In 1928 he was eventually caught, convicted and sentenced to prison after one of his patients died. He received a ten-year jail term, and lost his medical license. He served only two years. While in prison he ran the prison hospital successfully. The warden, Henry C. Hill, was so impressed that he helped him to obtain parole in 1931 and secured the return of his medical license.

It was in this capacity that he became associated with the Barker-Karpis Gang. In March 1933, Moran performed plastic surgery on gang members Fred Barker and Alvin Karpis for a fee of $1,250. He was successful in removing Karpis' fingerprints (so much so that even decades later, Karpis had difficulty obtaining a passport to re-enter his native Canada), but his work on the two men's faces was judged a dismal and painful failure.

Mostly he stitched cuts and removed bullets from wounded Gangsters such as Dillinger-gang member John "Red" Hamilton, from whom he removed five bullets after one robbery. However, in 1934 Moran began touting his skills as a plastic surgeon, able to change the faces and fingerprints of notorious outlaws in order to hinder police identification.

Moran was not seen alive again after the drunken bragging incident in July 1934. On September 26, 1935, a badly decomposed body washed up on the shores of Crystal Beach, Ontario, without its hands and feet. The FBI subsequently identified the body as Moran's by means of dental records.

In 1971, Alvin Karpis wrote in his autobiography that the identification was mistaken; he claimed that Moran had been murdered by Arthur and Fred Barker and then buried in a lime pit in Michigan. The most accepted version of the tale is that Karpis himself, along with Fred Barker, took Moran on a boat "ride" on Lake Erie, during which they both murdered him.