wire fraud - Conaway & Strickler

When Does a Business Dispute Become Federal Wire Fraud?

Conaway & Strickler, P.C. — Sun, 18 Oct 2026 18:15:10 GMT

A failed business deal is not necessarily fraud. A broken promise is not automatically a federal crime. And losing an investor’s money does not, by itself, mean someone committed wire fraud. Yet business disagreements that begin as civil disputes can sometimes escalate into federal criminal investigations, exposing business owners, executives, entrepreneurs, and other professionals to serious criminal charges.

Consider these common scenarios: Two business partners have a falling out. One accuses the other of misusing company funds. Or an investor claims that money was spent differently than promised. Or a customer alleges that a company misrepresented its financial condition. What began as a disagreement over contracts, compensation, or business decisions suddenly becomes an accusation of criminal fraud.

In some cases, the FBI becomes involved.

The distinction between a civil business dispute and federal wire fraud is critical. Under 18 U.S.C. § 1343, a federal wire fraud conviction can carry up to 20 years in prison, with a higher statutory maximum in certain circumstances.

For individuals facing these allegations, understanding where civil liability ends and federal criminal exposure begins is essential.

What Is Federal Wire Fraud?

Federal wire fraud is a criminal offense involving a scheme to defraud that uses interstate or foreign wire communications in furtherance of that scheme.

Under 18 U.S.C. § 1343, prosecutors generally must establish:

A scheme to defraud or obtain money or property through materially false or fraudulent representations, promises, or omissions.
The defendant’s knowing participation in the scheme with intent to defraud.
The use, or reasonably foreseeable use, of interstate or foreign wire communications to further the scheme.

The electronic communication does not necessarily have to contain a fraudulent statement itself.

Emails, telephone calls, electronic banking transactions, and other electronic communications may satisfy the wire requirement when the statutory jurisdictional and other elements are met.

But the existence of an email, electronic payment, or failed business transaction does not automatically establish federal wire fraud.

The central issue is whether the government can prove a fraudulent scheme and the defendant’s criminal intent—not merely that someone lost money or believes they were treated unfairly.

Breach of Contract Versus Federal Wire Fraud: What Is the Difference?

One of the most important distinctions in federal white-collar criminal defense is the difference between failing to fulfill a contractual obligation and entering into a transaction with fraudulent intent.

A breach of contract generally occurs when one party fails to perform an obligation under an agreement.

For example:

A business fails to repay a loan on time.
A contractor does not complete a project.
A company cannot deliver products as promised.
A business partner disputes how company profits should be distributed.
An investment fails to generate the anticipated return.

These circumstances may create civil liability. They do not necessarily establish a federal crime.

Wire fraud, by contrast, requires proof of a fraudulent scheme involving the requisite intent.

Consider two different situations.

Scenario One: A Business Deal Goes Bad

An entrepreneur raises $500,000 from investors to launch a new company. The entrepreneur genuinely intends to develop the business, uses the funds for legitimate operating expenses, but ultimately fails to make the company profitable.

The investors lose their money.

Although the investors may have civil claims depending on the circumstances, the failure of the business alone does not establish federal wire fraud.

Scenario Two: A Business Deal Built on Deception

An entrepreneur solicits $500,000 from investors while knowingly fabricating financial statements, inventing nonexistent customers, and falsely claiming that the company has secured major contracts.

The entrepreneur uses these representations to induce investors to transfer their money.

Those facts may support a federal wire fraud prosecution because the government could allege that the defendant intentionally used material deception to obtain money.

The distinction is not simply whether the investment succeeded or failed. It is whether the government can prove the elements of a fraudulent scheme.

Can a Business Partner Accuse You of Federal Wire Fraud?

Yes. Allegations of federal wire fraud sometimes arise from disputes between business partners, shareholders, investors, or corporate executives.

These cases can be particularly complicated because business relationships often involve informal agreements, overlapping responsibilities, disputed compensation arrangements, and disagreements about financial authority.

A business partner may allege that another partner:

Diverted company revenue.
Made unauthorized withdrawals.
Misrepresented the company’s financial condition.
Concealed business transactions.
Used investor funds for unauthorized purposes.
Submitted misleading financial statements.

However, an accusation does not establish that a federal crime occurred.

In closely held businesses, the authority to withdraw money, receive compensation, reimburse expenses, or make financial decisions may be governed by operating agreements, corporate documents, historical practices, or other evidence.

Experienced federal criminal defense attorneys like Conaway & Strickler, PC examines whether the disputed transactions were authorized, whether the accused had a legitimate ownership interest, and whether the evidence supports an inference of fraudulent intent.

A disagreement about who was entitled to company money is not automatically proof that someone committed federal wire fraud.

Can You Be Charged with Wire Fraud If Nobody Lost Money?

Yes. This is an especially important development in federal fraud law.

In May 2025, the United States Supreme Court decided Kousisis v. United States, holding that a defendant who fraudulently induces another party to enter into a transaction may be convicted of federal wire fraud even when the defendant did not intend to cause economic loss.

The case involved government contracts obtained through materially false representations about compliance with disadvantaged-business participation requirements.

The defendants argued that the government received the services it paid for and therefore suffered no economic loss.

The Supreme Court rejected the argument that an intent to cause net financial loss was required.

The decision reinforces an important principle: A defendant may face federal wire fraud liability even when the alleged victim received something of value in return.

For business owners and executives, this means that completing a contract, repaying an investor, or delivering a product does not necessarily eliminate criminal exposure if prosecutors can establish that money or property was obtained through a fraudulent scheme.

At the same time, the government must still prove the required elements of wire fraud, including material deception, criminal intent, and the use of qualifying wire communications.

Does Every Misrepresentation in a Business Deal Constitute Wire Fraud?

No.

Business negotiations frequently involve projections, estimates, opinions, and expectations about future performance.

A company may forecast revenue that never materializes. An entrepreneur may believe that financing will be secured but ultimately fail to obtain it. A business executive may make an overly optimistic prediction about future profitability.

Those statements are not necessarily fraudulent simply because events unfold differently than expected.

The analysis may turn on whether the representation concerned an existing fact, whether it was materially false or misleading, what the defendant knew at the time, and whether there was intent to defraud.

For example, there is an important distinction between predicting that a company will earn $5 million next year and knowingly presenting fabricated financial records showing that the company already earned $5 million.

The first may be an optimistic business projection. The second may constitute evidence of intentional deception.

Context matters, and prosecutors cannot establish criminal intent solely through hindsight.

The Supreme Court Has Also Limited the Reach of Federal Fraud Laws

Although federal wire fraud is a powerful prosecutorial tool, the Supreme Court has cautioned against interpreting the statute so broadly that ordinary business misconduct automatically becomes a federal crime.

