Tuesday, July 28, 2020

Chinese Networks Dominate Chemical, Cash Sectors of Drug Cartel Business

"MX" for Borderland Beat; The Epoch Times
A soldier stands guard inside a clandestine chemical drug processing laboratory discovered in Mexico on Feb. 9, 2012. Chinese gangs are supplying Mexican drug cartels with chemicals to create illicit substances, for sale in the United States. (Hector Guerrero/AFP/Getty Images)

WASHINGTON—The insidious Chinese presence in the drug trafficking arena has been growing for years. It now dominates the global money laundering business and chemical production—both critical services to cartel operations in Mexico, Colombia, and beyond.

Chinese criminal networks supply tons of drug-making chemicals and launder billions of dollars for cartels, yet most of the attention is focused on the territorial gun battles south of the border, or when a kingpin such as Joaquin “El Chapo” Guzman is arrested.

“Clearly the Chinese are way more dangerous, way more sophisticated, way more complex, and way more of a national security threat to America—it’s not even a comparison [with Mexican cartels],” Derek Maltz, former head of the Drug Enforcement Administration’s (DEA) special operations division, told The Epoch Times.

Agreements between cartel leaders and the heads of Chinese money laundering operations based in Mexico have cemented the relationships and provided fertile ground for rapid expansion, according to the DEA.

“China’s commercial and manufacturing industries have transformed China into a key international hub and criminal magnet for money laundering activities and illicit financial transactions,” a DEA spokesperson told The Epoch Times.

In June, a Chinese man pleaded guilty in connection with laundering more than $4 million in drug proceeds generated by large-scale cocaine trafficking in the United States, specifically Virginia.

The man, Xueyong Wu, worked with Latin American drug trafficking organizations to repatriate the money to Mexico through a “complex series of international financial transactions,” according to the Department of Justice (DOJ). Wu received a percentage of the money involved.
 
A display of fentanyl and meth seized by U.S. Customs and Border Protection officers at the Nogales Port of Entry at a press conference in Arizona on Jan. 31, 2019. (Mamta Popat/Arizona Daily Star via AP)
In March, another Chinese man was convicted of coordinating the collection of drug money in Chicago for Mexican cartels and transferring it to bank accounts in China, according to the DOJ. Xianbing Gan directed the money transfers while living in Guadalajara, Mexico, but was arrested at Los Angeles airport during a stopover from Hong Kong to Mexico.

Maltz said traditional money laundering organizations charged around 8 percent for laundering bulk cash, but Chinese networks overtook the industry by undercutting the competition and charging commissions as low as 1 percent, or even nothing.

“It’s a brilliant business idea,” Maltz said. “They set up very sophisticated, complex, trade-based money laundering schemes where hundreds of millions of dollars are picked up and used to buy consumer goods in China. And then the consumer goods are shipped into Central America, South America, all over the region in Latin America, to launder the proceeds for the drug traffickers in Mexico as well.”

Chinese nationals in the United States also operate a popular scheme, known as the Chinese Underground Banking System, which works not only to launder money for the cartels, but to help Chinese nationals living in the United States access massive amounts of cash, according to the DEA.

A prominent case involved three Chinese nationals who were indicted in 2019 but remain at large. They coordinated the collection of cash from cartel drug sales at around 300 pick-up locations in the United States, according to the DOJ. They then allegedly acted as brokers to supply cash to wealthy, U.S.-based Chinese who were restricted from transferring more than $50,000 per year from Chinese banks to overseas.

The Chinese buyer would transfer money from his or her Chinese bank account to the broker’s bank account in China. After the transfer, the U.S. cash from the drug sales would be directly released to the Chinese people in the United States. To complete the cycle, the brokers would export Chinese goods such as electronics and clothing to the cartel in Mexico, which would be sold for pesos.

Other laundering channels identified by the DEA include trade-based money-laundering (the over- or underpricing of goods, falsified bills of lading and customs declarations, and counterfeit import/export contracts); securities transactions (stocks, bonds, commodities, and precious metals); real estate transactions; casino-related transactions; and wire transfers via both formal and underground banking systems.

