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From nondescript buildings in the industrial nucleus of Wuhan, across wavy seas to dusty tented super laboratories in the heart of Mexico, and then across the jagged southwest border and dispersing like a wild bomb ripping through every crevice of the United States, the growing presence of Chinese drug lords and cartels below the southern border is one that is killing an unprecedented amount of Americans.
According to multiple Mexico-based security and intelligence professionals, the bulk of the deadly work is carried out by the “Los Zheng” wing, identified as having “the largest presence in Mexico for the trafficking of fentanyl and methamphetamine.”
As per intelligence findings by security firm Fortress Risk Management, obtained exclusively by Fox News, the Zhengs operate through seemingly legitimate shell companies that offer veterinary services, clothing sales, clinical laboratories and maintenance of computer systems in Mexico. They use the ports of Lázaro Cárdenas, Michoacán, Manzanillo Colima in Mexico and Ensenada Baja, Calif., for the commercialization of their products in the country.
“They have the collaboration of customs authorities and members of the Sinaloa and Jalisco Nueva Generación cartels in Mexico,” explained Lee Oughton, Fortress co-founder and COO. “Once in the country, the drug is transported by air and land to the United States through the states of Jalisco, Nayarit, Sinaloa, and Sonora.”
This past June in Ohio, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated four Chinese individuals and one entity pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act) for “facilitating payments for the purchase of fentanyl analogs or other controlled substances, including synthetic cannabinoids or cathinones, for the Zheng Drug Trafficking Organization (DTO) – known for its endeavors in Colombia and Mexico – and directed by alleged Chinese synthetic opioid trafficker, Fujing Zheng.
Fujing Zheng, 37, who operated under the alias Gordon Jin and his father Guanghua Zheng, 64 – both of whom live in Shanghai – were indicted by the U.S. in 2018 “with conspiracy to manufacture and distribute controlled substances, conspiracy to import controlled substances into the United States, operating a continued criminal enterprise, money laundering, and other crimes.”
Despite the recent arrests, the Zheng operation is said to only be proliferating on both sides of the snaking border.
Ed Calderon, a former Mexican law enforcement officer and narcotics subject matter expert, concurred that the Zheng-connected enterprises are ongoing – and that there are primary, secondary and backup facilitators to account for any arrests of personnel.
And it is not just the Chinese drug lords and Mexican cartels that stand to boost their bottom lines.
“You can’t bring anything into the country without paying off someone,” Calderon asserted. “There are a lot of ‘fixers’ and guards assigned to these entry ports making a killing from China too.”
Experts emphasize that it is a well-oiled machine in which each player has a distinct role and piece of the pie. Chinese-led money laundering procedures inside Mexico are said to be igniting faster growth and movement of the drug, which was initially developed for use as both an anesthetic and painkiller up to 100 times more potent than heroin.
Yet in cases such as Los Zheng, legitimate pharmaceutical and biotechnology companies are used as “fronts” or as a blurring between the legal and illegal missions.
And while Mexican cartels have, in recent times, upped the ante on their own production of fentanyl-related products, most still depend on Chinese counterparts for precursor chemicals and remain its biggest black market customers.
So with raw yet easy-to-cook and convert fentanyl costing around $2,000 per pound in China, its relative cheapness makes it highly profitable for cartels who then disperse the product on U.S. streets.
“For the past 12 years, Chinese criminal organizations have become the backbone to the drug cartels with chemicals supplied to the cartels and laundering tens of billions of the cartel profits in North America and Europe,” said Richard Higgins, author of “The Memo: Twenty Years Inside the Deep State Fighting for America First,” president of HTG, LLC, a strategic security and information warfare consulting who previously served on the National Security Council as the director for strategic planning. “Chinese-organized criminals south and north of the border are very sophisticated using WeChat and other forms of encrypted communication.”
The DEA continues to pinpoint the Sinaloa and the New Generation Jalisco (Cártel de Jalisco Nueva Generación or CJNG) cartels as the primary culprits responsible for plundering fentanyl to the States from Mexico via “corridors in Mexico that connect to California and Arizona, indicating drugs passing through these associated areas would need to be approved by these organizations.”
Moreover, Chinese nationals implicated in illicit webs are documented to cross through the southern border of Mexico at Frontera Corozal, in the state of Chiapas, into Tapachula, where there is a sizable ethnic Chinese community, and then journey by train to the Atlantic coast through territory controlled by Los Zetas. Others enter directly from Asia, passing through ports on the Mexican Pacific coast, including Puerto Vallarta in Jalisco, Manzanillo in Colima, and Coyacan in Mazatlan or arrive by air directly to Mexico City “where the activity of Chinese trafficking networks has been publicly reported by the Attorney General’s Office.”
But over the past two years, especially, there has been a steady drip of related seizures as a result of U.S. and Mexican authorities working on joint missions.
For one, the Mexican navy seized more than 25 tons of Chinese fentanyl en route to Culiacán, Sinaloa—the Sinaloa cartel’s Mexico flagship – in August last year, and the Administration claims to have intercepted more than 1 million fentanyl pills in Phoenix and Arizona in 2019 alone.
Aside from Zheng’s apprehension five months ago, numerous other arrests inside the U.S. have also been made in recent years pertaining to Chinese involvement in the drug trafficking trade.
Last month, six Chinese nationals were slapped with various charges connected to a conspiracy that allegedly made more than $30 million over the past 12 years distributing drug money to Latin America from U.S. soil, and according to the Department of Justice (DOJ), entailed a complex operation of offering bribes to undercover informants, cryptocurrency exchanges, as well as purporting to create fraudulent identities and fake U.S. passports in the long-running scheme.
In June, Chinese national Xueyong Wu pleaded guilty for his role in laundering over $4 million in drug profits in conjunction with organizations in Latin America and Mexico, through to Virginia.
In March, Chinese national Xianbing Gan was convicted in Chicago of laundering narcotics money – totaling more than half a million dollars – from his homeland bank accounts and remitted to trafficking operatives in Mexico.
In 2007, Zhenli Ye Gon, a Chinese-Mexican businessman, was one of the first to fall under the iron fist “under suspicion of trafficking precursor chemicals into Mexico from Asia.” While licensed by the Mexican government to import substances to feed his legal official Mexican pharmaceutical corporations, he was arrested by federal authorities in Maryland and charged with illicit dealings to siphon methamphetamine into the U.S., and hundreds of millions in cash was seized from his southern home. Gon has since maintained his innocence and was extradited to Mexico in 2016.
But since then, observers stress, such criminal activity between the two major bodies has only grown in depth and sophistication in the name of big cash rewards.
Calderon highlighted that smuggling and packaging techniques have also advanced in recent times, with cartels investing heavily in “pressing pill” technologies and moving from fentanyl-laced marijuana or heroin to regular pharmaceutical bottles and labels. These can be easily transported over-the-border and sold unbeknown to someone on the U.S. side seeking an oxycodone hookup.
Indeed, this has made the synthetic drug especially deadly – just a hint sprinkled into a counterfeit pill can be fatal, not to mention highly addictive.
The sudden onslaught of the coronavirus earlier this year provided an initial blow to the illegal drug industry, incapacitating the supply chain and flow of critical chemicals from the contagion’s Wuhan epicenter to cartel counterparts in Mexico; intelligence gathers say it did not take long to adapt and tweak the business model and alter production mechanisms.
And with the unparalleled economic strain of the ongoing health pandemic, experts note that demand for drugs has only soared and worsened the opioid overdose crisis that President Trump deemed a “public health emergency” just over 3 years ago.
During the first three months of 2020, according to preliminary estimates released by the Centers for Disease Control and Prevention (CDC), drug overdoses deaths rose 10% compared to the same time period last year.
Furthermore, last year, as per data from the Centers for Disease Control (CDC), more than 72,000 Americans died of drug overdoses, of which “illicitly manufactured fentanyl, heroin, cocaine, or methamphetamine (alone or in combination) were involved in nearly 85% of drug overdose deaths in 24 states and the District of Columbia during January–June 2019.”
