The insidious Chinese presence in the drug trafficking arena has been growing for years. It now dominates the global money laundering business and chemical production—both critical services to cartel operations in Mexico, Colombia, and beyond.
Chinese criminal networks supply tons of drug-making chemicals and launder billions of dollars for cartels, yet most of the attention is focused on the territorial gun battles south of the border, or when a kingpin such as Joaquin “El Chapo” Guzman is arrested.
“Clearly the Chinese are way more dangerous, way more sophisticated, way more complex, and way more of a national security threat to America—it’s not even a comparison [with Mexican cartels],” Derek Maltz, former head of the Drug Enforcement Administration’s (DEA) special operations division, told The Epoch Times.
Agreements between cartel leaders and the heads of Chinese money laundering operations based in Mexico have cemented the relationships and provided fertile ground for rapid expansion, according to the DEA.
“China’s commercial and manufacturing industries have transformed China into a key international hub and criminal magnet for money laundering activities and illicit financial transactions,” a DEA spokesperson told The Epoch Times.
In June, a Chinese man pleaded guilty in connection with laundering more than $4 million in drug proceeds generated by large-scale cocaine trafficking in the United States, specifically Virginia.
The man, Xueyong Wu, worked with Latin American drug trafficking organizations to repatriate the money to Mexico through a “complex series of international financial transactions,” according to the Department of Justice (DOJ). Wu received a percentage of the money involved.
In March, another Chinese man was convicted of coordinating the collection of drug money in Chicago for Mexican cartels and transferring it to bank accounts in China, according to the DOJ. Xianbing Gan directed the money transfers while living in Guadalajara, Mexico, but was arrested at Los Angeles airport during a stopover from Hong Kong to Mexico.
Maltz said traditional money laundering organizations charged around 8 percent for laundering bulk cash, but Chinese networks overtook the industry by undercutting the competition and charging commissions as low as 1 percent, or even nothing.
“It’s a brilliant business idea,” Maltz said. “They set up very sophisticated, complex, trade-based money laundering schemes where hundreds of millions of dollars are picked up and used to buy consumer goods in China. And then the consumer goods are shipped into Central America, South America, all over the region in Latin America, to launder the proceeds for the drug traffickers in Mexico as well.”
Chinese nationals in the United States also operate a popular scheme, known as the Chinese Underground Banking System, which works not only to launder money for the cartels, but to help Chinese nationals living in the United States access massive amounts of cash, according to the DEA.
A prominent case involved three Chinese nationals who were indicted in 2019 but remain at large. They coordinated the collection of cash from cartel drug sales at around 300 pick-up locations in the United States, according to the DOJ. They then allegedly acted as brokers to supply cash to wealthy, U.S.-based Chinese who were restricted from transferring more than $50,000 per year from Chinese banks to overseas.
The Chinese buyer would transfer money from his or her Chinese bank account to the broker’s bank account in China. After the transfer, the U.S. cash from the drug sales would be directly released to the Chinese people in the United States. To complete the cycle, the brokers would export Chinese goods such as electronics and clothing to the cartel in Mexico, which would be sold for pesos.
Other laundering channels identified by the DEA include trade-based money-laundering (the over- or underpricing of goods, falsified bills of lading and customs declarations, and counterfeit import/export contracts); securities transactions (stocks, bonds, commodities, and precious metals); real estate transactions; casino-related transactions; and wire transfers via both formal and underground banking systems.
Numerous countries have been investigating Chinese money launderers residing in Colombia, Mexico, Canada, Australia, and the United States, the DEA spokesperson said. Furthermore, in the past seven years, Chinese banks in Italy, Spain, and the United States have been under investigation resulting in arrests and heavy fines for money laundering violations.
“China’s massive export industry has allowed hundreds of billions of dollars’ worth of drug proceeds to be easily laundered on behalf of Mexican and Colombian drug trafficking organizations,” the spokesperson said.
It’s hard to imagine that the Chinese communist regime is not somehow involved in both the money laundering operations and the drug-related chemical manufacturing, Maltz said.
“How can they not be aware of this activity? Now, whether they’re leading it, whether they’re organizing it, whether they’re directing it, that’s an unknown,” he said.
Drug cartels are primarily motivated by money and power, but the Chinese motivations go beyond that, Maltz said.
“I look at this as another avenue in China’s global attack against their adversaries,” he said. “What better way to hurt America than poison the kids and cause all these overdose deaths, at the same time making billions of dollars? I call it a form of chemical war on America, because you’re dealing with these potent lethal chemicals that are being produced in these labs in China.”
Maltz said the Chinese networks are difficult to penetrate as there’s a dearth of undercover agents and informants who look Chinese, speak Chinese, and understand the culture.
