Money Laundering Charges in PPP Fraud Prosecutions

Thanks for visiting Federal Lawyers – a second-generation law firm managed by our lead attorney, 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.

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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.

Legal Scenario: What Would You Do?

Scenario

You received a PPP loan for your small business and used a portion of the funds to pay personal credit card bills and make a down payment on a new car. Federal investigators have now contacted you, and your attorney says prosecutors are pursuing not only PPP fraud charges but also money laundering counts under 18 USC §1956 for moving the loan proceeds into your personal accounts.

How can they charge me with money laundering when I just spent the PPP money — I didn't try to hide it or run it through shell companies?

Attorney's Answer

Under 18 USC §1956, prosecutors don't need to prove you used sophisticated laundering techniques — simply transferring fraudulently obtained PPP funds from your business account to personal accounts or using them to purchase assets can constitute a 'financial transaction' involving proceeds of specified unlawful activity. Each separate transfer or purchase can be charged as an independent count, carrying up to 20 years in prison per count, which is why money laundering charges often dwarf the underlying fraud exposure. A strong defense strategy may involve challenging whether you had the requisite knowledge that the funds were proceeds of unlawful activity, or arguing that the transactions lacked the 'concealment' or 'promotion' purpose required under §1956(a)(1)(A) and (B). We would also examine whether prosecutors are improperly 'stacking' charges to pressure a plea, which courts have scrutinized in cases like United States v. Santos, 553 U.S. 507 (2008), where the Supreme Court narrowed the definition of 'proceeds' in money laundering statutes.

This is general information only. Contact us for advice specific to your situation.

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