Money-flipping scams, a deceptively enticing ploy that has seen a significant rise in recent years, particularly on social media platforms. This alarming trend, often masquerading as opportunities to 'flip' a small amount of money into a larger profit, entices unsuspecting individuals with the allure of quick financial returns.

Often, scammers request upfront payments through peer-to-peer payment platforms like Cash App, claiming they will multiply the contribution and return a larger sum. However, after receiving the funds, they disappear, leaving the victims at a financial loss.

Money-flipping scams are typically disguised as opportunities to turn a small amount of money into a larger profit.

The federal government views money-flipping scams as serious financial crimes, and agencies like the Federal Bureau of Investigation (FBI) and Federal Trade Commission (FTC) take aggressive action to combat them.

Money-flipping scams and Cash App misuse are typically prosecuted under the strict purview of federal and state laws related to fraud, money laundering, and theft. The specific charges can vary depending on the nature of the scam and the jurisdictions involved. Still, the legal system takes these crimes very seriously, with severe consequences for the perpetrators.

For example, if the scam involves electronic communication (like Cash App), it could be prosecuted as wire fraud under 18 U.S. Code 1343, which prohibits using wire or electronic communication to defraud another person.

If the scam involves concealing or transferring illegally obtained funds, it can be prosecuted under federal money laundering laws. If multiple people are involved in the scam, they can be charged with conspiracy to commit the underlying crime, such as wire fraud.

Further, California state laws often have fraud statutes that can be used to prosecute individuals who intentionally deceive others for financial gain. If the scam involves the unlawful taking of another person's property, theft charges can be brought.

Depending on the nature of the scam, other state-specific laws may apply, such as laws related to false pretenses or defrauding.

Evidence and Investigation

Crucial evidence for prosecuting money-flipping scams can be found in Cash App transaction history and messages. These can be used to establish the scam's operation and the flow of funds. Bank statements, credit card transactions, and other financial records can be used to trace the flow of funds and identify the participants in the scam.

 This thorough investigation process should reassure you that steps are being taken to combat these fraudulent activities. Victims and witnesses can provide crucial information about the scam and the individuals involved.

These scams are not left unchecked. Federal and state law enforcement agencies, such as the Federal Bureau of Investigation and local state police agencies, are actively investigating and prosecuting these scams. The Federal Trade Commission (FTC) also investigates and takes enforcement action against scams, particularly those involving mobile payment apps.

This should reassure you that steps are being taken to combat these fraudulent activities. Cash App might also assist law enforcement by providing transaction data and other information. To convict, prosecutors must prove that the defendant acted with the intent to defraud or deceive. Each crime has specific elements that must be proven, such as:

• The use of wire communication,
• The intent to defraud, and
• The transfer of funds.

Money flipping scams can be complex, involving multiple individuals and transactions, making investigations and prosecutions challenging. Understanding these elements can help you grasp the legal process involved in prosecuting these scams.

If you're suspected of involvement in such schemes, you could face a variety of federal criminal charges, with the potential for significant prison time if convicted. The severity of these penalties, which can include substantial fines and lengthy prison sentences, underscores the gravity of these crimes and the importance of avoiding involvement in such scams.

Money flipping scams often involve multiple layers of criminal behavior, which fall under key federal statutes. 

Common Cash App Scams

• Marketplace scams. These typically begin at places like Craigslist or Facebook and involve the perpetrator making a fake Cash App payment, which the victim never receives.
• Cash App transactions. The perpetrator sends the victim an unsolicited Cash App payment and then requests that the recipient return the funds. When the recipient initiates another transaction to send the funds back, the scammer will dispute the original transaction and keep the recipient's return.
• Giveaway scams. These require the victim to download a separate app or process a test transaction to enter the giveaway, which is actually a fake giveaway.
• Payment claiming. The perpetrator will send a message to the victim notifying them that they have been sent a payment, but they need to send a processing fee to claim the payment. The scammer keeps the fee without sending a payment.
• Pets and property deposits. This scam involves the perpetrator listing a pet, apartment, or other kind of property below the market rate. The scammer then asks for a deposit on the sale and never provides the property.

Let's look at some of the most relevant laws and how prosecutors apply them in these cases.

Wire Fraud - 18 U.S.C. § 1343

Wire fraud is one of the most frequently charged crimes in cases involving money-flipping scams. This statute makes it illegal to use any form of electronic communication, such as emails, text messages, or social media, in a scheme to defraud someone of money or property. For instance, if a scammer uses Cash App or digital platforms to solicit funds under false pretenses, this could constitute wire fraud.