Numerous countries have been investigating Chinese money launderers residing in Colombia, Mexico, Canada, Australia, and the United States, the DEA spokesperson said. Furthermore, in the past seven years, Chinese banks in Italy, Spain, and the United States have been under investigation resulting in arrests and heavy fines for money laundering violations.

“China’s massive export industry has allowed hundreds of billions of dollars’ worth of drug proceeds to be easily laundered on behalf of Mexican and Colombian drug trafficking organizations,” the spokesperson said.

It’s hard to imagine that the Chinese communist regime is not somehow involved in both the money laundering operations and the drug-related chemical manufacturing, Maltz said.

“How can they not be aware of this activity? Now, whether they’re leading it, whether they’re organizing it, whether they’re directing it, that’s an unknown,” he said.

Drug cartels are primarily motivated by money and power, but the Chinese motivations go beyond that, Maltz said.

“I look at this as another avenue in China’s global attack against their adversaries,” he said. “What better way to hurt America than poison the kids and cause all these overdose deaths, at the same time making billions of dollars? I call it a form of chemical war on America, because you’re dealing with these potent lethal chemicals that are being produced in these labs in China.”

Maltz said the Chinese networks are difficult to penetrate as there’s a dearth of undercover agents and informants who look Chinese, speak Chinese, and understand the culture.

“And then when you add in encrypted communications, and you add in digital currency, it becomes very complicated,” he said. 

The rise in digital currency use by criminal organizations coincides with a drop in bulk cash seizures in the United States. In 2011, agents seized more than $741 million in cash, whereas $234 million was seized in 2018, according to a recent DEA report.

Chemicals by the Ton
As smaller methamphetamine labs were being shut down in the United States in the late 1990s and early 2000s, the DEA started targeting the precursor chemicals that were being used to produce the drug.

“During that same timeframe, the geniuses in the Sinaloa cartel like ‘Chapo’ Guzman and others were aligning themselves with the Chinese organized crime groups, and they were importing multi-ton shipments of chemicals from China right into Mexico—specifically to produce methamphetamine,” Maltz said.

Super labs were set up in Mexico and the flow of meth across the U.S. border has continued to increase dramatically—along with the potency of the drug.

In 2007, a Chinese national was arrested and charged with drug offenses for his role in manufacturing methamphetamine in Mexico to be distributed in the United States. The man, Zhenli Ye Gon, was arrested in Maryland but lived in Mexico. When Mexican authorities searched his residence, they found at least $205 million in U.S. currency stacked in a room.

“That’s one guy sitting in Mexico,” Maltz said. “That gives you an understanding of the magnitude of what we’re talking about. That was just from chemical sales.”
A stack of $205 million in cash sits in a room of a Chinese chemical distributor living in Mexico. (DOJ)
In recent years, the amount of meth being trafficked has increased dramatically. So far this fiscal year, with three months to go, Customs and Border Protection has seized almost 104,000 pounds of meth being trafficked through ports of entry. In comparison, almost 20,000 pounds was seized in fiscal 2014.

The super labs rely on the importation of precursor chemicals from China, as well as India, according to a 2019 DEA report.

“Chemical shipments will be mislabeled in China, shipped to legitimate companies in Mexico or Central America, and then diverted by the [cartels] and smuggled overland to the clandestine laboratories,” the report states.

Last summer, Maltz said, Mexican authorities seized a meth lab in Mexico that was capable of producing seven tons of meth in three days.

“Chinese are also operating all over [in] Panama and areas of Central America, as well as working on large cocaine shipments to Asia and other parts of the world,” Maltz said. “People don’t realize that ethnic Chinese are down there in the trenches organizing large-scale cocaine shipments as well.”
Cargo containers are loaded on container ships at a port in Qingdao in China’s eastern Shandong province, on April 8, 2018. (AFP via Getty Images)
Fentanyl
China is perhaps best-known for its connection to the potent synthetic opioid fentanyl. Tons of fentanyl have been manufactured in Chinese labs and mailed directly into people’s homes in the United States through the postal system. More has been brought in via Mexico over the southern border.

Mexican cartels have also increased their production of fentanyl-related products, but still rely on China for the precursor chemicals.

