A Chinese American gangster transformed money laundering for drug cartels
propublica.org
propublica.org
Manufacturers get pitted against each other and end up selling for cost + markup and a small risk premium.
Overall, drugs are cheap, it’s the regulations that make it expensive/difficult to acquire.
Easy to interdict heroin or opium from Afghanistan, not so easy for potent synthetics coming from an export powerhouse.
Safety for the consumer isn’t a concern for the regulators so you end up with this situation.
https://en.wikipedia.org/wiki/Triad_(organized_crime)#Chines...
This made it very clear to me that organized crime is a wing of the Chinese government.
Before I probably wouldn't have believed a post like this, but now it seems enough in alignment with all parties interests that I find it more likely to be true than false.
Though I think it’s fair to distinguish between using organised crime during times of war against an enemies military vs using organised crime during times of peace to grind down a competing nations civilian population.
[0] - https://en.wikipedia.org/wiki/Operation_Underworld?wprov=sft...
Basically it comprises interviews of gangsters who were recruited by the government to conduct mass executions of undesirable people, and the subjects describe some reasons for which the work was tasked to organized crime rather than to official government employees.
Personally speaking I have more to gain from American imperialism than from Chinese imperialism.
https://www.amacad.org/publication/what-does-it-mean-be-amer...
The short version is that what makes a person their nationality can either be adherence to a set of values (civil society) or that their parents were that nationality (an ethnic society).
China is clearly an ethnic society. America is practically on the verge of civil war over whether they are primarily an ethnic (white christian) society (GOP), or whether they are a civil (rule of law, believes in human rights) society (the very imperfect DNC).
Civil societies aim for everyone to be an "us," while ethnic societies have a strong idea of "us vs them." So when these societies ask "how should resources be distributed?" Ethnic societies tend to believe they are in competition with everyone else for all resources and they should try their best to attain as many resources as possible. This directly results in supremacist leaning beliefs and old world imperialism. Setting up British schools in India and taking all their resources is absolutely a supremacist policy, as is killing native Americans and taking their land. The fact that these softer forms of supremacy are not taught next to the holocaust is a disservice to the average persons intuitive understanding of what supremacy looks like and what kind of spectrum genocide exists along.
Ethnic societies are not governed directly by a set of values, so they tend to be ruled by dominance alone.
So from a jaded point of view America is an empire just as China is an empire, but from a forgiving charitable (extra emphasis on charitable) point of view, a Chinese empire is trying to suck all the resources of earth up in to china, while the American "empire" is trying to establish a set of laws and values that apply to all people (human rights) while trying to address the very real tragedies of the commons we are facing (over fishing, global warming, nuclear annihilation).
The reality though is that ethnic forces in america are strongly at work trying to achieve power, and liberal civil forces in america are extremely weak, so the "liberal world order" can be supplanted by "American supremacy" (America first), and we end up in a state where we look old wold imperialist via neocolonialism.
At the end of the day that means the most important thing for Americans to do is fight the ethnic party, and if we can't do that, then we don't deserve to exert our influence abroad, and should rightly be resisted.
They do offer a lot of goods. And they do build lots of infrastructure abroad, like in africa.
Also the theoretic doctrin behind is communism for all people, not just Han Chinese. In practice it has of course become very nationalistic, but I really doubt they dream about ruling the whole world.
Some taoist thinking of maintaining a healthy balance between the forces is also still alive. They would like to become the dominant power, though and that would be arguably worse, than US dominance.
But I actually would prefer it, if no state has dominance over others.
Coming to agreements with local organized crime against foreign enemies is distasteful but pragmatic and usually a good; Even The Joker[1] had some patriotism.
Funding foreign organized crime can be used for good or ill. You can supply the black market with foreign goods to convince them that life would be better under new government (which the CIA did during the cold war), or you can supply drugs and weapons so they kill themselves off. One is an absolute sin; The other is more questionable but generally good.
[1] https://c1.staticflickr.com/5/4051/4703531875_3b13568ed7_b.j...
Ironically public education spent more time talking about how all media lies to their countries and how we need to critically think about news to avoid falling prey to propaganda.