Total figures for 2020 are expected to well surpass the 72,000 figure. Each year, such causes of death have been increasing to almost double the 38,300 figure of 2010.
Officially, U.S. authorities have maintained that the Chinese Communist Party (CCP) is not complicit nor absolved in the illegal industry emanating from its terrain – yet some are skeptical that there isn’t an inch of trade that the leadership doesn’t have some form of engagement or watchful eye over.
“As part of the CCP’s unrestricted warfare model, they have progressed significantly against America with their enhanced role in the drug business. They can make multibillions and, at the same time, undermine the security of America,” claimed Derek Maltz, a retired special agent in charge at the DEA. “A kilogram of fentanyl can kill 500,000 people, so the administration should look at the death rates and treat this as a serious national security threat as opposed to only a public health crisis.”
U.S. anti-narcotics authorities warn that the deadly drug deluge into America will only continue to modernize and multiply in the forthcoming months amid the protracted pandemic and rising demand, posturing as one of the biggest national security threats for the incoming administration to grapple with.
“Drugs are now the primary source of funding for most terrorist organizations throughout the world,” Higgins added. “Go after the drug profits. Follow the money, not just drugs. Less money in cartel pockets means fewer chemicals and drugs, less violence and weapons, and less ability to corrupt the rule of law.”
Agency experts tell VICE World News that China and Mexico are not doing enough to help stem the global trade in the chemicals used to make fentanyl and meth.
China is ignoring a chemical industry that is fuelling the deadly U.S. drug crisis because it brings huge profits into the country, senior DEA officials have told VICE World News.
Almost all the precursor chemicals used by Mexican cartels to make fentanyl and methamphetamine for the U.S. market are coming out of China, said the DEA’s Deputy Chief of Operations, Matthew Donahue.
Donahue recognized that China, home to one of the world’s largest and poorly regulated chemical industries, has taken successful steps to stamp out the production and shipping of fentanyl, the drug fueling the drug death epidemic in the U.S.
But some of China’s estimated 400,000 chemical companies are dodging the clampdown by making and shipping huge amounts of the chemicals used to make fentanyl and methamphetamine to criminal gangs before they end up in clandestine Mexican drug labs, he said.
What appears to be irking the DEA is that Beijing is being slow to stem the leakage of precursor chemicals from its chemical companies into the hands of criminal gangs due to the fact that “billions” of dollars from their sale, according to Donahue, is laundered back into the Chinese economy.
“China needs to do more about its precursor drug producing ability because you are looking at a country which is providing precursor chemicals for the global drug market,” he told VICE World News.
“In Mexico the precursors from China are going directly to the cartels. China is aware that money [linked to the sale of precursor chemicals to criminal gangs] is entering back into their economy and this is facilitated by Chinese money laundering organisations through their use of China’s underground banking system. That is one of the reasons why they [Chinese chemical traffickers] don’t need to do more than just make precursor chemicals for drug producing countries. China is getting money from producing an enormous amount of precursor chemicals that are being used to produce drugs.”
Donahue said that apart from becoming a global factory for the production of the chemicals used to make most of the world’s increasingly deadly synthetic drugs, “Chinese money laundering organisations are now the primary money laundering networks for all drug cartels operating globally.”
According to Donahue, China’s drug money cleaning networks have successfully undermined other money laundering outfits by charging zero fees to launder drug proceeds, using a variety of complex money laundering schemes. They have rapidly expanded their networks by successfully integrating with the Mexican cartels and other transnational crime groups.
“Our attack point into China really is through Mexico. We are focusing on attacking the entire infrastructures of drug cartels, to include vast networks established between [drug cartels] and Chinese precursor chemical brokers and money launderers.” He said the DEA is using international trade laws as well as drug trafficking laws to go after precursor producing companies in China.
In September the DEA asked the Chinese government to introduce strict controls over the production and export of four legal precursor chemicals used in the production of fentanyl and methamphetamine: 4-AP, t-boc-4-AP, norfentanyl and methylamine. But the DEA is still awaiting action.
During the COVID-19 pandemic, the DEA has been using online video calls with chemical companies to brief them about how to avoid selling to cartels. “You have to know who you are selling these chemicals to and even if there is a legitimate use for these chemicals you shouldn’t be allowed to over produce them by ten-fold because you know they are going to the black market,” said Donahue.
Beijing has consistently argued that the U.S.’ drug problem is not caused by China, but should instead be blamed on America’s liberal drug culture and on insufficient law enforcement. Unlike methamphetamine which is a problem in China, fentanyl has not found its way into the country’s drug food chain, so a clampdown on the drug and its precursor chemicals is not a domestic priority.
With drug overdose deaths in the U.S. rising to record levels last year, largely due to the impact of fentanyl replacing less potent opioids such as heroin in the street drug trade, Donahue warned about the growing global trade in dangerous synthetic, non plant-based, drugs. He said synthetic drugs such as fentanyl can be more lethal and harder to detect by law enforcement than plant based drugs.
“We need countries to cooperate with us in order to [criminally] charge entire cartels, from the corrupt individuals who are supporting the cartels down to the people selling it in the streets. These organizations have no borders. They are unlimited when it comes to resources and money, so for us, specifically with China and Mexico, it’s about how we get them in line to work with us in a bilateral fashion,” said Donahue.
Another senior DEA official spoken to by VICE World News, who did not want to be named, was more direct in his assessment of China’s motives for failing to more firmly regulate its psychoactive drug precursor industry.
“This is one of the reasons why the Chinese are so protective of being co-operative. China is not going to want to lose the billions of dollars that comes in from the drug trade. It’s a trade-off for them, where they can have all that money coming into their country and their economy as opposed to going after corrupt activity they know is taking place. China is in the whole cycle of being beneficiaries of the drug trafficking trade.”
The anonymous senior official also laid into Mexico’s track record in helping nail the precursor traffickers.
“Right now, in Mexico, it’s a perfect place to be in the world for a bad guy, if you are a drug trafficker, a Sicario or a Chinese national trafficking in precursor chemicals to produce drugs in Mexico. You are looking at state, federal and local level corruption. It makes it much more complicated when you have a border with a narcostate. There are no repercussions for producing drugs that are killing hundreds of thousands of people around the world.”
They said the DEA has seen a rise in the number of Chinese criminals setting up bases in Mexico, particularly in the cartel heartlands of Sinaloa. “The Chinese know if they are going to go to Mexico they are not going to get caught, which is why we see a huge population of Chinese in Culiacan, and other places in Mexico working directly with the cartels to bring precursors in from China.”
Despite Trump’s China-baiting, Donahue foresees no change in approach to the Chinese precursor problem under a Biden presidency. “A change of administration here in the US is not going to change how we work. We are in this for the long run.”
Mexico’s Role in the Deadly Rise of Fentanyl
In October 2017, President Donald Trump declared the opioid epidemic a national
public health emergency, citing record deaths from opioids and expressing a belief that
his administration could end “the opioid epidemic”. As part of his strategy, the
President claimed that “90% of the heroin in America comes from south of the border”
and called for the construction of a border wall to stem the flow.
While it is true that a large percentage of the heroin sold in the United States comes
from Mexico, the message mussed the larger point. By far, the fastest growing class of
opioid-caused deaths in 2017 was fentanyl and similar drugs. According to the Centers
for Disease Control and Prevention, 70,273 people died from drug overdoses. Of these,
28,466 involved fentanyl or a similar synthetic drug. Horrifically, this was a 45%
increase over 2016.
While we can debate the potential effectiveness of a border wall in stopping overall
drug flows into the United States, the trouble with fentanyl is that, due to its highly
concentrated nature, it can be transported easily, in small quantities, and can have a
devastating impact on public health. As this publication by the Mexico Institute and
InSight Crime emphasizes, Mexican anti-narcotics policy has been slow to recognize the
horrific potential of Fentanyl and bilateral cooperation on the drug has not kept up with
the explosive development of the market.