“And then when you add in encrypted communications, and you add in digital currency, it becomes very complicated,” he said.
The rise in digital currency use by criminal organizations coincides with a drop in bulk cash seizures in the United States. In 2011, agents seized more than $741 million in cash, whereas $234 million was seized in 2018, according to a recent DEA report.
Chemicals by the Ton
As smaller methamphetamine labs were being shut down in the United States in the late 1990s and early 2000s, the DEA started targeting the precursor chemicals that were being used to produce the drug.
“During that same timeframe, the geniuses in the Sinaloa cartel like ‘Chapo’ Guzman and others were aligning themselves with the Chinese organized crime groups, and they were importing multi-ton shipments of chemicals from China right into Mexico—specifically to produce methamphetamine,” Maltz said.
Super labs were set up in Mexico and the flow of meth across the U.S. border has continued to increase dramatically—along with the potency of the drug.
In 2007, a Chinese national was arrested and charged with drug offenses for his role in manufacturing methamphetamine in Mexico to be distributed in the United States. The man, Zhenli Ye Gon, was arrested in Maryland but lived in Mexico. When Mexican authorities searched his residence, they found at least $205 million in U.S. currency stacked in a room.
“That’s one guy sitting in Mexico,” Maltz said. “That gives you an understanding of the magnitude of what we’re talking about. That was just from chemical sales.”
In recent years, the amount of meth being trafficked has increased dramatically. So far this fiscal year, with three months to go, Customs and Border Protection has seized almost 104,000 pounds of meth being trafficked through ports of entry. In comparison, almost 20,000 pounds was seized in fiscal 2014.
The super labs rely on the importation of precursor chemicals from China, as well as India, according to a 2019 DEA report.
“Chemical shipments will be mislabeled in China, shipped to legitimate companies in Mexico or Central America, and then diverted by the [cartels] and smuggled overland to the clandestine laboratories,” the report states.
Last summer, Maltz said, Mexican authorities seized a meth lab in Mexico that was capable of producing seven tons of meth in three days.
“Chinese are also operating all over [in] Panama and areas of Central America, as well as working on large cocaine shipments to Asia and other parts of the world,” Maltz said. “People don’t realize that ethnic Chinese are down there in the trenches organizing large-scale cocaine shipments as well.”
China is perhaps best-known for its connection to the potent synthetic opioid fentanyl. Tons of fentanyl have been manufactured in Chinese labs and mailed directly into people’s homes in the United States through the postal system. More has been brought in via Mexico over the southern border.
Mexican cartels have also increased their production of fentanyl-related products, but still rely on China for the precursor chemicals.
Fentanyl was originally developed as a painkiller and anesthetic. It’s 50 to 100 times more potent than heroin, highly addictive, and deadly. It is often pressed into counterfeit prescription oxycodone pills, or mixed into heroin, cocaine, and even marijuana. Buyers may be unaware the drugs they buy contain illicit fentanyl, of which a 2 mg dose can be fatal.
It is also an extremely lucrative drug. One kilogram of fentanyl costs about $5,000 in China, according to Maltz. If the cartels take that kilogram into their labs and cut it with other drugs or press it into pills, they can make $2 million or more by then selling it on American streets.
Fentanyl seizures just in Arizona have more than tripled each year since 2016.
In August 2019, the Mexican navy intercepted a 25-ton shipload of fentanyl originating from China and bound for Culiacán, Sinaloa—the home base of the Sinaloa cartel in Mexico.
“The Chinese and the Mexican cartels have a very lethal relationship right now,” said Maltz. “Why isn’t anybody in America talking about the level of overdose deaths from this poison every day?”
In 2018, there was an average of 184 fatal overdoses per day in the United States, according to data from the Centers for Disease Control and Prevention (CDC). The total for the year was more than 67,000 drug overdose deaths, slightly down from the more than 70,000 in 2017, according to the CDC.
About 70 percent of all drug overdoses are opioid-related, including prescription pills, heroin, and fentanyl.
In August 2018, the DOJ unsealed a 43-count indictment in Cleveland, Ohio, that charged two Chinese citizens with operating a conspiracy that manufactured and shipped deadly fentanyl analogues and 250 other drugs to at least 25 countries and 37 states.
On July 17, the Treasury Department placed sanctions on four Chinese nationals and their organization under the Kingpin Act for their role as significant foreign narcotics traffickers.
The four used a company called Global United Biotechnology Inc. to facilitate drug purchases of fentanyl and other drugs for front man Zheng Fujing, according to the Treasury.
The organization laundered its drug proceeds in part by using digital currency such as bitcoin and transmitted proceeds into and out of bank accounts in China and Hong Kong. The kingpin designation means all property of the individuals and the organization that are in the United States must be blocked and reported.