While I definitely have skepticism, it was primarily applied to the American media apparatus. I was skeptic because I don't trust that my government and educational/media institutions would give me the full story and that they would definitely lie and exaggerate for personal gain. American media has lied before, so it's important to be skeptical about what people want you to believe.
Hong Kong made it clear that I was too skeptical of western media and that a much better explanation was that foreign propaganda was sowing doubt and lack of trust in my own country and institutions. Hong Kong made it very clear that China is run by a very evil party and my government and institutions probably aren't lying to me as much as my younger self thought.
So while you told me I was ignorant in an inflammatory way, it was the case that I was ignorant of Chinese history and seeing it unfold in real time has given new perspective. Having spent well over a year in various parts of Asia, I am now much less ignorant of Chinese history.
I think you vastly underestimate the power of ideas like "live free or die" and the solidarity of oppressed countries that live next door to fascist authoritarian regimes.
I'm a middle class American who wants for nothing and I have given serious contemplation to joining the military to protect Taiwan. When no one is willing to make sacrifices to fight for freedom, everyone will become enslaved. If I won't fight for others, they won't fight for me.
I think I'd need a bit more substantiation on "right wing Ukrainians in Hong Kong" to evaluate the point being made.
If China is looking to abuse the world in the way it has been abused, and to cause humiliation to others the way it has been humiliated, then getting the nations workforce to spend their time sitting in front of a computer doing an almost entirely unproductive activity for hours on end, creating a dopamine high that most other activities and certainly hard acitivities like studying can't compete with, then video games share an aweful lot of properties with opium. Real money for digital currency or goods is also something that is ridiculous enough it should probably be heavily regulated.
Video games are (as) insanely popular in China (as everywhere else).
Perhaps, but it's mostly:
>government didn't care
There's no reason to dedicated domestic PRC resources to crackdown (technically) legal cancer drug manufacturers to subsidize US/DEA war on drugs. Priority is to crack down domestic drug trafficing in PRC / golden triangle. The entire reason synthesis moved to Mexico with PRC precursors was because past US admins politically pressured PRC to do something about it. Like if PRC wanted to be politically belligerant, they'd start exporting directly again.
However, the US government keeps hitting them with more and more sanctions, and is calling the entire One China Policy into question, so China stopped cooperating on a range of issues, including drug smuggling. The US government says it wants to separate these issues out, but the Chinese government doesn't want to go out of its way to help a foreign government that's actively trying to destroy the Chinese high-tech industry with sanctions.
There's actually a book by an investigative journalism on the topic: "Wilful Blindness, How a Network of narcos, tycoons and CCP agents infiltrated the West" - https://optimumpublishinginternational.com/shop/wilfulblindn...
Another article also including the fentanyl crisis: https://betterdwelling.com/new-book-dives-into-canadian-real...
Technically speaking, if you want to exceed the limit, you can send in an application form to explain and hopefully get approved to take out more money than that $50,000 limit but the original intent of this law was to restrict money flowing out of China and it is very hard to get approved beyond the limit.
This is it. If you have $100M inside China, can take a 30% loss but end up with $70M in the US that isn't a bad deal.
This is totally unrelated. If you’ve got money outside the country you’ve already won, the point is that Chinese people can’t freely participate in foreign funds.
For example, many funds (sequoia, light speed, etc) maintain separate independent China funds to which the Chinese are restricted. It should be obvious to say, but a Chinese person cannot easily get wealth out of the country using a Chinese investment fund.
> If you have $100M inside China, can take a 30% loss but end up with $70M in the US that isn't a bad deal.
That’s not what GP is describing. GP is describing fraud wherein you lie about your losses (take 5% loss, report 20% loss). Everything you claim you earned goes back to China, but the gap between reported losses and true losses stays outside the country.
Note that you still want to be investing in a somewhat successful business for this scheme, to minimize loss of capital.
Indeed. And look at the valuations those specific funds pay.
> It should be obvious to say, but a Chinese person cannot easily get wealth out of the country using a Chinese investment fund.
It's not easy for a rich person to move $100M either.
I know folks who set up companies who export. They get an invoice from a US company for $1M in goods, then cancel after sending “the company” money.
https://blockworks.co/tesla-sells-bitcoin-for-profit-still-p...
