Thread: Raids on illegal pot grow houses finding more Chinese nationals, mysterious financing

Raids on pot grow houses finding more Chinese nationals, mysterious financing

BY STUART LEAVENWORTH AND BRAD BRANAN
sleavenworth@mcclatchydc.com, bbranan@sacbee.com
OCTOBER 17, 2017 7:55 AM

SACRAMENTO Police are arresting large numbers of Chinese nationals in raids on illegal marijuana operations in California, Colorado and other states, raising questions about who is financing these grow houses and recruiting the immigrants to tend them.

In one recent indictment obtained by McClatchy, money from a southern China bank account was transferred to California to pay for down payments on homes that later become grow houses, suggesting that some investors in China are putting money into the illicit U.S. marijuana market.

“These are sophisticated operations,” said Thomas Yu, a longtime Asian gang investigator with the Los Angeles County Sheriff’s Department. “When we hear about Asian gangs, we think about young guys doing drive-by shootings. This isn’t like that. These are organized ad hoc enterprises, run by businessmen. They are in it for the profit.”

In and around Sacramento, police have arrested numerous Chinese suspects in recent raids on indoor pot farms. But raids have also taken place in more far-flung locations, such as Garfield County in Colorado’s northwest corner.

Last year, Garfield Sheriff Lou Vallario and his deputies descended on an illegal marijuana farm, arresting 14 suspects. To Vallario’s surprise, all 14 were Chinese nationals.

Vallario and other law enforcement officials are quick to note that people from many backgrounds — U.S. citizens, Mexicans, Russians — are involved in the illegal marijuana trade.

“We’ve had nationals from all over coming to this part of Colorado,” he said. “There are grow houses popping up in every neighborhood.”

But in recent years, Chinese operators seem to be expanding their reach:

• In three separate raids in September, authorities in California’s Yolo County and the cities of Roseville and Elk Grove arrested 13 Chinese immigrants in raids on marijuana grow houses.
• In a case filed in U.S. District Court in July, prosecutors allege that 10 Chinese suspects with out-of-state driver’s licenses were growing marijuana inside nine Sacramento-area homes. More than 7,700 plants were seized.
• North of Sacramento, Yuba County sheriffs arrested 14 Chinese — some U.S. citizens and some with Chinese passports — in three marijuana busts between March and May. Those raids hauled in 8,000 plants, six firearms and thousands of dollars in U.S. currency, according to the county, which says it has turned the case over to the U.S. Attorney’s office.
• In July, a federal jury in Nevada convicted a 66-year-old Chinese man, Jianguo Han, on charges of running a large-scale marijuana operation in two Las Vegas houses. A month earlier, Colorado indicted five Chinese immigrants and 69 other defendants. They are accused of participating in what Colorado Attorney General Cynthia Coffman called “the largest illegal marijuana trafficking ring” since the state legalized the drug in 2015.

Take a look inside an illegal marijuana grow house in Merced

The Merced County Sheriff's Office busted several illegal marijuana grow operations in Merced Friday, Aug. 18, 2017. Here is a look inside one of them.
vshanker@losbanosenterprise.com


Coffman and other law enforcement officials say that marijuana growers and smugglers are targeting states such as Colorado and California assuming they can operate in the shadows of commercial enterprises that are licensed to grow pot. Coffman called the June indictment “a prime example that the black market for marijuana has not gone away since recreational marijuana was legalized in our state.”

WHEN WE HEAR ABOUT ASIAN GANGS, WE THINK ABOUT YOUNG GUYS DOING DRIVE-BY SHOOTINGS. THIS ISN’T LIKE THAT. THESE ARE ORGANIZED AD HOC ENTERPRISES, RUN BY BUSINESSMEN.

Thomas Yu, gang investigator for Los Angeles County Sheriff’s Department

Yu, who has investigated scores of large-scale marijuana operations, say the Chinese grow houses share much in common. Many are purchased with cash and are located in quiet, unassuming suburbs. Electricians are brought in to bypass the electricity meters, so growers can tap a free source of power to run grow lights and fans.

They can reap enormous profits. A single pot house can produce three crops annually, which can net a grower $1 million or more, depending on the size of the grow and the quality of the bud, Yu said. Often the marijuana is shipped to markets on the East Coast, one reason that Chinese immigrants from New York have recently been arrested in Sacramento-area raids.