Fentanyl was originally developed as a painkiller and anesthetic. It’s 50 to 100 times more potent than heroin, highly addictive, and deadly. It is often pressed into counterfeit prescription oxycodone pills, or mixed into heroin, cocaine, and even marijuana. Buyers may be unaware the drugs they buy contain illicit fentanyl, of which a 2 mg dose can be fatal.
 
A fatal dose of fentanyl displayed next to a penny. (DEA)
It is also an extremely lucrative drug. One kilogram of fentanyl costs about $5,000 in China, according to Maltz. If the cartels take that kilogram into their labs and cut it with other drugs or press it into pills, they can make $2 million or more by then selling it on American streets.

Fentanyl seizures just in Arizona have more than tripled each year since 2016.

In August 2019, the Mexican navy intercepted a 25-ton shipload of fentanyl originating from China and bound for Culiacán, Sinaloa—the home base of the Sinaloa cartel in Mexico.

“The Chinese and the Mexican cartels have a very lethal relationship right now,” said Maltz. “Why isn’t anybody in America talking about the level of overdose deaths from this poison every day?”

In 2018, there was an average of 184 fatal overdoses per day in the United States, according to data from the Centers for Disease Control and Prevention (CDC). The total for the year was more than 67,000 drug overdose deaths, slightly down from the more than 70,000 in 2017, according to the CDC.

About 70 percent of all drug overdoses are opioid-related, including prescription pills, heroin, and fentanyl.

In August 2018, the DOJ unsealed a 43-count indictment in Cleveland, Ohio, that charged two Chinese citizens with operating a conspiracy that manufactured and shipped deadly fentanyl analogues and 250 other drugs to at least 25 countries and 37 states.

On July 17, the Treasury Department placed sanctions on four Chinese nationals and their organization under the Kingpin Act for their role as significant foreign narcotics traffickers.

The four used a company called Global United Biotechnology Inc. to facilitate drug purchases of fentanyl and other drugs for front man Zheng Fujing, according to the Treasury.
Montgomery County Sheriff’s deputies and emergency personnel respond to a suspected drug overdose in a gas station carpark in the Harrison Township of Dayton, Ohio, on Nov. 1, 2019. (Charlotte Cuthbertson/The Epoch Times)
The organization laundered its drug proceeds in part by using digital currency such as bitcoin and transmitted proceeds into and out of bank accounts in China and Hong Kong. The kingpin designation means all property of the individuals and the organization that are in the United States must be blocked and reported.

A rare action by China in November 2019 saw nine fentanyl traffickers sentenced for their roles in manufacturing and distributing drugs. The arrests were made off of a tip by U.S. law enforcement.

However, China expert and retired U.S. Air Force Brig. Gen. Robert Spalding expressed skepticism over China’s move in a Twitter post on Nov. 8, 2019.

“If you know anything about Fentanyl and the CCP you will know that this is all designed for the media. It represents no actual change in policy. The CCP is happy to sacrifice a few Chinese for a trade agreement. Since we don’t understand this it will be hailed as a big deal,” Spalding wrote.

The Chinese regime also pledged that it would widen its control of fentanyl analogues to try to curb the illicit manufacturing and distribution.

Stronger Than Ever
The partnership between Chinese criminal networks and Mexican cartels is stronger than ever. Each has its portion of the business, with the Chinese supplying chemicals and laundering services, while the Mexican cartels take care of the rest.

“Barring significant, unanticipated changes to the illicit drug market, Mexican [cartels] will continue, in the near term, to dominate the wholesale importation and distribution of cocaine, heroin, marijuana, methamphetamine, and fentanyl in U.S. markets,” the 2019 DEA report states. “No other criminal organizations currently possess a logistical infrastructure to rival that of Mexican [cartels].”

Using the Chinese organizations to launder money also creates a safety barrier for the cartels, said Maltz.

“They recognize that putting the Chinese out front—who know very little about their organization and their structure—is going to be a lower risk on their organization if one of these Chinese guys gets arrested with the money,” he said.

“Remember chemicals and money are the critical components for the cartels. Without the chemicals, no drugs can be produced. Without the money, they are out of business. They are making billions of dollars and at the same time killing Americans at unprecedented levels.”

46 comments:

  1. Who do you think bought distress houses in bulk during the Great Recession? The freaking Chinese who own 40 percent of the US. Sneaky guys been double crossing everyone the last 50 years.

