A California man pled guilty in federal court to his role in a conspiracy to launder more than $46 million in fraudulently obtained public benefits during the COVID-19 pandemic.
Some of the money was collected through fraudulent unemployment benefits from the Pennsylvania Treasury Department and other state treasuries throughout the United States.
Federal prosecutors say some of the money was transported to China.
Carlos A. Grijalva, 59, of Simi Valley, California, pleaded guilty to one count of conspiracy to launder monetary instruments in front of U.S. District Judge Jennifer P. Wilson, according to Acting US Attorney John C. Gurganus.
Grijalva is the second defendant to plead guilty in this case. Bruce Jin pleaded guilty to his role in the plot in January, according to Gurganus.
Grijalva and Jin, along with a third defendant, Brian R. Cleland, were accused in April in a superseding indictment of conspiracy to launder monetary instruments and other offenses, after accusations brought against all three in August 2023.
According to Gurganus, Grijalva stated that between 2021 and early 2022, he, Cleland, and Jin, together with other unknown coconspirators, agreed to launder unemployment benefits that they knew had been obtained fraudulently.
Grijalva also admitted that he and the others entered into a series of agreements that made it appear as if they were running legitimate businesses selling masks and other COVID-19 personal protective equipment, despite knowing that the funds obtained and laundered through their companies came from fraudulently obtained state unemployment benefits.
Grijalva also testified to knowing that identity theft victims’ bank accounts were illegally accessed throughout the United States and that bogus UC claims were produced and paid into these accounts. He acknowledged that scammers in China were responsible for the fraudulent activity.
Through this pattern of financial behavior, the Pennsylvania Treasury Department and other state treasuries across the country issued tens of millions of dollars in false UC payments to accounts.
Grijalva further admitted that he and Cleland sent payment processing businesses the bank account information of these identity theft victims so that they could make ACH payments to accounts controlled by him and Cleland.
As a result of this illegal operation, Grijalva and Cleland received more than $46 million in stolen funds.
Grijalva confessed that he and Cleland talked on several occasions about how the alleged sale of COVID-19-related PPE would serve as a cover narrative for their financial activity.
Following that, Cleland and Grijalva used several bank accounts to transfer more than $30 million to Jin-controlled firms, as well as additional payments to another individual.
Grijalva admitted that he and Cleland made payments to Jin with the expectation that Jin would send at least a portion of this cash to parties in China.
Grijalva also admitted that he and Cleland earned an estimated $2.2 million in personal profit from the plan.
Grijalva agreed to forfeit certain property as part of his plea agreement, including approximately $46.4 million in US currency, as well as the contents of several bank accounts and real estate properties in Hawaii and California purchased with funds traceable to the charged offenses.
One of these properties, in California, was purchased in the name of a Grijalva family member.
Jin has been incarcerated since his arrest in August 2023 and is currently awaiting punishment.
Cleland has pled not guilty to the alleged crimes and is awaiting trial.
The Federal Bureau of Investigation and the US Department of Labor’s Office of Inspector General examined the matter.
The case is being prosecuted by Assistant United States Attorneys Ravi Romel Sharma and K. Wesley Mishoe, as well as Trial Attorney Patrick B. Gushue from the Department of Justice’s Money Laundering and Asset Recovery Section, Bank Integrity Unit.
