Money Laundering Charges for Misusing PPP Funds
You probably never thought you'd be reading an article about money laundering charges. Thats something for drug dealers and organized crime bosses, right? Cartels running cash through shell companies. Mob operations hiding millions in offshore accounts.
Not small buisness owners who spent PPP funds wrong.
But heres the reality your facing. Federal prosecutors have absolutley no problem charging ordinary people with money laundering for how they spent pandemic relief funds. And that charge - designed for the worst criminals - now hangs over buisness owners who made mistakes during the most confusing economic crisis in decades.
At Spodek Law Group, we see this pattern constantly. Our founder Todd Spodek has watched prosecutors transform routine business transactions into "laundering" charges that sound horrifying and carry devastating sentences. We beleive in fighting back against this overreach. Call us at 212-300-5196 if your facing these charges.
Lets talk about whats really happening here.
How Spending Becomes "Laundering"
OK so this is the part that makes alot of people angry. And honestly, it should.
When you got your PPP loan, the money hit your business bank account. Then you spent it. Maybe on payroll. Maybe on rent. Maybe on some things that werent perfectly aligned with PPP guidelines. Maybe on personal expenses you shouldnt have touched.
Every single one of those transactions - every check, every transfer, every debit card swipe - can be charged as a seperate money laundering offense under 18 USC 1956.
Not becuase you were hiding anything. Not becuase you ran the money through a web of shell corporations. Not becuase you did anything remotely resembling what we normaly think of as money laundering.
Just becuase you spent money that prosecutors now claim was fraudulently obtained.
Let that sink in.
The crime of getting the money (fraud) automaticaly generates a second crime (laundering) whenever you spend it. Your punished twice for the same basic conduct. The same dollars that form the basis of wire fraud charges also form the basis of money laundering charges.
And each charge adds up to 20 more years of potential prison time.
The Statute That Was Never Meant For This
Heres some history that matters. 18 USC 1956, the federal money laundering statute, was enacted in 1986 as part of the war on drugs. Congress designed it to combat drug trafficking organizations that were generating massive cash flows and hiding them through complex financial maneuvers.
Were talking about cartels moving millions through dummy corporations. Crime syndicates using cash-intensive businesses to integrate dirty money. International wire transfers designed to obscure origins and ownership.
The statute was a powerful weapon against sophisticated criminal enterprises.
Now that same statute gets applied to a restaurant owner who paid his mortgage with PPP funds. To a salon owner who bought a car she probably shouldn't have. To a contractor who used pandemic relief for personal expenses.
These arent cartel operations. They're bad decisions made by ordinary people during extraordinary times. But the legal weapon hasnt changed. The penalties havent changed. The terrifying sound of "money laundering charges" hasnt changed.
Just the targets.
What Prosecutors Actually Have to Prove
Despite how scary money laundering sounds, prosecutors still have to prove specific elements beyond a reasonable doubt. And in PPP cases, some of these elements are genuinely difficult.
First, they have to prove you engaged in a financial transaction involving proceeds of "specified unlawful activity." In other words, the underlying fraud has to be proven before the laundering charge can stick. If you successfully defend against the fraud charges, the laundering charges collapse too.
Second, they have to prove you KNEW the funds came from unlawful activity. This is crucial. If you genuinely believed your PPP loan was legitimate - if you thought you were eligible, if you followed the confusing guidance as best you could - you might not have had the required knowledge that your spending was criminal.
Third, they have to prove the transactions were designed to conceal the nature, source, or ownership of the funds, OR that the transactions were meant to promote further unlawful activity.
That concealment element is where a lot of PPP money laundering charges get weak. You deposited money in your regular business account. You spent it through normal channels. You didn't set up shell companies. You didn't wire funds to offshore accounts. You didnt do anything to hide what you were doing.
Is paying your rent really "concealment"? Is buying equipment through your normal vendors really "designed to hide" anything?
The answer should be no. But prosecutors charge it anyway, hoping you'll be too scared to fight.
The Transaction Counting Nightmare
Here's something that should terrify you - and then make you understand why you need good defense counsel.
Prosecutors can charge each separate financial transaction as its own money laundering count. Each count carries up to 20 years in federal prison.
So let's say you spent PPP funds over a period of months. You made rent payments. Utility payments. Payroll. Bought supplies. Paid some personal expenses.
That's not one money laundering charge. That's potentially dozens of counts. Each carries two decades of maximum exposure.
Ten routine business transactions become 200 years of theoretical prison time.
This isn't about proportionate punishment. It's about creating pressure. Prosecutors stack these charges knowing that the combined exposure is so overwhelming that defendants will plead guilty rather than risk trial.
