California cartel members charged in connection to Chinese money laundering

The Department of Justice announced a 10-count superseding indictment against Los Angeles-based associates of the Mexican Sinaloa drug cartel on Tuesday, one day after the indictment was unsealed. Two dozen defendants stand accused of conspiring to distribute drugs and launder money. Sinaloa associates exchanged over $50 million in drug money with Chinese underground banking groups from 2019 to 2023, according to the Justice Department. Each of the accused faces a 10-year minimum sentence if convicted of all charges. Individual defendants received additional charges for possessing pound quantities of cocaine and methamphetamine, structuring funds to avoid government reporting, and assaulting a federal officer with a deadly weapon.

Investigators seized about $5 million in drug proceeds, along with 302 pounds of cocaine, 92 pounds of methamphetamine, 3,000 Ecstasy pills, and 44 pounds of mushrooms, according to the DOJ release. Authorities also confiscated several ounces of ketamine, three semi-automatic rifles with high-capacity magazines, and eight semi-automatic handguns.

While drug traffickers only care about profits, drugs like fentanyl and methamphetamine are destroying people’s lives, said U.S. Attorney Martin Estrada for the Central District of California. U.S. officials will be dogged in pursuing sophisticated, international criminal syndicates to protect communities, he added.

What kind of scheme were they running? The Sinaloa Cartel is largely responsible for the influx of fentanyl into the United States over the past several years, according to the Justice Department. The 24 defendants allegedly imported and distributed large amounts of narcotics into the United States, including fentanyl, cocaine, and methamphetamine, according to the indictment. Sinaloa associates allegedly delivered hundreds of thousands of dollars in cash from drug sales to members of the Chinese underground money exchange to be laundered for a fee.

The Chinese underground money exchange allegedly used the money made from laundering to help wealthy Chinese nationals evade China’s currency controls. The Chinese government enforces capital flight restrictions and bars citizens from transferring more than $50,000 annually out of China. Many wealthy Chinese nationals who wish to transfer assets to the United States seek alternatives to conventional banking to move funds without alerting the government. The money remitters allegedly used cryptocurrency and structured assets to hide the money’s source and to purchase luxury goods for clients in China.

Dig deeper: Listen to Mary Reichard’s report on The World and Everything in It podcast about catching fentanyl brought by drug gangs at the U.S. southern border.