I want to loan $70 k from a friend of mine for a investment.
closed as unclear what you're asking by Chris W. Rea, Ganesh Sittampalam♦, mhoran_psprep, CQM, Dilip Sarwate Jan 16 '15 at 21:22
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to trigger no audit , he want to make cash deposits of 9500$ around in to 7 of my friends accounts.
This is 'structuring' and is very illegal. Deliberately avoiding the $10k limit is itself a crime, even if the underlying transaction is legal.
As for the rest of the question, giving your friend $70k as part of a genuine loan transaction is not a taxable event on either side. But the interest he pays you is taxable to you; if you loan it at 0%, the interest he would have paid is a gift, which can be its own taxable event.
A cash transaction doesn't "trigger an audit"
In the US, depositing/withdrawing cash in excess of $10,000 is reported. The report doesn't trigger an audit. The federal government will know that your friend at one point had at least $10,000 that came from somewhere - if this is what you are concerned about then you shouldn't make the loan. It simply assists in an audit that is either completely random or triggered for other reasons.
Making smaller cash transactions to avoid reporting requirements is called structuring, and will land your friend in prison and the cash seized. Oops.
Good luck with your investment!