With millions amassed in cash in the United States, the Sinaloa cartel needs to move proceeds from sales of fentanyl, methamphetamine and cocaine back to Mexico.
Federal prosecutors say a group of Chinese nationals in the San Gabriel Valley offered a solution: combine a massive cash surplus among Sinaloa people in the greater Los Angeles area with demands from wealthy Chinese residents to move their money to the United States.
American lawyer. E. Martin Estrada announced Tuesday that a grand jury has indicted 24 defendants — drug dealers, couriers, salesmen and brokers — for conspiracy to distribute drugs, money laundering and operating without a license. remittance business.
The indictment describes a simple system for moving wealth out of China. The Chinese government has restricted the flow of assets out of the country, creating an underground market in U.S. dollars that drug traffickers need to transfer back to Mexico without using the traditional banking system.
Chinese citizens are generally limited to transferring no more than $50,000 per year from the country’s financial system. In the money laundering system, people seeking large transfers contact brokers in California, prosecutors said. The broker would then arrange for the delivery of the drug profits to representatives of Chinese nationals in the United States, typically in bulk cash or a series of “structured” deposits small enough to avoid triggering anti-money laundering controls.
Estrada said that on the broker’s instructions, the Chinese national transferred funds to a manufacturer in China that either produces consumer goods such as electronics and clothing or chemicals used to make synthetic drugs.
Once shipped to Mexico, the consumer goods are sold and the proceeds are forwarded to cartel representatives, who then return the value of the drug dollars purchased by Chinese citizens to the cartel in pesos.
On the other hand, the chemicals would be used in Mexico to make drugs like fentanyl and methamphetamine and then sold in the United States, starting the cycle again, Estrada said.
Prosecutors allege money laundering ring leaders Edgar Joel Martinez-Reyes and Peiji Tong traveled to Mexico in 2021 to establish cooperation with the Sinaloa drug cartel Partnerships.
An attorney for Martinez-Reyes did not immediately respond to a request for comment. Court records did not list an attorney for Tong.
According to the indictment, hundreds of thousands of dollars in drug money changed hands at a time in shopping bags, duffel bags, satchels, backpacks and foil-wrapped packages. Drug Enforcement Administration agents watched the handovers at the Park West Bike Casino in Bell Gardens, an office building in Downey and a townhouse in Temple City.
An alleged courier was charged with assaulting a federal official after he rammed his Lexus ES350 into his car and tried to escape with $598,000 worth of vacuum-sealed bills in his sedan, according to an indictment.
Estrada said the gang laundered more than $50 million over several years. DEA Director Anne Milgram said Sinaloa people welcome the San Gabriel Valley-based organization because it charges a commission of 0.5% to 2% for laundering cash, compared with the 5% to 10% charged by traditional money laundering networks.
San Gabriel Valley crime syndicates also took commissions from wealthy Chinese nationals who purchased U.S. dollars from the Sinaloa cartel, Milgram said.
Estrada said the Chinese nationals hope to move funds to California to buy real estate, pay for school fees and invest in the U.S. financial system.
Estrada said prosecutors had “no direct evidence” that Chinese nationals knew they were buying fentanyl, methamphetamine and profits from cocaine sales, but that anyone using the underground banking system to trade large amounts of cash “should be suspicious.” The source of money”.