I think most people would consider a billion dollars as a serious amount of money. Inflation isn't that bad yet ;)
Now that the credit tsunami looks to inexorablly ebb under its own weight, a looming population implosion, the party will have to prevent a collective cashing-out from the speculators they once rolled out the red carpet for. esp. in the form of offshore currency.
By trapping them in, to keep people from panic dumping.
I'd say it has something to do with the policy placed when the country needed dollars in 70s and 80s, and no one is taking the risk of removing it. China doesn't want to free foreign exchange on Chinese Yuan, mainly because it has shielded its financial institutes from western hedgefunds attacks. The Chinese financial institutes are new, and not as sophisticated as the western counterparts, IMO, this has been something working well for China, and I would hope it can continue to serve this purpose.
Source: Smuggler Nation: How Illicit Trade Made America by Peter Andreas (2013)
https://www.goodreads.com/book/show/13689883-smuggler-nation
> "Smuggling was also common practice for U.S. merchant ships penetrating the Chinese market for the first time... In the first decade of the nineteenth century, U.S. merchants would also begin to make inroads into the ilicit China opium market, much to the alarm of the British East India Company, which jealously protected its opium-smuggling monopoly. Jacque Downs, the foremost historian of the early U.S.-China opium trade, writes: "The Americans were marvelously ingenious in their exploitation of the commerce. They managed to circumvent both the East India Company's franchise and the Chinese Government's prohibition and carried on a very lucrative, if antisocial and ultimately ruinous trade." Dominated by a handful of players, opium smuggling by American shippers would become increasingly vital to U.S.-China trade relations, with opium sales generating the revenue to buy Chinese goods such as silks and teas. Many of America's most elite merchant families made fortunes in the opium trade: "Girard, Astor, Joseph Peabody of Salem, John Donnell of Baltimore, and the Perkins firm (now allied with Bryant and Sturgis) were among the largest shippers of the drug." "
Yes, legalization/decriminalization plus public health education campaigns and a ban on marketing and doctor kickbacks would probably destroy drug profits around the world.
"Some U.S. officials go further, arguing that Chinese authorities have decided as a matter of policy to foster the drug trade in the Americas in order to destabilize the region and spread corruption, addiction and death here."
Just as it is used in other countries, racial hatred and jingoism is also used in China for political and social control (or to justify immoral profits).
Sales within China would be much more tightly controlled and severely punished. It's about half way to funding Contras with crack sales in LA.
Oh, that's right it would be terrible and millions would suffer from terrorism through nuclear, biological, or chemical means so maybe enforcing your own laws equitably would be a reasonable plan?
Also good thing China has nuke and willing to go beyond 300 warheads.
The simpler explanation is it’s a lucrative way to make money.
It's one of those "just so stories" that people love because it ties everything into a nice bow.
I'm not saying it's irrelevant, but if the Opium Wars never happened does anyone believe they wouldn't be doing the same thing anyways?
I'll bet a lot of people involved in the fentanyl trade don't even know much about the Opium Wars anyways.
It's like claiming smuggling of liquor from Canada to the US during prohibition was Canada's attempt at getting back at the US for the War of 1812. Nahh.. they just wanted to make a crap ton of money.
I’ll bet you aren’t familiar with the grammar school Chinese history curriculum.
Besides, as a modern kingpin, think with scale! Recruiting goes much smoother when you can sell it as “you’re a soldier for the country, fighting an undercover war”. How many companies have “make money” as their mission statement besides Amazon?
The comparison to Canada and prohibition doesn’t pass the smell test. Given that the war of 1812 wasn’t predicated on getting the Canadians into a drunken stupor as a tactic of economic warfare.
Oh, and as far as USA vs British East India Company, it’s all “the west” in the end.
Since we’re speculating freely anyway, why does the revenge have to come in the same form as the initial affront?
(A tael was a unit of Chinese silver bullion; heads references the death penalty for drug running, which applied only to Chinese subjects for most of the opium years.)
Making money and then feeling patriotic that you are helping China slowly destroy America because of what they did in the past.
...
