FBI Charges Man in $1.2 Million Bitcoin Money Laundering Scheme

Tushal Rathod, a 44-year-old resident of Van Buren, NY, has been charged by the FBI with a series of financial crimes, including conspiracy to commit wire fraud, money laundering, and conspiracy to commit money laundering. The alleged crimes took place between November 2021 and June 2024, involving a complex scheme that utilized multiple bank accounts and cryptocurrency transactions.

Rathod is accused of receiving $1.2 million worth of Bitcoin (BTC) through a network of seven bank accounts spread across six different financial institutions. The scheme was uncovered when his former partner, who is the mother of his six-year-old child, noticed suspicious screenshots on his device. These screenshots included evidence of crypto transactions and conversations in other languages, which raised her suspicions and led her to report the activity to the FBI.

According to the court filing by FBI special agent Samuel Morgan, Rathod incorporated two companies that were used in the scheme. In 2016, he registered T3 Telecom, LLC, a telecommunications company that tested and deployed network devices. He also incorporated TSV Telecom Constructions LLC in 2021. Between April 2022 and June 2024, Rathod received over $1.7 million in suspected fraudulent proceeds from business email compromise (BEC) fraud and counterfeit checks. These funds were deposited into six different financial institutions, with five accounts belonging to T3 Telecommunications and one for TSV Telecommunications.

BEC fraud typically originates from compromised employee login credentials through spear phishing. Scammers intercept information about the company’s upcoming payments and deceive vendors into completing payments through fake domains. Rathod used at least $1.2 million of the proceeds to purchase Bitcoin, which he then sent to different external addresses. Three financial institutions, including Wells Fargo, contacted him in 2022, notifying him that the money received into his account was unauthorized and would proceed to close the account. Later that year, M&T Bank also contacted Rathod and informed him of the fraudulent funds, but he replied with a fake invoice to justify the funds as legitimate income. The accused stopped contacting M&T Bank after learning police records had been filed.

Rathod is alleged to have recruited other individuals to aid his plan, including his former girlfriend and family members. Between May and July 2024, he recruited his family members to assist in the scheme, resulting in an additional $1 million deposited into accounts controlled by his girlfriend and family members. Citibank has been able to recover $800,000 worth of fraudulent funds. Morgan explained that in his training and experience, he could identify fraudsters who conduct BEC scams, often working with an extensive network of launderers to help them. The scammers work with others to use multiple bank accounts to move money in a series of convoluted transactions that make it hard to identify the source or who controls the funds, referring to the plot as layering or funneling.

The first victim of the BEC scam reported in 2022 was a Rhode Island real estate law firm, which lost approximately $163,298. The victim received an email that impersonated an employee at Northpointe Bank, directing the victim to send funds to an account supposedly belonging to a Mortgage Company, Carrington Mortgage, associated with a valid real estate transaction. California Credit Union was also involved in the scheme as the second victim, losing approximately $8 million to bank accounts controlled by other scammers.

Rathod faces a 20-year jail term if convicted. The case highlights the growing complexity of financial crimes involving cryptocurrency and the need for vigilant monitoring and reporting of suspicious activities. The FBI's investigation involved obtaining records from Google for tushal27@gmail.com, Apple iCloud accounts belonging to the same email, and kluvbb110011@gmail.com, all via court order. The case serves as a reminder of the importance of cybersecurity and the potential risks associated with digital transactions.