Tags: Drug cartels | money laundering | Los Angeles | Black market peso

LA Raids Net Millions in Laundered Drug Cartel Money

By    |   Friday, 12 Sep 2014 01:48 PM


Nearly 1,000 federal and local officers launched extensive early morning raids in Los Angeles’ Fashion District, seizing more than $100 million in cash allegedly being laundered for drug traffickers, including a notorious Mexican cartel, federal officials announced.

“Los Angeles has become the epicenter of narco-dollar money laundering with couriers regularly bringing duffel bags and suitcases full of cash to many businesses. Because Los Angeles is at the forefront of this money laundering activity, law enforcement in Los Angeles is now at the forefront of combatting this issue,” said Robert E. Dugdale, the Assistant United States Attorney who oversees the Criminal Division in the Central District of California, in announcing the arrests.

While authorities initially said they seized $65 million in the Wednesday raids, Thom Mrozek, a spokesman for federal prosecutors, Thursday told CNN that the figure grew to more than $100 million.

“Today’s arrests and searches should send a message to international drug cartels that the FBI and our partners won’t tolerate the exploitation of American businesses for the purposes of illicit financial transactions that fund hostage-taking and the distribution of narcotics,” Bill L. Lewis, the Assistant Director in Charge of the FBI's Los Angeles Division, said Wednesday.

The operation, which was named "Operation Fashion Police," involved the execution of warrants arising from three separate criminal investigations, according to Government Security News.

One case unsealed alleges that the Sinaloa Drug Cartel used a Fashion District business to accept and launder ransom payments to secure the release of an American citizen who had been kidnapped, held hostage, and tortured at a ranch in Mexico, federal officials disclosed.

The victim’s relatives paid $140,000 to QT Fashion, a maternity clothing wholesaler allegedly involved in money laundering. Three of the six people wanted in connection with the scheme were arrested and face a maximum of 30 years in prison if convicted, according to the indictment.

To some, the complicity of local businesses is not surprising.

Elizabeth Deneau, a fashion designer in Tucson, Arizona, says desperation often leads small business owners to engage in illegal activity.

"Small businesses are struggling, and if somebody is handing you cash for your goods your probably not going to think twice about who you are selling it too," she told KVOA News.

She added that if business owners "want to keep your shop, you might want to go even further and totally get in bed with cartels."

Officials also unsealed money laundering indictments involving the so-called Black Market Peso Exchange (BMPE) scheme. Under the scheme, a peso broker would work with a U.S.-based drug dealer or another conspirator who needs to send dollars to Mexico or another country, authorities said.

In a BMPE scheme, a peso broker works with a criminal, such as a drug trafficker, who has money in the United States but needs to bring it to a foreign country, such as Mexico, and convert the dollars into pesos.

For example, a peso broker will identify a business owner in a foreign country, like Mexico, who sells U.S. goods and needs dollars to pay for the goods. Then the broker arranges for the illegally obtained dollars to be delivered to the U.S.-based businesses that sell those goods, such as the stores in the Fashion District, and these dollars are used to pay for the goods purchased by the foreign customers. The goods are shipped and sold, with the pesos or local currency from the sales given to the broker, who then pays the trafficker.

This BMPE scheme, according to federal officials, is often used by Mexico-based drug trafficking organizations to collect money without risking arrest by smuggling large amounts of U.S. currency across the Mexican border.


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Federal and local officers launched early morning raids in Los Angeles' Fashion District, seizing more than $100 million in cash allegedly being laundered for drug traffickers, including a notorious Mexican cartel.
Drug cartels, money laundering, Los Angeles, Black market peso
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2014-48-12
Friday, 12 Sep 2014 01:48 PM
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