>“They had to know it was illegal,” Ciesliga said. “Just the sheer amount of money, and the volume and consistency and frequency, there’s no legitimate businesses that are moving that kind of money. Any alert anti-money laundering investigator would have detected this kind of activity.”
This article has been given folks conniptions over PRC influence in Americas / Unrestricted warfare memes. Honestly even given generous interpretation of 100s of millions as a billion, over the alleged timeframe (first courier picked up in 2016, we're talking about ~150M per year, aka a few hundred houses in a nice western city or a few thousand international university tuitions. Operation is peanuts. Especially vs 20B-40B per year drug trade in Americas, 20B per year PRC telecom scams, or the 100s of billion per year PRC capital flight racket. Doesn't feel large enough to be on PRC radar for domestic enforcement, nor is PRC short of $$$ to do influence OPs to need laundering via such schemes. That said, I'd like to see a more detailed accounting of PRC/Asian syndicate influenced footprint in the Americas.
This is from 1997 (https://www.fincen.gov/sites/default/files/shared/advisu9.pd...) when Colombia had capital controls that made accessing dollars very difficult:
1) The Colombian drug cartels export drugs to the United States;
2) Drugs are sold for dollars in the U.S.;
3) A cartel in Colombia enters into a “contract” with the Colombian
Black Market Peso Exchanger who is usually in Colombia;
4) The cartel sells its U.S. dollars to the Exchanger’s U.S. agent;
5) Once the U.S. dollars are delivered, the peso exchanger in Colombia
deposits the agreed upon equivalent (of U.S. dollars) in Colombian
pesos into the cartel’s account in Colombia; (At this point, the cartel
representative is out of the picture because he has successfully converted his drug dollars into pesos.)
6) The Colombian Black Market Peso Exchanger now assumes the risk
for introducing the laundered drug dollars into the U.S. banking
system; this is done through a variety of structured transactions;
7) The Colombian Black Market Peso Exchanger now has a pool of
laundered funds in U.S. dollars to sell to Colombian importers who
use the dollars to purchase goods, either from the U.S. or from collateral markets; and
8) Finally, these goods are transported to Colombia.
I'm all for "ending the war on drugs" with regard to marijuana, LSD, mushrooms and such, all the drugs that got banned because they were politically inconvenient at the time. But that doesn't mean ending all regulation for all drugs.
Today you still get it cheap and uncontrolled beyond the queasy uninitiated, you fund organized crime and you get more humans into horrible cycles of criminality when they didn't need to be.
I'm for having narcan available at the same prevalence of a fire estinguisher.
Your experience has to do with tighter regulation of legal fentanyl. Thats its own crusade.
This framing is incredibly misleading, their experience has to do with access to fentanyl. Dropping tighter regulations of legal fentanyl would not have changed their experience, it would have brought their experience of fentanyl access to many more people.
Exposing people looking for fentanyl to such bad experience is not the reasonable or just outcome you present it to be. The physical side-effects and addictive nature of fentanyl means lapses of judgement by well meaning and reasonable people incurs far greater risk of irrecoverable damage than other kinds of bad choices allowed in liberal societies.
And narcan doesn't magically fix that, it only addresses one specific thing (overdoses).
What do you have in mind then?
I’m worried about fentanyl poisoning to people that accepted a risk to take something else, but got hit with a speck of fentanyl instead. A fixed supply chain helps them.
I'd prefer general/leisure use bans on fentanyl and an extensive crackdown on illicit fentanyl distribution.
Drug crackdowns on relatively harmless drugs like marijuana are severely hampered by public opposition to it and partly racist motivations: a lot of people will either not cooperate or fight back against the immorality of discriminatorily punishing the possession of a harmless drug.
