Category: US Department of Justice

Source: United States Department of Justice Criminal Division

The Justice Department today announced a 10-count superseding indictment charging Los Angeles-based associates of Mexico’s Sinaloa drug cartel with conspiring with money-laundering groups linked to Chinese underground banking to launder drug trafficking proceeds. During the conspiracy, more than $50 million in drug proceeds flowed between the Sinaloa Cartel associates and Chinese underground money exchanges.

Following close coordination with the Justice Department, Chinese and Mexican law enforcement informed United States authorities that those countries recently arrested fugitives named in the superseding indictment who fled the United States after they were initially charged last year.

The multi-year investigation into this conspiracy—dubbed “Operation Fortune Runner”—resulted in a superseding indictment returned on April 4 and unsealed on Monday charging a total of 24 defendants with one count of conspiracy to aid and abet the distribution of cocaine and methamphetamine, one count of conspiracy to launder monetary instruments, and one count of conspiracy to operate an unlicensed money transmitting business. 

The superseding indictment alleges that a Sinaloa Cartel-linked money laundering network collected and, with help from a San Gabriel Valley, California-based money transmitting group with links to Chinese underground banking, processed large amounts of drug proceeds in U.S. currency in the Los Angeles area. They then allegedly concealed their drug trafficking proceeds and made the proceeds generated in the United States accessible to cartel members in Mexico and elsewhere.

Lead defendant Edgar Joel Martinez-Reyes, 45, of East Los Angeles, and others allegedly used a variety of methods to hide the money’s source, including trade-based money laundering, “structuring” assets to avoid federal financial reporting requirements, and the purchase of cryptocurrency.

Twenty of the individuals charged in the superseding indictment are expected to be arraigned in the U.S. District Court in downtown Los Angeles in the coming weeks, including one who was arraigned on Monday.

“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 for the Central District of California. “To protect our community, therefore, it is essential that we go after the sophisticated, international criminal syndicates that launder the drug money. As this indictment and our international actions show, we will be dogged in our pursuit of all those who facilitate destruction in our country and make sure they are held accountable for their actions.” 

“Relentless greed, the pursuit of money, is what drives the Mexican drug cartels that are responsible for the worst drug crisis in American history,” said DEA Administrator Anne Milgram. “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. Laundering drug money gives the Sinaloa Cartel the means to produce and import their deadly poison into the United States. DEA’s top operational priority is to save American lives by defeating the cartels and those that support their operations. This investigation is the latest example, and there is more to come.”

“Drug traffickers generate immense amounts of cash through their illicit operations. This case is a prime example of Chinese money launderers working hand in hand with drug traffickers to try to legitimize profits generated by drug activities,” said Chief Guy Ficco of IRS Criminal Investigation. “We have made it a priority to identify, disrupt, and dismantle any money launderers working with drug cartels and we are committed to our partnerships with federal, state, and local law enforcement agencies to combat drug cartels and those who assist them in laundering drug proceeds.”

As part of this investigation, law enforcement has seized approximately $5 million in narcotics proceeds, 302 pounds of cocaine, 92 pounds of methamphetamine, 3,000 Ecstasy pills, 44 pounds of psilocybin (magic mushrooms), numerous ounces of ketamine, three semi-automatic rifles with high-capacity magazines, and eight semi-automatic handguns.

Background

The Sinaloa Cartel is largely responsible for the massive influx of fentanyl into the United States over the past approximately eight years, and for the accompanying violence and deaths that have afflicted communities on both sides of the border. The cartel’s activities generate enormous sums of U.S. currency in the United States that belong to the cartel in Mexico. Profits from the drug trade must be repatriated to Mexico for use by the cartel.

Chinese underground money exchanges in the United States assist the Sinaloa and other cartels to move their profits from the United States to Mexico by providing a ready market for U.S. currency in the United States. 

Many wealthy Chinese nationals who live, work, or invest in China wish to transfer assets to the United States for various reasons but are barred by the Chinese government’s capital flight restrictions from transferring the equivalent of more than $50,000 per year out of China. These individuals seek informal alternatives to the conventional banking system to move their funds.

To transfer money to the United States, the China-based investor contacts an individual who has U.S. dollars available to sell in the United States. The seller of U.S. dollars provides identifying information for a bank account in China with instructions for the investor to deposit Chinese currency (renminbi) in that account. Once the owner of the account sees the deposit, an equivalent amount of U.S. dollars is released to the buyer in the United States.

