LOS ANGELES, (Reuters) – Police and federal agents yesterday raided dozens of Los Angeles Fashion District businesses suspected of operating as part of a major money-laundering hub for narcotics traffickers in Mexico, law enforcement officials said.
Nine people were arrested on charges of taking part in the money laundering through a “black market peso exchange” scheme, in which bulk amounts of ill-gotten U.S. cash are converted to Mexican currency, they said.
Four others charged in the investigation remained at large, federal prosecutors said in a statement announcing the busts, which were carried out by about 1,000 law-enforcement personnel.
Authorities carted off scores of boxes stuffed with U.S. currency in large-denomination bills. Together with funds confiscated from bank accounts in asset-forfeiture actions filed around the world, officials estimated that $65 million in illegal proceeds were seized as part of the investigation.
In one of three indictment unsealed in connection with the raids, a wholesaler named QT Fashion was accused of accepting and laundering $140,000 paid as ransom for an American drug dealer kidnapped and tortured by the Sinaloa drug cartel in Mexico.
The indictment says the payments to win release of the victim – who was beaten, shot, subjected to electrical shocks and waterboarded – were funneled through 17 other Fashion District businesses at the direction of a Mexico-based clothing company.
The Fashion District consists of more than 3,000 wholesale and retail apparel outlets, showrooms and manufacturers covering about 100 blocks of downtown Los Angeles, making the garment industry a key sector of the city’s economy.
But prosecutors say that in addition to drawing throngs of designers and bargain-hunting shoppers, the Fashion District has attracted criminal elements from the illegal drug trade.
“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,” said Assistant U.S. Attorney Robert Dugdale.
California Attorney General Kamala Harris called “transnational gangs” like the ones behind the alleged Fashion District money-laundering rings “the No. 1 threat to California’s public safety.”
The raids capped a two-year investigation that officials dubbed “Operation Fashion Police.”