It is vital that Mexican public policy-makers and their US counterparts engage in
conversations focusing on counter-fentanyl planning and strategy in order to develop
effective means of addressing the problem of the drug in Mexico and in the United
States. As a recent Wilson Center Mexico Institute publication by Eric Olson has argued,
a common solution to a shared problem must be found:
“The principles of shared responsibility and bilateral collaboration are
fundamentally important to successful security cooperation. Illicit economies,
whether smuggling drugs, humans, or other products, do not respect borders, so
it is essential for both countries to work together to address these complex
problems. The United States and Mexico should reaffirm their commitment to
the framework of shared responsibility for addressing the security challenges
that threaten both countries.”
Since surging into the market in 2013, fentanyl has become the most lethal category of
opioid in the United States. The Centers for Disease Control and Prevention (CDC)
estimated that more than 47,000 people died from an opioid overdose in 2017 in the
United States—28,000 of those deaths were due to synthetic opioids, which the CDC
says is largely the result of the uptick in abuse of fentanyl.
This investigation sought to better situate Mexico’s role in the fentanyl trade. Chinese
companies produce the vast majority of fentanyl, fentanyl analogues, and fentanyl
precursors, but Mexico is becoming a major transit and production point for the drug
and its analogues as well, and Mexican traffickers appear to be playing a role in its
distribution in the United States.
To investigate Mexico’s role, we found we had to look at the entire distribution chain.
InSight Crime employed two researchers in Mexico, two in the United States, and two
in Colombia who combed all the databases, scoured through judicial documents, filed
freedom of information requests, and executed dozens of interviews in Mexico and the
United States with law enforcement, prosecutors, health specialists, and others. The
result is a nuanced picture but one with troubling implications for the future of drug
trafficking and drug consumption.
While seemingly dominated by two large criminal groups in Mexico, the fentanyl trade
requires vast networks of smaller subcontractors who specialize in importing,
producing, and transporting synthetic drugs. Both large and small organizations appear
to be taking advantage of the surge in popularity of the drug, which is increasingly laced
into other substances such as cocaine, methamphetamine, and marijuana—very often
without the end-user knowing it. To be sure, rising seizures of counterfeit oxycodone
pills laced with fentanyl illustrate that the market is maturing in other ways as well.
Fentanyl’s potency also opens the door to entrepreneurs who bypass Mexico
altogether, obtaining their supplies directly from China and selling them on the dark
web. There is little public understanding of the prevalence of this part of the trade and
even less of its medium- and long-term implications. The low barrier of entry into this
market and its high returns make for a frightening future in which synthetic drugs of all
types could proliferate.
+Fentanyl lends itself to drug trafficking in many respects and therefore may
represent how the drug trade might move in the future to more portable and
intoxicating synthetic substances.
+ Fentanyl is potent. Small amounts means less risk in the production and
transport process but still significant profits.
+ Production of fentanyl is also relatively simple and cheap, opening the door for
smaller groups to enter the trade using small spaces and moving small
quantities over the dark web.
+ China produces nearly all of the fentanyl, fentanyl analogues, and fentanyl
precursors in the world, although India—with its large chemical
infrastructure—appears poised to make an entry into the market, and Mexican
traffickers are starting to produce it as well using precursors obtained mostly
+Mexico is a growing transit and production point for fentanyl, with most of the
product entering via the ports of Manzanillo and Lázaro Cárdenas.
+ Mexico’s two largest criminal organizations—the Sinaloa Cartel and the Jalisco
Cartel New Generation (Cartel de Jalisco Nueva Generación – CJNG)—are the
most important Mexican purveyors of the drug and its precursors, although
smaller criminal organizations and contractors may play significant roles in
production and transport of the drug along the distribution chain.
+ It is not clear how much Mexico-sourced fentanyl is being consumed in the
United States. There are conflicting accounts of how much is arriving directly
from China versus how much is coming via Mexico.
+US authorities say Dominican traffickers are the main suppliers to end consumers in
the Northeast of the US, although Mexican trafficking networks do
play a significant role.
+Heroin and fentanyl are often trafficked together, but fentanyl and
methamphetamine may have more in common in the production phase and are
increasingly seen at the end-user stage.
+Legacy criminal organizations with experience importing chemicals for
methamphetamine production from Asia seem to be the best-positioned to take
advantage of this surge in fentanyl use.
+Mexico’s government does not see fentanyl as an important issue yet and has
not devoted significant resources towards finding the principal drivers of the
trade inside its borders.
Part I – Origins of the Epidemic
Fentanyl is a highly potent synthetic opioid meant to curb pain. Abuse in the United
States began in earnest in 2014, after a long period of over prescription of pain
medications that led users from the pharmacies to the streets. Although there is some
indication that India is entering the fentanyl market, production is almost solely the
domain of China, where regulation is lax, and small and large criminal organizations
have long-established ties to international networks or are connecting to customer
bases via the internet and direct mail services. China also exports precursor chemicals
to Mexico for the illicit production of the drug, a topic we will cover in Part II.
Fentanyl – The US Epidemic
The earliest reports of US fentanyl overdoses trace back to the 1970s during the first
heroin epidemic. Given their potency, fentanyl and its analogues occupied a small
percentage of the total illicit drug supply in the United States over the next few
decades—save for two brief spates of overdose deaths in 1991 and 2006. But, starting
in the late 1990s with the overprescribing of addictive prescription pain medications,
opioid addiction took root in the United States. Given that addiction is a progressive
disease and due to the lack of sufficient treatment options in the United States, people
who developed opioid use disorders because of prescription pain medication misuse
began switching to administering heroin towards the start of this decade.
Most public health leaders and advocates interviewed for this study believed that the
next logical step for people with heroin use disorders was fentanyl misuse, with some
maintaining that stronger synthetic opioids and fentanyl analogues represent a logical
next step after fentanyl. Still, there is considerable debate concerning whether users are
aware they are taking fentanyl. Given the similar effects the drug provokes in users, it
is difficult to differentiate.
What’s more, as we will describe, production is increasingly coming in pill form, usually
counterfeit oxycodone or other prescription opioids, giving rise to the idea that many
end users think they are consuming prescription pain medications when they first
consume fentanyl. Research also suggests that some users may have moved straight
from prescription painkillers to fentanyl, skipping the heroin step altogether, although
data is preliminary and anecdotal at this stage.
Data from the Drug Enforcement Administration National Forensic Laboratory
Information System (NFLIS) indicates a drastic increase in reports of fentanyl and
fentanyl-family exhibits—samples from law enforcement drug seizures sent for testing
at forensic labs—during this decade. From less than 700 in 2012, fentanyl exhibit
reports exploded to more than 32,000 in 2016. Along with overdose death figures,
emergency department data and interviews, exhibit reports point to 2014 as the year
of the outbreak of what has become an epidemic: the latest NFLIS report chronicled
56,530 fentanyl and fentanyl-analogues exhibits during 2017, nearly doubling 2016’s
Furthermore, the latest available NFLIS data also indicates that fentanyl’s market share
is growing within the illicit opioid consumption market. While fentanyl came in second
behind oxycodone as the most submitted narcotic analgesic in 2016, data for 2017
shows that fentanyl exhibit reports outnumber those for prescription pain medications,
even without counting fentanyl analogues.
This surge in fentanyl exhibits closely tracks with fentanyl-related overdoses, which
appear to have spiked since 2014, when the 4,200 fentanyl-related deaths represented
less than 9 percent of lethal overdoses that year. The CDC has not published standalone figures for fentanyl-related deaths in more recent years. But the center’s data
shows that overdose deaths related to synthetic opioids other than methadone—a
category dominated by deaths due to illicitly manufactured fentanyl— have risen
significantly both as a proportion of total overdose deaths and in gross quantity. The
CDC estimates that this fentanyl-dominated category may be responsible for over
30,000 deaths through the 12-month period ending May 2018, highlighting a fentanyl
overdose epidemic within a global US drug overdose epidemic that is predicted to have
claimed more than 71,000 lives in the same time period.
