Last week, the Southern District of California partially unsealed a superseding indictment (the “Indictment”) revealing allegations against 29 alleged members of an international money laundering organization (“MLO”) tied to some of the largest and most powerful drug trafficking organizations in Mexico, and who allegedly laundered over $32 million in drug proceeds from the United States to Mexico.  The Indictment sets forth a charge of conspiracy to commit money laundering and seeks forfeiture of $11,386,793.

The Indictment

According to the Department of Justice’s press release, the indicted MLO allegedly laundered drug money from the United States to Mexico for the Sinaloa Cartel and the Jalisco New Generation Cartel (known as CJNG, based on the acronym for its Spanish-language name Cártel de Jalisco Nueva Generación).  Both are notorious for their size, power, and brutality.

Specifically, the MLO allegedly laundered over $32 million in drug proceeds through an intricate network of contracts with Mexican drug trafficking organizations.  The MLO secured contracts with drug trafficking organizations in Mexico to pick up drug proceeds in cities throughout the United States, including Baltimore, Detroit, Los Angeles, Philadelphia, Boston, Denver, Chicago, New York City and numerous others.  The MLO relied on bulk cash transfers:

Once the MLO received a contract, it communicated with courier and bank account holders using burner phones and code phrases to coordinate bulk cash deposits into fictitious funnel business bank. . . . The defendants allegedly served as either couriers and/or funnel bank account holders. The couriers travelled from San Diego to cities throughout the country to receive the bulk cash after using photographs and codes to verify the meeting details. The bulk cash was typically concealed in trash bags, duffel bags, or shoeboxes.  After the illicit cash proceeds were deposited into the fictitious funnel bank accounts, the monies were wired to personal bank accounts in Mexico where the money was then dispersed to the drug trafficking organizations.

The prosecution is part of an Organized Crime Drug Enforcement Task Forces investigation, and was led by HSI Costa Pacifico Money Laundering Task Force, coordinated with the DEA, and the IRS-Criminal Investigation. Acting U.S. Attorney Randy Grossman analogized this takedown to cutting the Cartels’ legs out from under it, stating: “The key to dismantling Drug Trafficking Organizations is disrupting the flow of illicit funds and attacking the money laundering elements of the organizations.”  The operation leading to the Indictment is a stark reminder that the number one way end up on the wrong side of an indictment is to leave a money trail.

The Sinaloa & Jalisco New Generation Cartels: Who Are They?

The Sinaloa Cartel was once run by Joaquin “El Chapo” Guzman, who is currently serving a life sentence in U.S. federal prison for multiple crimes, including murder, kidnapping and conspiracy.  The longstanding Cartel is based in the city of Culiacan, Sinaloa, but it has organized crime activities across the world. The Sinaloa Cartel is well-acquainted with United States law enforcement agencies; one of its other money launderers was sentenced last month to 10 years in prison for laundering approximately $15 million from sales of drugs that were smuggled into the United States.  Other Cartel members were also convicted of conspiracy to violate several statutes—including the Racketeering Influenced Corrupt Organization (RICO) statute, drug possession and importation, money laundering, and firearms possession—for their roles in the Cartel’s narcotics distribution operations.

The CJNG, known as the “most aggressive” cartel in Mexico, and certainly one of the bloodiest, is also no stranger to U.S. law enforcement.  In August 2020, 28 people connected to CJNG were charged with, conspiracy to launder money and other financial, drug, and gun crimes.  Earlier, in February 2020, an additional four people were indicted on federal money laundering charges for their part in laundering Cartel money from 2018 to January 2020.

The more-recently formed CJNG is reputed to be the Sinaloa Cartel’s main rival—which begs the question of whether the two organizations knew their money was being handled by the same MLO.  The two Cartels have engaged in well-known battles over drug trafficking routes, so the recent indictment could cause even more strife between the organizations.

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