Yu said that he’s seen a general pattern with the pot-house caretakers he’s arrested. Many are experienced farmers from poor Chinese provinces, often in their 50s and 60s.

Some have been smuggled into the United States, but many arrive with Chinese passports, presumably arranged by the grow-house operators, he said.

Having obtained B-1 or B-2 visas, they are allowed to stay in the United States up to six months. If arrested, they often provide little help to investigators, even when Mandarin translators are brought in.

In Garfield County, Vallario and his deputies dug up 3,000 marijuana plants from the Chinese grow operation they raided last year. But when investigators tried to question the 14 Chinese suspects they arrested, they quickly encountered language barriers. “We didn’t do a very thorough job of interrogating them,” said the sheriff. He later turned the case over to the federal Drug Enforcement Administration, which declined to comment.

In Sacramento, attorney John B. Renwick has carved out a practice representing Chinese arrested on drug charges and other offenses. Fluent in Mandarin, with a bi-lingual web site, Renwick said he’s represented 100 Chinese arrested for marijuana growing over the last decade. Often the court appoints him because of his language skills.

Like Yu, Renwick said many the Chinese arrested are recent arrivals, often misled into thinking that large-scale marijuana grow houses are legal under California medical marijuana law.

While his Chinese clients rarely reveal anything about the bosses that recruited them, Renwick said he’s gleaned some information from evidence that has come out in court proceedings.

In one case in which he represented one of several defendants, for instance, he learned that the operation “was an arrangement between three people — a guy, I guess you could call him a kingpin, who put up money to put people in houses. He was the ‘money guy.’ The person who took title in his name was the ‘title guy.’ And then there’d be a third guy who managed the grow, and they split the profit three ways,” Renwick said.

Yu said that China is a source for at least some the money financing grow houses, and the July indictment of 10 Chinese suspects supports his contention. Prosecutors in that case allege that one female suspect, Xiu Ping Li, received three separate wire transfers of $48,985 each in early 2016 to purchase three homes that ultimately became Sacramento grow houses.

The money was allegedly transferred from a China Construction Bank account in Fujian province to Li’s Bank of America account. According to the indictment, she is accused of international money laundering and other offenses. The money laundering charge could get her up to 20 years in prison.

In California and other states, Chinese busted in marijuana grow operations generally receive probation and face potential deportation. But for many years, China has generally refused to take back its citizens convicted of U.S. crimes, in part because the United States — out of human rights concerns — has refused to extradite Chinese that Beijing claims are criminal fugitives.

As a result, many Chinese busted for pot growing “end up in a legal limbo,” according to a California court interpreter involved in several of these proceedings.

“I’m aware of several cases where (Chinese) people have been waiting for months and months,” said the interpreter, who asked to remain nameless because he was not authorized to talk to the media. “China will not take them back. So they periodically report to an ICE agent in town and get on with their lives. But they have no legal status.

Some are stateless. Their Chinese passports have expired.”
Drug detectives are overwhelmed these days with traffickers of heroin, fentanyl and other opioids. Yet illegal marijuana trafficking shouldn’t be seen as a “victimless crime,” said Yu. Last year, authorities arrested an alleged marijuana grower named Andy Chen and charged him with murdering one of his associates, Min Gu, a Chinese national. Police found Gu’s body in the trunk of a parked Lexus sedan in Monterey Park, a suburb east of Los Angeles, after neighbors reported a foul odor wafting from the vehicle.

By a margin of 57 to 43 percent, California voters last year approved Proposition 64, which legalized marijuana for persons 21 years and older. The law takes effect Jan. 1, requiring businesses to obtain state and local licenses to grow and sell marijuana for recreational use.

As in Colorado, California proponents have argued that legalization will help stamp out black-market marijuana. Many Colorado officials say that hasn’t happened.

According to a state study last year, police nationwide made 166 seizures of Colorado marijuana bound for other states between 2014 and September of 2015.

In Garfield County, Sheriff Vallario estimates that 90 percent of the marijuana grown in Glenwood Springs, the county seat, is destined for out-of-state black markets.

“Everyone in our town of 9,900 people would have to be stoned 24 hours a day just to smoke half of what is being grown,” he said.