Penalties: Convictions for wire fraud carry severe consequences, including up to 20 years in federal prison per count. If the scheme targets a financial institution or involves disaster relief, the potential prison term increases to 30 years. Additionally, depending on the severity of the crime, fines can reach $250,000 or more.

18 U.S.C. 1343 Fraud by wire, radio, or television says -

"Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned…."

Money Laundering - 18 U.S.C. § 1956

Money laundering charges often accompany wire fraud in money-flipping scams, especially when the accused attempts to conceal or disguise the origins of illegally obtained funds. For example, if someone receives money from victims through the Cash App and then transfers it to different accounts to hide the transactions, this could fall under money laundering.

Penalties: A conviction for money laundering can result in up to 20 years of imprisonment and fines up to $500,000 or twice the value of the laundered funds, whichever is greater. Additionally, assets involved in the scheme, including cash, accounts, or property, may be subject to forfeiture.

18 U.S. Code 1956 Laundering of monetary instruments says -

"(1) Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity-

(i) with the intent to promote the carrying on of specified unlawful activity; or

(ii) with intent to engage in conduct constituting a violation of section 7201 or 7206 of the Internal Revenue Code of 1986; or

(B) knowing that the transaction is designed in whole or in part-

(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or

(ii) to avoid a transaction reporting requirement under State or Federal law, shall be sentenced…."

Identity Theft - 18 U.S.C. § 1028

Identity theft can occur in conjunction with money flipping scams if a scammer uses someone else's personal information to commit fraud. For instance, scammers may steal a victim's account credentials or create fake profiles to solicit funds from other unsuspecting individuals.

Penalties: The maximum penalty for identity theft is typically 15 years in prison, but could be escalated to 20 years if the accused has a prior conviction for this crime.

18 U.S. Code 1028 Fraud and related activity in connection with identification documents, authentication features, and information says -

"(a) Whoever, in a circumstance described in subsection (c) of this section,

(1) knowingly and without lawful authority produces an identification document, authentication feature, or a false identification document,

(2) knowingly transfers an identification document, authentication feature, or a false identification document knowing that such document or feature was stolen or produced without lawful authority, shall be punished…."

Conspiracy - 18 U.S.C. § 371

Conspiracy charges are common in cases where multiple individuals work together to conduct a money flipping scheme. Under 18 U.S.C. § 371, it is illegal for two or more people to agree to commit a crime, such as fraud or money laundering, and take any overt action toward its execution.

Penalties: A conspiracy conviction may result in up to five years in federal prison, fines, and restitution. Furthermore, each conspirator can be held liable for the actions of others within the group, even if they played a minor role in the overall scheme.

18 U.S. Code 371 Conspiracy to commit an offense or to defraud the United States says -

"If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned…."

Additional Consequences 

Beyond imprisonment and fines, those convicted of money flipping scams could face several additional consequences. Courts often order restitution, requiring defendants to compensate victims for their losses. This financial obligation can be substantial, especially in cases involving multiple victims or large sums of money.

The FBI, FTC, and other federal agencies are dedicating significant resources to identifying, investigating, and prosecuting individuals involved in money flipping scams.

These agencies use advanced technology and inter-agency collaboration to trace transactions, identify patterns of fraud, and uncover those behind these schemes. Increased public awareness campaigns and undercover operations contribute to the broader effort to deter this type of crime.

Defenses for Money Flipping

Suppose you are under investigation or have been charged with a federal crime related to money flipping, Instagram, TikTok, or Cash App scams. In that case, it is crucial to seek qualified legal representation immediately.

Given the complexities of federal prosecutions, an experienced federal criminal defense attorney can help protect your rights, negotiate on your behalf, and develop a defense strategy tailored to your case. We will review the details of your case with you and strategize on potential defenses. Depending on the facts of your case, the strategies can include:

• Lack of intent. Perhaps we can prove that you had no intention to commit fraud can weaken the prosecution's case.
• Insufficient evidence. If the evidence is circumstantial, improperly obtained, or fails to establish a link between you and the fraudulent activities, it might lead to dismissal or reduction of charges.
• Mistaken Identity. If you can show that someone else used your accounts, for example, if they were hacked, we might be able to fight your charges successfully.
• Entrapment. If law enforcement officials induced you to commit a crime you would not have otherwise committed, we may be able to argue against the charges successfully.

For more information, contact Eisner Gorin LLP, a federal criminal defense law firm in Los Angeles, California.

Related Content:

• Social Media Fraud Trend
• What are Money Flipping Scams?
• What are Common Cash App Scams?