June 01, 2015
Contact: SA Timothy Massino
Phone Number: (213) 621-6700
Owner Of Fashion District Clothing Company Pleads Guilty To Customs, Immigration And Money Laundering Offenses
LOS ANGELES - The owner of a Fashion District import-export business pleaded guilty late Friday afternoon to federal charges stemming from an investigation into “Black Market Peso Exchange” schemes used by international drug cartels to launder and send narcotics proceeds out of the United States.
The owner of Yili Underwear and Gayima Underwear pleaded guilty in United States District Court pursuant to an agreement requiring him to forfeit hundreds of thousands of dollars in assets and will result in the loss of his United States citizenship.
Xilin Chen, 55, pleaded to three felony counts - conspiracy to launder money, knowingly passing false documents through a customhouse of the United States, and unlawful procurement of citizenship. In his plea, he acknowledged receiving bulk cash at his business he had reason to believe was from illegal activity, specifically drug trafficking. He further admitted deliberately avoided learning the truth about the bulk cash that was being delivered to his businesses.
The investigation into Chen’s companies was part of a larger investigation into Black Market Peso (BMPE) schemes in the Fashion District. In a BMPE scheme, 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. These BMPE schemes - a type of trade-based money laundering - are often used by Mexico-based drug trafficking organizations to collect proceeds from their drug sales in the United States without having to take the risk of smuggling large amounts of U.S. currency across the Mexican border and without having to wire the funds through financial institutions, both of which carry the threat of authorities detecting the illegal source of the money.
He admitted that on three occasions, he accepted bulk cash as payment for clothing from a DEA undercover agent posing as someone using the proceeds of narcotics trafficking to purchase merchandise. Xilin Chen admitted the he was aware, or should have been aware, of the high probability that he was accepting money derived from narcotics trafficking, but he “deliberately avoided asking questions or confirming the truth,” according to the plea agreement.
Xilin Chen also pleaded guilty to illegally procuring citizenship in 2012 when he declared he was not involved in criminal activity, even though he was involved in customs fraud and money laundering.
Xilin Chen’s son - Chuang Feng Chen, 25, also of Temple City - also pleaded guilty Friday afternoon to conspiracy to pass false documents through a customhouse of the United States.
The Chens agreed to forfeit proceeds from the sale of the building that houses the underwear company, two residences in Temple City, and more than $435,000 seized during the execution of search warrants and seizure warrants last fall.
The case involving the Chens was investigated by the Drug Enforcement Administration and IRS - Criminal Investigation under the auspices of the Southwest Border Initiative.