Fentanyl and Precursor Production in China
According to US officials, China is the principal source country of illicit fentanyl, fentanyl
analogues, and fentanyl precursors found in the United States. Some US officials claim
that China produces more than 90 percent of the world’s fentanyl. The US-China
Economic and Security Review Commission has also said that Chinese companies are
responsible for exporting various fentanyl-related products including “raw fentanyl,
fentanyl precursors, fentanyl analogues, fentanyl-laced counterfeit pills like oxycodone,
and pill presses and other machinery necessary for fentanyl production.”
China’s role in supplying the majority of synthetic opioids to the American market is
directly linked to its vast, poorly regulated pharmaceutical and chemical industries.
Over the years, China has risen to become the second biggest pharmaceutical industry
in the world behind the United States, bringing in an annual revenue of $122 billion.
At the same time, China has become the world’s number one exporter of active
pharmaceutical ingredients (API’s) and inert substances.
The current fentanyl overdose epidemic is almost entirely attributed to illicitly
manufactured fentanyl, and not to the diversion of legal, pharmaceutical fentanyl from
China or from the United States, according to the CDC and DEA.
Instead, US officials
believe that pharmaceutical or chemical companies produce fentanyl as a third-shift
operation at Chinese pharmaceutical factories in southern China. Officials also believe
that Chinese transnational criminal organizations, along with other smaller criminal
actors use diverted chemicals to manufacture fentanyl in rural clandestine labs.
An estimated 160,000 chemical companies are currently operating either legally or
illegally in China, according to the US Department of State. Like with the
pharmaceutical industry, China’s chemical industry suffers from poor regulation, thus
allowing fentanyl precursor chemicals such as ANPP and NPP to be diverted into
clandestine labs by criminal groups. A lack of oversight paired with administrative
inefficiencies has also allowed illegal chemical factories to spring up and manufacture
significant quantities of precursors.
From China, pure powdered fentanyl, fentanyl pills, and fentanyl precursors are either
sent to Mexico or mailed directly to the United States, often with pill presses and
binding agents. When sending fentanyl in any form or pill presses, Chinese groups
will often mislabel the product in order to avoid detection.
Illicit Networks in China
The movement of fentanyl from clandestine labs and precursor chemicals to Chinese
ports is a dynamic that was not the purview of this report and one that requires further
investigation. According to the DEA, it is difficult to track the origin of precursor
chemicals or clandestinely-produced fentanyl because of the intricate network of
freight forwarding companies commonly employed by criminal groups to conceal the
origin of the product—a strategy often used by criminal groups moving drugs and
contraband around the world in shipping containers in order to hide their trail.
Criminal groups will also purposefully mislabel fentanyl and fentanyl-analogues,
precursor chemicals and pill presses when shipping in order to evade inspection—the
DEA in Mexico claims that all fentanyl entering Mexican ports in shipping containers is
mislabeled. In May 2015, for example, 46 kilograms of fentanyl and kilograms of
acetyl fentanyl destined for Mexico were seized by Chinese customs officials. Chinese
officials later learned that the illicit cargo had gone through five different freight
forwarding companies before arriving at customs.
China has attempted to control the development of countless numbers of fentanyl
analogues and precursor chemicals. But implementation of these initiatives has proven
difficult as law enforcement and drug investigators struggle to keep track of high levels
of pharmaceutical and chemical output. Furthermore, as fentanyl addiction and
overdose deaths are not problems in China, it currently takes scheduling and
interdiction actions at the behest of the United States, making this relationship
dependent on the changing dynamics of the US-China relationship.
But some positive efforts are being made, and United States officials said that the
bilateral relationship with China on this issue is open and developing. In 2015, the
Chinese Food and Drug Administration made 116 psychoactive substances, along with
six fentanyl analogues, controlled substances, and in February 2018, newly created
controls on five fentanyl precursors including ANPP and NPP went into effect.
The impact that these controls will have on limiting the diversion of fentanyl precursor
to clandestine laboratories, or the export of said chemicals to criminal groups in Mexico
and the United States, remains to be seen.
India – Emerging Fentanyl Producer?
In September 2018, Indian authorities arrested three people, including a Mexican
national, in possession of 10 kilograms of fentanyl hydrochloride, a salt form of the
synthetic opioid. Investigators told local media that the fentanyl was produced at a
chemical factory in India run by the two Indian suspects.
The arrest startled but did not surprise US authorities contacted by InSight Crime. India,
along with China, provides the bulk of chemical precursors used in the manufacturing
of methamphetamine in Mexico. To be sure, as we detail later in this report, we believe
that organizations who have traditionally dealt in methamphetamine are some of the
best positioned to take advantage of the burgeoning fentanyl trade.
Part II – Fentanyl – The Mexico Gateway
Mexico is by far the most important gateway for fentanyl and precursor chemicals into
the region via ship. It is also a hub of production and export of fentanyl to the United
States. Myriad Mexican criminal organizations appear to be managing the processing,
storage, and shipment of fentanyl, although two in particular—the Jalisco Cartel New
Generation (Cartel de Jalisco Nueva Generación – CJNG) and the Sinaloa Cartel—seem
to exert control over the transport into the United States.
Mexico – Ports of Entry
For several reasons outlined in this section, US officials believe that Mexico is the main
hub of transit and production of fentanyl in the hemisphere. To begin with, several
maritime ports in Mexico have long played a major role in the illegal importation of
chemical precursors for the manufacturing of illicit drugs, sometimes leading to major
violence in those areas. Maritime ports handle large volumes of merchandise and a
significant portion of international trade, particularly between Asia and Mexico, which
makes them logistically ideal for both legal and illegal trading of large volume
Mexico has maritime ports that reported register cargo movement in 2016 (the last
year for which there is complete yearly data). Out of the 22, the 10 largest account for
84 percent of the total import-export tonnage. However, there is little indication that
many or even most ports are actually used for illegal chemical precursor trafficking, and
even less that they are being used to introduce fentanyl products. In fact, 3 of the 10
major ports account for over 87 percent of the total chemical precursor seizures by the
Navy between 2007 and 2018: Manzanillo, which accounts for the lion’s share of
seizures, Lázaro Cárdenas, and Veracruz.
Most of the fentanyl or its ingredients arriving from China via containers is being hidden
in plain sight by being mislabeled, according to DEA sources in Mexico City. The main
ports being used are those on the Pacific coast—Manzanillo in the state of Colima and
Lázaro Cárdenas in Michoacán.
The concentration of trafficking activity in these ports points to longstanding control of
them by organized crime groups. According to the Secretary of the Navy (Secretaría de
Marina – SEMAR), there has been little effective oversight of the ports.
Two former high-ranking Federal Police officials who were directly involved in several operations in and around Lázaro Cárdenas from 2008 to 2015 corroborated this sentiment. The police said their investigations revealed widespread corruption and intimidation
amongst the civilian port managers and a “marked reticence” to implement basic
counternarcotic measures and to denounce illegal or suspicious activities, which
extended to the customs officials attached to the port. The officials also emphasized that
at least one criminal group, the Familia Michoacana, was engaged in illegal mineral
exports through the port, as was widely reported at the time.
A former high-ranking official from the Ministry of the Interior (Secretaría de
Gobernación – SEGOB) confirmed there was also evidence of collusion and intimidation
in Manzanillo port and gave credence to reports that a significant amount of the
violence around the port has long been related to illegal chemical precursor trafficking
by local and national criminal groups. However, he emphasized that investigating
customs and port officials and civilian employees without unduly disrupting legal
commerce proved to be extraordinarily difficult, as there were a number of large legal
firms that were suspected of some level of involvement in illicit activities.
Mexico – Production and Transport
Once it arrives in Mexico, pure fentanyl is diluted or mixed with inert matter such as
lactose, dipyrone, or acetaminophen. The precursor chemicals that are imported are
moved to storage and production points in and around Mexico City, Guadalajara, and
Culiacán, according to US and Mexico law enforcement. As detailed in a later section,
groups that have traditionally imported precursors and processed methamphetamine
seem best positioned to take advantage of this market.
The fentanyl is packed and shipped with other drugs. These poly-drug loads are
transported by land, air or sea north to the US border where they cross in individual
vehicles, container trucks, or via “mules.” Officials once believed that fentanyl was
mixed with white powder heroin or camouflaged as heroin in Mexico. (Experts and law
enforcement say that fentanyl cannot be combined with black tar heroin.) However, the
most recent seizures show that this rarely happens anymore at the wholesale level.
