Feds Seize $100 Million In Los Angeles Fashion District Money Laundering Scheme

From Los Angeles Downtown :

About 1,000 federal agents and local law enforcement officers raided the Fashion District last week, seizing upwards of $100 million and arresting nine suspects in what federal prosecutors allege is a widespread money-laundering scheme tied to narcotics sold by international drug cartels, including from the Mexican state of Sinaloa.


“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,” Assistant United States District Attorney Robert E. Dugdale said in a prepared statement after the Wednesday, Sept. 9, action....MORE

From the U.S. Attorney's office: 

Large-Scale Law Enforcement Effort Targets Downtown Los Angeles Businesses Linked to Money Laundering for Drug Cartels

FOR IMMEDIATE RELEASE

September 10, 2014

Fashion District Store Using ‘Black Market Peso Exchange’ Scheme Allegedly Took Ransom Money for Hostage Being Held and Tortured by Sinaloa Drug Cartel

LOS ANGELES – Approximately 1,000 law enforcement officials this morning fanned out across the Fashion District in downtown Los Angeles to execute dozens of search warrants and arrest warrants linked to businesses suspected of using “Black Market Peso Exchange” schemes to launder narcotics proceeds for international drug cartels.

Authorities today arrested nine defendants and seized what is estimated to be at least $65 million in cash and from bank accounts around the world in relation to asset forfeiture actions filed as part of the ongoing investigations.

One case unsealed today alleges that the Sinaloa Drug Cartel used a Fashion District business to accept and launder ransom payments to secure the release of a United States citizen who was kidnapped by that narcotics organization, held hostage, and tortured at a ranch in Mexico.

Two other indictments also unsealed today involve alleged money laundering by other Fashion District stores using the Black Market Peso Exchange (BMPE) scheme. 

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.

This BMPE scheme – which is also known as Trade-Based Money Laundering – is often used by Mexico-based drug trafficking organizations to collect money from their drug sales in the United States without having to take the risk of smuggling bulk amounts of U.S. currency across the Mexican border and without having to convert and wire the U.S. currency through established financial institutions, which not only carries transaction fees, but also a threat their illegal activity will be detected....MORE

See also the Los Angeles Daily News:
Feds to seize Pasadena and Alhambra homes — including $8 million mansion — in L.A. Fashion District drug-money-laundering probe