In Ciminelli v. United States, the Supreme Court unanimously rejected the government’s use of a theory that treated the deprivation of economically valuable information needed to make business decisions as a deprivation of property.

The Court held that the federal wire fraud statute protects traditional property interests and does not broadly criminalize every dishonest practice affecting economic decision-making.

The decision is significant because it reinforces limits on federal prosecutors’ ability to transform conduct traditionally addressed through state contract or tort law into federal property fraud.

Read together, Ciminelli and Kousisis illustrate an important distinction.

Federal prosecutors cannot rely solely on the theory that a person was deprived of information necessary to make an informed economic decision. But when material deception is used to obtain money or property, the government need not establish an intent to cause net economic loss.

For individuals accused of business-related wire fraud, the precise nature of the alleged misrepresentation and the property the government claims was targeted can be critical defense issues.

How Do Business Disputes Become FBI Investigations?

A federal investigation may begin when a disgruntled investor, former employee, business partner, or other individual reports suspected financial misconduct.

Other investigations may originate from civil litigation, internal audits, financial institutions, regulatory agencies, or referrals to federal law enforcement.

Once investigators become involved, they may seek financial records, emails, text messages, bank statements, contracts, and communications between the parties.

They may also interview employees, accountants, investors, and business associates.

In some cases, investigators issue grand jury subpoenas for documents or testimony. In others, agents contact individuals directly and request voluntary interviews.

One of the challenges in these investigations is that the government may initially receive only one side of a complicated business dispute.

A former partner may characterize an authorized withdrawal as theft. An investor may describe an unsuccessful business strategy as intentional deception. An employee may misunderstand the purpose of a financial transaction.

That does not mean every allegation is unfounded. It does mean that a careful examination of the underlying business relationship and financial records is essential.

What Are the Potential Defenses to Federal Wire Fraud Charges?

Defending a federal wire fraud case often requires reconstructing the underlying business transactions and examining what the accused actually knew and intended when the relevant representations were made.

Depending on the circumstances, potential defenses may include:

Lack of Intent to Defraud

The defendant may have genuinely intended to perform contractual obligations, repay investors, complete a transaction, or operate a legitimate business.

Good-Faith Belief

Evidence that the defendant honestly believed representations were true, or believed the challenged conduct was authorized, may undermine the government’s allegations of fraudulent intent.

Absence of Material Misrepresentations

Not every inaccurate statement is material. The defense may challenge whether an alleged falsehood was capable of influencing the relevant economic decision.

Legitimate Business Purpose

Financial transfers or expenditures characterized as suspicious may have legitimate business explanations supported by contracts, accounting records, or historical practices.

Insufficient Evidence of a Fraudulent Scheme

A failed transaction, disputed contract, or financial loss does not alone establish the existence of a criminal scheme.

Challenges to the Government’s Legal Theory

The defense may examine whether the alleged scheme actually targeted money or property protected by the wire fraud statute and whether the government can establish the necessary interstate or foreign wire communication.

In complex cases, forensic accountants, financial experts, and other professionals may assist defense counsel in analyzing financial transactions and challenging the government’s interpretation of the evidence.

What Should You Do If a Business Dispute Turns Into a Criminal Investigation?

If a business partner, investor, or former employee threatens to report you to the FBI, it is important to understand that the dispute may have moved beyond an ordinary civil disagreement.

Do not assume that a federal investigation will disappear simply because you believe you acted appropriately.

Before responding to investigative inquiries, contact us immediately.

Avoid making substantive statements to federal investigators without first obtaining legal advice. Knowingly false statements to federal agents can create separate criminal exposure under 18 U.S.C. § 1001, even when the underlying allegations do not result in charges.

Do not delete emails, alter accounting records, destroy documents, or attempt to coordinate witness accounts.

Preserve potentially relevant records, including contracts, financial statements, correspondence, and documents showing the parties’ understanding of the transaction.

Early legal representation may allow defense counsel to assess the allegations, communicate with investigators when appropriate, identify favorable evidence, and address issues before an indictment is returned.

Frequently Asked Questions About Business Disputes and Federal Wire Fraud

Can I go to prison for failing to repay a business loan?

Simply failing to repay a loan generally does not establish federal wire fraud. However, obtaining loan proceeds through a scheme involving material misrepresentations and fraudulent intent may create criminal exposure.

Can an investor report me to the FBI because an investment failed?

Yes. Anyone can report suspected misconduct. However, an unsuccessful investment does not automatically establish fraud. The government must prove the elements of a criminal offense.

Can emails and text messages be used as evidence of wire fraud?

Yes. Electronic communications may be used to establish representations, knowledge, intent, or the use of interstate or foreign wires in furtherance of an alleged fraudulent scheme.

Can a civil lawsuit and a federal criminal investigation happen at the same time?

Yes. The same underlying business transactions may give rise to civil litigation and a criminal investigation. Parallel proceedings create important strategic concerns, particularly when testimony or discovery in the civil case could affect criminal exposure.

Does repaying the money eliminate wire fraud charges?

Not necessarily. Repayment may be relevant to the facts, intent, or sentencing, but it does not automatically eliminate criminal liability for an otherwise completed wire fraud offense.

Should I hire a federal criminal defense attorney before being charged?

Yes, particularly when there is a credible threat of a federal investigation or investigators have already made contact. Pre-indictment representation can be an important part of protecting your legal interests.

Accused of Federal Wire Fraud in Georgia? Contact Conaway & Strickler, PC

Business relationships can deteriorate. Investments can fail. Partners can disagree about money, management decisions, and contractual obligations.

But a business disagreement should not automatically be treated as evidence of federal criminal fraud.

When allegations of financial misconduct attract the attention of federal investigators, the consequences can be devastating. A federal wire fraud investigation can threaten a person’s freedom, professional reputation, financial security, and future.

At Conaway & Strickler, PC, our Atlanta federal criminal defense attorneys represent individuals facing federal criminal investigations and prosecutions, including allegations of wire fraud, financial fraud, conspiracy, and other white-collar offenses.

We understand the importance of examining the facts behind a business dispute, challenging unsupported allegations of criminal intent, and protecting our clients’ rights throughout the federal investigative and criminal justice process.

If a business dispute has escalated into allegations of federal wire fraud, or you believe you may be under investigation by the FBI or Department of Justice, contact Conaway & Strickler, PC to discuss your legal options.

This article is intended for general informational purposes and does not constitute legal advice. Every case depends on its specific facts and applicable law.

