Federal prosecutors say a Chinese network laundered millions for the Sinaloa cartel.
The Justice Department has announced a 10-count superseding indictment has been issued, charging Los Angeles-based associates of Mexico’s Sinaloa drug cartel with conspiring with Chinese underground banking groups to launder drug trafficking proceeds.
The indictment is a result of “Operation Fortune Runner,” a multi-year investigation into the laundering of over $50 million in drug proceeds.
Following close coordination with the Justice Department, Chinese and Mexican law enforcement authorities have recently apprehended fugitives named in the superseding indictment. These individuals had fled the United States after being initially charged last year.
The superseding indictment, returned on April 4 and unsealed recently, charges 24 defendants with various crimes, including conspiracy to aid and abet the distribution of cocaine and methamphetamine, conspiracy to launder monetary instruments, and conspiracy to operate an unlicensed money transmitting business.
The indictment alleges that the defendants participated in a network that laundered large amounts of drug proceeds through a money-transmitting group based in San Gabriel Valley, California, with ties to Chinese underground banking.
Lead defendant Edgar Joel Martinez-Reyes, 45, of East Los Angeles, and other co-conspirators are accused of using methods such as trade-based money laundering, structuring assets to evade federal financial reporting requirements, and purchasing cryptocurrency to conceal the source of their drug trafficking proceeds.
Twenty of the individuals charged in the superseding indictment are expected to be arraigned in the U.S. District Court in downtown Los Angeles in the coming weeks, including one who was arraigned on Monday.
“Drug traffickers only care about their profits,” stated U.S. Attorney Martin Estrada for the Central District of California. “To protect our community, it is essential that we go after the sophisticated, international criminal syndicates that launder the drug money.”
DEA Administrator Anne Milgram added, “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. DEA’s top operational priority is to save American lives by defeating the cartels and those that support their operations.”
Chief Guy Ficco of IRS Criminal Investigation emphasized the role of money laundering in drug trafficking: “We have made it a priority to identify, disrupt, and dismantle any money launderers working with drug cartels.”
Seizures and Background
As part of this investigation, law enforcement has seized approximately $5 million in narcotics proceeds, significant quantities of various drugs, and several firearms.
The Sinaloa Cartel is noted for its role in the influx of fentanyl into the United States, which has resulted in widespread violence and deaths. The cartel generates enormous sums of U.S. currency that need to be repatriated to Mexico. Chinese underground money exchanges assist in moving these profits by providing a market for U.S. dollars within the United States.
Details of the Superseding Indictment
From October 2019 to October 2023, members of the Sinaloa Cartel allegedly imported large quantities of narcotics into the United States, generating substantial drug cash proceeds. Martinez-Reyes and other conspirators are accused of striking a deal with money remitters linked to Chinese underground banking to launder these proceeds. The funds were allegedly used to purchase goods and properties, facilitating further drug trafficking operations.
The indictment also includes charges of possession of large quantities of narcotics, structuring funds to avoid reporting requirements, and assault on a federal officer. If convicted, each defendant faces a mandatory minimum of 10 years in prison, with a maximum penalty of life imprisonment.
The investigation is part of the Organized Crime Drug Enforcement Task Forces (OCDETF) operation, which targets high-level criminal organizations. The case is being prosecuted by Assistant U.S. Attorney Julie J. Shemitz for the Central District of California, with assistance from various federal and local law enforcement agencies.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
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