A federal indictment unsealed Tuesday alleges a collaborative effort between Los Angeles associates of the Sinaloa Cartel and money laundering groups connected to Chinese underground banking.
The alleged conspiracy involved laundering over $50 million in drug proceeds through a complex network.
The indictment details how the Sinaloa Cartel-linked network collected vast sums of drug money in the U.S. and, with assistance from a California-based group tied to Chinese underground banking, processed these illicit funds.
The proceeds were then disguised and made accessible to cartel members in Mexico and elsewhere.
After collaborating closely with the U.S. Justice Department, Chinese and Mexican authorities apprehended several fugitives named in the latest indictment.
These individuals had fled the United States following initial charges last year, but were recently captured thanks to international cooperation.
A multi-year investigation, codenamed “Operation Fortune Runner,” culminated in a superseding indictment unsealed on Monday. This indictment charges 24 individuals with multiple offenses, including conspiracy to aid and abet the distribution of cocaine and methamphetamine, conspiracy to launder money, and conspiracy to operate an unlicensed money transmitting business.
The indictment alleges a sophisticated scheme involving a Sinaloa Cartel-linked money laundering network operating in the Los Angeles area. With assistance from a San Gabriel Valley-based group connected to Chinese underground banking, the network allegedly processed substantial amounts of drug proceeds, disguising the origin of the funds and transferring them to cartel members in Mexico and other locations.
Edgar Joel Martinez-Reyes, the lead defendant, and others allegedly employed various methods to obscure the illicit nature of the money, such as trade-based money laundering, structuring assets, and cryptocurrency transactions.
Twenty of the defendants are expected to be arraigned in the coming weeks in a U.S. District Court in downtown Los Angeles.
Read: FBI Warns Of Mexican Cartel Timeshare Schemes
“Dangerous drugs like fentanyl and methamphetamine are destroying people’s lives but drug traffickers only care about their profits,” said U.S. Attorney Martin Estrada for the Central District of California. “To protect our community, therefore, it is essential that we go after the sophisticated, international criminal syndicates that launder the drug money. As this indictment and our international actions show, we will be dogged in our pursuit of all those who facilitate destruction in our country and make sure they are held accountable for their actions.”
“Relentless greed, the pursuit of money, is what drives the Mexican drug cartels that are responsible for the worst drug crisis in American history,” said DEA Administrator Anne Milgram. “This DEA investigation uncovered a partnership between Sinaloa Cartel associates and a Chinese criminal syndicate operating in Los Angeles and China to launder drug money. Laundering drug money gives the Sinaloa Cartel the means to produce and import their deadly poison into the United States. DEA’s top operational priority is to save American lives by defeating the cartels and those that support their operations. This investigation is the latest example, and there is more to come.”
As part of this investigation, law enforcement has 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), numerous ounces of ketamine, three semi-automatic rifles with high-capacity magazines, and eight semi-automatic handguns.
Read: Dismantling The Sinaloa Cartel’s Deadly Grip: The Downfall Of Florida’s Fentanyl Kingpins
The superseding indictment outlines a complex operation spanning from October 2019 to October 2023, wherein the Sinaloa Cartel imported substantial amounts of narcotics like fentanyl, cocaine, and methamphetamine into the United States, generating immense drug profits in U.S. currency.
A pivotal moment occurred in January 2021 when Martinez-Reyes allegedly traveled to Mexico to forge an agreement with Sinaloa Cartel members and money remitters linked to Chinese underground banking. This pact enabled the laundering of drug proceeds within the United States. Subsequently, the cartel distributed drugs through its network, generating large sums of U.S. dollars.
Martinez-Reyes and his co-conspirators allegedly delivered these cash proceeds, often in the hundreds of thousands, to members of Chinese underground money exchange and remitting organizations. These organizations, holding significant amounts of U.S. currency, facilitated the evasion of China’s currency controls for wealthy individuals.
The remitters employed various methods to dispose of the illicit funds. They either directly delivered U.S. currency to their customers or purchased assets like luxury goods and cars for shipment to China. Cryptocurrency transactions and traditional methods like cashier’s checks and structuring were also used to integrate the proceeds into the formal banking system.
Read: Ohio Man Sentenced In Florida After Attempting To Supply Mexican Cartel With Loads Of Firearms
The remaining seven counts in the indictment target individual defendants for offenses such as drug possession, structuring funds to evade reporting requirements, and even assault with a deadly weapon on a federal officer.
If convicted, each defendant faces a minimum of 10 years and a maximum of life imprisonment. This extensive investigation involved multiple agencies, including the DEA, IRS Criminal Investigation, several local police departments, the FBI, and the U.S. Marshals Service. International cooperation was facilitated by the Justice Department’s Office of International Affairs and the Criminal Division’s Narcotic and Dangerous Drug Section’s Special Operations Unit.
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