LOS ANGELES (CN) - Nine people were arrested Wednesday and $65 million in cash and bank accounts seized in a giant raid on black market peso exchanges in Los Angeles' Fashion District, who are believed to launder money for the Sinaloa drug cartel. One thousand law enforcement officials took part in the raids, the U.S. Attorney's Office said. Officials said late Wednesday that the cash haul had risen to $75 million and was still growing.
Three indictments were unsealed, including one that claims that "the Sinaloa drug cartel used a Fashion District business to accept and launder ransom payments to secure the release of a United States citizen who was kidnapped by that narcotics organization, held hostage, and tortured at a ranch in Mexico."
Drug dealers and other crooks use black market peso exchanges to move cash from the United States into Mexico.
Typically, the peso broker finds businesses in Mexico or elsewhere who buy stuff in the United States and need dollars to do it. The currency dealer arranges for the drug money to be paid for the goods, which are shipped out of country and sold for the foreign currency, which the broker pays to the drug dealer, laundering the money.
Similar scams are run using wrecked cars, which are "sold" in the United States for far above their real value; the cartels then pay taxes on the exorbitant sale price, losing some money on the deal - in taxes - and washing the money.
The black market peso exchange - also known as trade-based money laundering - "is often used by Mexico-based drug trafficking organizations to collect money from their drug sales in the United States without having to take the risk of smuggling bulk amounts of U.S. currency across the Mexican border and without having to convert and wire the U.S. currency through established financial institutions, which not only carries transaction fees, but also a threat their illegal activity will be detected," the U.S. Attorney's Office said.
Three defendants related to QT Fashion were arrested this morning: Andrew Jong Hack Park 56, of La Canada-Flintridge; Sang Jun Park, 36, of La Crescenta; and Jose Isabel Gomez Arreoloa, 49, of Los Angeles.
Three defendants linked to Maria Ferre are being sought: Luis Ignacio Orozco Munoz 50; Armando Arturo Chavez Gamboa, 43; and Daisy Corrales Estrada, 30, all of Culiacan, Sinaloa.
They are accused of conspiracy to launder money and other charges. If convicted, they face up to 30 years in prison.
In the second case unsealed today, three members of a Temple City family - Xilin Chen, 55; his son Chuang Feng "Tom" Chen, 24; and his daughter Aixia Chen, 28 - were charged with money laundering and other crimes. The men were arrested; the daughter is a fugitive.
In the third case, Fashion District business Pacific Eurotex and four of its operators face similar charges. All four were arrested.
They are: Pacific Eurotex CFO Hersel Neman, 55 of Beverly Hills; his brother, CEO Morad Neman, 54, of Los Angeles; their brother-in-law Mehran Khalili, 45, of Beverly Hills; and Alma Villalobos, 52, of Arleta.
All the defendants in custody were arraigned Wednesday afternoon before U.S. District Judge Charles F. Eick.
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