Multiple Downtown LA Businesses Linked to Drug Cartel Money Laundering

By - September 15, 2014
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0912-los-angeles-raids-970-630x420More than 1000 federal law enforcement officers descended on the Fashion District in Los Angeles last week to enact dozens of search and arrest warrants linked to multiple businesses using Black Market Peso Exchange schemes to do money laundering of money gotten from narcotics sales for international drug cartels.

Federal authorities arrested nine defendants and seized a staggering $75 million in cash and from bank accounts around the globe, related to asset forfeiture actions that were doing as part of the current investigations.

One of the cases that was unsealed last week alleged that the Sinaloa Drug Cartel used a business in the fashion district to accept and launder ransom money to get a US citizen released who was kidnapped by a drug cartel. That person was held hostage and tortured at a ranch in Mexico.

Two more indictments were unsealed last week that involved money laundering by stores in the Fashion District, also using a Black Market Peso Exchange Scheme.

In this scheme, a peso broker works with someone who is engaged in criminal activity, such as a drug dealer, who has US currency that he needs to get into a foreign country, such as Mexico, and change that money into pesos. The peso broker locates business owners in the foreign country who purchase products from businesses in the US, and who need dollars to buy those products. The peso broker has the illegal dollars delivered to the US companies, such as Fashion District stores, and those illegal dollars are then used to pay for the products bought by the foreign buyers.

After the goods are sent to the foreign country, and are sold by the business owner there for pesos, the pesos are given to the peso broker. He then pays the drug trafficker in the local currency. This is how the scheme is often used to launder illegal US dollars obtained from drug deals.

This type of scheme also is often used by drug trafficking groups in Mexico to obtain money from drug sales in the US without risking taking large amounts of US currency across the border, and also not having to exchange and wire US currency through financial organizations. This carries transactions fees, and there also are risks that the illegal activity will be spotted, and charges of wire fraud could result.

According to Robert E. Dugdale, the Assistant United States Attorney who oversees the Criminal Division in the Central District of California, the US government has targeted money laundering schemes in the Fashion District due to a great deal of information that came into agents’ hands, telling them that many businesses there are using Black Market Peso Exchange schemes.

In one of the criminal cases, three people were arrested in one of these BMPE schemes, which was based at a Fashion District company called QT Fashion. The indictment in this case states that a company in Mexico called Sinaloa, was involved in a plot to launder ransom cash. After a US citizen was kidnapped by the drug cartel, QT Fashion is alleged to have accepted large amounts of cash and funneled that money through several other businesses in the Fashion District.