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COVID Fraud of the Week: Washington State Man Charged with Attempting to Launder COVID-19 Relief Money

Posted  July 24, 2020

On July 23rd, the Department of Justice announced that Mukund Mohan, a Washington state tech company executive, was taken into custody for allegedly laundering money he fraudulently received through the COVID-19 related Paycheck Protection Program (“PPP”). After receiving funds through the program, Mohan allegedly transferred over $230,000 to his personal brokerage account. These charges mark another instance of the federal government pursuing individuals who attempt to profit off of the PPP after a California man was charged with doing the same on July 16th.

The PPP was one part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act providing financial help to people and businesses suffering from the effects of the COVID-19 pandemic. The PPP allowed businesses to apply for federally insured loans in an effort to ensure job retention and expense payments during a time when many businesses were shut down. Businesses could apply for loans with a maturity of two years and a 1% interest rate. If a certain percentage of the loan is used to pay payroll expenses, the principal and interest from the loan will be forgiven.

The complaint alleges that Mohan tried to submit multiple fraudulent PPP applications on behalf of eight different companies. Allegedly included in these fraudulent applications were fake and altered documents including false tax returns and false incorporation documents. In reality, at least some of the companies listed on the various application had no employees and no business whatsoever. Once Mohan received funds through the PPP program, he allegedly laundered those funds by transferring over $230,000 to his personal brokerage account for investment elsewhere.

The Department of Justice charged Mohan with one count of wire fraud and one count of money laundering in relation to his alleged conduct. These charges continue the Department of Justice’s push to attack COVID-19 fraud head on. This effort extends to early efforts against hoarding and price gouging of supplies in the early days of the pandemic to investigating fraud relating to COVID-19 relief programs under CARES or investigating fraudulent testing.

Enforcement efforts such as these help ensure that PPP funding is used for its intended purpose: helping small businesses affected by the economic downturn from COVID pay their employees and keep the business afloat. Fraudsters who line their own pockets with taxpayer money can be difficult to detect. Whistleblowers who see their employers either fraudulently applying for funds or misusing the funds when they receive them are an essential cog in ensuring that protection programs and relief funds in this delicate time work for those truly in need. Whistleblowers, as always, continue to be the seawall against the wave of potential fraudsters seeking to enrich themselves at the expense of the American taxpayers.

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Tagged in: Catch of the Week, COVID-19, Financial and Investment Fraud, Importance of Whistleblowers, Money Laundering,