Uncle Sam Strangles Criminals’ Cash Flow By Reining In Money Mules

Uncle Sam announced its commenced over 4,000 legal actions in three months — mostly harshly worded letters — to rein in “money mules” involved in romance scams, business email compromise, and other fraudulent schemes.

Money mules are the individuals who provide money transfer services — occasionally unwittingly — to launder robbery funds. Some of these people are willing participants in the fraud, receiving money from victims and then transferring it to the crooks. Others, however, are unwitting tools – asked to accept and pass on payments without understanding they’re assisting criminals to shift cash.

The law-enforcement actions targeted both groups. This includes criminal prosecutions against those who knowingly helped fraudsters, as well as warning letters sent to those who the Feds think maybe didn’t realize their role in the larger criminal ecosystem.

US federal agencies involved in the operation include the FBI, the Justice Department, Homeland Security Investigations and the US Postal Inspection Service (USPS). 

Yes, the US Post Office played a role in a crackdown that involved serving some 4,000 letters warning people that their activities are facilitating fraud. Then it was back to delivering all those ecommerce packages.  

“Anyone can be approached to be a money mule, but criminals often target students, those looking for work, and those on dating websites,” USPS Inspector in Charge Eric Shen of the Criminal Investigations Group said in a statement. “When those individuals use the US Mail to send or receive funds from fraudsters, postal inspectors are quick to step in and put a stop to money mule activities.”

In addition to the written scoldings outlining potential consequences for continuing to transmit illegal funds, the Feds also filed 12 civil or administrative actions, and criminal charges against 25 people for participating in the money laundering processes.

25 criminal charges

Some of these bigger fish caught in the Justice Department’s net include Craig Clayton, 73, of Cranston, Rhode Island, who was arrested in February for allegedly using his accounting and “virtual CFO” business to launder proceeds of internet fraud schemes.

Between 2019 and 2023, Clayton allegedly founded 65 shell companies in the US and used them to open about 80 bank accounts. He then allegedly used these accounts to shift to more than $35 million for his criminal clients in exchange for fees, according to the Justice Department.

In another case, a grand jury in April indicted Nachiket Banwari, 34, of Charlotte, North Carolina, for conspiracy to commit mail fraud, wire fraud, and money laundering.

According to the Feds, Banwari was involved in a multi-million-dollar tech support scam. He allegedly used phony pop-up internet ads to freeze victims’ computer screens and — when the scheme worked — trick them into thinking they needed technical support to fix the problem. 

These ads displayed phone numbers for Banwari’s scam companies, and when victims called the number of the ads for assistance, they were conned into buying services to solve non-existent computer issues. Banwari allegedly defrauded thousands of victims, many of whom were elderly, of more than $7 million.

In a third criminal action, Serena Lieu, 55, of Westminster, California was charged in February for her role in allegedly laundering money from fraud victims after receiving a money-mule warning letter in 2019. Lieu allegedly received more than $1.8 million into various bank accounts.

These funds came from fraud victims who had been tricked into sending the money to Lieu, as opposed to the victims’ intended recipients, we’re told. After receiving this money, Lieu allegedly withdrew or transferred it to criminals’ wallets.

This year’s effort represents the fifth US law enforcement campaign disrupting money-mule networks. Since the first campaign, which involved about 400 law-enforcement actions, government agencies have taken action in over 12,000 muling matters, and assert that those efforts have made it harder for crims to profit from fraud.

The push to disrupt these criminal networks is also part of a global effort to stop money muling. ®

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