Beyond The Horizon

China Syndrome: The Indictment Of The Sinaloa Cartel And Their Chinese Money Bundlers (Part 1) (6/22/24)

A recent federal indictment unsealed in June 2024 details a sophisticated scheme involving the Sinaloa Cartel and Chinese money launderers in Los Angeles. The indictment charges 24 individuals, including key figures such as Edgar Joel Martinez-Reyes, with conspiracy to distribute drugs, launder money, and operate an unlicensed money-transmitting business.

This investigation, dubbed "Operation Fortune Runner," revealed that over $50 million in drug proceeds were laundered through an underground banking system linked to Chinese nationals. The money laundering network, based in the San Gabriel Valley of California, processed and concealed large amounts of drug trafficking proceeds, making them accessible to cartel members in Mexico and elsewhere. Methods used included trade-based money laundering, asset structuring, and the purchase of cryptocurrency.

The collaboration between U.S., Chinese, and Mexican law enforcement led to the arrest of several fugitives involved in this scheme. This case underscores the growing partnership between Mexican drug cartels and Chinese organized crime groups to launder drug money, which funds the production and distribution of dangerous drugs like fentanyl and methamphetamine in the United States.

In this episode we take a look at that indictment.

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Duration:: 12m
Broadcast on:: 22 Jun 2024
Audio Format:: mp3