Instead, the fentanyl is moved on its own and mixed with other drugs once it is inside
the United States.
Fentanyl is also pressed into pill form in Mexico for transport and distribution as
counterfeit oxycodone or other prescription opioids. Some portion may arrive from
China already in pill form, so no further processing is needed. These counterfeit pills
bear all the markings of popular prescription pain medications—US prosecutors
referred to them as “pressed blues” because they look like blue oxycodone pills—but
actually contain fentanyl. The pills give the criminal organizations broader access to the
large prescription drug user population, which expands their market share and profit
This counterfeit pill form appears to be the current vehicle of choice. Of nine fentanyl
seizures in August 2018 along the San Diego border, for instance, five were in pill form,
significantly more than in previous months. Overall, US authorities along the San Diego Tijuana border say that counterfeit pills represented more than 30 percent of the total fentanyl seizures in FY2018, up from five percent in FY2017. They believe this upward trend will continue, since many fentanyl users are not purposely seeking the dangerous drug, and it generates such high returns. According to the Fentanyl Working Group, a collection of law enforcement agencies working out of the San Diego area, one kilogram
of fentanyl, which costs $32,000, can make one million counterfeit pills with a street
value of $20 million.
The criminal market for counterfeit drugs is already huge and has relatively low
barriers of entry. The United Nations estimates that as much as one-third of the world’s
prescription drugs are counterfeit.43 In the case of Mexico, initial indications were that
smaller criminal groups operating along the US-Mexico border were establishing
“pharma cartels” and peddling their drugs over the internet. The larger criminal groups
were taxing them for their operations, rather than exerting control at that time. That
may change, especially as the larger criminal groups lose hegemony in other criminal
markets and look to compete in new markets like fentanyl.
Seizure data suggests that the key trafficking route in Mexico is through the Baja
California – California border area. Seizures by Mexican law enforcement have been
concentrated around its northwest border with the United States, as well as Jalisco,
Michoacán, and Sinaloa.44 Although still not a priority for law enforcement in Mexico
(bilateral efforts to improve Mexico’s attention to the fentanyl problem and capacity to
detect it are currently in full throttle), authorities have been seizing more fentanyl year
on year, and there is enough data to illustrate a pattern.
Seizure figures acquired by InSight Crime via freedom of information requests show
that the Federal Police and the army seized less than a kilogram of powdered fentanyl
in 2013 and none in 2014. However, seizures spiked to nearly 43 kilograms in 2015 and
rose to more than 114 kilograms through mid-2018. In terms of fentanyl-laced pills,
none were reported until authorities seized some 36,000 in 2017, and over 33,000
through July 2018.
Seizure data from the US parallels that of Mexico. During 2016 and 2017, 75 percent of
the total poundage of fentanyl seized by US Customs and Border Protection (CBP) was
at the Southwest border. What’s more, fentanyl seizures by US officials on the US Mexico border are skyrocketing, suggesting a sharp uptick in fentanyl trafficking from
Mexico. Law enforcement officials along the Southwest border have seen a 700 percent
increase in seizures, going from 6 seizures in 2015 to 54 in 2017. Part of this was the
result of training dogs to sniff out the fentanyl, but part was an increase in the amounts
being transported through this corridor.
Publicly available seizure data from the CBP, Homeland Security Investigations (HSI),
and local level law enforcement suggests equally significant increases in fentanyl
seizures nationwide. CBP’s Office of Field Operations and Border Patrol surpassed total
fentanyl seizures for FY2017 during the first months of FY2018, and seizures have also
increased in proportion to total heroin seizures. Additionally, Homeland Security
Investigations reported 2,400 pounds of fentanyl seized in FY 2017.
Trafficking in Mexico via Air Routes
Several cases of fentanyl seizures in airports, primarily in the Tijuana International
Airport suggest that Mexican criminal groups are increasingly utilizing air routes—via
parcel services—to transport fentanyl from places like Sinaloa and Mexico City and to
airports located close to the US-Mexico border. Cases of fentanyl seizures at airports
seem to suggest that the majority of fentanyl being trafficked within Mexico via air
routes is in pill form.
In January 2018, members of Mexico’s Federal Police (Policía Federal – PF) and army
(Secretaría de la Defensa Nacional – SEDENA) seized 1,500 fentanyl pills in the parcel
area of the Tijuana International Airport, which has direct flights to Asia. The pills had
allegedly been sent from Culiacán, Sinaloa. In March, authorities seized 300 fentanyl
pills that were allegedly transported via parcel service from Mexico City to the Tijuana
One of the reasons why criminal groups may be increasingly looking to transport
fentanyl via air routes could be due to the small volumes of the drug that is trafficked
compared to other drugs such as heroin and methamphetamine, which are usually
shipped in greater quantities. Air routes are also quicker and, given the difficulty of
inspecting thousands of packages that pass through airports on a daily basis, the risk of
seizure is relatively limited. Finally, criminal groups of the type outlined below, have
long trafficked illicit drugs through airports and therefore have both the contacts and
the wherewithal to move fentanyl through these same spaces.
Illicit Networks in Mexico
The data, interviews, and review of the case files has led us to two intertwining theses
about who is responsible for the import, production, and transport of fentanyl to the
United States via Mexico. Each of these is based on limited data, as well as fragmented
and often anecdotal sources of information. Although it is our best current
approximation of the major trends in this dynamic market, it is by no means definitive.
Still, it provides us with a base from which to debate the evolution of this dangerous
drug market, which could be a game changer for drug trafficking organizations
Thesis 1: Mexico Umbrella Groups
There is a widespread consensus among all the US law enforcement officials
interviewed for this report that the Jalisco Cartel New Generation (Cartel de Jalisco
Nueva Generación – CJNG) and the Sinaloa Cartel in Mexico are the principal groups
responsible for the import and production, and its transport to the United States. These
two organizations can be considered umbrella groups: loosely knit networks with the
contacts, infrastructure, and wherewithal to move poly-drug loads across the stretch of
territory that represents the highest risk. This puts them in a unique position to control
this portion of the distribution chain and thus secure a good amount of its profit.
A senior DEA Mexico source told InSight Crime that they believe “the big cartels— CJNG
and Sinaloa—are trafficking in large amounts because they control big swathes of land.
They got all the contacts in China. They’re running their methamphetamine all the way
over into China and Japan. They’ve got all the contacts already and the power.” A
separate DEA source told InSight Crime in an email that, “Since the cartels have well
established routes of entry into the US especially with heroin and
methamphetamine…the trend we’ve noticed is fentanyl has often been infused or
comingled with heroin shipments bound for the Northeast coast of the US.”
Former drug agents concur. Mike Vigil, who worked for the DEA in Mexico for over a
decade, said, “Sinaloa and Jalisco New Generation are the ones primarily involved
because they control the ports and have a nexus with the Chinese. For example, the
CJNG controls Lázaro Cárdenas and Manzanillo, and also Veracruz. The Sinaloa Cartel
controls a larger amount of [other] ports.”
Thesis 2: Multi-layered Import, Production, and Transport Networks
The reality of the Mexican underworld is that there is a plethora of smaller
organizations that are subcontracted by the umbrella groups like the Sinaloa Cartel and
the CJNG. These include remnants of organizations that once specialized in the import
of precursors, and the production and export of methamphetamine, such as the Familia
Michaocana or the Knights Templar. Parts of both of those organizations were
subsumed by the CJNG and the Sinaloa Cartel or continue to operate independently,
Mexican and US law enforcement told InSight Crime.
There were also parts of the larger umbrella groups that specialized in
methamphetamine prior to the fentanyl boom, namely the aforementioned Nacho
Coronel, who was a top member of the Sinaloa Cartel and was killed in a shootout with
Mexican military in July 2010; and the Valencia brothers, who ran the Milenio Cartel
and operated out of Michoacán prior to the emergence of the Familia Michoacana.
