The owner of a Los Angeles Fashion District import-export business and his son pleaded guilty last week to federal charges for “Black Market Peso Exchange” schemes used by international cartels to launder drug money and send it out of the United States.
Xilin Chen (陳喜林), 55, of Temple City, California pleaded guilty in federal court to three felony counts — knowingly passing false documents through a customhouse of the United States, conspiracy to launder money, and unlawful procurement of citizenship.
Chen owned businesses known as Yili Underwear and Gayima Underwear.
He’ll forfeit hundreds of thousands of dollars in assets and lose his United States citizenship.
Chen received bulk cash at his business that he had good reason to believe was from drug trafficking.
When he applied for U.S. citizenship in 2012, Chen falsely declared he wasn’t involved in criminal activity, even though he was involved in customs fraud and money laundering.
Xilin Chen’s son — Chuang Feng Chen (aka “Tom” and 陳創鋒), 25, also of Temple City — also pleaded guilty to conspiracy to pass false documents through a customhouse of the United States.
The Chens are scheduled to be sentenced on August 24.
The Chens agreed to forfeit to the DOJ proceeds from the sales of the building that houses the underwear company, two homes in Temple City, and more than $435,000 seized during raids in September last year.
The Chens were among nine defendants arrested during the raids that involved more than a thousand federal agents. The agents targets 70 businesses across the Los Angeles Fashion District. They siezed about $65 million in cash allegedly linked to a money laundering operation for Mexican drug cartels.
The cartels were allegedly using businesses in the Fashion District to convert dollars into Mexican pesos.
The DOJ said last week that “operatives for a drug trafficking organization use money derived from the sale of narcotics to purchase goods, typically using large sums of cash. The goods are shipped to another country, where they are sold, and the funds are delivered to the drug trafficking organization.”
Xilin Chen said he accepted bulk cash as payment for clothing three times from an undercover agent posing as someone using the proceeds of narcotics trafficking to purchase merchandise.
As part of the plea agreement with the Chens, prosecutors asked for charges against Xilin Chen’s daughter Aixia to be dismissed.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.