I'm Victoria Cash, and I want to invite you to a place called Lucky Land. Where you can play over a hundred social casino-style games for free for your chance to redeem some serious prizes. So what are you waiting for? The best way to discover your luck is to spin. So go to luckylandslots.com, that's luckylandslots.com, and get lucky today at Lucky Land. No purchase necessary. VTW Group, boy prohibited by law, 18 plus terms and conditions apply. What's up, everyone, and welcome back to the program. Yesterday, we were talking a little bit about the people who were indicted by the federal government recently, who were working with the Sinaloa cartel to launder money. Well, I have the actual indictment right here in front of me, and we're going to dive into this bad boy and get all the details. The United States government, verse, a bunch of defendants. Case number two, 23-CR-524A-DMG. The grand jury charges, introductory allegations. At times relevant to this first superseding indictment, A, money laundering, organizations fuel the drug trade in the United States and contribute to the epidemic of addiction by providing a vital service to drug distribution organizations. One, drug trafficking organizations, DTOs, distribute cocaine, methamphetamine, heroin, and fentanyl, as pictured below, source for manufacturers in Mexico and elsewhere throughout the United States, fueling the epidemic of addiction and overdose deaths facing the nation. The American genocide, folks, right here, up close and personal. For instance, fentanyl is a single deadliest drug threat that the United States has ever encountered. Two, individuals purchasing drugs for personal use at the retail level generally pay for these drugs using U.S. currency, thus generating huge quantities of cash in cities across the country that belong to the DTOs, including the Sinaloa cartel. The Sinaloa cartel based in the Mexican state of Sinaloa operates in countries around the world and is one of the most dominant drug trafficking organizations in the Western Hemisphere. The Sinaloa cartel is largely responsible for the massive influx of fentanyl into the United States over the past approximately eight years and for the accompanying violence and deaths that have afflicted communities on both sides of the border. Three, the illegal drug trade generates illicit cash profits in the United States that needs to be repatriated to the DTOs in Latin America, for the DTOs to continue operating profitably. However, because the drug-related proceeds are the product of unlawful activity, the repatriation must avoid law enforcement detection. As a result, DTOs find it difficult to move drug-related cash using traditional banking systems. To transfer this cash to Latin America, DTOs employ money laundering organizations, MLOs, to assist them in transmitting the funds, concealing the source and true ownership of the money and enabling the DTOs to continue and expand their operations. Four, DTOs have increasingly partnered with China-based MLOs to take advantage of the large demand for U.S. dollars in China. MLOs use complex, sophisticated techniques to address DTOs need to collect and remit bulk cash from the sale of drugs in the United States to the DTO leadership in Latin America. Five, to initiate the Chinese money laundering cycle DTOs, contract with the Chinese MLOs for the pickup and remittance of cash from the sale of narcotics such as fentanyl, methamphetamine, and cocaine to the United States consumers by local organized criminal enterprises. Once the DTO and the MLO have confirmed that the drug-related cash changed hands in the United States, the Chinese MLO releases equivalent funds minus a fee to the DTO in a previously agreed manner. Six, in recent years, there have been an explosion of illegal money exchange businesses run primarily by Chinese nationals in the United States that are able to accept enormous amounts of United States currency from their DTO customers and complete the money laundering cycle for a small fee, half a percent to two percent of the amount being transferred. In contrast to traditional money laundering methods for which the MLOs typically charge much higher rates of 5% to 10% or more. B, traditional trade-based money launderers and Chinese underground banking. Seven, trade-based money laundering. A, trade-based money laundering. TBML is a system of informal value transfer that exploits legitimate businesses and trade systems to launder the proceeds of illegal activity. TBML, in the drug trafficking context, operates as follows. B, drug trafficking conducted within the United States generates large quantities of U.S. currency, drug trafficking proceeds that must be transferred in some manner to the true owners of that currency, that is, the individuals in other countries who are the source of the illegal drugs. C, drug traffickers and others who commit illegal acts in the United States are aware that banks and other financial institutions are required to file currency transaction reports, CTRs, with the Financial Crimes Enforcement Network (FINSN) of the United States Department of the Treasury that includes the name and identification of the beneficial owner or owners of those funds for any transaction in U.S. currency in excess of $10,000 and frequently try to evade these reporting requirements. D, in addition, drug traffickers are alert to the high costs of using the conventional banking system, which could include transfer fees when exchanging dollars for pesos and/or wire transfer fees. E, in order to evade the high costs of transfer and the government reporting that accompanies the deposit of large amounts of currency into the legitimate banking system, drug traffickers seek other methods of integrating the drug trafficking proceeds they accumulate in U.S. currency into the legitimate financial system so that it can be transferred to the true owners without detection. F, criminal actors such as drug traffickers typically employ brokers or money consolidators who each operate as an informal bank where drug traffickers can place their accumulated drug trafficking proceeds, typically at lower exchange rates and for lesser fees than those at legitimate financial institutions. G, brokers and money consolidators seek out businesses and individuals and other countries who purchase merchandise in the United States and need U.S. dollars to pay for that merchandise. H, the dollars are sold in the black market for pesos and used to pay the open invoices of the business and individuals who have purchased the goods in the United States. I, when the purchased goods are shipped to the country of the purchaser and sold, the proceeds of those sales are then relinquished to the owner of the drug trafficking proceeds in the country where the drugs originated, that is, the drug trafficker whose product generated the U.S. currency, thus enabling the drug trafficker to avoid the physical transfer of currency across the border and the accompanying risk of law enforcement seizure and robbery. A, trade and goods from China used a circumvent restriction on taking funds out of China. A, the People's Republic of China, PRC, maintains its economic strength in part by imposing a closed system of investment on its citizens. That is, individuals who live, work, or invest in the PRC are generally restricted from transferring more than the equivalent of 50,000 per year out of China. Consequently, many individuals with holdings in China who wish to transfer assets greater than 50G's in value to the United States seek alternative methods outside the conventional banking system to move their funds. These informal value transfer systems require participation of brokers who buy and sell U.S. dollars in the U.S. Hey everyone, it is Ryan Seacrest here, ready to heat up your summer vacation? Get ready, things are about to get sizzling at Chumba Casino. Your summer getting a whole lot hotter with a special daily login bonus waiting just for you. So, sign up now for reals of fun and reals of prizes right here at Chumba Casino. With yours truly, join me at Chumba Casino.com and dive into a summer of social casino fun. Sponsored by Chumba Casino, no purchase necessary. VGW Group, forward we're prohibited by law 18 plus Terms and Conditions apply. B, to transfer funds to the United States and individual in China, contacts a broker with dollars to sell in the United States. The individual in China then transfers the equivalent amount in Chinese currency to an amount in China specified by the broker. Once the broker receives electronic confirmation that the amount in question has been moved to the specified account, the broker arranges for the dollars in the U.S. to be released to the buyer or to a designated representative of the buyer. C, the seller of U.S. currency in the United States obtained dollars in a variety of ways, including by accepting cash from individuals engaged in criminal activity that generates large amounts of bulk currencies such as drug trafficking. The U.S. broker charges a percentage commission as a fee to the owner of the criminal proceeds to conceal the nature and source of the funds. D, the funds that are transferred in China to the broker are then used to pay for goods purchased by businesses and organizations in Mexico, Colombia, or elsewhere such as consumer goods or items needed to aid in the drug trafficking organizations to manufacture illegal drugs, for example, precursor chemicals including fentanyl. Once the goods are sold generating local currency, for example in Mexican pesos, the proceeds are returned to the drug trafficking organization that provided the dollars in the United States. In this way, the funds from China facilitate the laundering of drug trafficking proceeds from the United States to the source country while at the same time providing United States dollars to the individuals from China who initiated the transaction and this system is depicted in the below diagram. E, because of the many Chinese nationals living in the United States who use this method of transferring their funds from China to the United States, there's a very high demand for United States currency from the Chinese money exchange businesses described above. That demand can easily be met by the DTOs that have drug trafficking proceeds they wish to transform into usable funds available in the traditional banking system. F, the Chinese money exchange businesses actively solicit and accept drug trafficking proceeds from the DTOs by charging a reduced rate for laundering those proceeds thereby assisting the DTOs to repatriate their profits and continue the business of supplying deadly drugs to the United States and other countries. G, the Chinese money exchange businesses dispose of the drug proceeds by either delivering United States currency directly to their money exchange customers, purchasing real or personal property, including luxury goods and cars to be shipped to China or using a variety of traditional methods to place the funds into the traditional banking system such as purchasing cashier as checks or structuring that is depositing small amounts at a time and the bank accounts opened for this purpose. All right, we're going to wrap up this episode here and in the next episode we're going to pick up with Part C, Federal Reporting Requirements and Structuring. All of the information that goes with this episode can be found in the description box. Hello, it is Ryan and I was on a flight the other day playing one of my favorite social spin slot games on Chumba Casino.com. I looked over the person sitting next to me and you know what they were doing. They're also playing Chumba Casino. 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