Money Mules: Fraud Victims Become Criminals Facing Arrest in Texas

Who gets arrested in Texas for being a money mule? It is often shocking to the accused as well as their loved ones that people being victimized by sophisticated enterprises, often based overseas, find themselves under arrest and facing serious felony charges.

In my own Texas criminal practice, I am aware of more and more folks falling victim to any number of recruitment scenarios.  The common denominator?   They are all U.S. citizens with easy access to a bank account.

Recruiting Unwitting Money Mules

What’s going on?  Sometimes, the individual responds to an online “job offer.”  Perhaps they become involved in an online romance.  Age doesn’t matter here:  the elderly widow is just as vulnerable to an online romance scam as a college student looking to make ends meet with a side-gig.

From the United States Postal Service comes the warning that “criminal elements usually use several methods of recruiting victims” that involve:

• Work-from-home Scams: A job posting offers easy money for reshipping packages, buying gift cards or Postal Money Orders, or transferring money, which can be done at home.
• Confidence Scams: A person or business you don’t know offers you a cut/commission if you transfer money for them. Many of these scammers are active on social media sites, like Facebook and Instagram.
• Lottery Scams: A person informs you that you need to transfer or accept money in order to collect a prize/winnings.
• Romance Scams: A person you’ve met online or on an app who says they’re romantically interested in you asks you to transfer money and/or packages.

These cons are often initiated overseas.  Criminals in other countries need someone with a U.S. bank account that can accept a wire transfer of their proceeds.   Their goal is usually money laundering.  Meanwhile, their victim here in Texas who agrees to accept their transfer will violate state and federal law.  The minute they do so, they become “money mules.”

These money mules are unaware of the underlying scam.  They are usually told that they are helping someone – perhaps to buy a car – or to accept a prize.  Maybe they are asked to help someone by buying bitcoin on someone’s behalf and then forwarding the cryptocurrency.  They don’t know anything is wrong.

To friends and family, they become victims when they are become “money mules” but to law enforcement, whenever the legal line is crossed, they become criminals.  Now, they will need experienced and zealous criminal defense against charges like felony theft, fraud, or even money laundering – after possibly never having any kind of criminal record or the need for any kind of legal representation in their lives.

What is a Money Mule in the Eyes of Law Enforcement?

According to the Federal Bureau of Investigation (“FBI”), “…[a] money mule is someone who transfers or moves illegally acquired money on behalf of someone else.”

Often these people are recognized as unwitting or unknowing about the illegal purpose of the money transfers.  These are the victims described above, who become involved through things like job offers or online dating sites.  As the FBI acknowledges, these people are not outlaws, but have been “…[m]otivated by trust in the actual existence of their romance or job position.”

However, this does not prevent their arrest.  And for many, there will be intrusive scrutiny to see if they fit into other categories or types of “money mules” where prosecutions will involve complex charges that may include things like fraud (wire, bank, mail); conspiracy; and money laundering.

Other Types of Money Mules

Law enforcement also investigates and arrests those labelled as “money mules” who are “witting” or “complicit” in the underlying criminal operation.  Obviously, the criminal allegations against these people will be more complicated and involve more serious felony charges than those faced by the unwitting or clueless money mule.

1.      Witting Money Mules

According to the FBI, a “witting money mule” is a person who ignores “obvious red flags or act willfully blind to their money movement activity.”  Characteristics of a witting money mule include:

• May have been warned by bank employees they were involved with fraudulent activity
• Open accounts with multiple banks in their true name
• May have been unwitting at first but continue communication and participation
• Motivated by financial gain or an unwillingness to acknowledge their role.

2.      Complicit Money Mules

When someone is “aware of their role and actively participates,” then the FBI explains they will be considered as a “complicit money mule” by law enforcement.  Here, these people are known to:

• Serially open bank accounts to receive money from a variety of individuals/businesses for criminal reasons
• Advertise their services as a money mule, to include what actions they offer and at what prices. This may also include a review and/or rating by other criminal actors on the money mule’s speed and reliability.
• Travel, as directed, to different countries to open financial accounts or register companies
• Operate funnel accounts to receive fraud proceeds from multiple lower level money mules
• Recruit other money mules
• Motivated by financial gain or loyalty to a known criminal group.

Investigation and Arrest of Money Mules and Fraudsters

For several years, law enforcement at the state, federal, and international level have worked together in an effort to find and prosecute money mules and those much higher up in the organizations overseeing them (called “fraudsters” by the Department of Justice (“DOJ”)).

One example of this joint effort is the Money Mule Initiative where a global coordination of various agencies works together to try and “disrupt money mule networks.”  In 2021, for example, the ten-week Money Mule Initiative resulted in the arrest of 4750 alleged money mules.

The previous year, the Office of the United States Attorney General for the Eastern District of Texas announced a coordinated national effort between the DOJ; FBI; U.S. Postal Inspection Service; and six other federal law enforcement agencies in a Money Mule Initiative campaign connecting with a simultaneous effort with Europol that resulted in the arrest of over 2300 money mules.

The Eastern District Attorney General’s Office explained that their investigations found money mules “…involved in a wide range of schemes including lottery fraud, romance scams, government imposter fraud, technical support fraud, business email compromise or CEO fraud, and unemployment insurance fraud.  Many of these schemes target elderly or vulnerable members of society.”

An unwitting widow involved in an online romance scam will be considered to have violated the law as a “money mule,” but the Attorney General acknowledges that her case may be given different considerations (in both charges and plea deals) than someone intentionally profiting in money mule services.  From the DOJ: “The action taken will depend on the facts and circumstances of each unique matter.”