Portions of both Nacho Coronel’s old organization and the Mileno Cartel are the core of
the CJNG, but there are undoubtedly others who work primarily for the Sinaloa Cartel
and others that remain independent.
The reconfiguration of these criminal groups is near constant. And while it is easy for
crime analysts, law enforcement, and prosecutors to place them in large groups, the
truth is that these are fluid relationships subject to a large number of changing
variables. In fact, over the last several years, it is clear that the traditionally hierarchical
drug trafficking organizations in Mexico have been replaced by flatter, more nimble
organizations that are loosely networked. Within this framework, it is likely that Sinaloa
and the CJNG outsource aspects of production and trafficking to smaller criminal
groups. Sinaloa, in particular, is believed to operate with an increasingly horizontal
structure in which local and regional gangs that specialize in particular operations are
subcontracted for their services.
Part III – Fentanyl – The Destination
This section covers the different ways in which fentanyl arrives to the United States for
consumption. Though there’s a lack of clarity in determining how much of which
fentanyl-family product is exported the most and which route it takes, related data
seems to illustrate that fentanyl coming via Mexico is surging but that Mexican criminal
groups play a limited role at the distribution level in areas where fentanyl is most
prevalent. Instead, they seem to rely on Dominican networks, who have long dominated
the heroin market in the northeast. In addition, pure fentanyl and fentanyl analogues,
as a powder or in pill form, are also being sent from China directly to the United States
via mail or to Canada, a transshipment point for small quantities of the drug. Given
the speed with which the synthetic opioid market is maturing, this second form of
trafficking may represent a far greater medium- and long-term threat.
It is important to begin this section by declaring that there are no reliable estimates for
illicit fentanyl use in the United States. This is related to the newness of the drug, as well
as wide disparities of training of drug agents, sniffing dogs, medical professionals and
others who deal with fentanyl. It is difficult to detect because it comes in small
quantities, and is often camouflaged in other drugs. US law enforcement and health
professionals are only beginning to see the signs on both the seizure side and the
overdose side, the two data points most important to determining the scope of the
The current fentanyl epidemic is largely concentrated in regions of the country where
white powder heroin and prescription pill misuse dominates the market—Appalachia
and the Northeast. In a 2016 CDC study, for instance, Northeastern states reported the
highest percentage of opioid overdose deaths involving fentanyl, ranging from 60–90
percent of all opioid overdose deaths; midwestern states also exhibited high
percentages of opioid overdose deaths involving fentanyl. In many of these states,
deaths from fentanyl alone have started to outnumber deaths from fentanyl cut into
other substances, potentially suggesting a unique fentanyl and fentanyl analogue
market. These regions of the country have similarly seen the largest increases in
non-fatal opioid-related emergency department visits96 and fentanyl seizures.
Distribution Networks in the United States
Once fentanyl crosses the US-Mexico border, it typically moves inland to a distribution
center where it is packaged and shipped via truck or private vehicle to the markets in
Appalachia and the East Coast. US law enforcement sources said that Mexican TCOs
control the fentanyl as it moves within the United States and exert control over the
distribution in larger cities—though there are critical exceptions to that rule.
The most critical exceptions to this rule happen in the Northeastern United States. In
Massachusetts and Connecticut, the epicenter of the US fentanyl epidemic, Dominican
TCOs serve as mid-level distributors for cocaine and white powder heroin, which is the
type of heroin cut with fentanyl. Dominican TCOs obtain multi-hundred kilogram
quantities of heroin, heroin cut with fentanyl, and cocaine from Mexican wholesalers in
New York City and other hubs, which they then sell in increments to local street gang
clients for local street sales. DEA sources in Mexico also told InSight Crime that
Dominican TCOs go to the US-Mexico border and have even traveled to Mexico to get
The DEA believes that criminal groups have moved beyond cutting white powder
heroin with fentanyl. These days it is increasingly more common for fentanyl to be
mixed with adulterants and sold as heroin, with no heroin present in the product.
This observation is backed up by the NFLIS data which shows fentanyl-only exhibits far
outstripped heroin cut with fentanyl exhibits in 2016.
Maritime Fentanyl Trafficking in the United States
A vast majority of the fentanyl seized by Customs and Border Patrol is seized at ports
of entry on the Southwest border and international mail service centers. In fact, less
than one percent of the fentanyl seizures made between 2016 and 2017 by CBP
involved a transport method other than mail or traditional land trafficking transport
Of the hundreds of seizures made in 2016 and 2017, only seven fentanyl
seizures were made at ports of entry that were not on the southwest border or at
international mail facilities.
Despite the low seizure count, it is likely that maritime trafficking of fentanyl directly
into the United States is a transport method that’s utilized—though probably at far
lower rates than mail or land ports of entry on the Southwest border. For example, in
June 2018, Customs and Border Protection officials seized 110 pounds of fentanyl at the
Port of Philadelphia.119 The fentanyl was discovered by a CBP narcotics detector dog in
a shipment of iron oxide that arrived from China.
This is the only instance of maritime fentanyl trafficking found by InSight Crime, though
given how it recent it was, it could indicate efforts by Chinese groups to move fentanyl
in larger quantities directly into the United States. What’s more, authorities consulted
about this seizure could not say whether it was an anomaly or the norm.
- Pressure Mexico to put fentanyl higher on the agenda. Fentanyl is not a
priority for law enforcement in Mexico, and there is little indication that this will
change in the near future. When approached, Mexico’s federal forces told InSight
Crime that fentanyl was not a priority and that they did not believe it was a
significant part of Mexican TCO’s criminal portfolios. The issue is long-term:
fentanyl may be just the first of many synthetic drug scourges to come.
- Specifically, to help combat the trafficking of fentanyl and its analogues, Mexico
could: increase capacity to detect and test for fentanyl and its analogues at its
laboratories and where it seizes drugs; beef up detection at its ports for
fentanyl and precursors; and open the door to inspections of seized
laboratories and chemicals.
- Pressure China to participate more actively in criminal investigations to deter
Chinese producers and exporters, and actively update precursor watchlists and
prohibitions. As the President’s Commission on Combatting Drug Addiction and
the Opioid Crisis wrote, “We are losing this fight predominately through China.
This must become a top tier diplomatic issue with the Chinese; American lives
are at stake and it threatens our national security.”141
- Invest in research and data collection to better understand this drug
trafficking phenomenon. In many ways, fentanyl represents the democratization
of drug trafficking, offering small and large groups myriad ways of exploiting
markets. However, the data on production, trafficking, and consumption is
sparse at best.
Federal law enforcement officials in Oregon say they’ve uncovered an elaborate scheme to convert Mexican drug profits from sales in the United States back into pesos using Chinese citizens who seek to circumvent their country’s banking laws.
The Mexican drug cartels are taking advantage of the trade war between the United States and China, which law enforcement officials say has increased the demand for U.S. dollars among wealthy Chinese citizens living abroad as China has clamped down on its banking rules.
What the Drug Enforcement Administration and federal prosecutors uncovered is a sophisticated, triangular international criminal enterprise where Mexican drug cartels used Chinese nationals living in the United States to help bring their profits back across the southern border. In the process, Chinese nationals get access to cash in the U.S. that they otherwise wouldn’t be able to because of tight Chinese banking restrictions.
Mexican banking laws limit the amount of U.S. dollars that can be deposited into accounts to $4,000 per month.
“That’s not nearly enough for large drug trafficking organizations,” de Villiers said. Ultimately, the cartels need to transfer the dollars into pesos to access the proceeds of drug sales back in Mexico.
At the same time, China’s Capital Flight laws allow Chinese living outside the country to access only $50,000 per person annually from their bank accounts, which isn’t enough for some wealthy Chinese, de Villiers said.
The relationship between Chinese nationals in the United States and Mexican drug cartels dates back nearly 20 years, law enforcement officials say.
“The geopolitical side is new,” said Cam Strahm, the assistant special agent in charge of the Drug Enforcement Administration in Oregon.
The trade war between China and the U.S. has increased the demand for dollars among Chinese living in the U.S. While there used to be ways to work around the $50,000 withdrawal restriction, the trade war has caused China to clamp down on its rules, de Villiers said.