Recent Investment Fraud case in Georgia

Conaway & Strickler, P.C. — Sat, 03 Jan 2026 18:04:54 GMT

David Bradford, the former Chief Operating Officer of Drive Planning LLC (“Drive Planning”), pled guilty last month to conspiracy to commit wire fraud arising from a multi-year Ponzi investment fraud case that defrauded investors out of millions of dollars. A SEC complaint was also filed against Jacqueline and Russell Todd Burkhalter. The SEC complaint details that promises of investment gains were built on lies. Drive Planning and its officers did not have any legitimate business operations capable of generating the returns they touted. Instead, they used new investor funds to pay earlier investors in classic Ponzi scheme fashion. The defendants in the case, it was alleged, used the funds to fund an extravagant lifestyle, including purchasing a $3.1 million yacht, spending $4.6 million on private jets and luxury car services, and acquiring a $2 million luxury condo.

An Indianapolis broker is also being charged with securities fraud and investment fraud by the SEC in relation to Drive Planning LLC, and its alleged $300 million Ponzi scheme. Gerardo “Gerry” Linarducci, a former Managing Partner of Drive Planning and head of its Indiana branch office, was charged on Dec. 19.

It is alleged that from late 2021 until in or about June 2024, Drive Planning, a Georgia based financial advisory group, marketed several investments, including the “Cash Out Real Estate Fund,” or “CORE Fund,” as “easy and simple,” advising prospective investors that the fund provided “100% Passive Income from Tax Liens.” Drive Planning guaranteed investors a return of 10% every six months or a 22% return per year for up to three years. Drive Planning further materially misrepresented that investors’ contributions to the CORE Fund were pooled together, government-protected, and fully collateralized. As part of the scheme, Bradford created a marketing brochure to promote the CORE Fund, which was shared with Drive Planning’s sales agents to solicit investors.

In actuality, the investors’ monies were being used for other purposes, including to pay off other Drive Planning investors, make commission payments to Drive Planning’s agents, and pay for personal expenditures. Bradford and others at Drive Planning further concealed the scheme to defraud by failing to disclose that Drive Planning did not invest any funds in the CORE Fund after approximately December 9, 2022. To the contrary, even after the Securities and Exchange Commission (SEC) began investigating Drive Planning in approximately March 2024, Bradford and others continued to solicit investments for the CORE Fund. In total, Drive Planning received at least $4.1 million from CORE Fund investors.

In August 2024, the SEC obtained a temporary restraining order against Drive Planning and filed separate civil enforcement actions against Drive Planning and others in the U.S. District Court for the Northern District of Georgia related to the above-described scheme.

We Can Help

Conaway & Strickler, PC has vast experience representing those who are facing charges from the SEC and the DOJ and we are equally adept at representing victims of investment fraud. We pursue all available legal avenues to recover your lost investments. Contact us should you need representation.

What is Money Laundering?

Conaway & Strickler, P.C. — Wed, 26 Nov 2025 02:14:54 GMT

I. What charges can the government use to allege money laundering?

18 U.S.C. § 1956: This is for laundering monetary instruments and carries a penalty of up to 20 years in prison and fines of up to $500,000 or twice the value of the funds involved, whichever is greater

18 U.S.C. § 1957: This applies to engaging in monetary transactions in property derived from specified unlawful activity and can result in up to 10 years in prison and fines up to twice the value of the property involved.

18 U.S.C. § 1956(h): criminalizes conspiracy to commit money laundering. It makes it illegal for two or more people to agree to conduct or attempt to conduct a financial transaction involving the proceeds of specified unlawful activity (money laundering). The crime is the agreement itself, regardless of whether the money laundering was ultimately successful.

Bulk cash smuggling (31 U.S.C. § 5332): knowingly concealing more than $10,000 in currency or other monetary instruments on the person of such individual or in any conveyance, article of luggage, merchandise, or other container, and transports or transfers or attempts to transport or transfer such currency or monetary instruments from a place within the United States to a place outside of the United States, or from a place outside the United States to a place within the United States

RICO Act- the Racketeer Influenced and Corrupt Organizations (RICO)

II. Drug traffickers are purported to utilize some of the following tactics to money launder

-Purchase and or title assets in fictitious names, aliases, or in the names of friends or relatives

-Create and maintain Bitcoin and other cryptocurrency accounts. These are utilized because of the anonymity associated with the use of Bitcoin and other cryptocurrency accounts and because cryptocurrency is decentralized.

III. Dark Net Explanation

The darknet is a part of the internet that requires special software, like the Tor browser, to access, and is not indexed by standard search engines. It uses layered encryption to make user activity anonymous

IV. Cryptocurrency

This is a type of virtual currency, that is a decentralized, peer to peer network based medium of value or exchange that may be used as a substitute for fiat to buy goods or services or exchanged for fiat currency or other cryptocurrencies. Examples of cryptocurrency are Bitcoin, Ethereum, Litecoin, Dogecoin, Monero, among others.

Most cryptocurrencies have a blockchain which is a distributed public ledger, run by the decentralized network, containing an immutable and historical record of every transaction. It is still difficult for a number of reasons for law enforcement to track.

Cryptocurrency is stored in a virtual account called a wallet. Crypto wallets are designed to store your private key, keeping your crypto accessible at all times. They also allow you to send, receive, and spend cryptocurrencies like Bitcoin and Ethereum. Crypto wallets keep your private keys – the passwords that give you access to your cryptocurrencies – protected and accessible, allowing you to send and receive cryptocurrencies like Bitcoin and Ethereum.

The Financial Crimes Enforcement Network (“FinCEN”) has issued many notices discussing the various issues with cryptocurrency including recent concerns over regulatory risks related to convertible virtual currency kiosks. This notice dates back to 2019! It’s worth a read as it describes dark net marketplaces and cryptocurrency really well.

V. Recent cases in the news

The recent “Fire bunny” case was a case that operated on the darknet from January 2019 to August 2022. It operated on multiple dark web marketplaces and described itself as an “old vendor with the best in QUALITY SPEED OF DELIVERY and STEALTH.” In total, the defendants allegedly received nearly $8 million in Bitcoin proceeds and investigators found nearly $900,00 worth of cryptocurrency on one of the defendant’s phone. Some of the money received was laundered by converting Monero – a form of anonymized cryptocurrency that is extremely difficult to trace or monitor – into Bitcoin. The Bitcoin would then enter cryptocurrency exchange accounts controlled by the defendants and others. At least $2.4 million in Bitcoin was sent to a foreign based cryptocurrency exchange and laundered in the form of Chinese Yuan.

Samourai CEO Keonne Rodriguez and Samourai CTO William Lonergan Hill were recently sentenced for knowingly transmitting over $237 million in alleged criminal proceeds, coming from, among other things, drug trafficking, darknet marketplaces, cyber-intrusions, frauds, sanctioned jurisdictions, murder-for-hire schemes, and a child pornography (“CSAM”) website.

It utilized a Bitcoin mixing service known as “Whirlpool,” and coordinated batches of Bitcoin exchanges between groups of Samourai users. Through this process, the original source of particular Bitcoin holdings became obscured within the blockchain’s transactional record, effectively preventing law enforcement agencies and cryptocurrency exchanges from tracing funds back to their origins.

