CENTENNIAL, Colo. (KDVR) — Authorities on Thursday announced a take-down of what they say is a major, sophisticated money laundering scheme.
A grand jury has just indicted 21 Chinese nationals in Colorado for illegally growing marijuana, selling it on the black market then hiding the proceeds overseas.
According to 18th Judicial District Attorney John Kellner, 16 people have been arrested so far, and arrest warrants have been issued for the other five.
This complex investigation started in August 2020. According to the indictment, a Mandarin-speaking undercover officer responded to a social media open forum post from someone looking to do a money exchange of tens of thousands of dollars.
“This was money laundering with a side of marijuana,” Kellner said. “The defendants grew and distributed marijuana throughout the Denver metro area, with grow houses and stash houses all across Colorado. They then contacted money brokers on social media apps to cleanse their drug money, avoid taxes and circumvent the Chinese limit foreign money movement. We believe they moved illegal black-market schemes to Oklahoma to continue making millions of untaxed dollars on the black market.”
Investigators seized $1 million in black-market proceeds, as well as hundreds of pounds of pot and 10,000 marijuana plants.
“It’s a black-market marijuana case, but most importantly, we’ve uncovered how these Chinese nationals are moving their money out of the state and enriching themselves and the cartels in Mexico through this very complex money-laundering scheme,” said Deanne Reuter, Drug Enforcement Administration Special Agent in Charge.
Law enforcement described this as a “micro cell” and suspect there are similar operations going on across the country.
“Chinese money-laundering organizations are not new, but they are gaining acceptance with cartels to launder their proceeds, which fuels drugs coming back into our country, which affects our families and our children,” said Steven Cagen, Homeland Security Investigations Special Agent in Charge.
They say this investigation started by following the money, and what they learned will help with other trafficking investigations in the future.
“This happens with every type of trafficking organization, whether it’s drug, human, slave labor, sex trafficking — all the things we abhor as a society. Understanding how the money is being moved and laundered to affect those schemes is going to make us more effective in bringing down these organizations,” Kellner said.
Law enforcement officials said they thought legalizing recreation marijuana made it easier for illegal grows and the black market to “hide in plain sight.”
When the Colorado legalization discussion began, “there were many people that said this was going to eradicate the black market. That is incredibly far from the truth. In many respects, it has grown that black market,” Kellner said.
As of now, 16 of the 21 defendants have been arrested. They are facing a variety of charges, including racketeering and conspiracy under Colorado’s Organized Crime Control Act, drug cultivation and distribution and money laundering.