“We have seen an increase in the demand by Chinese nationals for U.S. currency here in the U.S. in the last three years,” de Villiers said.
Su, Li Yan and Su worked as brokers, who took Mexican cartel drug proceeds and sold the bundles of cash to Chinese nationals in the U.S., according to the indictment. The buyers would then make a mobile transfer from their Chinese bank accounts to the accounts of Su, Li Yan or Su. There’s no limit on transfers between Chinese bank accounts, de Villiers said.
As part of this scheme, prosecutors allege more than $19 million was transferred between more than 251 Chinese bank accounts.
The brokers — like Su, Li Yan and Su — then buy goods in China, like electronics or clothing, which are then sent to cartel members in Mexico where they’re sold, effectively converting the drug proceeds into pesos where they can be deposited into Mexican banks, completing the cycle.
“They’re drug traffickers, but they also understand they’re getting repatriated for the value of those drugs,” the DEA’s Strahm said. “They’re getting that currency in the form of pesos back. At the highest levels, those [drug] organization leaders understand that.”
Nobody can deny that illegal and legal drug use has grown tom epidemic levels in the US. Under the auspices of President Trump, major inroads and progress has been made in combating it. The US received aid from an unlikely ally in 2020, that of the Coronavirus pandemic.
Coronavirus is dealing a gut punch to the illegal drug trade, paralyzing economies, closing borders and severing supply chains in China that traffickers rely on for the chemicals to make such profitable drugs as methamphetamine and fentanyl.
One of the main suppliers that shut down is in Wuhan, the epicenter of the global outbreak.
Associated Press interviews with nearly two dozen law enforcement officials and trafficking experts found Mexican and Colombian cartels are still plying their trade as evidenced by recent drug seizures but the lockdowns that have turned cities into ghost towns are disrupting everything from production to transport to sales.
Along the 2,000-mile U.S.-Mexico border through which the vast majority of illegal drugs cross, the normally bustling vehicle traffic that smugglers use for cover has slowed to a trickle. Bars, nightclubs and motels across the country that are ordinarily fertile marketplaces for drug dealers have shuttered. And prices for drugs in short supply have soared to gouging levels.
“They are facing a supply problem and a demand problem,” said Alejandro Hope, a security analyst and former official with CISEN, the Mexican intelligence agency. “Once you get them to the market, who are you going to sell to?”
Virtually every illicit drug has been impacted, with supply chain disruptions at both the wholesale and retail level. Traffickers are stockpiling narcotics and cash along the border, and the U.S. Drug Enforcement Administration even reports a decrease in money laundering and online drug sales on the so-called dark web.
“The godfathers of the cartels are scrambling,” said Phil Jordan, a former director of the DEA’s El Paso Intelligence Center.
Cocaine prices are up 20 percent or more in some cities. Heroin has become harder to find in Denver and Chicago, while supplies of fentanyl are falling in Houston and Philadelphia. In Los Angeles, the price of methamphetamine has more than doubled in recent weeks to $1,800 per pound.
“You have shortages but also some greedy bastards who see an opportunity to make more money,” said Jack Riley, the former deputy administrator of the DEA. “The bad guys frequently use situations that affect the national conscience to raise prices.”
Synthetic drugs such as methamphetamine and fentanyl have been among the most affected, in large part because they rely on precursor chemicals that Mexican cartels import from China, cook into drugs on an industrial scale and then ship to the U.S.
“This is something we would use as a lesson learned for us,” the head of the DEA, Uttam Dhillon, told AP. “If the disruption is that significant, we need to continue to work with our global partners to ensure that, once we come out of the pandemic, those precursor chemicals are not available to these drug-trafficking organizations.”
Cartels are increasingly shifting away from drugs that require planting and growing seasons, like heroin and marijuana, in favor of synthetic opioids such as fentanyl, which can be cooked 24/7 throughout the year, are up to 50 times more powerful than heroin and produce a greater profit margin.
Though some clandestine labs that make fentanyl from scratch have popped up sporadically in Mexico, cartels are still very much reliant upon Chinese companies to get the precursor drugs.
Huge amounts of these mail-order components can be traced to a single, state-subsidized company in Wuhan that shut down after the outbreak earlier this year, said Louise Shelley, director of the Terrorism, Transnational Crime and Corruption Center at George Mason University, which monitors Chinese websites selling fentanyl.
“The quarantine of Wuhan and all the chaos there definitely affected the fentanyl trade, particularly between China and Mexico,” said Ben Westhoff, author of “Fentanyl, Inc.”
“The main reason China has been the main supplier is the main reason China is the supplier of everything — it does it so cheaply,” Westhoff said. “There was really no cost incentive for the cartels to develop this themselves.”
But costs have been rising and, as in many legitimate industries, the coronavirus is bringing about changes.
Some Chinese companies that once pushed precursors are now advertising drugs like hydroxychloroquine, which President Donald Trump has promoted as potential treatment for COVID-19, as well as personal protective gear such as face masks and hand sanitizers.
Meanwhile, the gummed up situation on the U.S.-Mexico border resembles a stalled chess match where nobody, especially the traffickers, wants to make a wrong move, said Kyle Williamson, special agent in charge of the DEA’s El Paso field division.
“They’re in a pause right now,” Williamson said. “They don’t want to get sloppy and take a lot of risks.”
Some Mexican drug cartels are even holding back existing methamphetamine supplies to manipulate the market, recognizing that “no good crisis should be wasted,” said Joseph Brown, the U.S. attorney in the Eastern District of Texas.
“Some cartels have given direct orders to members of their organization that anyone caught selling methamphetamine during this time will be killed,” said Brown, whose sprawling jurisdiction stretches from the suburbs of Dallas to Beaumont.
To be sure, narcotics are still making their way into the U.S., as evidenced by a bust last month in which nearly $30 million worth of street drugs were seized in a new smuggling tunnel connecting a warehouse in Tijuana to southern San Diego. Shelley said that bust was notable in that only about 2 pounds of fentanyl was recovered, “much lower than usual shipments.”
With the election of Biden as President, many of the advances we have made in fighting the illegal drug war, will be reversed. Biden is halting the building of the wall bordering Mexico, and is opening up the borders, which will greatly facilitate the drug trade. He is also soft on China, so there will be little repercussions for China’s involvement in the illegal drug trade. It is estimated that 50,000 people die from fentanyl over doses alone in the US. Under Biden these numbers can only be expected to grow. As more and more Hispanics move into the US and more and more Caucasians die from drug over doses, our population demographics will change. Eventually Caucasians will be in the minority. As a matter of fact this is predicted to occur by 2045.
reuters.com, “Factbox: Step by step – How Chinese ‘money brokers’,” By Drazen Jorgic; wilsoncenter.org, ” Mexico’s Role in the Deadly Rise of Fentanyl,” By Steven Dudley, Deborah Bonello, Jaime López-Aranda, Mario Moreno, Tristan Clavel, Bjorn Kjelstad and Juan Jose Restrepo; cco.ndu.edu, “Chinese Organized
Crime in Latin America,” By R. Evan Ellis; justice.gov, “Chinese National Guilty of Laundering Millions for Mexican Drug Cartels,” By Office of Public Affairs; foxnews.com, “Chinese ‘cartels’ quietly operating in Mexico, aiding US drug crisis,” By Hollie McKay; vice.com, ” China Turns Blind Eye To Lucrative Cartel Chemical Trade, DEA Says,” By Mas Daly; opb.org, “Trade War With China Opens Doors For Mexican Drug Cartels, Federal Prosecutors Say,” By Conrad Wilson; apnews.com, “‘Cartels are scrambling’: Virus snarls global drug trade, ” By Jim Mustian and Jake Bleiberg; amac.us, ” Why are Sanctuary Cities Helping Mexican Heroin Cartels?,” By The Association of Mature American Citizens;
Factbox: Step by step – How Chinese ‘money brokers’ launder cash for Mexican drug cartels
Chinese “money brokers” have emerged as vital partners for Latin American drug cartels, becoming key cogs in their multi-billion-dollar empires and upending the way narcotics cash traditionally has been laundered, according to U.S. authorities.