The sellers of U.S. currency in the United States obtain dollars in a variety of ways. Some of them accept cash from individuals engaged in criminal activity that generates large amounts of bulk currency, including drug trafficking. These U.S. currency brokers charge a percentage commission as a fee to the owner of the criminal proceeds to conceal the nature and source of the funds—typically far less for their services than their competitors. Drug traffickers increasingly have partnered with Chinese underground money exchanges to take advantage of the large demand for U.S. dollars from Chinese nationals.

The funds that are transferred in China are then used to pay for goods purchased by businesses and organizations in Mexico or elsewhere such as consumer goods or items needed to aid the drug trafficking organization to manufacture illegal drugs, such as precursor chemicals, including fentanyl.

The Superseding Indictment

According to the superseding indictment, from October 2019 to October 2023, members and operatives of the Sinaloa Cartel imported large quantities of narcotics, including fentanyl, cocaine, and methamphetamine, into the United States, generating huge sums of drug cash proceeds in U.S. dollars.

In January 2021, Martinez-Reyes allegedly traveled to Mexico to meet with Sinaloa Cartel members to strike a deal with money remitters with links to Chinse underground banking to launder drug trafficking proceeds in the United States. After the deal was struck, the Sinaloa Cartel—through their connections and associates—distributed cocaine, methamphetamine, and other narcotics, generating U.S. dollars as drug proceeds.

Martinez-Reyes and other conspirators allegedly then delivered the currency—frequently in amounts of hundreds of thousands of U.S. dollars in cash—to other members of the Chinese underground money exchange and remitting organizations to be laundered for a fee. The remitting organizations possessed large amounts of U.S. currency and could help wealthy Chinese nationals evade China’s currency controls.

The money remitters allegedly disposed of the drug proceeds by either delivering United States currency directly to their money exchange customers or by purchasing real or personal property, including luxury goods and cars to be shipped to China. Additionally, the remitters also moved illicit drug proceeds through cryptocurrency transactions. They also allegedly used a variety of traditional methods to place the funds into the traditional banking system such as purchasing cashier’s checks, or “structuring,” that is, depositing small amounts at a time into bank accounts opened for this purpose to avoid banks from reporting large cash deposits to the U.S. government.

The remaining seven counts charge individual defendants with crimes such as possession of pound quantities of cocaine and methamphetamine, structuring funds to avoid federal reporting requirements placed on banks, and one count of assault with a deadly weapon on a federal officer.

If convicted of all charges, each defendant faces a mandatory minimum of 10 years in prison and a maximum penalty of life in prison.

The DEA, IRS Criminal Investigation, South Gate Police Department, Downey Police Department, Glendora Police Department, Fullerton Police Department, and El Monte Police Department are investigating the case, with valuable assistance from the FBI and U.S. Marshals Service.

Assistant U.S. Attorney Julie J. Shemitz for the Central District of California is prosecuting the case. The Justice Department’s Office of International Affairs and Criminal Division’s Narcotic and Dangerous Drug Section’s Special Operations Unit assisted with the investigation and overseas coordination in the case.

This case is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at www.justice.gov/OCDETF.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Source: United States Department of Justice Criminal Division

A federal court on June 11 enjoined a Colorado company and its owner from manufacturing, distributing or selling unauthorized vaping products.

In a complaint filed on June 6, in the U.S. District Court for the District of Colorado, the government alleged that Boosted LLC, also known as Boosted E-Juice, and its owner, Cory Vigil, violated the Federal Food, Drug and Cosmetic Act by introducing or delivering for introduction into interstate commerce adulterated and misbranded tobacco products. According to the complaint, the defendants manufactured and sold electronic finished nicotine delivery systems (ENDS) products, including finished e-liquids. The complaint alleged that the Food and Drug Administration (FDA) warned the defendants that their products, including flavored e-liquids sold as “Dragon Fruit Coconut Milkshake,” “Horchata Milkshake” and “Raspberry Milkshake,” were adulterated and misbranded because they lacked the required marketing authorization order from FDA. The government also alleged that despite repeated FDA written warnings, the defendants continued to illegally sell their flavored e-liquid products online.

The defendants agreed to settle the lawsuit and be bound by a consent decree of permanent injunction. The order entered by the court permanently enjoins the defendants from directly or indirectly manufacturing, distributing, selling, and/or offering for sale any new tobacco product that has not received marketing authorization from FDA. The court also ordered the defendants to destroy ENDS products in their custody, control, or possession.

The injunction against Boosted is the first enforcement action finalized since the Justice Department and FDA announced the creation of a federal multi-agency task force to combat the illegal distribution and sale of e-cigarettes. To date, the FDA has authorized the sale of 23 specific tobacco-flavored e-cigarette products and devices. These are the only e-cigarette products that currently may be lawfully marketed and sold in the United States.

