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Financial Crimes

L.A. toy company accused in scheme to launder foreign drug proceeds

Millions of dollars in 'structured' deposits in U.S. allegedly went to clients in Mexico and Colombia

LOS ANGELES - A federal grand jury indicted a Los Angeles toy company Thursday in a complex financial scheme to launder millions of dollars for drug trafficking organizations in Mexico and Colombia. The drug proceeds, which were allegedly laundered through numerous "structured" cash deposits in the United States, were returned to clients when stuffed animals -- including Teddy bears and Topo Gigio dolls -- were exported to the foreign countries and sold to generate local "clean" money.

Following a two-year probe by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) and the California Attorney General's Bureau of Narcotics Enforcement (BNE), three top-level executives of the Angel Toy Corporation were arrested Friday morning at the business on various federal charges. The charges include conspiracy to structure cash transactions to avoid federal requirements that any cash transaction over $10,000 be reported to authorities.

"It's no small irony that a multi-million dollar company which promoted itself as retailer of cuddly stuffed animals was allegedly acting as a financial linchpin for drug trafficking operatives in Colombia and Mexico," said ICE Director John Morton. "It may be a toy company, but we believe these defendants' pursuits were anything but child's play. Businesses that launder profits for drug trafficking organizations should be on notice there will be a high price to pay for helping further these dangerous criminal enterprises."

"Consumers in Mexico and Colombia thought they were buying Teddy bears and Topo Gigio dolls when, in reality, they were unwittingly helping to launder millions of dollars of drug profits for ruthless drug cartels," said California Attorney General Edmund G. Brown Jr. "Today's indictments stopped this obscene travesty."

The arrests stem from a five-count indictment that charges a total of five defendants, including two owners of Angel Toy Corp. and a Colombia-based businessman who allegedly oversaw the importation of the toys into Colombia.

The three arrested Friday morning are: Meichun Cheng Huang, 57, of Irvine, Calif., a co-owner of Angel Toy Corp.; Ling Yu, 52, of Arcadia, Calif., a co-owner of Angel Toy Corp. and its chief executive officer; and Xiaoxin "Judy" Ju, 48, of San Gabriel, the company's accountant.

Authorities are seeking to take custody of the fourth defendant in the case, Colombian businessman Jose Leonardo Cuevas Otalora, 50, in Bogota. Friday afternoon, ICE's Attaché Office was coordinating with the Colombian National Police and the U.S. Department of Justice to make the arrest. The fifth defendant in the case is Angel Toy Corporation, which is located at 930 South Alameda Street in Los Angeles.

Additionally, the indictment seeks the forfeiture of more than $8.6 million dollars, which is the amount of money allegedly laundered over a four-year period, from 2005 to 2009.

The case is being prosecuted by the United States Attorney's Office in Los Angeles.

According to the indictment, Huang and Yu directed their Colombian and Mexican clients to drop cash off at the company's Los Angeles headquarters or deposit it directly into the company's bank accounts. The defendants allegedly instructed Angel Toy's employees not to accept deposits of more than $10,000, to avoid federal currency reporting requirements. When clients made cash deliveries in excess of $10,000, the indictment states that the defendants divided the currency into amounts of less than $10,000 before depositing it into the company's accounts.

Investigators say that after receiving the deposits, Angel Toy executives wired the money to China to purchase stuffed animals. The toys were subsequently exported to Colombia, where Cuevas arranged for their sale. The Colombian pesos generated by those sales were then used to reimburse the Colombian drug traffickers. This type of scheme, which enables criminal organizations to launder drug profits using international trade, is often referred to as a "black market peso exchange."

All five defendants are charged with conspiracy to structure case transactions, a charge that carries a statutory maximum penalty of five years in federal prison. Angel Toy Corp. is charged with conspiracy to launder money. Yu is charged with conspiracy to smuggle cash out of the United States, as well as structuring the exportation of monetary instruments, charges that cumulatively carry a maximum penalty of 15 years in prison. Huang is charged with witness tampering for allegedly intimidating and coercing an Angel Toy employee who was called earlier this year to testify before a federal grand jury about the case. The witness tampering charge carries a maximum penalty of 20 years.

The three Angel Toy executives arrested Friday morning are expected to make their initial appearances in United States District Court Friday afternoon.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty.

For more information, visit www.ice.gov.