DEA operation exposes growing links between Sinaloa cartel and Chinese organized crime

Two dozen Los Angeles-based associates of Mexico’s Sinaloa cartel were charged in a sophisticated scheme to launder more than $50 million in drug money through an underground banking system run by Chinese nationals in the United States, federal prosecutors said Tuesday.

The case, outlined in a 10-count superseding indictment, highlights the growing relationship between Mexican cartels and Chinese citizens in the U.S., and the complex system they have developed to finance drug operations and launder the proceeds, authorities said.

“This investigation shows that the Sinaloa cartel has entered into a new criminal partnership with Chinese nationals living in the U.S. who launder money for the cartels,” Drug Enforcement Administration Administrator Anne Milgram said at a news conference.

Packages containing cocaine said to be found in the possession of defendant Vidal Emilio Licon-Robles in 2022.U.S. District Court

The money laundering scheme was overseen by Edgar Joel Martinez-Reyes, 45, of East Los Angeles, who traveled to Mexico in January 2021 to meet with Sinaloa cartel members and strike a deal involving people with links to the underground Chinese banking system, prosecutors said.

“These two groups have discovered that they have mutual interests,” U.S. Attorney Martin Estrada said of the Mexican cartels and the Chinese money launderers.

The cartels are desperate to getmoney from drug sales back to Mexico as safely and cheaply as possible, he said. The Chinese money laundering organizations are in the business of helping wealthy Chinese people circumvent the restrictions on how much money they can move out of China per year, which stands at the equivalent of $50,000.

“Together these groups have created an organization in which millions and millions of dollars are moved in proceeds from the drug sales in the United States back down to Mexico,” Estrada said, “and wealthy Chinese nationals in this country are given access to virtually limitless supplies of cash.”

Defendant Daniel Gonzalez is alleged to have used his car as a dangerous weapon against a DEA agent.U.S. District Court

The four-year investigation, dubbed “Operation Front Runner,” spanned from October 2019 to October 2023. It began with federal drug agents tracking suspects, some of them Chinese, as they collected bags of cash from cartel associates in and around the Los Angeles area.

During one such law enforcement operation in May 2021, one of the defendants, Daniel Gonzalez, intentionally slammed his car into a vehicle driven by one of the DEA agents in a bid to obstruct the investigation and injure the officer, the indictment says.

Gonzalez had in his possession 46 individually-wrapped bundles of cash totaling $598,110, according to the indictment.

Defendants Edgar Joel Martinez-Reyes and Peiji Tong entering the United States from Mexico on Jan. 10, 2021.U.S. District Court

At least 22 of the defendants have been arrested or taken into custody, authorities said. One was detained in China in May. A second fugitive was arrested in Mexico last week.

Among those charged in the indictment is Sai “Tommy” Zhang, who was initially indicted in May 2023 on money laundering charges tied to drug trafficking.

Lawyers for Zhang did not immediately respond to a request for comment.

Martinez-Reyes’ attorneys also did not immediately respond to a request for comment.

Andrew Blankstein

Andrew Blankstein is an investigative reporter for NBC News. He covers the Western U.S., specializing in crime, courts and homeland security.

Rich Schapiro is a reporter for the NBC News Investigative Unit.