Based on Reuters reporting and details that U.S. prosecutors presented at the recent trial of a Chinese businessman convicted of laundering cartel drug money, here is a popular method Chinese brokers employ to launder U.S. drug proceeds of Mexican crime groups:
A Mexican cartel wants to bring proceeds from U.S. drug sales back to Mexico. It contacts Chinese money brokers operating in Mexico to see who offers the cheapest rates.
The parties agree on a commission and the amount to be laundered, say $150,000.
The Chinese broker, using encrypted phone messages, would send the cartel three things:
1. a code word
2. the number of a U.S. burner phone
3. the unique serial number of an authentic $1 bill
The Mexican crime group shares those details with a cartel-linked drug dealer in the United States, who calls the burner phone and identifies himself by using the code word. He arranges to meet a U.S.-based money courier working for the Chinese broker.
The drug dealer and the money courier meet in public. The courier hands over a $1 bill with the unique serial number. When that checks out, the dealer hands over the cash, keeping the bill as a “receipt.”
The courier takes the $150,000 to a U.S.-based Chinese merchant who has a bank account in China. The merchant then performs a currency swap known as a “mirror transaction.” He takes possession of the U.S. cash and then transfers $150,000 worth of Chinese yuan from his Chinese bank account to the money broker’s Chinese account, using an account number provided to him by the courier.
The cartel’s drug cash is now sitting in a Chinese bank, outside the view of U.S. law enforcement. The broker has two options to send it on to Mexico to the drug cartel.
Option 1 is to do another “mirror transaction.” The $150,000 worth of yuan is now transferred from the money broker’s Chinese account to the Chinese bank account of a Mexico-based businessperson. That Mexico-based businessperson then provides $150,000 worth of pesos to the money broker in Mexico, who delivers that cash to the cartel.
Under option 2, the Chinese money broker buys $150,000 worth of consumer products in China, such as clothing, and exports them to Mexico. The goods are then sold, and the proceeds delivered to the cartel.
Why are Sanctuary Cities Helping Mexican Heroin Cartels?
About 14 of the 284 rejected Immigration and Customs Enforcement (ICE) detainer requests for illegal aliens by local law enforcement were individuals on narcotics charges, including trafficking, a Freedom of Information Act (FOIA) request by Judicial Watch from the Department of Homeland Security has revealed. The period covered the first three months of 2017.
When an ICE detainer request is rejected, the criminal gets released prior to interception by the ICE agents, and is back on the street. No word on if they ever turn up for their court dates — why would they bother? — but leaving that aside, the real question is why are local law enforcement entities refusing to cooperate with federal immigration authorities in cases that would result in drug dealers being deported?
So far, we’ve seen excuses that ICE detainer requests are not legally binding — because Congress has not set forth that local law enforcement must comply with the requests — or that is simply the policy or law (as is the case now in California and Illinois) of that jurisdiction not to allow illegal immigrants to be deported, even if they’re drug traffickers.
But with now 13,000 heroin overdose deaths a year as of 2015, a significant and growing portion of the now 33,000 annual opioid overdose deaths, according to Centers for Disease Control (CDC) data, considered by all to be a crisis facing communities across the country, allowing some of these dealers back out onto the street who could be removed from the country appears inexplicable.
It is so inexplicable, it may be time for the Justice Department to start looking into the possibility that sanctuary jurisdictions are not harboring illegal aliens simply because they are liberal do-gooders who believe in open borders and non-enforcement of immigration law. Maybe they are being bribed by the cartels. Or worse, infiltrated.
Consider how drug dealers, especially bigger ones, already routinely bribe local and federal police officials to enable the drug trade.
Federal court documents against El Chapo, notorious head of the Sinaloa cartel, state that, “A cornerstone of his strategy was the corruption of officials at every level of local, municipal, state, national and foreign government, who were paid cash bribes to ensure that he and the Sinaloa Cartel were free to bring in tonnage quantities of cocaine from South America and move it freely to the United States.”
To be certain, a number of cases in recent years have been brought against police officers who it turns out were taking bribes from local drug dealers, in Baltimore, Md., Atlanta, Ga., Chicago, Ill., and Bakersfield, Ca. All are in sanctuary jurisdictions.
There are instances of airport security screeners being popped for taking bribes to allow drugs onto passenger planes, for example at San Francisco International Airport and Oakland International Airport.
Even the U.S. Border Patrol has a major problem, a 2012 Government Accountability Office (GAO) report found: “From fiscal years 2005 through 2012, a total of 144 employees were arrested or indicted for corruption-related activities, including the smuggling of aliens or drugs, and 125 have been convicted. 20 About 65 percent (93 of 144 arrests) were employees stationed along the southwest border. Our review of documentation on these cases indicates that 103 of the 144 cases were for mission-compromising corruption activities, which are the most severe offenses, such as drug or alien smuggling, bribery, and allowing illegal cargo into the United States.”
But it’s not simply a matter of good cops going bad. The GAO report also warns of active infiltration by those who specifically sign up for the Border Patrol to facilitate the drug trade. The report stated, “there have been a number of cases in which individuals, known as infiltrators, pursued employment at CBP solely to engage in mission-compromising activity. For example, in 2007, a CBPO in El Paso, Texas, was arrested at her duty station at the Paso Del Norte Bridge for conspiracy to import marijuana into the United States from June 2003 to July 2007, and was later convicted and sentenced to 20 years in prison. OFO reported that she may have sought employment with CBP to facilitate drug smuggling. CBP officials view this case as an example of the potential impact of corruption — if the officer had succeeded in facilitating the importation of 5,000 pounds of marijuana per month, this would amount to a total of 240,000 pounds over 4 years with a retail value of $288 million dollars. In another case, a former BPA previously stationed in Comstock, Texas, was arrested in 2008 for conspiracy to possess, with intent to distribute, more than 1,000 kilograms of marijuana. The agent was convicted in 2009 and sentenced to 15 years in prison and ordered to pay a $10,000 fine.”
These could just be the tip of the iceberg. In “Drugs: America’s Holy War,” Arthur Benavie warns, “The drug war generates enormous amounts of money, which flows in underground channels between groups of law breakers who are in constant danger of arrest. Police, judges, prosecutors, legislators, DEA agents, and prison guards are among those subject to bribery… Given the astronomical profits in black market drugs, and the fact that the illegal transactions take place between colluding sellers and buyers, law enforcement officials find themselves in possession of an extremely valuable service — looking the other way.”
The problem is extensive, according to “America’s Longest War: Rethinking Our Tragic Crusade Against Drugs,” in which Steven Duke and Albert Gross state, “Policemen in virtually every American city are on the payrolls of drug merchants, earning their pay by tipping off drug dealers about raids or searches, about ‘snitches’ and the like. Some police even engage in the drug trade themselves. Hundreds of law-enforcement officials have been convicted of taking bribes, stealing from drug dealers, even selling drugs.”
Then, a simple look at a map shows that sanctuary jurisdictions lay neatly along routes known to be taken by drug traffickers from Mexico, in California, Oregon, Washington, New Mexico, Colorado, Kansas, Iowa, Illinois, New Jersey, New York, Connecticut, Massachusetts and Washington, D.C. Chicago is the major destination for traffickers. From there, the drugs, including heroin, pretty much go everywhere.
Dallas, Texas, a sanctuary city, has been declared a “command center” by drug traffickers.
The damage can be traced as well, with the states being hit with the greatest number of heroin overdoses are falling in these distribution areas as well. Wherever the cartel goes, it leaves a path of death in its wake.
And if we want to get to the bottom of it, perhaps the Justice Department needs to follow these patterns. Maybe the sanctuary cities are helping. They might just be useful idiots, foolishly setting up non-enforcement zones against illegal aliens in areas where the cartel happens to be operating. Or perhaps they’re doing it on purpose. Maybe they’re on the take. It wouldn’t be the first time. It might be time to take a look, not just at dirty cops, but city councilmen, legislators and judges, too. This could be big.
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