IL: Chinese money-laundering rings in Chicago, New York cleaning Mexican drug cartel cash

Chicago Sun Times –

They’ve used complex schemes to disguise millions in drug proceeds, making them seem to be legitimate transactions, according to law enforcement sources and court files.

A Chinese money-launderer was about to pick up Mexican drug-cartel cash in Chicago, federal authorities say, when his plans suddenly changed.

They say the suspected launderer got a call from a man he thought was a Mexican money courier who told him they needed to change their meeting place because he’d spotted a cop.

“You Asian, I’m Mexican — not a good look,” the courier said in the 2017 phone call, court records show.

So they picked a different address to meet. They described their cars to each other. And when they met on the Southwest Side, they had a way to identify each other, authorities say: The money-launderer handed the courier a $1 bill. The men had agreed earlier that the serial number on the bill — G5915410C — would confirm the Chinese man’s identity. Authorities say that’s common in the world of drug-trafficking.

They say the courier then turned over a Menards shopping bag stuffed with nearly $200,000 in cash to Huazhi Han, who later was charged with money-laundering.

But the courier was no courier. He was an informant for the U.S. Drug Enforcement Administration.

DEA agents arrested Han and say they found a gun in his van.

They also searched the Riverside home where he was living and seized about $1.2 million they found hidden in the ceiling there, according to court documents.

Han’s now awaiting trial on money-laundering charges in Chicago.

He was part of a network of Chinese nationals who were using complex financial schemes to launder Mexican cartel cash, federal authorities say. Such schemes have disguised tens of millions of dollars of drug proceeds into what are supposed to look like legitimate business transactions, according to law-enforcement sources and court documents.

He says Mexican cartels started turning to Chinese money-laundering networks because they were faster and demanded lower fees than their Mexican counterparts.

“They do not need to charge as much as other laundering organizations because their processes have been in place for many generations and date back to the earliest forms of tax evasion in Chinese history,” Giuffre says.

He says the Chinese money-laundering networks also reduced the need for the Mexican cartels to move big loads of cash from drug sales across the U.S. border, where it could be spotted and seized more easily.

Xianbing Gan, 51, was sentenced Tuesday to 14 years in prison for laundering Mexican drug cartel cash.
 U.S. District Court trial exhibit

One of the central figures in the DEA’s money-laundering investigations in Chicago is Seok Pheng Lim, a Singapore national who agreed to cooperate with investigators. In late 2019, she pleaded guilty to being part of a money-laundering network that operated in Chicago and New York in a scheme that laundered about $48 million in cartel drug proceeds in 2016 and 2017 alone, according to a court filing.

Lim, 42, worked with Chinese businessmen in Mexico, federal authorities say. At their behest, she approached U.S.-based Chinese brokers to carry out the scheme.

Those brokers would transfer Chinese currency from bank accounts they held in China to the launderers’ accounts in China, bypassing the U.S. banking system. The amount of Chinese currency they transferred was equal to the amount of U.S. drug currency they got. No money was wired from the U.S. directly to China.

It’s called a mirror swap, which can take as little as three hours to complete, officials say.

“So you’re not seeing a paper trail of U.S. dollars going into China and RMB [Chinese currency] leaving China and going into Mexico,” a federal agent explained in court in Chicago.

Transcripts of their electronic communications show they worried about getting cheated, about U.S. authorities catching them and even about the possibility of getting killed by the cartels they worked for.

Lim, who used to sell shoes in China, is awaiting sentencing.

Prosecutors say she should get a break on her sentence in exchange for having cooperated with them against her co-defendants, including 51-year-old Xianbing “Gary” Gan, who was sentenced Tuesday in federal court in Chicago to 14 years in prison.

Gan was convicted of facilitating the illegal money transfers while he was living in Guadalajara, Mexico. He was arrested in Los Angeles in 2018 during a layover on a flight from Mexico to Hong Kong.

In a court filing, prosecutors Sean Franzblau and Richard Rothblatt had argued for a stiffer, 20-year sentence for Gan, writing, “Drug distribution and money-laundering are two sides of the same malignant coin.”

Gan, according to the prosecutors, is believed to be “the first such high-level broker to go to trial in the United States, and is among the highest-level brokers to be convicted in the United States.”

They say he was “part of a recent phenomenon in which a relatively small network of Chinese money brokers based in Mexico have come to dominate international money laundering markets.”

Gan’s lawyers have said he was in the shoe business in China, where he met Lim, and that he used his profits to start a seafood export business in Guadalajara in 2011. In Mexico, according to his lawyers, he learned he could help people get money out of China for a fee in order to avoid the government’s banking restrictions there. They said he unwittingly became involved in laundering money for drug cartels.

Gan’s lawyers said Lim’s trial testimony against him kept “shifting” and that she was not a credible witness. They pointed out the jury acquitted him on a conspiracy count. His lawyers said he should have received a sentence of no more than two years in prison.


This chart, introduced in court, shows how cash from Mexican drug cartels was moved to Chinese money-laundering organizations.
This chart, introduced in court, shows how cash from Mexican drug cartels was moved to Chinese money-laundering organizations. Xianbing Gan, a money-laundering broker in Mexico, had a bank account in China. An associate in the United States collected cash from cartel drug sales, removed an equal amount from a bank account in China and deposited it in Gan’s Chinese account to get around the U.S. banking system and try to avoid detection, according to prosecutors, in what’s called a mirror swap. A second swap was then done in Mexico to complete the money-laundering and try to make the illegal drug proceeds look like a legitimate business transaction.
 U.S District Court trial exhibit

Federal agents are continuing to investigate these types of money-laundering schemes in Chicago, according to an affidavit for a search warrant filed last October in federal court in Chicago.

According to the court filing, U.S. Department of Homeland Security Investigations agents were looking into a money laundering network used by the Sinaloa Cartel, which is infamous for having been run by now-imprisoned Joaquín “El Chapo” Guzmán Loera.

It also said the money-launderers were swapping those U.S. dollars for bitcoin virtual currency.

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