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    Replies
    1. Great Depression was more than 50 years ago bro. Lol

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    2. After spreading the kung-flu, now the chi-coms are spreading bad seed through the mail to our nation. While our attention was focused on the Russian hoax, the Chinese were continuing their shadow war on us with the help of a few well placed American politicians lobbying for chi-com cause and to fatten their bank accounts.

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    3. 5:53 offshoring US Corporations still own the companies that went to China, blaming the Chinese for all the ills that the US and the people suffer need to take that into their opinions as much as US candidates take contributions from Sheldon Addelson, and his foreign "casinos"...
      Why do you think zhenli te gone used to go and "lose" millions of dollars in Vegas "casinos", orders from above or he is a real pendejo?

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    4. @6:11...he said Recession like in 2008 not Depression in 1920, you big dummy! Stop smoking yeyo like Sicario 006...

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    5. Sicario006 for president!

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  2. The fact that there are Chinese business men laundering money at no cost makes it look very suspicious. They either need the extra cash flow for accounting purposes or the Chinese government is financing illegal drug operation for the purpose of poisoning the American youth. Nobody moves big amounts of dirty money for nothing.

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    1. It's funny because those drug precursors can come from many other countries. Soooo to have a communist country that "SUPPOSEDLY" has this immense "CONTROL" over its entire population. But somehow all these chemicals that are being manufactured by tens of thousands of tons. And the CHINESE government doesn't know this "🤔"....

      It's definitely a way to not only get their country rich. But I really see it as a way to destabilise a country. Specially with uppers like crystal. And downers like fentanyl. And it's also sad because I think this country with it's amazing intelligence networks, knows what's going on. And they ( US ) IS LETTING IT BE......

      Rubio NYC

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    2. This is 100% what it is- china couldnt win in a regular- military type war- so this is the alternative- its actually pretty smart on their part

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    3. Yes. Take some time and read Unrestricted Warfare by Qiao Liang and Wang Xiangsui (free .pdf version at the link below). This book was written by two People's Liberation Army colonels in 1999. If you read it and then look at is happening with Methamphetamine and Fentanyl, this book clearly shows the PLA's plan to attack the US using drugs. https://www.c4i.org/unrestricted.pdf

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  3. Wow, what an article! Thank you!

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  4. I've BEEN saying THAT for YEARS..
    CHINESE are too smart, American agencies only WISH they can catch ONE big CHINESE CAPO.. I DON'T think they EVER have..
    The thing is.. IF the U.S REALLY wanted to get RID of DRUGS it would..
    THIS war on DRUGS is a SHAM..

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    1. As far as I'm aware of, the U.S. lacks an extradition treaty with China. This complicates the situation a lot more. If I'm not mistaken the U.S. does have a treaty with Hong Kong but that is at risk now with the crisis in U.S.-China relations.

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    2. China cannot be trusted at all. Trump is 100 percent correct about trade, china is still deemed a favored and developing nation.

      they spy on everyone. they knocked on our door a month ago, took my husbands blood, three times, took his phone and warned not to remove the apps they installed.

      we cannot have an open communication at all. Tik Tok ad WECHAT are the two apps they most use to spy on the public.

      China is violating all agreements. UK has opened its door to HK citizens and a path to citienship.

      Taiwan is VERY vulnerable

      as for drugs, precursor etc, ancient societies such as the triads oversee and have a hand in everything. from the labs and farmers to the markets and every layer in between, they get a piece. It is complicated.

      They worked for the CCP keeping peace during the transfer of sovereignty of Hong Kong sort of a security company. They worked for us when extortion attempts were made, we never had a problem again.

      as for extradition, never with china, it is in that basket of dictators and communists like russia, no extradition.

      HK we for over 20 yrs have had extradition but trump announced a couple wksago he is suspending the treaty because of chinas move over HK. that said we have never extradited an US citizen to HK and only 8 or so others. yet HK has given us 60 or 70 people via extradition.

      The other growing issue is the vile human rights violations of the one million Uighurs in slave prison camps.

      The relationship with Hong Kong....including the extradition treaty, export controls, and trade relations, is dead.