Stuart Leavenworth: 202-383-6070, @sleavenworth

http://www.modbee.com/news/article179260411.html

I.C.E. News Releases

NARCOTICS

03/07/2019

3 SoCal men arrested in scheme in which Chinese money allegedly funded 7 Inland Empire marijuana grow houses


LOS ANGELES – Three men were arrested this morning on federal charges alleging they took part in a scheme that used millions of dollars wired from China to purchase seven residential homes in San Bernardino County that were converted into illegal marijuana grow houses.

The three defendants arrested today pursuant to a federal criminal complaint are:

• Lin Li, a.k.a. Aaron Li, 37, of Chino, the U.S.-based coordinator of the alleged scheme;
• Ben Chen, 42, of Alhambra, who allegedly took care of the marijuana grows; and
• Jimmy Yu, 44, of Pasadena, a second alleged grow house caretaker.

The complaint charges the three defendants with one count of manufacturing, distributing, and possessing with the intent to distribute marijuana. The three men are expected to make their initial appearances this afternoon in U.S. District Court in Los Angeles.

In conjunction with the arrests, law enforcement executed search warrants at Li’s home and seven marijuana grow houses in Chino, Ontario and Chino Hills. As a result of the searches, authorities seized approximately 1,650 marijuana plants from several grow houses, as well as cash at Li’s house currently estimated to be at least $80,000.

Today’s takedown is the result of a 14-month investigation that was initiated by the San Bernardino County Sheriff’s Department and soon after was joined by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).

In relation to the criminal charges, the U.S. Attorney’s Office, in coordination with the HSI’s Asset Identification and Removal Group, has begun the process to forfeit the seven homes where marijuana was being grown. The properties are cumulatively worth more than $5 million.

According to a 120-page affidavit in support of the criminal complaint, Li, a real estate agent, orchestrated a scheme that purchased residential properties through transactions designed to conceal the homes’ true owners, converted the houses to marijuana grow operations, and trafficked marijuana, with most of the processed marijuana being sold to customers in California and Nevada.

After receiving financing from sources in China, Li “acted as the realtor for the purchase of [seven residences], which he then converted into illegal marijuana grow houses,” the affidavit states. “Li coordinated the purchase of the properties, managed them after purchase, paid their utilities and taxes, and established shell companies for the purpose of managing the properties’ finances.”

Investigators believe Li attempted to distance himself from the conspiracy by using Chen and Yu to manage day-to-day operations at the grow houses, to help with out-of-state distribution of the marijuana, and to return marijuana sale proceeds. Li also used bypasses to physically divert electricity directly from power lines, thus stealing power from the electric companies, hiding the grow houses’ high-power usage from law enforcement, and creating fire risks in neighborhoods. According to the affidavit, Li’s attempts to insulate himself from culpability went as far as creating fake leases for some of the properties, documents that included fake tenants, forged electronic signatures, and special clauses that purported to prohibit the fake tenants from cultivating marijuana at the homes.

“In states that have decriminalized marijuana, we have seen an influx of foreign money used to establish grow operations, with much of the marijuana being destined for out-of-state consumers,” said United States Attorney Nick Hanna. “By establishing illegal drug operations in residential neighborhoods, the defendants increased the risks to law-abiding homeowners, caused neighborhood blight, and stole power from utilities.”

“HSI, together with our law enforcement partners, will continue to target transnational criminal organizations that think they can use our neighborhoods as locations for criminal activity,” said Joseph Macias, Special Agent in Charge for HSI Los Angeles. “Today’s arrests and searches, coordinated jointly with the San Bernardino Sheriff’s Department and the U.S. Attorney’s office, are the next step in shutting down criminals who would trash our communities for their own greed.”

“Deputies and detectives from the San Bernardino County Sheriff’s Department assisted HSI with multiple narcotic search warrants. We assist our federal law enforcement partners regularly when requested,” said Sheriff John McMahon. “Our county does not support criminal operations like this and will make every effort to eliminate these threats to our local communities.”

According to the affidavit, down payments for most of the grow houses were traced back to wire transfers from China, and several of the properties were bought by “straw buyers” who actually had nothing to do with the transaction. The titles for most of the homes were transferred, shortly after they were purchased, to limited liability companies associated with Li, who served as the homes’ property manager.

