Xilin Chen, Money Laundering, California 2023

LOS ANGELES - Xilin Chen, 55, of Temple City, California, pleaded guilty 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.

Chen, owner of Yili Underwear and Gayima Underwear, pleaded guilty in United States District Court pursuant to a plea agreement that requires him to forfeit hundreds of thousands of dollars in assets and will result in the loss of his United States citizenship.

Chen pleaded guilty to three felony counts - knowingly passing false documents through a customhouse of the United States, conspiracy to launder money, and unlawful procurement of citizenship.

In a plea agreement filed with the court, Chen acknowledged that he received bulk cash at his business that he had good reason to believe was from illegal activity, specifically drug trafficking. Chen further acknowledged that he 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 Exchange 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 - which is 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.

Chen pleaded guilty to a customs offense related to a form he filed with U.S. Customs and Border Protection in which he claimed merchandise imported from China was worth $86,635, even though the true value of the clothing was $175,535. In the plea agreement, Chen admitted that the purpose of undervaluing the merchandise was to defraud the United States out of the proper duty owed on the merchandise.

Chen's son, Chuang Feng Chen, 25, also of Temple City, pleaded guilty to conspiracy to pass false documents through a customhouse of the United States. The Chens pleaded guilty before United States District Judge Percy Anderson, who is scheduled to sentence the defendants on August 24.

Xilin Chen's guilty plea will result in the loss of his United States citizenship, and he will forfeit hundreds of thousands of dollars in assets. The exact sentence or outcome is pending a court hearing on August 24, 2023.

Xilin Chen's businesses, Yili Underwear and Gayima Underwear, were investigated for their involvement in Black Market Peso Exchange schemes in the Fashion District. Chen's actions were part of a larger investigation into the use of BMPE schemes by international drug cartels to launder and send narcotics proceeds out of the United States.

This case highlights the ongoing problem of Black Market Peso Exchange schemes used by drug cartels to launder and send narcotics proceeds out of the United States. Chen's guilty plea serves as a reminder of the serious consequences of engaging in such activities.

Source: https://www.justice.gov/usao-cdca/pr/owner-fashion-district-clothing-company-pleads-guilty-customs-immigration-and-money