“The illegal distribution of unauthorized vaping products poses a serious public health threat, particularly to youth,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Justice Department will use all available criminal and civil authorities to bring new enforcement actions in coordination with our task force partners.”

“Those who disregard the law are responsible for the consequences, and today’s action is further demonstration of FDA working with our federal partners to hold those who break the law accountable,” said Director Brian King, Ph.D., M.P.H., of FDA’s Center for Tobacco Products (CTP). “This latest action brought by the FDA and DOJ shows how we’re taking an ‘all government’ approach toward addressing illegal e-cigarettes in this country.”

Trial Attorney Michael J. Murali of the Civil Division’s Consumer Protection Branch handled the case, with assistance from Assistant Chief Counsel Sarah Rosenberg of FDA’s Office of the Chief Counsel.

Additional information about the Consumer Protection Branch and its enforcement efforts can be found at www.justice.gov/civil/consumer-protection-branch.

Claims made in a complaint are allegations that, if a case were to proceed to trial, the government would be required to prove by a preponderance of the evidence.

Source: United States Department of Justice Criminal Division

The Justice Department announced today its findings that Alaska violated Title II of the Americans with Disabilities Act (ADA) by failing to provide an accessible ballot for in-person voting, selecting inaccessible polling places for federal, state and local elections and maintaining an inaccessible elections website. The ADA requires that states’ voting services, programs and activities be accessible to individuals with disabilities.  

“For too long, people with disabilities have been denied the fundamental rights and freedoms that citizens of our democracy possess, including the opportunity to fully participate in the voting process,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Justice Department is fully committed to enforcing the ADA to make sure that individuals with disabilities have an equal opportunity to vote, including by voting privately and independently like everyone else.”

“Voting is a fundamental right for all American citizens and ensuring they have full access to the election process is a hallmark of our democracy,” said U.S. Attorney S. Lane Tucker for the District of Alaska. “The U.S. Attorney’s Office will continue to collaborate with the Justice Department’s Civil Rights Division to work toward accessibility in voting for all Alaskans.”

The department opened its investigation in response to complaints from individuals with disabilities in Alaska alleging accessibility issues. Voters with disabilities reported that they could not vote privately and independently because accessible voting machines were unavailable or did not work, that they encountered inaccessible polling places and that they could not obtain key election information on the state’s election website. Following an investigation, in a public letter of findings issued to Alaska, the department detailed its findings and asked the state to resolve the identified civil rights violations. The findings include the state’s failure to provide functional accessible voting machines, to provide polling places without physical barriers, such as muddy parking lots or steps, that allow voters with disabilities to vote in person and to ensure the accessibility of its website where voters with disabilities can obtain election information, including voter registration forms, candidate statements and voting dates and polling place locations.   

The Alaska investigation is part of the department’s ADA Voting Initiative, which focuses on protecting the voting rights of individuals with disabilities across the country. More information about voting and elections is available on the Justice Department’s website at www.justice.gov/voting. For more information on the Civil Rights Division, please visit www.justice.gov/crt. For more information on the ADA, please call the department’s toll-free ADA Information Line at 1-800-514-0301 (TTY 1-833-610-1264) or visit www.ada.gov. If you believe you have been discriminated against based on disability, please submit a report online at www.civilrights.justice.gov.

Source: United States Department of Justice Criminal Division

The Justice Department today announced that it has filed statements of interest in federal courts in Ohio and Alabama to promote the correct and uniform interpretation of voting laws guarding the rights of voters with disabilities. The statements of interest are part of the Justice Department’s continuing nationwide efforts to ensure that the voting rights of all individuals, including people with disabilities, are protected.

“No voter should be denied access to the ballot based on a disability,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The right to vote is fundamental to our democracy, and the Justice Department will take action to safeguard that right for all eligible voters, including those with disabilities who need assistance casting absentee ballots.”

Private plaintiffs brought lawsuits in Ohio (League of Women Voters of Ohio v. LaRose) and Alabama (Alabama State Conference of the NAACP v. Marshall) challenging state laws that restrict how voters with disabilities may receive assistance, or from whom they may receive assistance, in casting an absentee ballot. The Justice Department’s statements of interest confirm that Section 208 of the Voting Rights Act permits voters with disabilities who require assistance to receive that assistance from any person they choose, so long as that person is not an agent of the voter’s employer or union. Allowable assistance includes all action necessary to make their vote effective, including casting an absentee ballot. The department’s statement of interest in Ohio also affirms that Title II of the Americans with Disabilities Act (ADA) requires public entities provide equal opportunities to vote absentee and allows voters with disabilities to use an assistor of their choice as a reasonable modification.

