DOJ Indictment Reveals Sinaloa Drug Cartel Ties to Chinese Money Launderers

A federal indictment unsealed on Monday charged Los Angeles-based associates of Mexico’s Sinaloa drug cartel with collaborating with Chinese underground banking networks to launder over $50 million in proceeds illicit drug trafficking.

The superseding indictment, which includes 10 counts, follows a multi-year investigation known as “Operation Fortune Runner.”

The indictment, returned on April 4, names 24 defendants who are accused of conspiring to distribute cocaine and methamphetamine, laundering various currencies, and operating an unlicensed money transmitting business.

Key defendants, including Edgar Joel Martinez-Reyes, 45, of East Los Angeles, allegedly employed complex and sophisticated methods to disguise the origins of drug money, such as trade-based money laundering, structuring assets to avoid federal reporting requirements, and cryptocurrency.

“Dangerous drugs like fentanyl and methamphetamine are destroying people’s lives, but drug traffickers only care about their profits,” said U.S. Attorney Martin Estrada. “It is essential that we go after the sophisticated, international criminal syndicates that launder the drug money.”

DEA Administrator Anne Milgram said in the DOJ press release that the extensive collaboration uncovered by the investigation showed how Chinese transnational criminal organizations are directly contributing to the American fentanyl epidemic.

“This DEA investigation uncovered a partnership between Sinaloa Cartel associates and a Chinese criminal syndicate operating in Los Angeles and China to launder drug money,” Milgram said. “Laundering drug money gives the Sinaloa Cartel the means to produce and import their deadly poison into the United States.”

The IRS, which assisted with the investigation, said the Chinese money launders provide the veneer of legitimacy to funds generated through illicit drug trafficking.

All of the activities alleged in the indictment occurred from Oct. 2019 to Oct. 2023.

The Chinese and Mexican governments have claimed to U.S. officials that they have arrested their respective citizens who fled the U.S. after learning of their indictments last year; however, none of those suspects were named by the DOJ.

The DOJ did not say whether the alleged conspirators residing in the U.S. had legal authorization to be in America.

The investigation led to the seizure of approximately $5 million in narcotics proceeds, 302 pounds of cocaine, 92 pounds of methamphetamine, 3,000 Ecstasy pills, 44 pounds of psilocybin mushrooms, numerous ounces of ketamine, three semi-automatic rifles with high-capacity magazines, and eight semi-automatic handguns.

Martinez-Reyes and his co-defendants are accused of meeting with Sinaloa Cartel members in Mexico to negotiate money laundering deals with Chinese underground banking groups. Following the agreement, the cartel distributed large quantities of drugs, generating significant U.S. dollar cash. These funds were then allegedly delivered to Chinese money exchange operatives, who laundered the money through various means, including cryptocurrency transactions and the purchase of luxury goods.

Twenty of the charged individuals are expected to be arraigned in the U.S. District Court in downtown Los Angeles in the coming weeks. If convicted, each defendant faces a mandatory minimum of 10 years in prison and could be sentenced to life.

The case was investigated by the DEA, IRS Criminal Investigation, and several local police departments, with assistance from the FBI and the U.S. Marshals Service. The Justice Department’s Office of International Affairs and the Narcotic and Dangerous Drug Section’s Special Operations Unit also played key roles in the investigation.