DEA overthrows money laundering ring linked to Sinaloa cartel El Chapo
Hong Kong businessman who helped launder drug money in a cartel flew to Guam in October to retrieve false US passports.
What he got instead was a private jet escort in Virginia flanked by federal agents.
Tao Liu, a venture capitalist who disguised himself as Santa Claus for underprivileged young people in New York, is now awaiting conviction for attempting to bribe a public official to obtain passports and for money laundering for drug traffickers – including the infamous Sinaloa Cartel in Mexico.
Liu was part of a large network of Chinese nationals accused of hiding the true origin of more than $ 30 million, mostly from cocaine sales, dating back to 2008.
A senior U.S. Drug Enforcement Administration official, who asked not to be named to protect the sensitivity of his work, said Chinese businessmen have long been aiding Mexican cartels in a variety of lucrative programs money laundering, playing a key role in the deadliest drug crisis. in American history.
Cartels are sneaking methamphetamine into phallic candles:Deadly Thing: Mexican Cartels Bring Methamphetamine Into US In Penis, Pharaoh-Shaped Candles
Recently, the number of such partnerships designed to displace and launder drug profits has increased, according to the DEA’s National Drug Threat Assessment 2020. The high-profile case involving Liu illustrates how agents are increasingly targeting money laundering rings, trying to cripple drug networks by cutting off their cash supply.
Liu was stunned when DEA special agents arrested him in Guam in October.
“It’s surprising to know that the government is ready to come and pick you up from overseas,” Liu’s lawyer Jonathan Simms said. “I never put anyone on a private jet. It allowed them to question him on the way here.”
Liu, a father of four, discussed the case with officers on the plane and finally pleaded guilty in April to bribery for offering $ 150,000 by fake passport to someone he believed to be a corrupt government official. Department of State but who was in fact an undercover DEA agent.
He was going to pay the bribe with wire transfers and cryptocurrency. Liu lived in Hong Kong but traveled frequently to the United States and Mexico. Other Chinese businessmen have moved to the United States, Belize, Guatemala and Mexico to set up elaborate networks to implement several sophisticated money laundering programs.
Wendy Woolcock, a special agent in charge of the DEA’s Special Operations Division, released a statement in April after three of the defendants pleaded guilty, accusing the money laundering ring of redirecting “millions of dollars in proceeds from the drug to the cartels, thus enabling criminal organizations. to continue their activities, flooding our communities with dangerous drugs, causing devastating addictions and death. “
After:Powerful gang leader becomes plastic-wrapped victim of bloody cartel wars in Mexico
The network is also accused of hiding drug money in casinos, Guatemalan shell companies used only to hide money, and through US and foreign bank accounts, court records show.
Members of the money laundering ring often drove or transported bulk money, usually in increments of $ 300,000 to $ 350,000, across America to avoid depositing too much money in the Los area. Angeles, according to lawyers familiar with the case.
They kept an emergency bag of cash hidden in Mexico in case they lost any cargo in the United States by a police bite or a double-crossing employee, because they didn’t want to owe the cartels.
A former DEA supervisor sold assault rifles:DEA supervisor turned ‘outcast’ sold assault rifles to Sinaloa cartel associates
Money launderers have also used the proceeds of the drugs to buy American and Chinese goods, which they could send to cartels in Mexico, where these goods are in demand.
Many court documents in the case remain sealed. But those available describe an elaborate black market peso system that used a series of steps to ultimately return drug profits to Mexican cartels in their own currency.
Business transactions were discussed on encrypted mobile phone apps WhatsApp and WeChat, where one of the usernames was “SUPERKING99”.
Simms said Liu was on the fringes of the money laundering ring.
“I don’t think he understood the danger or the extent of the narcotic activity” or what cartels were involved, Simms said.
“He needed access to US liquidity and they needed the renminbi,” the Chinese currency known as the RMB. Liu therefore accepted the ploy, but felt more secure not to ask questions about who was firing the shots, his lawyer said.
Prosecutors allege in court applications that Xizhi Li, 45, who lived in Mexico, played a more central role in the crimes, with a direct link to El Chapo, the notorious former leader of the Sinaloa cartel.