A rare action by China in November 2019 saw nine fentanyl traffickers sentenced for their roles in manufacturing and distributing drugs. The arrests were made off of a tip by U.S. law enforcement.
However, China expert and retired U.S. Air Force Brig. Gen. Robert Spalding expressed skepticism over China’s move in a Twitter post on Nov. 8, 2019.
“If you know anything about Fentanyl and the CCP you will know that this is all designed for the media. It represents no actual change in policy. The CCP is happy to sacrifice a few Chinese for a trade agreement. Since we don’t understand this it will be hailed as a big deal,” Spalding wrote.
The Chinese regime also pledged that it would widen its control of fentanyl analogues to try to curb the illicit manufacturing and distribution.
Stronger Than Ever
The partnership between Chinese criminal networks and Mexican cartels is stronger than ever. Each has its portion of the business, with the Chinese supplying chemicals and laundering services, while the Mexican cartels take care of the rest.
“Barring significant, unanticipated changes to the illicit drug market, Mexican [cartels] will continue, in the near term, to dominate the wholesale importation and distribution of cocaine, heroin, marijuana, methamphetamine, and fentanyl in U.S. markets,” the 2019 DEA report states. “No other criminal organizations currently possess a logistical infrastructure to rival that of Mexican [cartels].”
Using the Chinese organizations to launder money also creates a safety barrier for the cartels, said Maltz.
“They recognize that putting the Chinese out front—who know very little about their organization and their structure—is going to be a lower risk on their organization if one of these Chinese guys gets arrested with the money,” he said.
“Remember chemicals and money are the critical components for the cartels. Without the chemicals, no drugs can be produced. Without the money, they are out of business. They are making billions of dollars and at the same time killing Americans at unprecedented levels.”
Planned Parenthood of Greater New York is removing the name of Margaret Sanger, the founder of the nation’s largest abortion provider, from its New York City clinic due to her “harmful connection to the eugenics movement,” the group said Tuesday.
The announcement comes after more than 350 current and former staffers at the Manhattan clinic, as well as 800 donors, supporters and volunteers, called Sanger “a racist, white woman.” An open letter on June 18 to Planned Parenthood of Greater New York, criticized the organization as “steeped in white supremacy,” the Washington Times reports.
For decades, pro-life activists pointed out Sanger’s racism, but in the wake of the Black Lives Matter movement, Planned Parenthood said it is addressing the problem.
“The removal of Margaret Sanger’s name from our building is both a necessary and overdue step to reckon with our legacy and acknowledge Planned Parenthood’s contributions to historical reproductive harm within communities of color,” Karen Seltzer, the chair of the New York affiliate’s board, said in a statement.
Margaret Sanger, shown in a 1959 photo, founder of the birth control movement in the United States, died in a nursing home Sept. 6, 1966, the Planned Parenthood Federation of America announced. She was 83 years old.
The New York clinic is now asking city leaders to remove Sanger’s name from local streets as well, the New York Times reports. It will now be called the Manhattan Health Center.
Planned Parenthood Federation of America, the national organization, said it supported the New York chapter’s decision.
“Planned Parenthood, like many other organizations that have existed for a century or more, is reckoning with our history, and working to address historical inequities to better serve patients and our mission,” Melanie Roussell Newman, a spokeswoman for the group, said in the statement.
The New York clinic’s president and CEO, Laura McQuade stepped down June 23 after the open letter accused her of abusive behavior and unfair treatment of Black staff members.
The national organization has defended Sanger in the past, claiming she was well-intentioned in her outreach to Black communities.
The Manhattan Planned Parenthood clinic changed its name and disavowed founder Margaret Sanger for her racist eugenics. (Google Maps)
Sanger launched the Negro Project, in 1939, which was aimed at “helping Negroes to control their birthrate,” while advocating for a federal “population bureau” to police reproduction. She worked with Black leaders like W.E.B DuBois and Mary McLeod Bethune, but also addressed the women’s auxiliary of the Ku Klux Klan in 1926. Planned Parenthood stated it strongly disagrees with Sanger’s decision to speak to an organization that spreads hatred. The national Planned Parenthood group also criticized Sanger’s support for policies to sterilize people with disabilities that could not be treated, and for “placing so-called illiterates, paupers, unemployables, criminals, prostitutes and dope fiends on farms and in open spaces as long as necessary for the strengthening and development of moral conduct,” the group said in a 2016 fact sheet.
Rev. Dean Nelson, the executive director of Human Coalition Action and an African American minister, told Fox News in a statement that the decision is “long overdue” and said more action is needed.
