on personal expenses, you avoided money laundering charges. Wrong. The spending itself constitutes money laundering.

The Cincinnati defendant who got 18 months for a $21,000 PPP fraud spent the money on DoorDash, Grubhub, CashApp and hotel stays. Each of those transactions could have been charged as money laundering. Prosecutors likely didn’t charge laundering because the amounts were relatively small and they wanted to move the case quickly.

In larger cases, prosecutors always charge money laundering when defendants spent fraud proceeds on luxury items, vacations, gambling or other conspicuous consumption. Those spending patterns demonstrate both concealment (converting fraud proceeds into assets) and willful blindness to the illegal source.

Luxury Purchases Draw Scrutiny

Buying cars, jewelry, designer goods or real estate with PPP funds virtually guarantees money laundering charges. These purchases serve no legitimate business purpose and clearly demonstrate that you knew the funds weren’t for payroll or business expenses.

Federal agents love tracking luxury purchases because they’re easy to prove and juries hate defendants who bought Lamborghinis with pandemic relief money meant for struggling businesses. The optics are terrible, and judges impose harsher sentences.

The Nevada defendant bought real estate and gambled with his fraudulent PPP funds. His sentence – over 15 years – reflects the court’s view that he engaged in sophisticated laundering to conceal and enjoy his fraud proceeds.

The Merger Problem Usually Doesn’t Apply

Some defense attorneys argue that money laundering charges should merge with the underlying fraud because the laundering is inherent in the fraud itself. Courts rarely agree.

The Supreme Court’s decision in United States v. Santos held that money laundering requires proof of laundering activity separate from the underlying offense. But later cases narrowed this holding significantly.

In most circuits, depositing fraud proceeds into a bank account or spending them is sufficiently distinct from obtaining them through fraud to support separate laundering charges. The fraud is complete when you get the money. The laundering occurs afterward when you move or spend it.

International Transfers Create Additional Charges

If you transferred fraudulent PPP funds overseas, you face additional exposure under 18 USC §1956(a)(2), which criminalizes international money laundering. This provision carries the same 20-year maximum but involves different proof requirements.

International money laundering applies when you transport, transmit or transfer funds from the U.S. to a foreign country, or from a foreign country to the U.S., with intent to promote unlawful activity or to conceal the proceeds.

Sending PPP funds to offshore accounts is the worst thing you can do. It demonstrates consciousness of guilt, sophisticated concealment efforts and intent to avoid U.S. law enforcement. Judges impose maximum sentences in cases involving offshore transfers.

Defending Money Laundering Charges

The government must prove you knew the funds came from unlawful activity. In PPP fraud cases, this element is usually easy to prove – if you submitted the fraudulent application yourself, you obviously knew the funds came from fraud.

You can argue that specific transactions weren’t designed to conceal or promote the fraud. If you deposited the funds directly into your personal account and paid routine bills, that’s less obviously laundering than if you moved the funds through multiple accounts and bought assets in nominee names.

The “mere spending” defense argues that simply spending fraud proceeds on personal consumption doesn’t constitute laundering. Some courts have accepted this defense when the spending wasn’t designed to conceal the source of funds or promote additional fraud. But many courts reject it, holding that all spending of fraud proceeds involves concealment.

Negotiating to Drop Laundering Counts

Defense attorneys often negotiate for prosecutors to drop money laundering charges in exchange for guilty pleas to the underlying fraud. This eliminates the 20-year exposure per laundering count and reduces the overall sentencing range.

Prosecutors sometimes agree because laundering counts require additional proof at trial. If they have a strong fraud case but weaker evidence on the laundering elements, they might accept a plea to fraud only.

Your bargaining position depends on the evidence. If agents traced your PPP funds through multiple accounts, into offshore transfers and into luxury purchases, the laundering evidence is strong and prosecutors won’t drop those charges. If you simply deposited the funds and paid regular expenses, the laundering case is weaker and negotiation is possible.

Why You Need Counsel Who Understands Money Laundering

At Spodek Law Group, we’ve defended complex money laundering cases for decades. Todd Spodek has represented clients in high-profile fraud and laundering prosecutions, including cases covered by national media. Our team includes former federal prosecutors who know how DOJ builds money laundering cases and what it takes to defend them.

We analyze financial records to challenge the government’s theory of laundering. We identify transactions that don’t meet the statutory elements. We negotiate with prosecutors to reduce or eliminate laundering charges through strategic plea agreements.

If you’re under investigation for PPP fraud and you moved the funds after receiving them, contact us immediately. Money laundering charges transform a manageable fraud case into a potential decades-in-prison exposure. Early intervention gives us the best chance to keep laundering charges off the indictment or negotiate them away during plea discussions.