DEA Uncovers Drug Money Laundering Scheme Between Chinese Organized Crime, Sinaloa Cartel

DEA Uncovers Drug Money Laundering Scheme Between Chinese Organized Crime, Sinaloa Cartel

The DOJ announced a 10-count indictment against Los Angeles-based people of Mexico’s Sinaloa drug cartel in connection with a massive drug money laundering scheme totaling over $50 million linked to Chinese organized crime.

From the press release:

The multi-year investigation into this conspiracy—dubbed “Operation Fortune Runner”—resulted in a superseding indictment returned on April 4 and unsealed on Monday charging a total 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.

The superseding indictment alleges that a Sinaloa Cartel-linked money laundering network collected and, with help from a San Gabriel Valley, California-based money transmitting group with links to Chinese underground banking, processed large amounts of drug proceeds in U.S. currency in the Los Angeles area. They then allegedly concealed their drug trafficking proceeds and made the proceeds generated in the United States accessible to cartel members in Mexico and elsewhere.

Lead defendant Edgar Joel Martinez-Reyes, 45, of East Los Angeles, and others allegedly used a variety of methods to hide the money’s source, including trade-based money laundering, “structuring” assets to avoid federal financial reporting requirements, and the purchase of cryptocurrency.

“Drug traffickers generate immense amounts of cash through their illicit operations. This case is a prime example of Chinese money launderers working hand in hand with drug traffickers to try to legitimize profits generated by drug activities,” said Chief Guy Ficco of IRS Criminal Investigation. “We have made it a priority to identify, disrupt, and dismantle any money launderers working with drug cartels and we are committed to our partnerships with federal, state, and local law enforcement agencies to combat drug cartels and those who assist them in laundering drug proceeds.”

Wealthy Chinese nationals face obstacles when they want to transfer assets to America. The Chinese government doesn’t allow them to transfer more than $50,000 annually out of China.

The operation:

To transfer money to the United States, the China-based investor contacts an individual who has U.S. dollars available to sell in the United States. The seller of U.S. dollars provides identifying information for a bank account in China with instructions for the investor to deposit Chinese currency (renminbi) in that account. Once the owner of the account sees the deposit, an equivalent amount of U.S. dollars is released to the buyer in the United States.

The sellers of U.S. currency in the United States obtain dollars in a variety of ways. Some of them accept cash from individuals engaged in criminal activity that generates large amounts of bulk currency, including drug trafficking. These U.S. currency brokers charge a percentage commission as a fee to the owner of the criminal proceeds to conceal the nature and source of the funds—typically far less for their services than their competitors. Drug traffickers increasingly have partnered with Chinese underground money exchanges to take advantage of the large demand for U.S. dollars from Chinese nationals.

The funds that are transferred in China are then used to pay for goods purchased by businesses and organizations in Mexico or elsewhere such as consumer goods or items needed to aid the drug trafficking organization to manufacture illegal drugs, such as precursor chemicals, including fentanyl.

Interesting, though. I wonder if the operation runs deeper.

We’ve seen a record number of Chinese nationals cross our border. We’ve seen numerous marijuana farms pop up across the country with money from China.

In fact, Oklahoma changed immigration laws because of the relationship between Chinese organized crime and Mexican drug cartels.

Oklahoma Attorney General Genter Drummond mentioned it when he told off the DOJ after it threatened to sue the state due to those changes:

“A very large population of Mexican cartel members and Chinese syndicated crime organization members, who have found a way to Oklahoma via the Mexican border,” Drummond said.

He said one of the biggest problems is the drug movement.

“We know with absolute certainty that the fentanyl product is coming from China into Mexico, manufactured in Mexico,” Drummond said.

Drummond said Oklahoma “identified a partnership between the Chinese syndicated crime organizations and the sophisticated Mexican cartels that are partnering in Mexico.”

“They’re transferring the fentanyl, getting it across the border,” added Drummond.

In 2022, a quadruple murder shook Oklahoma at an illegal marijuana farm in Hennessey, OK. A Chinese national pleaded guilty to four counts of first-degree murder. He claimed the four people owed him $300,000.

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