For example, in relation to one of the homes, the affidavit describes how a straw buyer purchased a Chino Hills residence in 2015 for $782,000. The purported buyer was named as chief executive officer of an LLC that Li had established, and that LLC received a $1 million wire transfer from a Hong Kong-based investment group. The vast majority of the purchase price of the house was then wired from the LLC’s bank account. Li received a commission check as the realtor for the sale and also served as the home’s property manager, the affidavit alleges. In early 2018, a neighbor complained to law enforcement about the “overwhelming” smell of marijuana coming from the Chino Hills home and how no one seemed to live there, court papers state.

The total purchase price for the seven homes, which were bought between July 2013 and September 2017, was $4,067,882, according to the affidavit.

In June 2018, deputies and HSI agents executed a search warrant and seized 1,038 marijuana plants at an eighth grow house in Chino Hills believed to be part of the same criminal scheme.

This matter is being prosecuted by Assistant U.S. Attorneys Carley Palmer of the Organized Crime Drug Enforcement Task Force Section and Jonathan Galatzan of the Asset Forfeiture Section.

Last Reviewed/Updated: 03/08/2019

https://www.ice.gov/news/releases/3-...-inland-empire

I.C.E. News Releases

CONTRABAND

05/18/2020

Los Angeles-area real estate agent pleads guilty to coordinating multi-million-dollar scheme that funded marijuana grow houses




LOS ANGELES – A Chino real estate agent pleaded guilty today to a federal criminal charge for coordinating a scheme that used millions of dollars to purchase nine residential homes in San Bernardino County that were then converted into illegal marijuana grow houses.

Lin Li, a.k.a. Aaron Li, 38, pleaded guilty to one count of conspiracy to manufacture, possess and distribute at least 1,000 marijuana plants.

This case is the result of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Los Angeles and San Bernardino County Sheriff’s Department This case is being prosecuted in conjunction with the Organized Crime Drug Enforcement Task Force.

Between May 2013 and September 2017, Li facilitated the purchase by Chinese investors of nine residential homes in Chino, Chino Hills and Ontario. While exercising control over these properties, Li converted or allowed the conversion of the houses to marijuana grow operations. Li also admitted in his plea agreement that the conspiracy trafficked marijuana, with most of the processed marijuana being sold to customers in California, Nevada and New York.

Between October 2016 and September 2018, Li also created and signed false lease documents naming straw tenants for seven of the homes so they could be used to grow marijuana without being traced back to him or the other marijuana growers, according to Li’s plea agreement. Some of the false leases contained clauses prohibiting marijuana cultivation.

The down payments for most of the grow houses were traced back to wire transfers from China. The titles for most of the homes were transferred, shortly after they were purchased, to limited liability companies associated with Li, who served as the homes’ property manager.

Li and his co-conspirators physically diverted electricity directly from power lines, thus stealing power from the electric companies, hiding the grow houses’ high power usage from law enforcement, and creating fire risks in neighborhoods, according to court documents.

In early 2018, a neighbor complained to law enforcement about the “overwhelming” smell of marijuana coming from one of the Chino Hills homes and how no one seemed to live there, court papers state.

HSI special agents executed search warrants in 2018 and 2019 at Li’s home and the nine marijuana grow houses in San Bernardino County.

As a result of the searches, agents seized approximately 4,342 marijuana plants and 91.72 kilograms of processed marijuana from the grow houses, as well as approximately $89,995 in drug proceeds from Li’s house.

The total purchase price for the seven homes, which were bought between July 2013 and September 2017, was $4,067,882, according to court documents.

Li also admitted in his plea agreement that these marijuana grows violated California law because they were not licensed to cultivate or sell marijuana, and all of the grow houses were in cities that prohibited commercial marijuana activity.

U.S. District Judge George H. Wu has scheduled a March 22, 2021 sentencing hearing. As a result of today’s guilty plea, Li faces a statutory maximum sentence of life imprisonment.

A second defendant in this case – Jimmy Yu, 45, of Pasadena, an alleged grow house caretaker – is scheduled to go to trial in this matter in February 2021.

Ben Chen, 43, of Alhambra, who also took care of the marijuana grows, pleaded guilty in May 2019 to one count of conspiracy to manufacture, distribute, and possess with intent to distribute marijuana. Chen is scheduled to be sentenced on August 17.

This case is being prosecuted by the U.S. Attorney for the Central District of California’s Criminal Appeals and Asset Forfeiture Sections.

Last Reviewed/Updated: 05/18/2020

https://www.ice.gov/news/releases/lo...million-dollar