The second service, called “Ricochet,” enabled users to introduce additional and unnecessary intermediate transactions—known as “hops”—between sending and receiving addresses. This feature served a similar obfuscation purpose, making it substantially more difficult for monitoring entities to establish connections between cryptocurrency transfers and potential illicit activities. The scale of these operations was considerable: from Ricochet’s launch in 2017 and Whirlpool’s inception in 2019, more than 80,000 Bitcoin—valued at over $2 billion at the time—passed through these services. Samourai collected fees for both services, estimated to have a total value of more than $6 million.

Finally, in Operation RapTor, participating law enforcement agencies in the U.S., Europe, South America, and Asia arrested 270 darknet vendors, buyers, and administrators. Recently, as part of that large takedown, in the Southern District of New York (which is a district we are licensed to practice in) Incognito Market owner Rui-Siang Lin pled guilty for operating an online narcotics bazaar that existed on the dark web. It is alleged that Incognito Market sold more than $100 million of narcotics to anyone using the Tor web browser on the “dark web” or “darknet.”

Conaway & Strickler, PC is licensed to practice in NY, GA and CA. We can “pro hac” into any federal district in the country and have represented clients in New Hampshire, Vermont, Georgia, New Jersey, New York, California, Iowa, Texas, Tennessee, Florida, Pennsylvania, among others. We have “first chaired” many jury trials and have represented clients charged with RICO, drug trafficking and cryptocurrency money laundering cases. Please contact us for additional information or if you have a case you want to discuss with us. Please see here for additional blogs on this subject.

Trends in Healthcare Fraud Enforcement

Law Office of Conaway & Strickler — Wed, 09 Jul 2025 13:52:00 GMT

The DOJ boasted their record-breaking 2025 healthcare fraud take down in a recent press release that we discussed more generally in another blog post. This post focuses on some of the specific actions taken by the government and highlights the trends across enforcement.

DME Fraud

Durable Medical Equipment (DME) fraud remains a cornerstone of federal enforcement as seen in the recent takedown. An indictment in the Western District of New York charges a medical doctor with billing roughly $29.6 million for fictious DME and $5.6 million for audio-only telehealth visits, which were brief or never occurred. That doctor produced and maintained false and fictitious medical records and fraudulently certified orders for braces without regard to medical necessity. The doctor now faces federal criminal charges of conspiracy to commit health care fraud, health care fraud, and false statements relating to health care matters.

In “Operation Gold Rush,” prosecutors in the Eastern District of New York indicted 11 defendants, including two pharmacists, members of a transnational criminal organization based in Russia and Eastern Europe. These individuals allegedly orchestrated a massive Medicare fraud and money-laundering scheme that billed over $10.6 billion to federal health programs—making it the largest case by loss amount ever charged by the DOJ. The group used foreign straw owners to acquire dozens of U.S.-based DME suppliers, then submitted fraudulent claims for equipment such as urinary catheters and glucose monitors that never delivered, exploiting stolen identities and confidential patient data. To date, 19 defendants have been charged in the case, including multiple arrests abroad (Estonia) and at U.S. entry points.

COVID-19 Testing Kickbacks

COVID-19 testing kickback schemes typically involve health care providers or marketers billing Medicare for over-the-counter or lab-based COVID-19 tests that were unnecessary, never provided, or obtained through illicit referrals. These cases often rely on the same core tactics as DME fraud: using stolen or misused patient information, paying illegal kickbacks for referrals, and submitting inflated or false claims to federal programs. In both types of fraud, the perpetrators exploit gaps in oversight during high-demand periods—such as the pandemic or public health emergencies—to rapidly bill large amounts to Medicare, often with little or no patient interaction or verification.

These 2025 takedown includes criminal indictments and civil settlement agreements targeting this type of COVID-19 fraud. An indictment out of Illinois charged multiple individuals, including a physician, for their roles in a kickback scheme. According to the indictment, the defendants caused laboratories in Illinois and Texas to submit fraudulent claims to the HRSA COVID-19 Uninsured Program, ultimately receiving over $293 million in payments. The physician involved allegedly misused patient information—including data from a former hospital employer—to falsely claim that uninsured individuals had submitted samples for COVID-19 testing. In reality, many of the patients had not submitted samples at all. Defendants submitted claims through Texas labs they owned, despite those labs being non-operational. The proceeds were then laundered through various financial accounts to disguise the funds’ origin. Charges include wire fraud, conspiracy to commit money laundering, HIPAA violations, and conspiracy to defraud the United States. Authorities have seized a Rolls Royce Phantom and more than $104 million in assets linked to the fraud.

The charges being brought by the federal government in these cases carry significant criminal penalties and collateral consequences, especially for licensed medical professionals. At Conaway & Strickler, we are highly experienced in defending against these types of claims. Contact us to schedule a consultation and discuss your case.

Cryptocurrency Money Laundering

Law Office of Conaway & Strickler — Mon, 24 Mar 2025 13:22:00 GMT

Cryptocurrency fraud has become increasingly prevalent in recent years. The lack of a centralized authority governing crypto along with the relative anonymity of transactions has contributed to this rise in digital financial crime. Specifically, cryptocurrency money laundering has grown significantly in recent years with billions of dollars stolen through hacks, Ponzi schemes, mixers. A recent report from Chainalysis estimates illicit cryptocurrency addresses received more than 50 billion dollars in 2024.

Crypto money laundering follows the same pattern used for fiat (government-issued) currencies by “cleaning” funds gained through illicit means, before exchanging or withdrawing them for cash. Traditionally, money laundering involves disguising financial assets so they can be used without detection of the illegal activity that produced them. In the context of crypto, tokens are moved through various digital addresses to obscure their illegal origin and make them more difficult to trace.

The privacy-preserving nature of crypto has opened the door for criminals to conceal the origin of illicitly gained funds through a variety of methods. Cybercriminals ultimately funnel assets through several businesses and online addresses to hide the money trail before transferring the funds to a seemingly legitimate source.

There are several methods that criminals will use when engaging in cryptocurrency money laundering, including:

Smurfing: Splitting up large sums of money into smaller amounts so they can be sent via multiple transactions.
Exchange Hopping: Using multiple cryptocurrency exchanges to transfer funds across several platforms and obscure the money trail.
Crypto Swaps: Using multiple cryptocurrency wallet addresses to directly convert funds without an intermediary or a centralized exchange.
Offshore Transactions: Creating offshore accounts to hide the origin of funds.
Mixing: Blending together the crypto assets of multiple users, making it difficult to determine who owns what.
Gambling Platforms: Depositing tokens into online gambling websites to be either withdrawn as cash or used to place coordinated bets.

Cybercriminals require other actors (individuals and sometimes shell companies) to facilitate this crypto money laundering. Like traditional money laundering, criminals recruit “money mules” to move or launder the illicit funds, often unknowingly. In the context of crypto, this is often done under the guise of a cryptocurrency investment scheme.