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    3. Weird HOW CHINESE basicly BULLY the world incuding AMERICA..
      You would THINK AMERICAN AGENCIES had more CONTROL..
      Americans can go ANYWHERE in the 🌎 and basicly TAKE over EXCEPT China,russia and NORTH Korea..
      CHINESE made a deal with AFRICA and made sea ports and TAKING many natural resources..
      China is all ABOUT BUSINESS

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    4. India has a crap load of precusor and is in the street market of fake opioid drugs. US should cut them at the pass, NOW.

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    5. Chivis is it not economically feasible for your business to manufacture in another country?

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    6. we have been in 11 countries in the pacific rim. they have limited population compared to china. Mx was mx. we should have stayed in Vietnam.

      But we are lucky, we have made our money. the imposed 25 percent tarriff is not something that the market can tolerate. all of our colleagues left for other counties. but it is difficult and a long process.

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    7. Basicly China DOESN'T sell OUT IT'S people like in OTHER smaller weaker countries WHO have no POWER to intervene..
      I DON'T blame THEM, THAT'S what makes China 💪.. If China WAS a pushover country LIKE Mexico it would be RUINED just like 🇲🇽 is at this point..
      I'm I WRONG?

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    8. Out of over 200 countries Mexico's economy is 15th and growing. China is 2nd but a huge swath of its citizens live in poverty and it only has 2 aircraft carriers compared to the USA 22. It's strong but, honestly, calm down.

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    9. Ask any farmer in the midwest if trompas is right about trade. Reality check chivis! He was great in getting Brazil to take over our once great agriculture trade. Or come on down and ask any of these farmers if they don't regret voting for this bankruptcy hack

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    10. Stress'em Chivis. By now if you have read a clip here, a news show there, kept up with what is going on around you then you know. This is a competition the world around. That other side they're aint no holds barred. They trying to come. We can take the gloves off though. Might be because they are mad, jealous, upset about their countries past failures, or the fact that they are set and can't do nothing about it. Any one of those is just an excuse and I will not let up letting them know either come or start were you at. You can't rewrite the letters of a book that were written by much wiser men when all everybody had was just goats and chickens and solace to lace it together. Then by luck the Example is sent to help you get to that point of realization that the stars are reachable. If their heart is hard then He will make it soft. You just have to believe the whole story.

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    11. China is strong?

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  5. I'm not racist but I don't like Chinese. The China government is racist. They lock up the Muslim weegurs and nobody gives a damn because we want to buy their cheap plastic sh#t.

    I wish the world would isolate them. They knew about the Rona and did nothing to warn the world.

    El Chocomil

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    1. Sorry fool. You racist. You’re making an overgeneralization about Chinese people.

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    2. I am with you 9:56 after living and working in mainland for so long.

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    3. China is a communist totalitarian state. They are not only a race or culture of people. It isn’t racist to point out how horrible the Chinese Communist Party is, which is China. The Chinese people are either brainwashed or complicit. China blatantly hacks and steals intellectual property, citizen data from other countries, facilitate the drug trade, bully smaller countries for land and water rights that aren’t rightfully theirs, enslave and brutalize an entire Muslim population, knowingly withhold life saving information about a virus originating in their country which led to more poverty and hardship for poor countries like Mexico. You are a blind fool to think China is not bad for the world, and that is not racist.

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    4. Just to elaborate on my reply. I don’t generalize the Chinese people as bad or good. Though, it is well documented the propaganda machine that a China the government employs on its people. They most certainly are brainwashed or at least manipulated from birth. Facebook is banned, only a government approved social media platform is allowed which is obviously spied on. Honestly, they arrested the first doctor who leaked the coronavirus, trying to save lives, forced him to apologize for...reporting a virus? Then, he later died from the virus. You talk bad about the CCP, you disappear or end up in a prison camp. Do some research and actually educate yourself, use some logic and common sense. China is a horrible government, and because western societies place so much power in the hands of corporations, and those corporations put profits over anything else, we will all suffer eventually. Our governments and corporations empower this evil government and will be the reason it will supplant the USA. Hate the US all you want, it has many blemishes, but wow will you miss them after China owns the world.

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    5. The Chinese Communist Party has saved China from being taken over and fragmented.

