DOJ: Accountant Sentenced to Federal Prison for Money Laundering, PPP Fraud

• He laundered $150,000 in drug proceeds and fraudulently obtained nearly $1 million in COVID relief loans.
• The court ordered over $900,000 in restitution and a $250,000 fine.

Arun Mago, a certified public accountant in Austin, was sentenced to 41 months in federal prison for laundering $150,000 in cocaine proceeds and committing bank fraud related to PPP and EIDL loans. He transferred nearly $1 million in fraudulent COVID relief funds into his personal account and used them for real estate purchases.

The investigation by IRS-CI and the Texas Attorney General revealed Mago's repeated loan fraud between April and November 2021. In addition to prison, Judge Robert Pitman ordered Mago to pay over $900,000 in restitution and a $250,000 fine. The DOJ recently launched the National Fraud Enforcement Division to target such crimes.

• 41 months prison sentence
• $150,000 laundered drug proceeds
• over $900,000 restitution ordered

• Review PPP and EIDL loan applications for entities linked to Arun Mago for signs of fraud.
• Screen for typologies involving laundering drug proceeds through real estate purchases as seen in this case.
• Monitor for certified public accountants referencing 'Black Money' or similar schemes in client communications or publications.

This case highlights the risks of professionals exploiting federal relief programs and laundering illicit proceeds, including drug money, through legitimate channels like real estate. The DOJ's new National Fraud Enforcement Division and President Trump's Task Force to Eliminate Fraud signal increased scrutiny and enforcement against fraudsters targeting federal benefit programs. Compliance officers must be vigilant for similar typologies and ensure robust controls to detect and report suspicious activity, especially involving COVID relief funds and professional service providers.