Friday, October 30, 2020

Guatemalan Casinos used to launder U.S drug cash

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Chinese coke traffickers. Latin American cartels. Millions in American cash laundered through a Guatemalan casino.

According to a wild federal criminal complaint unsealed in Virginia last week, the war on drugs is going about as well as ever. But it’s still no cinch to hide the proceeds of cross-continental coke dealing.

U.S. affidavits and civil forfeiture paperwork describe two men, Xueyong Wu, an alleged Guatemala-based drug trafficker who goes by the nickname “Antonio,” and Xizhi Li, a Chinese national, as alleged leaders of a drug trafficking cartel that netted millions of dollars in proceeds.

According to charging documents in a case against Wu, the duo operated in no small part thanks to two casinos they owned and operated in Guatemala. Part of the alleged scheme was to show regional cartel members that the Chinese nationals had the collateral to pay them back if they were busted—and, of course, make the proceeds appear more legitimate. All told, the feds said, Wu and Li were linked to at least $30 million of illegal drug sales in the United States, which were picked up by a series of couriers up and down the East Coast, and then laundered through Guatemala by the pair of men back to the Colombian cartels.

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Wu was arrested on Dec. 11 in Los Angeles, upon returning from China. Law enforcement searched four of his electronic devices, which allegedly included conversations between him and others about moving large quantities of currency over the popular Chinese messaging app WeChat. His criminal case was unsealed late last week after an indictment charged him with conspiracy to distribute cocaine and money laundering. A lawyer assigned to Wu in California when he was arrested stated he no longer represents the defendant after an initial detention hearing. Wu did not have an attorney of record for pending federal charges in Virginia, and could not be reached for comment for this story.

Li’s name also surfaced in a civil forfeiture procedure in Tennessee, where prosecutors seized over $600,000 in what they claimed were illicit drug proceeds from a bank account allegedly set up by Li. Li, for his part, does not appear to have been charged with a crime and does not appear to have responded to a federal summons in the case. Li did not immediately respond to Facebook messages and emails sent by The Daily Beast. A Justice Department spokesman with the Eastern District of Virginia, which is prosecuting the Wu case, declined to comment.  A spokeswoman with the U.S. Attorney’s office in the Western District of Tennessee did not respond to a request for comment.

Prosecutors claim the duo bought a casino, named Golden Video Loteria, in Guatemala because they believed that it would help their drug trafficking business, which had been under DEA investigation since 2017, in a number of ways. In an affidavit, federal agents quoted an unnamed confidential witness who said the men, who had previously owned a Guatemalan casino called “Golden MGM,” went into the gambling business “to show drug cartel representatives that they (LI, Xueyong Wu, and others) were wealthy businessmen” and “were capable of successfully moving drug money, and that if the money was seized they would be capable of repaying.”

The casino also served as a place for the two men to entertain alleged fellow gangsters, “make new drug trafficking and money laundering contacts,” and act as a convenient spot to stash weapons, the feds said.

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Henry Tso, a director at MNP, a Canadian tax accounting firm, and former RCMP superintendent of financial integrity, said he was not surprised by details of the case.

Money laundering sees no boundaries,” he told The Daily Beast, noting that Canadian officials have seen drug cartels in Mexico and Colombia use casinos as a front for their illegal activities. He added that in Canada, dirty money was loaned out to high-roller gamblers, which converted the currency to chips, gambled a small portion of it, and then cashed out the remaining money.

Li and Wu allegedly used a number of methods to help move money for their cartel clients, court documents from the disruption of a drug trafficking network in Tennessee show.

In an affidavit, federal agents alleged that Li rented out money laundering services to a Central American cartel run by Marisela Flores-Torruco, known as “the Iron Lady.” Flores-Torruco allegedly moved cocaine for notorious convicted cartel boss Joaquin “El Chapo” Guzman and was arrested in Colombia in in 2017 on drug charges following an Interpol “red notice” requesting her detention on behalf of federal prosecutors in Virginia. As of 2018, Flores-Torruco was still fighting extradition to the United States, and could not be reached for this story.

Investigators found that Li used a number of tricks to launder drug proceeds from Flores-Torruco’s business and others, including “domestic real estate ventures (including mortgages and loans on these properties) and mirror transfers.”

Li allegedly used the account names SUPER KING 99 and JL007 to text one of his alleged underlings, Qiyun Chen (aka “Chinaloa”), and organize bulk cash pickups and wire transfers of drug money to be laundered from drug sales in the United States. When the cartel linked by the feds to Flores-Torruco sold its cocaine in the U.S. branded with the names “Rolex,” XXX, and “Swastica,” Chen would allegedly take the cash and wire it to Li in Central America from locations in California and Colorado, using bank accounts set up with fake Guatemalan passports.

Documents in the forfeiture case show federal agents arrested Chen in California in July 2017 following an indictment in the Eastern District of Virginia and charged her with belonging to a drug trafficking organization “that had amassed over $62 million in drug proceeds.”  A Justice Department spokesman also declined to comment on the investigation of Chen, and The Daily Beast was unable to reach her for comment for this story.

Money launderers for drug trafficking organizations, federal investigators explained in the civil forfeiture documents, “commonly receive a commission fee (typically between 1%—5%) as a result of their money laundering services.” In other words, being involved with alleged players like Wu would have been extremely lucrative, to say the least.

For his part, Wu is set to be arraigned in front of a federal judge on Friday. The casinos’ Facebook pages remained live as of this week, happily informing users that “only videoloteria golden gives you many prizes.”

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