Austin accountant gets 41 months for PPP loan fraud and laundering cocaine cash
Arun Mago, an Austin accountant, was sentenced to 41 months in prison for money laundering and bank fraud linked to pandemic relief loans and cash from cocaine sales, federal prosecutors in Texas said.
The US Attorney's Office for the Western District of Texas announced on 28 October 2026 that Arun Mago, 47, an Austin accountant, was sentenced to 41 months in federal prison for money laundering and bank fraud. US District Judge Robert Pitman ordered him to pay over $900,000 in restitution and a $250,000 fine.
According to the office, from about 4 April to 23 November 2021 Mago applied for and received several fraudulent Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL) for several business entities, totalling nearly $1 million. PPP and EIDL were US government relief loan programmes during the pandemic. Prosecutors say he transferred the funds into his personal bank account and used them for multiple real estate purchases.
The office also says that between October 2023 and July 2024 Mago laundered $150,000 in cash that he knew to be the proceeds of cocaine distribution. The IRS Criminal Investigation (IRS-CI) special agent in charge said investigators got him on the money laundering charges in an undercover operation.
IRS-CI and the Office of the Texas Attorney General investigated the case. Assistant US Attorney Keith Henneke prosecuted it.
Why it matters to AML professionals
Professional gatekeepers such as accountants can use their knowledge of business structures to obtain and move illicit funds. AML professionals should watch for relief or business loan proceeds that move quickly into personal accounts and then into property. Cash handled by a professional client with no clear business source deserves close review.
Red flags in this case
- Government-backed or business loan proceeds moved straight into a personal account soon after funding
- Loan funds used for real estate purchases instead of the stated business purpose
- Several loan applications made for multiple related business entities controlled by the same person
- Large cash amounts handled by a professional services client with no clear link to their practice
If this landed in your queue
- Trace the loan disbursement and map every onward transfer, including transfers to personal accounts and title or escrow companies
- Compare the stated use of the loan with actual spending and with the borrowing entities' real activity
- Check whether the customer controls other entities that also received loans and look for shared addresses, owners or accounts
- Document cash deposits whose source is unclear and consider filing a suspicious activity report
Key terms
- Paycheck Protection Program (PPP)
- A US pandemic-era loan programme meant to help businesses keep paying staff.
- Economic Injury Disaster Loan (EIDL)
- A US Small Business Administration loan for businesses hit by a declared disaster, including the pandemic.
- Restitution
- Money a court orders a defendant to pay back to victims of the crime.
Interview angle
What signs would make you suspect that a business loan was obtained by fraud and then laundered?
Point to loans for entities with little real activity, quick transfers of loan money to personal accounts, and spending on property or luxury items rather than payroll or operations. Explain how you would trace the funds and escalate.
Sources
Go deeper on AMLift
Every fact in AMLift News Desk stories comes from an official source: a regulator, court, government gazette or the company's own filing.
Report an error
Every report is checked against the official source. If we got something wrong, the story is corrected.