The raids, which involved about 1,000 law enforcement officers targeting 70 locations, are a result of three separate federal indictments on money laundering charges. Authorities are searching for four other suspects, three of whom are in Mexico.
Allegedly, the cartels converted US dollars into pesos through businesses, generally small clothing manufacturers or wholesalers, in the L.A. fashion district. As the LA Times reports, here’s how it worked: Drug dealers awash in dirty US dollars would contact black market peso brokers, who would then contact legitimate Mexican importers that want to buy merchandise from the US.
A drug contact in the US would then pay the LA businesses for the merchandise in the dirty dollars, and the merchandise would be delivered to Mexico, where the Mexican importer would pay the broker the amount in pesos. The broker takes his cut, and then pays the rest in pesos to the cartel.
Robert E. Dugdale, the assistant US attorney in charge of federal criminal prosecutions, said “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.”
Officials say that such trade-based money laundering operations are a result of Mexico’s move in 2010 to tighten financial regulations and restrict the use of US dollars, leaving the drug cartels increasingly dependent on international trade to launder money.