Just as traditional money laundering can be federally prosecuted under 18 U.S.C. § 1956, crypto money laundering is a crime under that same law. In addition to money laundering charges, involvement in a cryptocurrency scam can lead to charges including conspiracy, wire fraud, mail fraud, and more. Further, individuals at all levels of these schemes can face prosecution, including those who may have unwittingly played the role of a money mule.

With decades of experience in defending traditional financial fraud paired with a deep understanding of the newer world of cryptocurrency, our firm possesses the skills and expertise to assist those accused of crypto fraud. Contact us for a free consultation.

White Collar Crime at a Crossroads: The Implications of Kousisis on Federal Fraud

Law Office of Conaway & Strickler — Mon, 16 Dec 2024 19:32:00 GMT

This month, the Supreme Court heard oral arguments in Kousisis v. United States, a case that could have significant implications on the future of federal white-collar prosecutions. Specifically, the Court is considering the boundaries of federal fraud statutes in scenarios where deceptive practices are employed without causing direct financial harm to the victim.

Kousisis comes before the Court after a Philadelphia-area government contractor was found guilty of fraud after it failed to comply with a contract provision intended to promote diversity. Stamatios Kousisis and Alpha Painting and Construction Co., Inc. (Alpha) secured two substantial contracts with the Pennsylvania Department of Transportation (PennDOT). These contracts mandated a certain percentage of work to be allocated to Disadvantaged Business Enterprises (DBEs). Kousisis and his company misrepresented their compliance with this requirement by using a DBE as a mere pass-through entity, thereby falsely claiming adherence to the DBE participation goals. Despite this deception, the contracted work was completed to PennDOT’s satisfaction, and no direct financial loss was incurred by the department.

Federal prosecutors charged Kousisis and Alpha with wire fraud, conspiracy to commit wire fraud, and making false statements. The prosecution’s argument was based on the “fraudulent inducement” theory, suggesting that the defendants obtained the contracts through deceptive promises, even though PennDOT did not suffer a financial loss. Ultimately, Kousisis was sentenced to 70 months’ imprisonment for the multi-million dollar fraud he perpetrated following a jury trial in 2018.

However, the defense has argued that for a fraud conviction, there must be an intent to cause economic harm, which they claim was absent in this case. During oral arguments, Justice Ketanji Brown Jackson posed the question, “Why isn’t this a classic scheme to obtain property under false pretenses?” For years in federal white-collar cases, the “scheme” itself has always been recognized as the “harm” that triggers application of the federal fraud statutes. Despite that precedent, defense argued: “If there’s no harm that occurs in those transactions, there is no fraud.”

It seems that conservative justices were receptive to the defendant’s argument. Chief Justice John Roberts suggested that “such crimes were better handled by state prosecutors.” Justice Samuel Alito expressed that “the court really doesn’t like the federalization of white-collar prosecutions and wants that to be done in state court and is really hostile to this whole enterprise.”

The outcome of Kousisis v. United States holds the potential to redefine the scope of federal white-collar prosecutions. A decision favoring the defendants could lead to a substantial shift in prosecutorial responsibilities from federal to state authorities. A ruling that limits federal jurisdiction in such cases would compel companies to adapt by focusing more on state-level compliance and legal frameworks. Engaging with experienced legal counsel will be essential for businesses to remain compliant and mitigate risks in this evolving legal landscape.

The New FINCEN Rule for Residential Real Estate: What it Means for Investors and Legal Compliance

Conaway & Strickler, P.C. — Wed, 18 Sep 2024 13:24:34 GMT

Recently, the Financial Crimes Enforcement Network (FINCEN) issued a pivotal final rule aimed at tightening regulatory oversight in the residential real estate sector. This change marks a significant step towards enhancing transparency in an industry that has, until now, been relatively free from such regulatory scrutiny. Generally, the new rule requires certain real estate professionals to report information about non-financed transfers of residential real estate to legal entities or trusts.

What Is the New FINCEN Rule?

FINCEN’s new rule extends Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) obligations to investment advisers involved in residential real estate transactions. The aim is to prevent illicit financial activities in an industry known for large cash transactions that can serve as vehicles for money laundering, fraud, and other financial crimes.

Previously, residential real estate investments, particularly those conducted through shell companies or trusts, offered a level of anonymity that bad actors could exploit. This new rule eliminates some of that opacity by requiring reporting and disclosure obligations for entities and individuals involved in these transactions.

The final rule imposes several key requirements:

Increased Reporting and Disclosure: Individuals and firms engaged in residential real estate investments must now report detailed information regarding the identity of buyers and sellers, the source of funds, and other financial details. This includes both U.S. and foreign investors, adding an extra layer of scrutiny for cross-border transactions.
Enhanced Due Diligence: Investment advisers and firms must now conduct thorough due diligence on clients and the source of their funds, ensuring that they comply with AML/CFT standards. This may involve verifying identities, examining financial records, and reporting suspicious activities to FINCEN.
Penalties for Non-Compliance: The rule includes penalties for individuals and firms that fail to meet the new AML/CFT obligations. Non-compliance could lead to fines, sanctions, or even criminal charges depending on the severity of the infraction.

For real estate investors, the new FINCEN rule adds a new layer of legal and financial oversight. While the intention is to weed out bad actors, the burden of proof is now on investors and their advisers to ensure compliance. This means that investors will need to be more transparent in their transactions, particularly regarding the source of their funds. Without proof of the funds coming from a legitimate source, criminal charges of money laundering and fraud can result.

As the FINCEN rule takes effect, compliance will be a critical concern for many in the real estate industry. Our firm is experienced in navigating the complex landscape of financial regulations, including defending clients against charges of money laundering and related financial crimes. We can help you understand your obligations under the new FINCEN rule and defend against any accusations of non-compliance or criminal misconduct.

This new regulation represents a major shift for the residential real estate industry. Whether you’re an investor or an adviser, staying compliant is no longer optional—it’s the law. The new FINCEN rule is set to take effect on December 1, 2025. If you have questions about the new rule and how it affects your business, contact ustoday for a consultation.

When Can Law Enforcement Search my Cell Phone?

Conaway & Strickler, P.C. — Sat, 14 Sep 2024 14:38:34 GMT

Cell phones are everywhere today and thus play a significant role in criminal investigations.

What reports are generated from my devices?

Cellebrite reports provide information about phone calls and text messages; but now it also provides a report on the data stored on these devices such as voicemails, images, and browsing history. From GPS location data to social media activity, cell phones can provide a treasure trove for law enforcement agencies to use to build their cases.

What protections do I have to prevent law enforcement from searching my devices?

