In federal crackdown on Chinese money laundering in Chicago, man admits helping send $3M to Mexican cartels
A Chicago man has pleaded guilty in federal court to helping a money-laundering ring move about $3 million in illegal drug proceeds from Chicago to Mexico through China.
Last week, Weiliang Zheng admitted to participating in international money laundering. Under sentencing guidelines, he could get at least 70 months in prison. His alleged partner, Di Xiong Luo, is awaiting trial.
From 2016 to 2018, according to prosecutors, Zheng and Luo picked up drug proceeds in parking lots in the Chicago area, counted the money and delivered the cash to a contact.
Undercover investigators posing as money launderers arrested the two in April 2018 after they allegedly gave the officers $95,000 in drug cash, along with the numbers of the Chinese bank accounts into which the proceeds were supposed to be transferred.
The indictment against Zheng and Luo was unsealed in 2023. Their roles in the alleged money laundering scheme didn’t appear to have been very lucrative.
For his nearly two years of work as a money pickup man, Zheng, who lived in McKinley Park on the Southwest Side, made about $50,000, prosecutors said. Luo, who now lives in Oregon, was too poor to afford a plane ticket and hotel to come to Chicago for hearings, so the court ordered the government to pay for it.
Their case was part of a larger effort by the government to crack down on Chinese money-laundering rings that were helping drug cartels move cash from Chicago to Mexico through China.
In late 2015, the federal Drug Enforcement Administration began noticing Chinese nationals were laundering money for the cartels. Chinese operatives were replacing Mexican money launderers, who were slower at their work and demanded higher fees than their Chinese counterparts.
In 2019, a federal Homeland Security Investigations case in Chicago led to charges against two Chinese men living in Mexico. They were accused of running a ring that transferred tens of millions of dollars in illegal U.S. drug money to Mexican cartels via China.
The money came from drug sales in Chicago, New York, Los Angeles and other areas in 2017 and 2018.
The operation used “mirror swaps” in which U.S.-based Chinese brokers transferred Chinese currency from bank accounts they held in China to Mexico-based money launderers’ accounts in China.
This chart, introduced in court, shows how cash from Mexican drug cartels was moved to Chinese money-laundering organizations. Xianbing Gan, a money-laundering broker in Mexico, had a bank account in China. An associate in the United States collected cash from cartel drug sales, removed an equal amount from a bank account in China and deposited it in Gan’s Chinese account to get around the U.S. banking system and try to avoid detection, according to prosecutors, in what’s called a mirror swap. A second swap was then done in Mexico to complete the money-laundering and try to make the illegal drug proceeds look like a legitimate business transaction.
U.S District Court trial exhibit
The amount of Chinese currency they transferred was equal to the amount of U.S. drug currency that the U.S.-based brokers kept.
The scheme allowed the ring to bypass the U.S. banking system and help cartels avoid huge losses of cash to law enforcement agencies stopping vehicles transporting drug proceeds to Mexico, officials said.
One convicted ringleader, Mexico-based money launderer Xianbing Gan, was sentenced to 14 years in prison. During his 2020 federal trial in Chicago, Gan said he was a seafood merchant — and not knowingly involved in the drug business.
In 2023, Gan’s partner, Haiping Pan, pleaded guilty in federal court in Chicago to laundering $62 million in drug money. He was sentenced to 10 years in prison. Prosecutors said he was among the highest-level money launderers convicted in the United States.
Pan moved from China to Guadalajara, Mexico, in 2004. Before he got into money laundering, he operated a business that imported inexpensive products, such as toys, his attorney said in a court filing. He made about $250,000 for his money-laundering work, prosecutors said.