Reno man sentenced to prison for $3.5M Paypal fraud scheme

Mugshot courtesy Washoe County jail
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RENO, Nev. (KOLO) - Update: A Reno man will spend the next four years in prison for creating more than 8,000 fraudulent online accounts with stolen identities to commit a $3.5 million fraud scheme.

In addition to prison time, 47-year-old Kenneth Gibson was sentenced to three years supervised release and 100 hours of community service. He will also pay $1 million in restitution and a $3.5 million forfeiture judgment.

Gibson previously pleaded guilty to one count each of wire fraud, mail fraud, filing a false tax return, and aggravated identity theft.

Original Story: A Reno man made his initial appearance in federal court Thursday for allegedly engaging in a $3.5 million fraud scheme involving more than 8,000 fraudulent PayPal credit accounts, bank accounts, and prepaid credit and debit card accounts he created with stolen identities.

46-year-old Kenneth Gilbert Gibson was indicted on ten counts of wire fraud; three counts of mail fraud; ten counts of bank fraud; six counts of access device fraud; and six counts of aggravated identity theft.

According to allegations made in the indictment, between 2012 and 2017, Gibson allegedly obtained the identities of multiple victims and used those victims' identities to open unauthorized online accounts, credit accounts, bank accounts, and prepaid debit and credit card accounts to obtain money and property. In total, he allegedly opened more than 8,000 fraudulent and unauthorized accounts with PayPal, an online payment company, using the stolen identities. He then allegedly used those fraudulent and unauthorized accounts to transfer, deposit, and send about $3.5 million to himself via hard copy checks and through electronic transactions to about 500 bank accounts and pre-paid debit cards owned and under his control.

If convicted, he faces a maximum penalty of 20 years in prison and a $250,000 fine for the wire fraud and mail fraud counts, a maximum penalty of 30 years in prison and a $1,000,000 fine for the bank fraud counts, a maximum penalty of ten years in prison and a $250,000 fine for the access device fraud counts, and a maximum penalty of two years in prison for the aggravated identity theft counts. Gibson also faces a period of supervised release and a criminal forfeiture money judgment.

If you believe you are a victim of the alleged fraud, email the FBI at or click here.

You can report identity theft to the Federal Trade Commission (FTC) online at or by phone at 1-877-438-4338. For identity theft prevention tips and free resources, click here.

The case is being jointly investigated by a Task Force consisting of the FBI, United States Secret Service, IRS, United States Postal Inspection Service, and the Reno Police Department. The case is being prosecuted by Assistant U.S. Attorney Carla B. Higginbotham.

The indictment announcement was made by a group including Acting U.S. Attorney Steven W. Myhre for the District of Nevada, Special Agent in Charge Aaron C. Rouse of the FBI’s Las Vegas Office, Special Agent in Charge Brian Spellacy of the U.S. Secret Service Las Vegas Field Office, Special Agent in Charge Tara Sullivan of the IRS Criminal Investigation, Inspector in Charge Melisa Llosa of the U.S. Postal Inspection Service, and Reno Police Chief Jason Soto.

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