Earlier this month, 1,000 law enforcement agents from the FBI, U.S. Immigration and Customs Enforcement, and various state and local police departments raided the Los Angeles Fashion District. The target: dozens of apparel companies, including several wholesalers, suspected in a Mexican drug cartel money-laundering scheme.
The U.S. Department of Justice said that nine defendants were arrested and an estimated $65 million in cash was seized in the Sept. 10 raids, which came after three separate federal indictments and a massive investigation of businesses suspected in “Black Market Peso Exhange” schemes, also known as trade-based money laundering. Said the agency:
In a BMPE scheme, a peso broker works with an individual engaged in illegal activity, such as a drug trafficker, who has currency in the United States that he needs to bring to a foreign country, such as Mexico, and convert into pesos. The peso broker finds business owners in the foreign country who buy goods from vendors in the United States and who need dollars to pay for those goods. The peso broker arranges for the illegally obtained dollars to be delivered to the United States-based vendors, such as the stores in the Fashion District, and these illegally obtained dollars are used to pay for the goods purchased by the foreign customers. Once the goods are shipped to the foreign country and sold by the foreign-based business owner in exchange for pesos, the pesos are turned over to the peso broker, who then pays the drug trafficker in the local currency of the foreign country, thus completing the laundering of the illegally obtained dollars.
“We have targeted money laundering activities in the Fashion District based on a wealth of information that numerous businesses there are engaged in Black Market Peso Exchange schemes,” Robert E. Dugdale, assistant U.S. attorney, criminal division, Central District of California, said in the Justice Department release. “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.”
The Independent reported that QT Fashion, one of the wholesalers busted in the raid, was accused of funneling $140,000 in ransom payments to the Sinaloa Cartel—called “the most powerful drug trafficking organization in the world” by U.S. law enforcement officials—in exchange for a kidnapped U.S. citizen who had been trafficking drugs. The Justice Department said the payments were delivered to QT Fashion, laundered, and distributed to the cartel via 17 other businesses in the L.A. Fashion District. Three defendants connected to QT Fashion were arrested, while three others remained wanted by authorities.
At least two other wholesalers, Yili Underwear and Gayima Underwear, and one fabric company, Pacific Eurotex, were involved in the raids, on separate indictments.
