Fashion district crackdown: Strict cash reporting ordered after raids
Federal authorities cracking down on suspected money laundering linked to Mexican drug cartels said they warned about 2,000 businesses in the downtown Los Angeles fashion district Thursday that they must follow stricter rules on reporting cash transactions.
In issuing the orders, the U.S. Department of Treasury put at least half the district’s businesses on notice, following a strategy that federal agencies have used to target drug profits sent from New York and Miami to Colombia, the Dominican Republican and Puerto Rico.
Federal officials said that Thursday’s move marked one of the largest uses of such orders by the U.S. government.
“When we go in and do something of this magnitude in an industry where the cartels are so heavily invested, it stops their business. The question is for how long,” said Jere Miles, deputy special assistant in charge for Immigration and Customs Enforcement in Los Angeles.
Last month, more than 1,000 agents swarmed the district to execute search-and-seizure warrants on storefronts, warehouses and homes as part of an investigation of trade-based money laundering. Authorities said at the time that Los Angeles had become the “epicenter” for laundering drug money and that the fashion district, with its high volumes of wholesale trade with Mexico, had become a funnel for sending drug proceeds south of the border.
The raids, dubbed “Operation Fashion Police,” netted more than $90 million in cash packed in banker’s boxes, shoe boxes, duffel bags piled in a shower, and $20,000 in the trunk of a Bentley luxury automobile.
“That’s a mind-boggling amount of money, and it makes it abundantly clear the scale of criminal activity we’re up against,” Claude Arnold, ICE special agent in charge for Los Angeles, said in a statement. “Unscrupulous companies that help the cartels cover their financial tracks are contributing in a major way to the devastation wrought by the international drug trade and they will be held to answer for their actions.”
Thursday’s orders, called geographic targeting orders, require businesses to file detailed reports on cash transactions exceeding $3,000, drastically lower than the normal $10,000 threshold. The orders take effect Oct. 9 and will remain in effect for 180 days.
Targeted businesses include garment and textile stores, transportation companies, travel agencies, perfume stores, electronics stores, beauty supply stores and stores with “import” or “export” in their names. Most of the orders were sent via FedEx, but some were hand-delivered Thursday morning by federal agents.
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