ALEXANDRIA, Va. – Within the last week, three individuals pleaded guilty to their involvement in a conspiracy to launder at least $30 million of drug proceeds combined throughout the United States on behalf of foreign drug trafficking organizations (DTOs). These guilty pleas are the result of a nearly four-year investigation into the relationship between foreign drug trafficking organizations and Asian money laundering networks in the United States, China, Mexico, and elsewhere.
“These defendants were involved in a wide-ranging conspiracy to launder millions of dollars of drug proceeds throughout the United States to aid foreign drug trafficking organizations,” said Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia. “Through their tenacity and indefatigable investigative efforts, our law enforcement partners unraveled the complex money laundering scheme, which involved the use of casinos, front companies, foreign and domestic bank accounts, and bulk cash smuggling. This prosecution demonstrates our continued commitment to dismantle and bring to justice transnational criminal organizations that threaten the safety of our communities.”
“For years, these defendants participated in a sophisticated money laundering system to help drug cartels line their pockets with the ill-gotten gains of drug trafficking, while profiting considerably, themselves,” said Wendy Woolcock, Special Agent in Charge for the DEA Special Operations Division. “Money laundering is not a victimless crime – the actions of these individuals routed millions of dollars in drug proceeds back to the cartels, allowing these criminal organizations to further their activities, flooding our communities with dangerous drugs, causing devastating addictions and death. The apprehension and prosecution of these individuals is a significant success for the DEA, and we thank our countless partners for their work in this transnational effort to battle money laundering and other related crimes at the highest levels.”
“The dedicated men and women of the Drug Enforcement Administration will go to great lengths to ensure those who profit off of the poisoning of our communities are ultimately brought to justice,” said Special Agent in Charge Todd Scott, head of DEA’s Louisville Division. “I’m very proud of the work done by our folks, along with our law enforcement counterparts in this complex investigation.”
According to court records, the defendants participated in a years’ long conspiracy to use casinos, front companies, foreign and domestic bank accounts, and bulk cash smuggling to launder money on behalf of transnational drug trafficking organizations, whose main trafficking activities involved cocaine. The DTOs issued “contracts” to the defendants to collect money generated by drug trafficking activities in the United States, and members of the conspiracy engaged in financial transactions that were designed to conceal the illicit source of the original proceeds, in return for the payment of commissions.
To facilitate the scheme, the defendants used several methodologies, including transporting, or causing others to transport, drug proceeds across the United States and in the Eastern District of Virginia. The defendants also converted drug proceeds into Chinese and Mexican currency through a variety of methods, including “mirror transfers” in which financial transactions in the United States are used to trigger the release of equivalent funds into bank accounts in China, with those funds then being used to purchase Chinese goods that are subsequently sold by merchants in Latin American countries, including Mexico.
As part of a guilty plea entered on April 9, Jiayu Chen, 46, of Brooklyn, New York, admitted to his participation in the drug trafficking and money laundering network. Chen received drug proceeds from couriers in New York City and then delivered this cash to other individuals who conducted additional financial transactions with the money to hide its source. Chen kept detailed ledgers of the money he received totaling approximately $2.8 million. During this period, Chen was a mail carrier for the U.S. Postal Service (USPS), and he received drug proceeds from, and payed commissions to, couriers as compensation for their role in transporting drug proceeds. On at least one occasion, Chen accepted bulk drug proceeds while wearing his USPS uniform.
As part of a guilty plea entered today, Tao Liu, 46, of Hong Kong, admitted that he worked with his co-defendants to execute the money laundering scheme. At times, Liu accepted bulk drug cash on behalf of co-defendant Xizhi Li, which he later deposited into bank accounts that Xizhi Li provided. Additionally, Liu was the target of a months-long undercover investigation during which he attempted to bribe what he believed was a corrupt U.S. Department of State official to obtain U.S. passports for individuals, including Tao himself, who were not otherwise entitled to use or possess such documents. This purportedly corrupt official was actually an undercover DEA agent. Liu agreed to pay $150,000 per passport as part of this scheme.
As part of a guilty plea entered today, Jingyuan Li, 49, of San Gabriel, California, admitted that he used a California-based seafood import/export business, known as “Shuoyu USA Inc.” (Shuoyu), in connection with the above-described money laundering scheme. Specifically, Li used the proceeds of drug trafficking to purchase goods through Shuoyu, which he later had shipped to China and Hong Kong for sale. This enabled the conspiracy to pay back the DTOs who gave the conspiracy the contracts to launder their money. Additionally, Li organized and participated in the delivery of drug cash within the United States. In all, Li’s activities resulted in the laundering of at least $3.8 million of drug proceeds.
Jiayu Chen pleaded guilty to conspiracy to commit money laundering, and he faces a maximum penalty of 20 years in prison when he is sentenced on July 20, 2021. Tao Liu pleaded guilty to conspiracy to commit money laundering, which carries a maximum penalty of 20 years in prison, and bribery of a public official, which carries a maximum penalty of 15 years in prison, when he is sentenced on July 13, 2021. Jingyuan Li pleaded guilty to conspiracy to commit money laundering, and he faces a maximum penalty of 20 years in prison when he is sentenced on July 13, 2021. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
In addition to the three defendants referenced above, two other defendants, Xizhi Li, 45, and Eric Yong Woo, 43, previously were charged in the superseding indictment for their alleged involvement in the scheme. Li and Woo have pleaded not guilty and are presumed innocent unless and until they are proven guilty at trial, which currently is scheduled for August 23, 2021. In addition, Jianxing Chen, 40, was charged in the superseding indictment for his alleged involvement, and he remains a fugitive.
This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation, Operation Dark Castle and Taishan Triangle. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia; Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Wendy C. Woolcock, Special Agent in Charge for the Drug Enforcement Administration’s (DEA) Special Operations Division; J. Todd Scott, Special Agent in Charge for the DEA-Louisville; Raymond P. Donovan, Special Agent in Charge for the DEA-New York; Jessica Moore, Chief of the Criminal Investigations Division of the U.S. Department of State’s Diplomatic Security Service (DSS); and Raymond Villanueva, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Washington, D.C., made the announcement after U.S. District Judge Leonie M. Brinkema accepted the pleas.
Assistant U.S. Attorneys David A. Peters and Michael P. Ben’Ary and Trial Attorneys Kerry Blackburn, Mary Daly, and Stephen A. Sola of the Justice Department’s Money Laundering and Asset Recovery Section are prosecuting the case.
Significant assistance was provided by the Australian Criminal Intelligence Commission and the Australian Federal Police, the Mexican Federal Police, Australia Department of Home Affairs, the Guatemalan National Civil Police (PNC), and the New Zealand Police.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:19-cr-334.