An Austin accountant who wrote a book with a chapter titled "Black Money" — and who, investigators say, claimed that money-laundering and tax-evasion schemes were untraceable — has been sentenced in federal court in Texas to 41 months in prison for money laundering and bank fraud that undermined the Paycheck Protection Program, the U.S. Attorney's Office for the Western District of Texas announced on October 28. Arun Mago, 47, a certified public accountant, was also ordered to pay more than $900,000 in restitution and a $250,000 fine.
Source: U.S. Department of Justice, Western District of Texas
According to court documents cited by prosecutors, the case had two halves. Between October 2023 and July 2024, Mago laundered $150,000 in cash that he knew to be the proceeds of cocaine distribution. The Justice Department's earlier announcement of his guilty plea in its COVID-era loan-fraud surge takedown added the detail that the cash was money represented to him by an undercover agent to be the proceeds of cocaine distribution — in other words, the laundering was caught in an undercover operation, not reconstructed years later from bank records alone.
The pandemic loan fraud that came first
The investigation also revealed a second, earlier scheme. From about April 4 to November 23, 2021 — while small businesses across Texas were applying for pandemic relief to keep staff paid — Mago applied for and received several fraudulent Paycheck Protection Program loans and Economic Injury Disaster Loans for several business entities, totalling nearly $1 million, prosecutors said. Bank records revealed that he transferred the funds into his personal bank account and used them for multiple real-estate purchases. The PPP and EIDL programmes were created under the CARES Act to rush forgivable loans and disaster credit to legitimate small businesses during COVID-19; prosecutors across the country are still, five years on, working through fraud cases from that period.
"Money always leaves a trace"
"Mago, who was a certified public accountant, wrote a book with a chapter titled 'Black Money' and claimed money laundering and tax evasion schemes were untraceable. I can only imagine his shock when we traced his more than $900,000 of COVID loan fraud and also got him on money laundering charges in an undercover operation," said Christopher J. Altemus Jr., Special Agent in Charge of IRS Criminal Investigation's Texas Field Office. "Money always leaves a trace and criminals always think they are smarter than law enforcement. You can earn certifications, you can write books, but, when you break the law, we write the final chapter by taking your money and your freedom." U.S. Attorney Justin R. Simmons said Mago "not only defrauded the United States government during the chaotic COVID-19 pandemic but continued down his criminal path to launder a substantial amount drug money," adding that Mago "thought that he was untouchable and an expert fraudster, but now he knows otherwise."
How the case was built, and who sentenced him
The case was investigated by IRS Criminal Investigation and the Office of the Texas Attorney General, and prosecuted by Assistant U.S. Attorney Keith Henneke. U.S. District Judge Robert Pitman imposed the 41-month sentence, the restitution of more than $900,000 and the $250,000 fine. Mago had pleaded guilty in July, according to the Justice Department's surge-takedown announcement, in which the Western District of Texas joined the DOJ's new National Fraud Enforcement Division in a coordinated takedown the department said exceeded $245 million in COVID-era loan fraud. The department says the Fraud Division, announced on April 7, is focused on fraud against federal benefit programmes, supporting a whole-of-government task force to eliminate fraud, waste and abuse.
Why an Austin courtroom case matters to small-business readers
For Punjabi and wider South Asian small-business owners in Texas — truckers, motel and store owners, restaurateurs and the accountants and tax preparers who serve them — this sentence carries a practical warning that goes beyond one man. Pandemic-relief fraud is being prosecuted on a long clock: loans taken in 2021 produced a guilty plea in 2026 and a prison sentence now, and the investigators in this case were the IRS's criminal arm working alongside the Texas Attorney General's office. The professional at the centre of it was not a fly-by-night operator but a certified public accountant who literally wrote about untraceable money. What happens next in this case is the prison term itself and the collection of more than $900,000 in restitution and a $250,000 fine; the wider surge of COVID-era loan-fraud prosecutions, the Justice Department says, is continuing.