U.S. Attorney Martin Estrada discussed the alleged crimes committed by a Los Angeles-based money launderer who is accused of supporting the Sinaloa Cartel in Mexico.
The Sinaloa Cartel, one of the most infamous drug trafficking criminal organizations in the world, has found an unlikely ally in Southern California: money laundering groups made up of wealthy Chinese nationals living in the San Gabriel Valley.
The Mexican cartel conspired with the Southern California-based groups with ties to Chinese underground banking to launder up to $50 million in drug trafficking proceeds, the U.S. Justice Department announced.
This is how the sophisticated, illicit operations allegedly worked:
First, on behalf of the cartel, the Chinese nationals in the San Gabriel Valley area initiated transactions to a Chinese bank controlled by a money laundering broker.
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Then the money laundering group used that money to purchase goods, such as electronics, clothing and precursor chemicals used to make fentanyl and methamphetamines.
After the Chinese sent those purchased goods to Mexico, the items were sold, and their proceeds eventually ended up in the hands of the cartel to pay for drugs shipped to U.S., according to U.S. Attorney Martin Estrada.
“The cartels are desperate to get cash made from the sale of drugs in the United States back down to Mexico without having that cash seized by U.S. or Mexican authorities. The Chinese money laundering groups, on the other hand, are in the business of helping wealthy Chinese nationals obtain cash in this country and thereby circumvent export controls in China on the movement of cash,” Estrada said.
But as the results of the multi-year investigation called “Operation Fortune Runner,” the DOJ charged each of 24 defendants with one count of conspiracy to aid and abet the distribution of cocaine and methamphetamine, one count of conspiracy to launder monetary instruments, and one count of conspiracy to operate an unlicensed money transmitting business.
Among them, Edgar Joel Martinez-Reyes, 45, of East Los Angeles, managed a group of money launderers in the greater Los Angeles area and partnered with a leader of a Chinese money-laundering network, Estrada said.
The two defendants are accused of traveling together to meet with Sinaloa cartel members in Mexico to negotiate contracts to launder drug money in the United States.
Just a few years ago, Mexican cartels had used to load stacks of cash in trucks to transport them back to Mexico.
But with the latest investigation, federal authorities said they confirmed that the Sinaloa Cartel “entered into a new criminal partnership.”
“These Chinese criminal money laundering networks can move money faster, cheaper, and at a fraction of what is usually charged,” DEA Administrator Anne Milgram said.
Milgran added the Chinese networks charged far less commission to the cartel than traditional money launderers.
The department also said investigators seized approximately $5 million in narcotics proceeds, 302 pounds of cocaine, 92 pounds of methamphetamine, 3,000 Ecstasy pills, 44 pounds of psilocybin (magic mushrooms), numerous ounces of ketamine, three semi-automatic rifles with high-capacity magazines, and eight semi-automatic handguns.
The Chinese government cooperated with the DOJ's investigation to make arrests, Estrada said.
