The Sinaloa Cartel, one of the world’s most notorious drug trafficking organizations, has found an unlikely ally in Southern California: a money-laundering ring made up of wealthy Chinese citizens living in the San Gabriel Valley.
The Department of Justice said Mexican drug cartels conspired with a Southern California-based group with ties to underground Chinese banking to launder up to $50 million in drug trafficking proceeds.
The sophisticated illegal operation was allegedly carried out as follows:
First, Chinese nationals in the San Gabriel Valley area began conducting transactions on behalf of the cartels with Chinese banks controlled by the money laundering brokers.
The money laundering group then used the funds to purchase goods such as electronics, clothing and raw chemicals used to manufacture fentanyl and methamphetamine.
According to U.S. Attorney Martin Estrada, the Chinese nationals would send their purchases to Mexico, where they would be sold and the proceeds would eventually end up in the hands of the cartels to pay for drugs being shipped to the United States.
“Drug cartels are desperate to get cash from U.S. drug sales back to Mexico without it being seized by U.S. or Mexican authorities, while Chinese money laundering groups are helping wealthy Chinese nationals access cash in Mexico to circumvent China’s export controls on cash movements,” Estrada said.
However, after a years-long investigation known as “Operation Fortune Runner,” the Department of Justice charged each of the 24 defendants with one count of conspiracy to aid in the distribution of cocaine and methamphetamine, one count of conspiracy to launder financial instruments, and one count of conspiracy to operate an unlicensed money transmitting business.
One of the suspects, Edgar Joel Martinez Reyes, 45, of East Los Angeles, was in charge of managing a money laundering ring in the Los Angeles metropolitan area and was affiliated with the leader of a Chinese money laundering network, Estrada said.
The two defendants are accused of traveling together to Mexico to meet with members of the Sinaloa Cartel to negotiate deals to launder drug money in the United States.
Only a few years ago, Mexican drug cartels were shipping huge amounts of cash into Mexico by the truckload.
But federal authorities said the latest investigation found the Sinaloa Cartel had “formed a new criminal alliance.”
“These Chinese criminal money laundering networks are able to move funds faster, cheaper and at a fraction of the cost typically associated with them,” DEA Administrator Anne Milgram said.
Milgran added that the fees the Chinese networks charge the cartels are much lower than traditional money launderers.
The department also said agents seized approximately $5 million in drug proceeds, 302 pounds of cocaine, 92 pounds of methamphetamine, 3,000 ecstasy pills, 44 pounds of psilocybin (magic mushrooms), and Ketaminethree semi-automatic rifles with high-capacity magazines, and eight semi-automatic pistols.
Estrada said the Chinese government cooperated with the Justice Department’s investigation in making the arrests.
