CEDAR RAPIDS — A Marion man and two others have been indicted in three separate cases for receiving unemployment benefits related to coronavirus relief and then acting as “money mules” for others who gained access to the unemployment claims system in one or more states.
Brian Whorton, 54, of Marion, is charged in U.S. District Court with one count of wire fraud, and Alvin Rex, 61, of Schaller, and Jerry D. Johnson, 54, of Webster City, are charged with one count each of mail fraud, according to the indictments. All had initial hearings and were released without bond pending trials.
The three men are accused of receiving unemployment benefits during the pandemic, which included an extra $600 a month, under false identities, and then laundering the money through their bank accounts. They kept a portion for themselves each check but sent the rest to others involved in the scheme.
A criminal complaint affidavit shows Whorton received fraudulent unemployment funds from Arizona. He then withdrew the cash and transferred a portion to a Bitcoin ATM, while keeping and spending a portion on personal expenses. The Arizona unemployment deposits went into Whorton’s checking account that he had at a Marion bank.
A fraud specialist with the bank discovered the suspicious funds from Arizona and that those deposits were followed by cash withdrawals. The complaint provides examples from a June 8 deposit of $6,570 from the state of Arizona into Whorton’s account, two check withdrawals of $5,000 and $3,5000 on June 9 and 11, and a $7,170 deposit from Arizona on June 15.
According to the affidavit, there were two applications for unemployment for “Brian Horton,” each with different addresses in Arizona and different identification information. The direct deposits went into Whorton’s account.
The fraud specialist called Whorton about the activity. Whorton said he received the funds as an inheritance from his uncle, who had died.
The bank contacted Whorton’s uncle, who also is a customer, and confirmed the uncle was alive.
Court documents show the bank closed Whorton’s previous account because of fraudulent activity in February. Whorton admitted he shared his account number and other information with “some friends.”
When authorities interviewed him Aug. 3, Whorton said he had been a victim of a “romance scam,” which caused the bank to close his previous account. He said he had been talking to woman — his contact in the scheme — online. Whorton said up until then he believed he was receiving inheritance money from the father of the woman who he was communicating with online.
Whorton also admitted giving the woman his banking information, according to the affidavit. The woman told him she needed his bank account because her dad’s benefits couldn’t go to her and that she needed a male partner or husband to receive the money because of the instructions in her father’s will.
The woman told him to send her most of the money and take a “little for himself,” Whorton said. After receiving funds, he withdrew money as cash and sent $2,500 to the woman using a Bitcoin ATM at Jim’s Foods in Cedar Rapids. He then kept the remaining cash.
Investigators discovered Whorton had been communicating with the woman since February 2019, which was six months earlier than he told investigators.
Throughout the 18 months of chats, the woman requested numerous gift cards and gift card numbers, which is common in fraud schemes, according to the affidavit. She also encouraged Whorton to open new bank accounts.
The other men’s complaint affidavits show similar schemes.
If convicted, each man faces up to 20 years in prison, a $250,000 fine and three years of supervised release following any prison time.
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