There was no present within the white gift bag with the cheerful words “Happy Birthday” printed on the side. Inside was $226,000 in money that the Sinaloa drug cartel needed to launder, authorities say.
The US Department of Justice on Tuesday announced an indictment with several charges which accuses greater than a dozen members of Mexico’s Sinaloa drug cartel and Chinese currency brokers from Los Angeles of laundering drug money for years. The major defendant, Edgar Joel Martinez-Reyes, 45, lives in East Los Angeles. The investigation has up to now turned up $5 million in money, greater than 300 kilos of cocaine, 92 kilos of methamphetamine, 3,000 pills of ecstasy and 44 kilos of magic mushrooms. According to the indictment, the list of defendants includes Peiji “Dr. P” Tong, Sai “Tommy” Zhang, Chengwu “Ocean” He, Raul “Batman” Contreras, Jiaxuan “Edward” He, Diego Acosta Ovalle and others.
The first 20 defendants shall be dropped at trial in the following few weeks. If convicted on all counts, they each face a jail sentence of not less than ten years and a maximum of life imprisonment.
“Relentless greed, the pursuit of money, is what drives the Mexican drug cartels responsible for the worst drug crisis in American history,” said DEA Director Anne Milgram in a press release“This DEA investigation uncovered a partnership between Sinaloa Cartel operatives and a Chinese crime syndicate operating in Los Angeles and China to launder drug money.”
The Justice Department said the cartel, based within the Mexican state of Sinaloa, was behind a surge in fentanyl smuggling within the United States over the past eight years, bringing in huge amounts of money. To bring the cash to Mexico, the cartel members turned to Chinese money exchange firms within the United States, authorities said. To arrange this, Martinez-Reyes and “Dr. P” Tong traveled to Mexico about 4 years ago to sign contracts that called for the cartel’s drug profits to be laundered in exchange for a commission.
After the agreement was made, the drug traffickers, loaded with money, handed the cash over to foreign currency dealers for money laundering purposes. To hide the money, the defendants used gift bags, reusable shopping bags, backpacks, a box of Fruity Pebbles and other items to hide the cash, authorities said.
Prosecutors said the couriers bought cryptocurrency or deposited the cash in small, structured installments into bank accounts. The indictment says the cryptocurrency could easily be transferred to Sinaloa cartel accounts. Other methods used to launder the profits included buying precious metals and gemstones and bringing them to Mexico to sell.
The indictment describes a posh system involving Chinese money exchange businesses. The exchange offices working with the cartels also help wealthy Chinese who want to take a position in China and transfer their money to the United States, but who’re prohibited from doing so by the Chinese government, in line with the Justice Department. In China, it is unlawful to take greater than $50,000 in a foreign country per 12 months.
To get across the restrictions, Chinese residents turn to brokers who sell U.S. dollars, authorities say. The brokers give residents living in China checking account information in China with instructions to deposit Chinese currency into an account. Once the account holder confirms the deposit, an equivalent amount in U.S. dollars is transferred to the U.S. broker. The brokers take money from the cartels and charge a percentage commission of about 0.5 to 2 percent of the entire to hide the drug money. (Traditional money launderers charge much higher fees than the Chinese ones, starting from 5 to 10 percent or more, in line with authorities.)
“Drug traffickers are increasingly working with Chinese underground money exchanges to capitalize on the high demand for U.S. dollars among Chinese citizens,” the Justice Department said.
The brokers either delivered the dollars on to the purchasers or bought real estate, luxury goods and cars and shipped them to China, the indictment says. The money transferred in China was used to purchase goods reminiscent of consumer goods or chemicals for the production of more drugs for firms in Mexico, the authorities said.
“This case is a prime example of how Chinese money launderers work hand in hand with drug traffickers to legitimize the profits made from drug trafficking,” said Guy Ficco, director of the IRS Criminal Investigation Division.
