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Wednesday, July 24, 2024 | Back issues
Courthouse News Service Courthouse News Service

L.A. Fashion District Under Scrutiny|After Cartel Drug-Money Raid

LOS ANGELES (CN) - The U.S. Treasury has ordered garment and textile vendors in the Los Angeles' fashion district to provide detailed financial records after authorities last month charged individuals of laundering Mexican drug cartel money through their businesses.

U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) said Thursday a Geographic Targeting Order (GTO) goes into effect on Oct. 9 for 180 days. The order was served to more than 2,000 fashion district businesses.

"This order requires nearly every business in the fashion district to report any instance in which they receive at least $3,000 in cash, and failure to comply with the order could lead to a criminal indictment," said Acting United States Attorney Stephanie Yonekura. "My office sought the unprecedented order from FinCEN with the goal of shutting down the flow of dirty money to foreign drug cartels - a huge problem that has contaminated the fashion district."

Authorities believe money laundering is pervasive in the fashion or garment district. The nine individuals arrested last month allegedly used a "black market peso exchange" to convert bulk cash into goods that were transported to Mexico. The goods were sold and the money funneled back to the drug cartels, which include Mexican and Colombian drug traffickers, according to prosecutors.

FinCEN's order applies to garment and textile stores and other types of businesses in the district, including shoe, perfume and electronic stores.

"The issuance of this Geographic Targeting Order will assist law enforcement agencies in ferreting out money launderers from this trade industry and will help to preserve a strong local economy," Chief of IRS Criminal Investigation Richard Weber said.

During a Sept. 10 raid more than 1,000 agents executed search warrants and arrest warrants in the district.

Agents with the U.S. Immigration and Customs Enforcement's Homeland Security Investigations seized more than $90 million in currency from homes, file boxes at stores, duffel bags, backpacks, and from the trunk of a Bentley, FinCEN said in a statement. In August, the federal government changed rules for financial reporting at the U.S.-Mexico border at two California ports of entry. That GTO order helps authorities track the transportation of money in and out of the country.

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