Key Defense Consideration: Establishing the Mule Was Unwitting or Unaware

An accused’s claims that they were clueless to any illegality and they are victims themselves will not carry much weight after an arrest.  Indeed, investigators and prosecutors will be actively attempting to find proof that the accused is either a willing or complicit money mule.  The defense strategy must be to confirm that the individual has been victimized.

Prosecution Understands the Grift

Of importance here is the reality of these schemes – and their growing popularity worldwide – can help the defense.  Law enforcement agencies and financial institutions recognize that all too often, money mules have been victims of grifters.

As the United States Secret Service explains,

“…To avoid being detected by law enforcement, criminals use money laundering techniques to conceal the identity, source, and destination of illicitly obtained money. Criminals often prey on unsuspecting individuals by creating elaborate stories to assume false identities to gain your trust by pretending to be an entrepreneur or a bachelor looking for romance….

“Here are a few ways to protect yourself from becoming a victim:

• • Never respond to an offer to earn quick and easy money.
  • Never agree to receive and send money on behalf of others.
  • Never share your bank account or personally identifiable information – PII.
  • Never open a joint account with anyone other than close family.”

Defense Investigation:  Accused Perspective

While each case must be respected for its own unique characteristics, experienced defense attorneys will know to look for some of the common denominators in these unwitting money mule scenarios.  An independent investigation not only into the accused’s financial records but their online histories will be important.

Personal information that may prove embarrassing or even humiliating may be needed in order to successfully defend the money mule charges.  No one likes to be a victim of a con, but it happens.

A clueless money mule will enter into some form of relationship with the fraudster.  They may think they are being hired for a job or side-gig.  Sadly, they may think they are being romanced by someone on a dating app where true love can be found.  Some may be excited to think they have just won a life-altering sweepstakes.

These fraudulent relationships may take time to build, so that trust can be gained.  A series of online conversations (e.g., texts, e-mails) can be important as evidence of how the accused was lured into the scheme.

The key here will be when the fraudster feels comfortable enough to ask the accused to use their U.S. bank account in some way.  There will be messages where help is requested to do things like depositing the fraudster’s check in the accused’s account.  How could this be wrong, the accused will think?  I’m being trusted with someone else’s money – no one is asking me for my life savings, right?

Soon, the fraudster will ask for some of that money to be moved elsewhere.  To help a relative.  To send a gift card.  The key here is that the money has entered the accused’s account and is now being transferred elsewhere.  That’s how money is laundered.

Defense Investigation: Fraudster Focus

The defense investigation will also delve into how the accused was recruited with a look at the fraudster’s actions.  The defense will consider every action (or inaction) taken by the fraudster during the course of the relationship with the accused.

Were the fraudster’s emails real or were there fake social media accounts connected to phony phone numbers and bogus email addresses?  Are they still there or have they disappeared?  Was the accused ghosted? Was phishing involved?

The accused, or mark, may have been conned to such an extent that they shared personal information with the fraudster that included very personal information as well as personal identification that can be used in other criminal activities to their detriment, such as social security numbers or passwords.

Possible Criminal Charges Facing the Money Mule

Unwitting money mules usually come into the crosshairs of law enforcement during an investigation that is tracing illegal monies back to their source.  A bank account appears on the trail, and the owner of that bank account becomes a target.

Depending upon the facts collected by the investigators, the prosecution may decide upon charges that involve a range of felonies, from theft to money laundering; wire fraud; mail fraud; bank fraud; and/or conspiracy (to commit money laundering or to commit fraud).

These are all serious charges with very serious punishments upon conviction.  If the money mule can be shown to be willing or complicit, they can face serious potential prison sentences.

Consider a recent  example out of the Southern District of Texas, where a woman has been charged as a money mule facing serious fraud charges in what is described by the DOJ as “nationwide romance fraud scheme” where she was a money mule “…in relation to various mail and wire fraud schemes including internet fraud and romance scams,” where the accused “…allegedly opened and maintained bank accounts to collect proceeds from the schemes and to send the money to themselves, co-conspirators and overseas.” The DOJ reports that conviction in this case can come with 20 years imprisonment and a maximum fine of $500,000.00.

Element of Intent

The key here is intent.  The unwitting money mule must be able to provide authenticated and admissible evidence that they lacked the intent necessary for the prosecutor to prove up these more serious charges.  Intent is a key element in money laundering and all forms of fraud.

The AUSA must show things like the money mule intentionally made a profit over their actions in the money transfers and the money mule intentionally helped in disguising the source of the funds.  Without these elements, the case cannot stand and the defense can move to dismiss or to plea down to a lesser charge.

It has been my experience that many of these unwitting money mule prosecutions end up as theft cases where plea negotiations are possible – especially for sympathetic victims such as college students just trying to make some extra cash to elderly widows involved as marks in an online romance scam.

For more on elder fraud, read:  Elder Crimes: Federal Prosecutions and The Elder Justice Initiative.

For more on money laundering and fraud, read:

• Fraud Charges: Texas Criminal Defense Overview
• Money Laundering and Federal Sentencing Guidelines
• 5 Things to Know About Money Laundering in Texas
• Financial Institution Fraud (FIF): Criminal Defense Overview.

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For more information, check out our web resources, read Michael Lowe’s Case Results, and read “The Early Part of a Texas Criminal Case in State or Federal Court.”