Laws on the admission and use of this evidence in court are still evolving. In the Georgia Supreme Court case State v. Wilson, the court ruled search warrants for cell phone contents must specify the items being sought. This is to prevent a general search of a person’s belongings, which is prohibited by the Fourth Amendment.

Do I have the same legal rights at the border that I would elsewhere in the United States?

The Supreme Court ruled that the police must get a warrant before searching someone’s cell phone in Riley v. California. The Supreme Court held that a warrant is generally required before a search of a cell phone seized incident to arrest. BUT, at the border, there is less protection. According to US Customs and Border Protection a person may be chosen for inspection for many different random reasons and thus there is less protections when crossing the border in or out of the US. What this means – you can be pulled for a secondary inspection and all of your devices can be searched without a warrant. They can also get an image from the hard drive of these devices and / or seize the devices at the border.

What do I do if I am asked to give my cell phone to law enforcement?

If you know your rights, you can comply when necessary. So, for example, if you are traveling internationally – do not travel with devices that you would not want searched. Furthermore, if you are driving and pulled over with drugs or a high amount of currency in your car, etc, your cell phone and / or other devices WILL be seized and analyzed.

And, please remember anything uploaded to the cloud is fair game for law enforcement. That’s a broad statement – but when you signed up for Instagram, Whats App, Google, TikTok, Facebook, Signal, Twitter/X, etc, you signed away any privacy rights. Those companies are fast to comply with law enforcement subpoenas giving whatever you posted/uploaded immediately to them.

Suspicious Activity Reports (SARs): What Triggers Them and How to Respond

Conaway & Strickler, P.C. — Fri, 13 Sep 2024 16:36:56 GMT

In the world of banking and finance, the term “Suspicious Activity Report” (SAR) may sound intimidating—especially if you’ve been notified that a bank has filed one concerning your transactions. For individuals and businesses alike, it’s essential to understand what a SAR is, what activities can trigger these reports, and the potential legal consequences that may follow.

What is a Suspicious Activity Report (SAR)?

A Suspicious Activity Report (SAR) is a document that financial institutions are legally required to file with the Financial Crimes Enforcement Network (FinCEN) when they detect potentially suspicious behavior involving financial transactions. Once filed, these reports are sent to FinCEN, a division of the U.S. Department of the Treasury, which shares the information with law enforcement agencies for further investigation if necessary.

Why Do Banks File SARs?

Banks must comply with a variety of regulations designed to prevent financial crimes. One of the core elements of these regulations is monitoring customer transactions for anything that might indicate illegal or suspicious activity. A SAR is typically filed when a bank suspects that a transaction, or series of transactions, might involve:

Money laundering: Attempting to disguise the origins of illegally obtained money by passing it through a legitimate banking system.
Fraud: Including wire fraud, identity theft, and other deceptive financial activities.
Structuring: Breaking down large sums of money into smaller deposits to avoid triggering reporting requirements (also known as “smurfing”).
Unexplained large transactions: Transactions that don’t align with an individual’s or business’s typical activity or appear inconsistent with known financial patterns.

Common Triggers for SARs

Financial institutions are trained to spot red flags, and there are a number of scenarios that could trigger a SAR filing. Here are some of the most common:

Unusually Large Transactions: If an individual or business is suddenly moving unusually large amounts of money, especially in cash, this can raise red flags. Large deposits, withdrawals, or transfers that don’t align with normal activity patterns may prompt the bank to investigate further.
Frequent Cash Deposits Below $10,000: To avoid the $10,000 threshold that triggers an automatic Currency Transaction Report (CTR), some individuals break down larger sums into smaller deposits (a practice called structuring). If a bank detects this behavior, it will likely file a SAR.
Wire Transfers to High-Risk Countries: International wire transfers to or from countries that are known for terrorist activity, money laundering, or lacking robust financial regulations may result in a SAR filing.
Multiple Accounts Under One Name: Using multiple accounts to shuffle money back and forth—especially if the accounts seem unrelated to legitimate business or personal activities—can appear suspicious.
Account Activity Inconsistent with Known Business Practices: If a company typically processes small, regular transactions and suddenly starts handling large, irregular amounts, it might trigger suspicion. Likewise, if a personal account shows business-level activity, this could raise alarms.
Use of Shell Companies: Banks scrutinize accounts associated with shell companies that lack a clear purpose or business activity, as they are often used in money laundering schemes.
Unexplained Source of Funds: If the origin of deposited funds is unclear, or if large amounts of money are transferred without any legitimate explanation, the bank may file a SAR.

The Impact of a SAR Filing

When a bank files a SAR, it is confidential. The individual or business subject to the report is not directly informed; However, the bank may decide to take action based on its findings, which can include:

Account closures: If the bank believes the activity is risky or potentially illegal, it may close your account or freeze any available funds.
Increased monitoring: Your account may come under closer scrutiny, with more restrictions placed on transactions.
Law enforcement involvement: If the behavior in question warrants it, the SAR could lead to a broader investigation by federal or state law enforcement agencies.

What to Do if You Believe a SAR Has Been Filed Against You

While you won’t be directly informed if a SAR has been filed, you may suspect something is amiss if your bank account is frozen, closed, or you’re contacted by law enforcement regarding your financial activity. If you find yourself in this situation, here are some steps to take:

Seek Legal Counsel: The most important thing you can do is consult with an experienced criminal defense attorney. A SAR filing could be the beginning of a serious investigation, and you’ll want legal guidance to protect your rights and interests.
Gather Financial Records: Be prepared to provide your attorney with all relevant financial records. This can help explain the nature of your transactions and demonstrate that they are legitimate.
Do Not Attempt to Explain Yourself to the Bank: Anything you say to the bank could be misinterpreted or used against you in a later investigation. Your attorney will be able to navigate these communications appropriately.

A Suspicious Activity Report can be a precursor to serious legal trouble, but it’s important to remember that it is not an accusation of a crime. Banks are required to report anything that appears suspicious, even if the behavior is ultimately lawful. If you find yourself facing consequences related to an SAR filing, don’t wait—contact us today for a consultation and take control of your situation before it escalates. If you are facing financial crime allegations, our skilled team of criminal defense attorneys is here to help.

The Truth Behind the TikTok “Free Money Hack” Trend: What You Need to Know

Conaway & Strickler, P.C. — Fri, 13 Sep 2024 16:06:45 GMT

In the age of social media, viral trends come and go at lightning speed. Some are harmless and fun, but others can lead people into serious legal trouble. One of the most alarming trends recently circulating on TikTok is the so-called “free money hack.” This trend falsely promises easy money through exploiting banking loopholes, but what many don’t realize is that following such advice could land you in serious legal trouble.

What is the “Free Money Hack”?