“You cannot acknowledge the racist person and history without admitting to the racist vision that has resulted in nearly 80 percent of Planned Parenthood’s surgical abortion facilities being located within walking distance of Black neighborhoods,” Nelson said.
“This is the fulfillment of Margaret Sanger’s vision. It is unconscionable that the taxes of Americans go to an organization with racist founding and mission. There’s no redeeming Planned Parenthood’s tainted origins and current-day racist practices, and I call on Congress to follow Planned Parenthood of Greater New York’s lead and fully defund Planned Parenthood.”
The decision also comes as the anti-abortion Students for Life of America organization is launching an “S.O.S. Strike Out Sanger” campaign Tuesday calling for the removal of Sanger’s statues and symbols wherever they are.
“Margaret Sanger’s racist legacy continues to be at work in America, as seen in Planned Parenthood’s business model,” Students for Life of America’s President Kristan Hawkins said in a statement to Fox News. “But whether in the Smithsonian, Manhattan, or the Old South Meeting House on the Freedom Trail, Margaret Sanger’s tributes need to be taken down and stored away because her desire to ensure that black babies would not be born doesn’t deserve honor.”
SBA List President Marjorie Dannenfelser took it a step further, calling on Planned Parenthood to “immediately publish its historical abortion data by race given indications they have skewed the placement of abortion facilities and actively target minority communities,” and “drop its fierce opposition to anti-discrimination laws that protect unborn children from being selected for abortion due to their race, sex, or disability.”
Dannenfelser added, “We further call on Speaker Nancy Pelosi and Hillary Clinton to disavow and return their Planned Parenthood Margaret Sanger awards immediately.”
The closure of schools amid the COVID-19 pandemic has forced millions of children to spend months at home, prompting online child predators to ramp up their sexual enticement of minors and the posting of child sexual abuse material, according to the latest data from the National Center for Missing and Exploited Children (NCMEC).
The number of reports of online child sexual abuse materials reported to the NCMEC during the first six months of this year surged 90 percent to more than 12 million, the center reported. Reports of predators enticing minors went up 93 percent to more than 13,200.
“In the first quarter of 2020, NCMEC became aware of predators openly discussing the pandemic as an opportunity to entice unsupervised children into producing sexually explicit material,” John Shehan, vice president of NCMEC’s Exploited Children Division, said in a statement.
According to the center, buyers of commercial sex with children have recently become reluctant to meet in person to engage in the illegal act. It’s unclear if the reluctance is related to the pandemic. Child traffickers have adjusted to this shift in demand to produce subscription-based services that allow buyers to access images and videos of a specific child.
The school closures associated with the Chinese Communist Party (CCP) virus, commonly known as the coronavirus, don’t appear to have had an impact on the number of reports of missing children, according to NCMEC. The center nonetheless said it is aware of 273 missing child cases in which the pandemic played a significant role. Some of the children ran away from home due to frustration with the stay-at-home restrictions. Others have run away from group homes for fear of catching the virus.
The COVID-19-related spike in predator activity online followed a year of explosive growth in the number of child sexual abuse materials found online. The Canada-based ARACHNID project, which uses artificial intelligence to identify images of abuse, sent 3.5 million notices to providers hosting the material over the course of a year starting on March 1, 2019, more than double the amount sent in the prior two years. ARACHNID sent more than 600,000 notices between March and July this year.
Child predators are increasingly exploiting the fact that children have access to smartphones. They pose as peers in online games and lure children into producing sexually explicit material. The predators then use the material they collected to extort the children into producing more abuse material by threatening to post the images online.
“There is not only a surge, there is especially a surge in the exploitation of special-needs kids, autistic mostly, who are not receiving the same level of engagement from outsiders and simply don’t understand the danger of their behavior online,” Opal Singleton, the president and CEO of Million Kids, a nonprofit that works to end human trafficking domestically, told The Epoch Times in an email.
The predators frequently use encrypted messaging and browsing software, which severely affects law enforcement’s ability to track and prosecute them. A bill recently introduced by Sens. Lindsey Graham (R-S.C.), Tom Cotton (R-Ark.), and Marsha Blackburn (R-Tenn.) would require service providers to assist the Justice Department with accessing encrypted information after a court issues a warrant. Attorney General William Barr strongly backs the bill’s passage.
“While strong encryption provides enormous benefits to society and is undoubtedly necessary for the security and privacy of Americans, end-to-end encryption technology is being abused by child predators, terrorists, drug traffickers, and even hackers to perpetrate their crimes and avoid detection,” Barr said in a statement on June 23.
“Indeed, the danger is particularly great for children who are targeted online for sexual exploitation, especially during this time of coronavirus lockdowns. Survivors of child sexual abuse and their families have pleaded with technology companies to do more to prevent predators from exploiting their platforms to harm children.”