Imagine your lawyer telling you that you face 200 years if you lose at trial, or 2 years if you plead guilty now. Most people take the plea even if they had defenses. Even if the charges were overblown.
That's how the system actually works.
The Forfeiture Problem
Money laundering charges come with another devastating consequence that a lot of people don't see coming. Forfeiture.
When prosecutors charge money laundering, they can seek forfeiture of any property involved in the offense. Not just the allegedly laundered funds - any property "involved in" the money laundering transactions.
Used PPP funds to make a mortgage payment? The house is potentially subject to forfeiture. Bought a vehicle? Forfeiture. Deposited funds in your business account? The entire account balance can be targeted.
Forfeiture proceedings can be civil or criminal, and civil forfeiture has a lower burden of proof. The government can sometimes take your property even if you're never convicted of anything.
People focus on prison time, which makes sense. But losing your house, your business equipment, your vehicles, your bank accounts - that's a different kind of devastation, that's harder to recover from.
Why These Charges Get Added
Let's be really honest about something. In most PPP cases, money laundering charges are added not because prosecutors genuinely believe laundering occurred, but because the charges create leverage.
When you're facing wire fraud, bank fraud, AND money laundering, the combined exposure is staggering. The psychological pressure is immense. You're willing to plead to almost anything just to make the laundering charges go away.
Then prosecutors offer to drop the money laundering counts in exchange for a guilty plea on the fraud charges. Seems like a great deal, right?
Except that the money laundering charges may never have been provable in the first place. The "concealment" element was always weak. The "knowledge" element was shaky. You just gave up your trial rights to avoid charges that might have collapsed anyway.
Good defense attorneys recognize this pattern. They evaluate whether money laundering charges are substantive or just leverage plays. They negotiate from knowledge rather than fear.
That's the difference between fighting back and just surrendering.
Defense Strategies That Work
So how do you fight money laundering charges in a PPP case?
First, attack the underlying fraud. Money laundering requires "proceeds of unlawful activity." If the fraud charges are weak - if you had good faith beliefs about eligibility, if you relied on professional advice, if the guidance was genuinely confusing - then the money laundering charges lose their foundation.
Second, challenge the knowledge element. Did you actually KNOW you were spending illegally obtained funds? Or did you believe your loan was legitimate? Good faith defeats the knowledge requirement. Prosecutors have to prove you knew, not just that you should have known.
Third, challenge the concealment element. Normal business spending is not concealment. Depositing money in your regular account is not concealment. Paying vendors through normal channels is not concealment. Make prosecutors explain exactly what you did to "conceal" anything.
Fourth, challenge the transaction charging. If prosecutors are counting every single expense as a separate offense, argue that this is an excessive multiplication of charges from unitary conduct. Courts sometimes consolidate counts that arise from a single course of action.
Fifth, use the leverage imbalance to your advantage. If prosecutors added money laundering mainly to create plea pressure, call their bluff. Make them explain how they intend to prove these charges. Sometimes, the offer to drop laundering charges becomes available without requiring a guilty plea on everything else.
The Real Stakes Here
Let's be clear about what you're facing if convicted of money laundering.
Up to 20 years per count in federal prison. And remember, there are likely multiple counts.
Massive fines - up to $500,000 or twice the amount laundered, whichever is greater.
Forfeiture of any property involved in the transactions.
Restitution requirements.
A federal felony conviction that follows you forever.
These are life-altering consequences. And they're being applied to conduct that, in many cases, amounts to spending pandemic relief funds improperly. Not hiding drug money. Not running organized crime operations. Spending PPP funds incorrectly.
The punishment should fit the crime. In money laundering charges for PPP cases, it often doesn't even come close.
When to Fight Back
If you're facing money laundering charges related to PPP or EIDL funds, you need experienced federal defense counsel immediately.
Not next week. Not after you "figure things out." Now.
Every day without representation is a day prosecutors are building their case while you're not building yours. Every statement you make could become evidence. Every decision you make uninformed could close options that should stay open.
At Spodek Law Group, Todd Spodek and our team understand how prosecutors weaponize money laundering charges. We know the elements they have to prove. We know where these charges are weak. And we know how to fight back effectively.
You didn't become a criminal because you spent pandemic relief funds. You became a target because prosecutors needed headlines and conviction statistics. That's not justice.
Call 212-300-5196 today. Let's talk about your specific situation and how to mount the strongest possible defense.
Your facing charges designed for drug cartels. You deserve someone who's going to fight like your life depends on it.
Because it might.