“Every Ohio resident, disabled or not, has a fundamental right to vote. Ohio residents with disabilities should have the access and assistance they need to exercise that basic right of citizenship,” said U.S. Attorney Rebecca C. Lutzko for the Northern District of Ohio. “The Americans with Disabilities Act ensures that individuals with disabilities are provided reasonable modifications to undertake their ability to vote. Our office will continue its work to secure the ADA’s protections for Ohio’s residents.”

“Every citizen has the right to vote without discrimination and to have that vote counted in a fair and free election,” said U.S. Attorney Prim Escalona for the Northern District of Alabama. “It is important that those who have specific information about voter discrimination make that information available to my office, the FBI or the Civil Rights Division. The Justice Department will always work tirelessly to protect the integrity of the election process.”

More information about voting and elections is available on the Justice Department’s website at www.justice.gov/voting. More information about the ADA and the Justice Department’s enforcement of the rights of people with disabilities is available at www.ada.gov. To learn more about the Civil Rights Division visit www.justice.gov/crt and to report possible violations of federal voting rights laws go to www.civilrights.justice.gov or call toll-free at 800-253-3931.

Source: United States Department of Justice Criminal Division

A New Jersey man pleaded guilty today to engaging in an extensive, multi-year conspiracy to fraudulently obtain over $54.7 million in loans and to fraudulently acquire multifamily and commercial properties.

According to court documents, between 2016 and 2022, Aron Puretz, 53, conspired with others to deceive lenders into issuing multifamily and commercial mortgage loans. Puretz and his co-conspirators provided the lenders with fictitious documents, including purchase contracts with inflated purchase prices, fake financial statements, and other fraudulent documents. Puretz was an employee of Apex Equity Group, a real estate investment and advisory firm, and one of the owners of Maple Lawn in Eureka, Illinois, and Big Country Chateau in Little Rock, Arkansas, both multifamily properties, and Troy Technology Park in Troy, Michigan, a commercial property.

In February 2017, Maple Lawn was acquired for $4.1 million. However, Puretz and his co-conspirators from Apex Equity Group utilized the identity of a co-conspirator to present a lender and Freddie Mac with a purchase and sale contract for $5.8 million and other fraudulent documents. On Feb. 17, 2017, a title and settlement company based in Lakewood, New Jersey, performed two closings, one for the true $4.1 million sales price and another for the fraudulent $5.8 million sales price presented to the lender. Furthermore, part of the conspiracy was to create a nonprofit entity, JPC Charities, for the purpose of receiving tax-exempt status for the properties owned by Puretz and co-conspirators. Puretz and co-conspirators provided false statements to the city of Eureka, Illinois, to receive a property tax exception. 

In July 2019, Puretz and his co-conspirators acquired Big Country Chateau. However, Puretz knew the lender and Freddie Mac would not approve him as an owner, and used the identity of an associate instead of his own. Furthermore, Puretz hid his ownership and involvement with the property management company from the Department of Housing and Urban Development and other federal and state agencies. 

In September 2020, Troy Technology Park was acquired for $42.7 million. However, Puretz and his co-conspirators presented the lender with a fraudulent purchase and sale contract for $70 million. Additionally, to support the inflated purchase price, Puretz and his co-conspirators submitted to the lender and appraiser a fraudulent letter of intent to purchase the property from another party for $68 million and other fraudulent documents. To conceal the fraudulent nature of the transaction, Puretz and his co-conspirators arranged for a short-term $30 million loan, which was used to make it appear that they had the funds needed to close on the loan. On Sept. 25, 2020, a title and settlement company based in Lakewood, New Jersey, performed two closings, one for the true $42.7 million sales price and another for the fraudulent $70 million sales price presented to the lender.

Puretz pleaded guilty to one count of conspiracy to commit wire fraud affecting a financial institution. He is scheduled to be sentenced on Oct. 30 and faces a maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; U.S. Attorney Philip R. Sellinger for the District of New Jersey; Inspector General Brian M. Tomney of the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG); and Postal Inspector in Charge Eric Shen of the U.S. Postal Inspection Service’s (USPIS) Criminal Investigations Group made the announcement.

FHFA-OIG and USPIS are investigating the case.

Trial Attorney Siji Moore of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Martha Nye for the District of New Jersey are prosecuting the case.