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Feds link Sinaloa cartel to Chinese bankers in money laundering indictment

Federal authorities charged 24 associates of the Sinaloa cartel with laundering over $50 million, including by purchasing cryptocurrency.

(CN) — A federal indictment unsealed Tuesday in Los Angeles exposed what the government calls a complex conspiracy between the Sinaloa cartel and Chinese underground banking networks to launder more than $50 million in drug proceeds.

Federal authorities charged 24 people linked to the organizations following a multi-year investigation dubbed “Operation Fortune Runner,” which unveiled sophisticated methods used by the cartel and its associates to hide and transfer illicit funds, according to the Justice Department.

Associates of the Sinaloa cartel in Los Angeles are accused of conspiring with Chinese underground banking groups to launder the drug money, moving tens of millions between the cartel associates and these Chinese money exchanges.

Law enforcement 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) and numerous ounces of ketamine.

Authorities also confiscated three semiautomatic rifles with high-capacity magazines and eight semiautomatic handguns.

If convicted, each defendant faces a mandatory minimum of 10 years in prison and a maximum penalty of life in prison.

Edgar Joel Martinez-Reyes, 45, of East LA, is named as the first defendant. Prosecutors say he and his associates used various techniques to obscure the money's origins, including trade-based money laundering; structuring assets to avoid federal financial reporting requirements; and purchasing cryptocurrency.

“DEA’s top operational priority is to defeat the cartels that are flooding the United States with deadly drugs like fentanyl and methamphetamine,” said Anne Milgram, administrator of the Drug Enforcement Administration, at a press conference on Tuesday.

Chinese and Mexican law enforcement arrested fugitives named in the indictment who had fled the United States.

The Sinaloa cartel, known for its onetime kingpin Joaquín "El Chapo" Guzmán and its role in the massive influx of fentanyl into the United States, generates enormous sums of U.S. currency. Through the laundering efforts, the money can be repatriated to Mexico for the cartel's use, the U.S. government says.

And Chinese underground money exchanges help cartels move the profits from the U.S. to Mexico by providing a ready market for U.S. currency.

“They perpetuate this cycle by importing more dangerous drugs like fentanyl and methamphetamine into this country and then laundering those proceeds using the Chinese money laundering groups,” U.S. Attorney Martin Estrada said at the conference.

U.S. officials say Martinez-Reyes allegedly traveled to Mexico in January 2021 to meet with cartel members to negotiate a deal with money remitters linked to Chinese underground banking.

Following the deal Martinez-Reyes and other defendants would delivered U.S. currency raised from shilling fentanyl, cocaine and methamphetamine to members of the Chinese underground money exchange and remitting organizations to be laundered for a fee, according to charging papers.

These organizations could help wealthy Chinese nationals evade China’s currency controls, U.S. officials said.

“Martinez-Reyes’ couriers in Los Angeles picked up hundreds of thousands of dollars at a time, wrapped in rubber bands, from drug traffickers supplied by the Sinaloa cartel,” Milgram said at the conference. “These couriers would take that money, count it, package it, and deposit it in bank accounts set up in their own names and others' names, often making small deposits to avoid the banks' reporting requirements.”

According to the DEA, the Chinese money laundering group released the funds to Chinese nationals in the United States, and to pay the cartels back, the groups bought goods in China, which then were sent to Mexico and sold. The proceeds from those sales went back to the cartels to pay for the drugs they shipped to the United States.

Categories / Criminal, International

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