The trend usually involves TikTok users claiming they have found ways to manipulate the financial system, offering viewers methods to “hack” or exploit bank accounts, cash apps, or credit systems to obtain free money. Some of these schemes involve:

Overdraft exploits: Encouraging users to overdraw bank accounts and then supposedly avoid the consequences.
Fake check schemes: Depositing fraudulent checks into accounts and withdrawing the funds before the bank detects the fraud.
Refund fraud: Filing fake claims with companies to get refunds for purchases that were never made.

These tactics promise fast cash with minimal effort, but what they really deliver is financial and legal disaster.

Why Following the Trend is Illegal

What these TikTok videos don’t explain is the serious legal consequences of participating in such schemes. Fraud, theft, and exploiting banking systems for personal gain are criminal acts, regardless of how trendy or harmless they may seem in a 60-second clip.

Here are some common legal charges that can result from participating in these activities:

Bank Fraud: This is a federal crime that can result in hefty fines and imprisonment. Intentionally defrauding a financial institution is illegal under U.S. law, and following these TikTok hacks can quickly escalate into a federal investigation.
Wire Fraud: Many of these hacks involve electronic transfers or communications, which falls under wire fraud. This also carries severe penalties, including long prison sentences.
Check Fraud: Depositing fake or altered checks with the intent to withdraw funds is considered check fraud. Even if you think you’re being clever by pulling out the money before the bank catches on, it’s still a criminal act.
Identity Theft: Some of these schemes suggest using fake names or other people’s banking details, which could lead to identity theft charges. This is a serious offense with strict penalties.
Theft by Deception: If you knowingly mislead a financial institution or another individual to gain money or assets, this is classified as theft by deception. Penalties can include jail time and significant fines.

Participating in these “hacks” isn’t just risky from a financial perspective—it’s a direct pathway to legal repercussions that can follow you for the rest of your life. Depending on the scale of the fraud or theft, you could face:

Criminal Charges: These could range from misdemeanors to felonies, depending on the amount of money involved and the nature of the crime.
Restitution: If convicted, you could be required to pay back any money that was wrongfully obtained, along with additional penalties.
Permanent Criminal Record: A fraud conviction can make it difficult to secure future employment, housing, or loans, and can damage your reputation permanently.

The allure of easy money is tempting, but it’s important to remember that many social media trends, like the “free money hack,” come with significant risks. Engaging in these activities can lead to criminal charges that affect your financial future and personal freedom. Before following any advice from TikTok or other social media platforms, it’s vital to understand the full legal ramifications.

If you’ve been accused of fraud or any criminal activity related to online schemes, our experienced legal team is here to help. Don’t hesitate to contact us today for a free consultation. The legal system can be complex and unforgiving, but with the right defense, you can navigate the process and work toward the best possible outcome

The Intersection of Crime and Non-Fungible Tokens (NFTs)

Conaway & Strickler, P.C. — Tue, 14 Nov 2023 16:23:31 GMT

An NFT, or Non-Fungible Token, is a digital asset representing ownership or proof of authenticity of a unique item or piece of content using blockchain technology. Unlike cryptocurrencies such as Bitcoin or Ethereum, which are fungible and can be exchanged on a one-to-one basis, NFTs are non-interchangeable and one-of-a-kind. As long as you’re following copyright laws and selling legitimate assets, creating, selling, and reselling NFTs is legal. However, due to the decentralized and anonymous nature of the crypto world, NFTs come with a host of legal issues. Like with most digital innovations, regulatory legislation has been slow to catch up and establish clear guidelines; still, wrongful use of NFTs can implicate an array of criminal charges.

Money Laundering refers to the illegal process of concealing the origins of money obtained through criminal activities, making it appear as if it comes from a legitimate source. This is criminalized under 18 U.S.C. § 1956. Money laundering using NFTs involves the illicit use of these digital assets to disguise the origins of illegally obtained funds. In this context, individuals create a fake record of sales on the blockchain by selling NFTs to themselves using different accounts. Once finished, they sell the NFT to an unsuspecting buyer and repeat the process.

Fraud has grown increasingly common in the crypto landscape due to its anonymous and decentralized nature. Fraud involving NFTs can manifest in various ways due to the unique characteristics of these digital assets. This is mostly being prosecuted as wire fraud under 18 U.S.C. § 1343. Some common forms of fraud associated with NFTs include:

Fake or Stolen NFTs: Fraudsters might create counterfeit NFTs by copying digital content and attempting to sell them as original or rare pieces. Additionally, they might steal someone else’s artwork or content and mint NFTs to sell without the creator’s consent.
False Representation: Individuals might misrepresent the ownership or authenticity of an NFT by falsely claiming it is associated with a particular creator or source, leading buyers to believe they are purchasing something of higher value or legitimacy than it actually holds.
Pump-and-Dump Schemes: Similar to traditional financial markets, some individuals may engage in pump-and-dump schemes within the NFT market. This involves artificially inflating the value of certain NFTs through false hype or manipulation, only to sell them off at a high price, leaving unsuspecting buyers with devalued assets.
Phishing and Scams: Scammers may use phishing techniques to trick NFT owners into providing their private keys or access to their digital wallets, allowing the fraudster to steal the NFTs. Additionally, fraudulent schemes and fake NFT marketplaces can deceive buyers and sellers into making transactions for non-existent or misrepresented NFTs.
Rug-Pull Scheme: As the term suggests, a “rug pull” refers to a scenario where the creator of an NFT and/or gaming project solicits investments and then abruptly abandons a project and fraudulently retains the project investors’ funds.

Law enforcement is continuing to prosecute these types of NFT schemes across the nation, in cases that allege millions of dollars being defrauded. Two defendants were charged for executing a $1 million NFT money laundering and fraud scheme in January 2022. In another NFT rug-pull, Aurelien Michel was charged for diverting $2.9 million dollars in an international fraud scheme.

Federal Criminal Law – Wire Fraud and Possible Alternatives

Conaway & Strickler, P.C. — Sun, 26 Mar 2023 18:22:13 GMT

By Brandon Fitz

Wire Fraud is a serious white-collar crime and is defined under 18 USC §1343 and states:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation occurs in relation to, or involving any benefit authorized, transported, transmitted, transferred, disbursed, or paid in connection with, a presidentially declared major disaster or emergency (as those terms are defined in section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122)), or affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both. 18 U.S.C.A. § 1343.

Generally, the 11th Circuit has stated that mail or wire fraud occurs when (1) a person intentionally participates in scheme to defraud another (2) of money or property and (3) uses mails or wires in furtherance of that scheme. Cesnik v. Edgewood Baptist Church, 88 F.3d 902 (11th Cir. 1996).

The Department of Justice however does have its own internal limitations for prosecution. According to Justice Manual 9-43.100 (Prosecution Policy Relating to Mail and Wire Fraud), “Prosecutions of fraud ordinarily should not be undertaken if the scheme employed consists of some isolated transactions between individuals, involving minor loss to the victims, in which case the parties should be left to settle their differences by civil or criminal litigation in the state courts. Serious consideration, however, should be given to the prosecution of any scheme which in its nature is directed to defrauding a class of persons, or the general public, with a substantial pattern of conduct.”

