FBI Charges New York Man With $1.7 Million Fraud Scheme Using Bitcoin

The Federal Bureau of Investigation has formally charged Tushal Rathod of Baldwinsville, New York, with orchestrating a complex fraud and money laundering operation that generated approximately $1.7 million in illicit proceeds. The scheme, active from November 2021 through June 2024, involved the use of counterfeit checks and business email compromise (BEC) scams to defraud victims. Rathod allegedly converted most of these ill-gotten gains into Bitcoin, leveraging the cryptocurrency’s pseudonymous nature to obscure the money trail.

Rathod is accused of exploiting a network of seven bank accounts across six financial institutions to funnel stolen funds. Despite warnings from at least three banks about suspicious deposits, Rathod reportedly fabricated invoices to legitimize the incoming payments. One notable incident involved M&T Bank presenting a fraudulent invoice to a victim, who confirmed its illegitimacy, prompting police involvement. Rathod’s refusal to provide further documentation compounded suspicions of deliberate deception.

Business email compromise scams remain a prevalent cyber threat, wherein attackers use spearphishing techniques to steal login credentials and intercept payment information. Rathod’s case exemplifies how criminals manipulate these tactics to redirect payments to fraudulent accounts. The FBI’s court filing details how Rathod’s scheme capitalized on these vulnerabilities, deceiving vendors into processing payments through counterfeit domains.

FBI special agent Samuel Morgan highlighted that fraudsters often open multiple bank accounts under various business names to receive and commingle victim funds before transferring them to other accounts or converting them into cryptocurrencies. This layered approach complicates law enforcement efforts to trace and recover stolen assets.

Between February 2023 and June 2024, Rathod reportedly purchased over 40 BTC in two transactions valued at approximately $900,000. These Bitcoins were swiftly transferred to unidentified external addresses, suggesting an intent to further distance the illicit funds from their origin. The FBI also alleges that Rathod enlisted his girlfriend and family members to assist in laundering additional funds, with over $1 million deposited into their accounts. While Citibank managed to recover $800,000 of these fraudulent deposits, significant sums remain unaccounted for.

Google records indicate Rathod expressed frustration over repeated bank account closures, a common challenge for individuals involved in suspicious financial activities. A key witness, Rathod’s former partner, provided critical testimony and digital evidence, including screenshots of crypto transactions and multilingual communications, reinforcing suspicions of money laundering.

Rathod faces multiple charges, including wire fraud, conspiracy to commit wire fraud, money laundering, and conspiracy to commit money laundering. If convicted, he could face up to 20 years in federal prison. This case underscores the increasing scrutiny on cryptocurrency’s role in facilitating financial crimes and the ongoing efforts by authorities to combat such illicit activities.

The FBI’s indictment of Tushal Rathod highlights the sophisticated methods criminals employ to exploit both traditional banking systems and cryptocurrency networks for laundering illicit funds. As fraud schemes evolve, combining counterfeit checks, business email compromise, and crypto transactions, vigilance from financial institutions and regulatory bodies remains crucial. This case serves as a reminder of the persistent risks in the crypto ecosystem and the importance of robust fraud detection and compliance measures to safeguard financial integrity.