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  6. $5,000.00 for a kilo of fent and after you cut it or process its worth $2,000,000.00 in USA talk about biiiiig profits

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    1. Tip of the iceberg. Fentanyl structural derivatives can be over 100x the potency of fentanyl, for example Carfentanil. To synthesize carfentanil is only slightly more challenging than fentanyl, as such you could buy a kilo of carfentanil for $5,000. That kilo would be equal to 100 kilos of fentanyl. Meaning the final retail value when cut to the same equipotency would be $200,000,000 from a $5,000 investment.

      But thats STILL not how far the rabbit hole goes. ohmefentanyl, also only slightly harder to make than fentanyl has a stereoisomer that is 180x the potency of fentanyl or nearly double the potency of carfentanil. Means you could get close to $400,000,000 value from a kilogram when cut to equipotent strength.

      Oh no, it doesnt end there. Last I knew there was a fentanyl derivative that was over 230x the potency of fentanyl. Again, for an experienced chemist only slightly harder to make than fentanyl itself. A kilo of that cut to equipotency could yield close to $600,000,000.... and potentially cost just $5,000 to buy.

      I dont even understand why the cartels only deal with fentanyl, they can easily move into the super potent derivatives and reap even more absurd profits for almost the same investment.

      And one other thing, these super potent structural derivatives are so powerful they are better classified as psychochemical weapons of mass destruction. For perspective VX Nerve Gas is lethal around 10mg inhaled. Carfentanil is lethal at less than 0.01mg inhaled, means it is 1,000x more deadly than VX Nerve Gas. You can mix it with DMSO, an agent that enhances tissue permeability, then wipe that onto a targets door knob or door handle of their car and they will die minutes after touching it. They could be utilizing this to covertly eliminate any government agents they want with ease.

      Im actually surprised its not happening yet, that im aware of, but inevitably it will.

      PS: the Chinese will sell you carfentanil, theyve been offering it for the past few years on the dark web

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  7. History repeats itself!

    Read about the opium wars. Same thing.

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  8. Chinese government knows who these chinese drug traffickers are. They do that to destroy other lives, but they are tough when drugs distributed inside china. Never trust communist party. Three things they are good at: steal property that doesn't belong to them. Bring in drugs. Bring in virus.

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  9. Just a reminder for those so called "american people" you are no from this continent you belong in europe

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    1. @5:59, your ancestors crossed over the Bering Strait, you get out as well....hell let's all go back to africa since that is where we all came from.

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    2. 12:15
      Bering Strait doesn't count, too long ago it's negligible because there were no nations back then unlike what Europeans did: destroy entire civilizations and leave nations in ruins.

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    3. Native AMERICANS were here first before the continents were named AFTER a European!
      Before all the nasty decreases brought by white men that whipped out more than half the population..
      Now China is destabilizing America with an infection 🇺🇸.. How ironic..

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    4. Africa? Iam from Ophir

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    5. Caucasians were before the native Americans Florida bog people
      Solutrians
      Clovis
      Adina

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  10. I believe Mexican Cartel have have a China partner that in time will take over their business. So Mexican Cartel be careful these your partners [China] got more money than u do and a lot of firepower

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  11. "I'm not racist but I don't like Chinese."

    That is, by definition, a blatantly racist statement. Say the same thing, except substitute "black people" for Chinese. How does it sound to you now?

    You are another example of failure from whatever educational system you sprang from.

    Att
    AmigoAnónimo

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  12. Bro Xi jinping himself is aware of the magnitude in which China's own citizens are profiting and manufacturing in the drug trade internationally. There is no way the CCP is not aware, 0% chance they are not colluding with the local leaders or at least looking the other way in exchange for bribes. Take a look at how closely the government monitors its own citizens. 0% chance the top bosses are oblivious to the sea of poison that originates from within China

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  13. 6:11
    Great Recession not great depression. Great depression 70/80 years ago. Great recession during our last republican president.

    Republican in office = recession! Has never failed. And now with Trompitas fanning this now Trump Virus, we're back in a recession.

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  14. China is one disgusting country, They are purposely doing this with there 100 year plan they will take over the world.

    ReplyDelete
  15. Hey chivis I’m curious. What do you do for living?
    Love your blog

    ReplyDelete

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