Alternatives to prosecutions can also come in the form of Pretrial Diversion (PTD). PTD programs divert certain offenders from traditional criminal justice processing into alternative systems of supervision and services. Individuals who successfully complete a PTD program may qualify for a range of case outcomes, including the declination of charges, dismissal or reduction of charges, or a more favorable recommendation at sentencing.

Navigating serious crimes like these can be the toughest thing you have ever done. Don’t do it alone. Contact our team today for more information about how we can protect your rights.

What is RDAP?

Conaway & Strickler, P.C. — Sun, 22 May 2022 22:45:20 GMT

The Residential Drug Abuse Program (RDAP) and the Non-Residential Abuse Program (NRDAP) are offered by the Federal Bureau of Prisons (FBOP) to assist inmates suffering from substance abuse issues.

RDAP consists of 3 intensive phases, totaling over 500-hours of voluntary individual and group treatment, and it is about 9-12 months long. This program offers prisoners to live in a modified prosocial community within the prison, separate from the general population. They split their day in half with vocational, work, or school activities and the other half in treatment/programs. Prisoners must meet specific requirements to be considered for this program, and space is often limited. The prisoner must have at least 24 months remaining in their sentence to complete the program.

Since some inmates may have less than a 24-month sentence, the FBOP also offers a Non-Residential Drug Abuse Program (NRDAP), where prisoners can participate in 12-24 weeks of Cognitive-Behavioral Treatment. This treatment consists of skill-building within communication, rational thinking, and institution adjustment. NRDAP is often offered in a group setting and is more accessible to prisoners because of the less strict qualifications. NRDAP differs from RDAP because offenders may join this program if they have short sentences, are not eligible for RDAP, or awaiting availability.

The key benefit other than treatment is that those inmates who successfully complete either program may be eligible for a maximum pre-release time in a residential re-entry center, such as a halfway house, where treatment continues thus shortening the actual time incarcerated.

For more information, please click here or feel free to access our blog or contact Conaway & Strickler, PC to discuss this in more detail.

What are the current DOJ priorities?

Conaway & Strickler, P.C. — Fri, 01 Apr 2022 15:03:29 GMT

Attorney General Merrick Garland made recent comments about what he considered to be the Department of Justice’s top priorities for 2022. Since taking office in March 2021, Garland has tried to combat crime in a tumultuous time. He has been criticized for his handling of January 6 investigation and has stated it’s the most urgent probe in history.

With all of this going on, the US Attorney’s office increased its prosecutions of individuals of white collar crimes in the year 2021. White collar charges like fraud, theft, corruption, bribery, environmental crime, tax fraud, health care fraud, procurement fraud, money laundering, PPP loan fraud, etc will continue to get more attention from the Department of Justice.

What does this mean? It means that investigations of any sort need to be taken seriously and that you should contact a lawyer immediately if any wrongdoing is alleged.

Conaway & Strickler, PC has a long history of handling fraud cases of all varieties and is well equipped at fighting the DOJ in their overzealous prosecutions. Please feel free to contact us so that we can help you avoid future headaches.

IRS Increased Focus on Cryptocurrency in Operation Hidden Treasure

Conaway & Strickler, P.C. — Sat, 01 May 2021 13:41:12 GMT

The IRS has just announced that Operation Hidden Treasure will seek to find taxpayers with unreported income from currency transactions. Did you notice the new question on page 1 of the Tax Form 1040? It states, “At any time during 2020 did you receive any financial interest in virtual currency?” Last year this question was only on Schedule 1.

The IRS Criminal Investigation Division (“CID”) will look for typical “flags” in money transactions. That may include “structuring” (transactions in increments of less than $10,000 to avoid reporting requirements), “the use of nominees, shell corps” (entities used solely for moving money around) or “getting on and off the chain.” (On chain transactions – blockchain is modified to reflect the transaction on a public ledger. Off chain transactions are those that that go off the blockchain. They work by swapping private keys to an existing wallet instead of transferring funds.)

The IRS identifies and investigates these tax evasion flags. Operation Hidden Treasure is “all about finding, tracing, and attributing crypto to U.S. Taxpayers.” Do not be fooled into thinking that since it’s cryptocurrency the government does not have the know how to investigate. Charges for tax evasion, false information on a tax return or even money laundering or structuring can be forthcoming. Call Conaway & Strickler, PC if you have had a friendly visit from an IRS CID Agent or if you think you might be facing some issues with the IRS. Carolyn Schenck, national fraud counsel in the IRS Office of Chief Counsel states, “Operation Hidden Treasure is designed to find, trace and attribute such transactions to taxpayers. These transactions are not anonymous. We see you.”

NEWEST DEVELOPMENTS – PPP Loan Fraud

Conaway & Strickler, P.C. — Wed, 24 Feb 2021 17:26:01 GMT

PPP Loan Fraud -NEWEST DEVELOPMENTS As we continue to see in the news, many cases are being charged by the Department of Justice for PPP (Payroll Protection Program) issues. There continues to be a lot of confusion out there over the Paycheck Protection Program (PPP). Understandable since information continues to change about how to apply, whether to apply for forgiveness, and the second round of PPP loans being rolled out. Due to the rules and the program itself changing frequently, it is important to not fall under scrutiny by the DOJ.

The Department of Justice (DOJ) has already charged and convicted many cases of PPP loan fraud. But, the purpose of this post is that, recently, the DOJ announced the first (publicized) civil settlement resolving PPP loan fraud allegations against a company and its owner. The owner and SlideBelts, Inc was required to pay a $100k civil penalty per FIRREA civil penalty provision 12 USC 1833a and the False Claims Act (FCA) 31 USC 3729 in the Eastern District of California. The DOJ continues to be aggressive and swift in bringing criminal charges, but, this is the first public civil settlement. Please see https://www.justice.gov/usao-edca/press-release/file/1352931/download to read it in its entirety. The SlideBelts loan application for $350k was misleading as to whether or not the company was in bankruptcy. This means that each and every box checked/information provided was scrutinized. The bank reviewed the application and still paid the loan but then the DOJ argued that the PPP loan application was false and misleading. In this case, SlideBelts worked with law enforcement and the bankruptcy court to acknowledge the issue and worked to settle the case without criminal charges. Claims made by PPP loan borrowers can and will continue to be scrutinized by the DOJ. And even in the absence of clear false statements, it is becoming increasingly clear that the DOJ is investigating and auditing PPP Loan cases. SBA continues to audit applications, especially those over $2 million. If you are unclear whether you need assistance with your loan or PPP or EIDL loan application or if you are being investigated, call federal criminal lawyers, Conaway & Strickler, PC