Li has also “forged close ties” with drug organizations in Colombia and Guatemala, prosecutors say in the indictment.
Li, who went through “Z”, maintains his innocence on charges of money laundering and conspiracy to traffic more than 5 kilograms of cocaine.
In the midst of the investigation, Li abandoned his Los Angeles restaurant to move to Guatemala. He opened a casino, which prosecutors say was used to launder drug money in Guatemala City.
Investigators targeting a major drug ring in Memphis, Tennessee, came across a link with the Sinaloa cartel, which supplied the cocaine – and with Xizhi Li, who allegedly helped launder the profits from its sale.
In 2018, Miami investigators seized more than $ 617,000 from a bank account they claimed belonged to Xizhi Li, using the name “Franco Ley Tan,” one of his 13 aliases, according to an affidavit by ‘a leader of the DEA working group.
DEA agents in Memphis took control of the money as part of their investigation. Li never tried to get the money back, so a federal judge issued a default judgment last year to return the money to the government.
Prosecutors and defense attorney John Kiyonaga, who represents Li, declined to comment ahead of the trial.
After:El Mencho’s daughter, elusive Mexican cartel leader, pleads guilty in US
After:Kentucky Among Top States Where Overdose Deaths Rise During COVID-19 Pandemic
While Li ran his restaurant in Los Angeles, he befriended California businessman Eric Yong Woo, 43, whom he allegedly lured into the plot. Woo has pleaded not guilty to money laundering charges, and the two are set to stand trial in August.
Attorney Robert Lee Jenkins Jr., who represents Woo, told the Courier Journal that his client moved from China to the west coast of the United States and ran a legitimate business importing and exporting goods from his country. original.
“Mr. Woo was not aware of any drug related activity,” Jenkins said. “Mr. Woo took advantage of it.”
Li, who owned a restaurant in Los Angeles, befriended Woo using a pseudonym, Jenkins claims. Li claimed his restaurant was headed for bankruptcy, so Woo agreed to let his friend open a bank account in his name to protect the company’s assets from creditors, the attorney said.
Prosecutors say the account was in fact used to funnel drug money, and they have “overwhelming evidence” against Woo, according to their motion persuading a judge that Woo is a flight risk and should remain jailed until. at his trial.
They say they found a draft passport application with Woo’s photo but another name.
Prosecutors also raised concerns about Woo’s history of international travel to Mexico; Suriname in South America; China and elsewhere.
Woo had asked to stay with a relative in the Los Angeles area while awaiting trial and offered to wear an ankle monitor. However, prosecutors argued that Woo’s parents are in their 60s, do not speak English, and are said to be unable to prevent their son from escaping.
After:The rise and fall of a father-son drug ring linked to 4 deaths and the Sinaloa cartel
He remains incarcerated in Warsaw, Virginia, until his trial.
Liu and co-defendants Jiayu Chen, of Brooklyn, New York; and Jingyuan Li, of San Gabriel, California; admitted to conspiring to launder money in guilty pleas in April.
Each faces up to 20 years in federal prison when sentenced in July in U.S. District Court in Alexandria, Virginia. Others are free or awaiting trial.
Jingyuan Li, 49, admitted to arranging for bulk shipments of drug profits to the U.S. He also used a California-based seafood import-export company Shuoyu USA Inc. to purchase goods, which were shipped to China and Hong Kong for sale. The profits were sent to Mexico to pay off the cartels.
Prosecutors say Jingyuan Li, who was born in China, has often spent time in Mexico and San Gabriel, California, and has laundered at least $ 3.8 million.
Officers were unable to find the third defendant, Jianxing Chen, 40, who is charged with money laundering but remains a fugitive. He was born in China and lives in Belize. Prosecutors allege in the indictment that he traveled to New York, Los Angeles, Cancun, Guatemala City and elsewhere to help launder money and had a business interest in Li’s casino.
Simms called the reach of this network “massive, possibly the largest and most complex money laundering case I have seen.
“The layers go on and on.”
Journalist Beth Warren: [email protected]; 502-582-7164; Twitter @BethWarrenCJ.