That doesn't really happen for crackdowns on less morally ambiguous crackdowns like human trafficking or meth or barbiturates. People believe they are dangerous because they are actually very dangerous and it's not difficult to understand why. It doesn't suffer from a crisis of legitimacy that is critical to government power. The wrong message to take away from the failed war on marijuana is that the government cannot enforce any significant restrictions on substances.
from people I know in the recovery community, they say that getting off fent is way harder than other opiates and suboxone doesn't always work well enough, even at crazy high doses.
it's a disgusting drug.
we're seeing a similar pattern now where cartels are mixing crap like xylazine in. when the only drugs you can get on the street are literal poison, there isn't much choice but to use them.
that's why if pure injectable morphine was available, for free or close to it, I doubt new users would choose to move to fent; especially if fent wasn't easily available.
sure some people will always chose to use more destructive drugs. but we need to stop the next cycle of escalation.
and I don't think most people are advocating selling high dose opiates OTC at the corner store.
i'm personally ok with MDMA, cocaine, speed (pills not rock) being pretty accessible with some type of license limit system, and tools to avoid smurfing/create outreach for those high quantity users move into dependence.
Shot/smoked meth & opiates I think should be more controlled, but still provided for free as part of harm reduction & programs to reduce use.
Favorite quote: "I'd like to congratulate drugs for winning the war on drugs"
Related: new data from CO lends even more credence to legalization/harm reduction: pot use is way down (35% amongst teens)
The idea isn’t ”if we legalize opiates and opioids, no one will ever get hurt from them again”. It’s ”when they are illegal, even more people get hurt”. Just like how alcohol is a substance that causes a very large amount of direct and indirect damage to its users and those around them, yet its prohibition in the US increased the net suffering substantially.
As long as there are opiates/opioids around, they will be abused in a self-destructive way by some (and they are cheap and easy to make, so they will be around as long as there’s demand). We’re currently trying to limit this through enforcing prohibition, which is not particularly effective and has well-known drawbacks. We could instead try to do the same with increased spending on education and treatment. Through that, we could make people less likely to want to use them, we could make people use them as safely as possible when they do, and we could make it so that less of the people who use them start to abuse them in ways that affect their lives negatively. Perhaps this would have better effect than criminalization, while increasing safety and decreasing associated violence.
Of course, this is all very complicated and messy, and every possible policy has negative effects and causes collateral damage. I’m open to arguments saying that this is not how it would play out. But I think the chances are better than with the current approach.
You can buy real estate in the US in cash no questions asked? Is that true?
Big brother wanting its lion share in everything you earn is the crux of it.
Well... At least the infrastructure isn't falling apart and crime isn't rampant...in rich neighbourhoods.
Hell even credit ratings don't cross borders.
A local realtor/finance company works with these clients.
EB5 visa is $550k minimum to buy a business in impacted investment areas designated by USA.
Either way - pretty sure it easy enough to fudge the employees too.
A friend of mine who is an interior designer in an affluent area has received calls from clients that go like this:
1. A Chinese couple showed up at their door with a suitcase of cash in the middle of the day offering to buy their house, on the spot. The cash value was about 2x the value of the home.
2. The client declined. They _just_ remodeled, why leave?
3. The Chinese couple gets upset, not understanding why paying 2x for a home on the spot isn't a sweet deal. They leave to go find someone else willing to take the cash to move out ASAP.
There's not much the government can do, but you now have 2MM in cash that you need to hide. The buyer knows you have 2MM, and who knows who they'll tell about it.
Now, if you accepted cash for the full value of the house and deposited it in a bank, then yes, the bank reports it for you, and the IRS - if it is a priority - would look into it.
The IRS got a massive funding boost recently. Let's see how they use the money in the next little while.
Well if I'm selling a house how am I supposed to know?
the payer was 123 Main St Trust who just bought the property at 123 Main St
the trade is over, it was compliant
when you make enough money the IRS stops being an adversary and that has nothing to do with how well funded the agents are. most of what the IRS does is not enforcement (in number of distinct roles, not frequency or headcount), it is collaboration with wealthy citizens. sooner you learn that, sooner more doors open up for you.
The person we are talking about here is immigrants with dirty cash basically, not doing it properly, a pretty different kind of person in the US gov's eye, and might be drug related, which is a great career boosting lead for their buddies at the DEA.
https://www.nar.realtor/money-laundering-and-terrorism-finan...
This is also usually how drug dealers get busted after paying cash for a car. It goes to the IRS and then basically every federal agency has it (DEA, FBI, etc)
When you buy a house using account balance no actual paper note is involved but it is referred to as "cash".
If you’re expecting a wire transfer being a loophole, the cash has to get into the bank where the funds exist and they are required reporters for AML/SAR.
