In a significant breakthrough, a five-year investigation by U.S. officials has exposed an intricate partnership between Mexico’s notorious Sinaloa Cartel and Chinese underground banking groups in the United States. Federal prosecutors announced on Tuesday that the scheme involved laundering more than $50 million in profits from the sale of fentanyl, cocaine, and other drugs, with much of the money being processed in the Los Angeles area.
The investigation, which led to charges against 24 individuals, relied on assistance from Chinese and Mexican law enforcement to arrest fugitives who had fled the United States after initial charges were filed last year. Drug Enforcement Administration official Anne Milgram emphasized the significance of the case, stating, “This investigation shows that the Sinaloa Cartel has entered into a new criminal partnership with Chinese nationals who launder money for the cartels.”
The lead defendant, Edgar Joel Martinez-Reyes, 45, of East Los Angeles, is accused of managing couriers who collected drug cash in the Los Angeles area and partnering with the leader of the Chinese money launderers. Prosecutors alleged that Martinez-Reyes traveled with the Chinese leader to Mexico to negotiate contracts with the cartel.
The scheme exploited the high demand for U.S. currency among wealthy Chinese nationals, who face government restrictions on transferring more than $50,000 per year out of China. According to authorities, individuals in China would move money into a seller’s Chinese bank account and receive the dollar equivalent in the U.S. for various purposes, such as purchasing real estate, luxury items, and paying tuition. Cryptocurrency transactions were also utilized to move the drug money.
Prosecutors highlighted that the Chinese money brokers charged lower commission fees compared to traditional money launderers, providing more cost-effective methods than previous practices like smuggling cash across the U.S.-Mexico border or using banks and businesses.
The funds in China were allegedly used to purchase chemicals for manufacturing fentanyl and methamphetamine, which were then sent to the drug cartels in Mexico. U.S. Attorney Martin Estrada described the situation as a “cycle of destruction,” with drugs sold in the United States funding precursor chemicals for even more drug production.
Federal law enforcement has collaborated closely with China’s Ministry of Public Security since the meeting between President Joe Biden and Chinese leader Xi Jinping in November 2022. At least 22 of the 24 defendants have been arrested, facing charges of conspiracy to aid and abet drug distribution, money laundering, and operating an unlicensed money-transmitting business.
Law enforcement also seized approximately $5 million in drugs, including cocaine and methamphetamine, as well as several firearms during the investigation. The case highlights the evolving nature of international drug trafficking and the importance of cross-border cooperation in combating organized crime.
