FBI Charges New York Man With $1.7 Million Bitcoin Money Laundering Scheme

The Federal Bureau of Investigation (FBI) has charged Tushal Rathod, a resident of Baldwinsville, New York, with wire fraud and money laundering. Rathod is accused of masterminding a scheme that involved counterfeit checks and business email compromise scams, generating approximately $1.7 million in illicit funds. The funds were allegedly laundered through a network of bank accounts at various financial institutions, with a significant portion converted into Bitcoin (BTC).

Rathod is alleged to have received the funds through a network of seven bank accounts at six different financial institutions. A substantial amount, $1.2 million worth of BTC, was sent to external addresses. The FBI's investigation revealed that at least three of these banks had warned Rathod that the funds entering his accounts were from fraudulent sources. Despite these warnings, Rathod is accused of creating fake invoices to disguise the illicit income. One institution, M&T Bank, presented this invoice to a victim, who confirmed its fraudulent nature. Police reports were filed, but Rathod failed to provide any further requested documents, insisting that he was the victim of a scam.

Business email compromises involve scammers stealing login credentials, primarily through "spearphishing" cyber campaigns. Information about a company's upcoming payments is intercepted, with vendors then deceived into completing transactions through bogus domains. The FBI's court filing, written by special agent Samuel Morgan, details how individuals engaged in fraud schemes often open multiple bank accounts under business entity names to receive funds from victims. These funds are then commingled with other seemingly legitimate funds and moved to other accounts. In this case, Rathod is alleged to have recruited his girlfriend and some family members to assist in the scheme. Over $1 million in additional funds were deposited into accounts controlled by Rathod’s girlfriend and family, although Citibank was able to recover $800,000 of these fraudulent funds.

In February 2023, Rathod is alleged to have purchased 20.18 BTC and 20.16 BTC in two transactions, worth a total of $900,000, and sent it to an unidentified recipient on the same day. Records obtained by Google suggest that Rathod complained to an associate about his bank accounts being continually closed. One of the witnesses who came forward to the FBI was a former partner, who is the mother of his six-year-old child. She claimed that she suspected money laundering due to suspicious screenshots on the device, which included evidence of crypto transactions and conversations in other languages.

Rathod faces up to 20 years in prison if convicted. The case highlights the growing intersection of traditional financial crimes and cryptocurrency, as well as the challenges law enforcement faces in tracking and prosecuting such schemes. The use of Bitcoin in money laundering operations is a concern for regulators and law enforcement agencies worldwide, as the decentralized nature of cryptocurrencies makes it difficult to trace transactions. This case serves as a reminder of the importance of vigilance and cooperation between financial institutions and law enforcement to combat financial crimes.