Comment: Nation states have been waging asymmetric warfare for long time, this is not new. China has become a major player in the illegal drug trade by supplying money laundering and chemicals [1]. Oldest modern reference I am aware of on the topic as it relates to China is a book on military strategy written in 1999 by two colonels in the People's Liberation Army titled Unrestricted Warfare.[2]
__________________
[1] https://en.wikipedia.org/wiki/Allegations_of_CIA_drug_traffi...
The US has had maintain a certain "better than that" image at times but states have managed their images for a long time too.
They restrict currency movements, but that doesn’t work when you can ship out goods and deposit payments overseas. Drugs is one way to do this, but so is virtually any other good.
Sure there's lots of margins on the marketing side that's captured and retained wealthy countries, but China is capturing some percentage of so many finished products.
It’s not just high level people moving capital our of China. It’s any well-to-do Chinese. Look at what happened to Vancouver. Basically a lot of people wanted to bring their cash out of China to avoid things like taxation, government crackdowns, etc. in general just protect their wealth because western governments are more predictable and friendlier to wealth inequalities.
But more importantly, all of that cash going to Canadian real estate and property owners is money taken out of the domestic Chinese economy.
It allows capital flight to occur without draining the official central bank reserves of dollars.
> But more importantly, all of that cash going to Canadian real estate and property owners is money taken out of the domestic Chinese economy.
If you read the article it talks about how the money is used to buy goods in China that are then sent to Mexico so it's not a total loss.
China gets to turn the historical tables on the Opium wars.
And it's not like the US/EU banking system isn't complicit in money laundering. When they get caught, they are handslapped a pittance. And we tolerated outrageous opium farming by the former corrupt Afghanistan government.
The US needs a rational policy to deal with its bored suburban teenager problem that is turning Latin america into a dual-continent mafia state that puts Putin to shame.
A prohibition on murder is a regulation. In a totally free market a corporation could murder to obtain market advantage. This is what criminal economics involves.
But of course free market zealots won't want to allow unregulated murder. There's no assurance of property rights (which is also regulation). So there are no true free market advocates, merely people that want to set the regulation boundary to the point that maximally benefits them.
Already seen with Russian oligarchs sending their yachts to HK
The US shall, of course, return the favour
The problem is China can touch your money in that tax haven.
https://en.wikipedia.org/wiki/Allegations_of_CIA_drug_traffi...
It is policy in the US. There are a number of simple policy changes that would make money laundering much harder for most. Start with anonymous corporation ownership.
Or you could get serious and enforce already existing AML laws against large banks. Of course then a lot of people who actually matter would be in trouble, and more would have to pay taxes, and we can't have that, now can we?
Who does this? Non-public or behind an attorney is very different from anonymous.
There is a legal difference, of course, between "truly anonymous" and merely effectively so. I am including situations like the designated trustee knows who the owner is, and if subpoenaed, will disclose that the owner is an Isle of Man corporation with a Panama address.
Here is discussion about it for Delaware corporations, but my understanding is South Dakota is currently the most popular US state in which to incorporate for, uh, privacy reasons.
https://gfintegrity.org/press-release/delaware-bills-mere-wi...
Which is an important difference when it comes to AML. We don't have anonymous corporations in America. Computers have made it easier to create and track daisy chains of entities, which makes tracing beneficial ownership difficult. But that's a far cry from it being U.S. policy to encourage that chaining.
> the designated trustee knows who the owner is, and if subpoenaed, will disclose that the owner is an Isle of Man corporation with a Panama address
They would also disclose the signer, likely a lawyer and/or registrar, along with the method and contents of communications with them. This is tedious. But one can only do one or two hops through these methods before running out of (a) people who will keep your secret without (b) losing your chain of ownership and with it control of the underlying asset.
There's an awful lot of opaque money flow in entities like this, and a lot of them fly under the radar.
Meaningless. And the government does certainly know that (and could care less). The EU wants transparency around that but mostly for tax purposes and bureaucracy.
What matters is the cash-flow and transaction-flow. In this case, bank accounts, crypto transactions/exchanges, real-estate transfers, cash movement, etc...