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China and Mexico Arrest Fugitives Following U.S. Justice Department’s Investigation into Drug and Money-Laundering Scheme

July 8, 2024 — In a significant breakthrough in the fight against international drug trafficking and money laundering, law enforcement agencies in China and Mexico have arrested key fugitives following a multi-year investigation by the U.S. Justice Department.

The operation, dubbed “Operation Fortune Runner,” has led to a 10-count superseding indictment against Los Angeles-based associates of Mexico’s Sinaloa drug cartel. The indictment alleges that these associates conspired with money-laundering groups linked to Chinese underground banking to launder over $50 million in drug trafficking proceeds.

The complex scheme involved the Sinaloa Cartel’s money laundering network in the Los Angeles area collaborating with a San Gabriel Valley-based money transmitting group. This group, with connections to Chinese underground banking, allegedly processed large amounts of drug proceeds in U.S. currency. These proceeds were then made accessible to cartel members in Mexico and elsewhere.

Key Developments and Charges

Lead defendant Edgar Joel Martinez-Reyes, 45, from East Los Angeles, is accused of using methods such as trade-based money laundering, structuring assets to avoid federal financial reporting requirements, and purchasing cryptocurrency to hide the source of the funds. The superseding indictment, returned on April 4 and unsealed recently, charges a total of 24 defendants. The charges include 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.

Law Enforcement Actions and Seizures

As part of this extensive investigation, law enforcement has seized approximately $5 million in narcotics proceeds, along with significant quantities of drugs and weapons, including:

  • 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
  • Eight semi-automatic handguns

International Coordination and Arrests

Following close coordination with the Justice Department, Chinese and Mexican law enforcement informed U.S. authorities of the recent arrests of fugitives named in the indictment who had fled the United States after initially being charged last year.

“This indictment and our international actions show that we will be relentless in our pursuit of all those who facilitate destruction in our country and make sure they are held accountable for their actions,” said U.S. Attorney Martin Estrada for the Central District of California.

Implications and Broader Impact

The Sinaloa Cartel is largely responsible for the massive influx of fentanyl into the United States over the past eight years, causing widespread violence and deaths. The cartel’s activities generate enormous sums of U.S. currency, which need to be repatriated to Mexico. Chinese underground money exchanges in the U.S. have increasingly assisted cartels in moving these profits by providing a market for U.S. currency, taking advantage of the large demand from wealthy Chinese nationals who wish to transfer assets to the United States but are barred by China’s capital flight restrictions.

The superseding indictment details how Martinez-Reyes and his associates laundered drug proceeds through a variety of means, including cryptocurrency transactions, purchasing luxury goods, and depositing small amounts into bank accounts to avoid detection.

If convicted of all charges, each defendant faces a mandatory minimum of 10 years in prison and a maximum penalty of life in prison.

Collaboration and Future Efforts

The investigation involved multiple agencies, including the DEA, IRS Criminal Investigation, and several local police departments. The Justice Department’s Office of International Affairs and Criminal Division’s Narcotic and Dangerous Drug Section’s Special Operations Unit played a crucial role in the investigation and overseas coordination.

This case is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation, which aims to identify, disrupt, and dismantle the highest-level criminal organizations threatening the United States through a multi-agency approach.

Assistant U.S. Attorney Julie J. Shemitz is prosecuting the case. The Justice Department emphasized that an indictment is merely an allegation and that all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

 

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Patrick Zarrelli

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