LA toy company owners sentenced in international money laundering scheme

LOS ANGELES – The two owners of a local toy manufacturing company were sentenced Tuesday to over three years in federal prison for their roles in a cash "structuring" scheme that prosecutors say was linked to the Black Market Peso Exchange (BMPE) that allows drug cartels to launder the proceeds of their narcotics trafficking.

The business owners were sentenced along with their company, Angel Toy Company (ATC), which manufactured plush toys while developing an international reputation for laundering money generated by drug trafficking, according to court documents. The case was the result of an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the California Attorney General's Bureau of Narcotics Enforcement.

The company co-owners sentenced today were:

• Meichun Cheng Huang, 58, of Irvine, ATC's vice president in charge of sales, who was sentenced to 37 months in federal prison; and, Huang's sister,
• Ling Yu, 53, of Arcadia, the president of ATC, who also was sentenced to 37 months in prison.

Huang and Yu were sentenced by United States District Judge S. James Otero, who remanded both defendants into custody. In addition to the prison terms, Judge Otero ordered each defendant to pay a $20,000 fine, and also sentenced ATC, by ordering the company to pay a $200,000 fine.

All three defendants were ordered to forfeit $1 million to the government.

"Businesses that launder profits for drug trafficking organizations should understand that they will actually be the ones paying the price when they forfeit their freedom and the proceeds of their criminal acts," said Claude Arnold, special agent in charge of HSI Los Angeles. "HSI will continue to relentlessly target members and associates of organizations that seek to exploit vulnerabilities in our trade, travel and financial systems in order to earn, move and store their illegitimate gains."

In March 2011, all three defendants pleaded guilty to conspiracy to structure currency transactions. In court documents, all three defendants admitted that, from 2000 through July 2010, there was an agreement that cash deposits into ATC's bank accounts had to be under $10,000 in order to avoid financial reporting requirements, specifically the filing of a Currency Transaction Report.

In documents filed in relation to today's sentencings, prosecutors portrayed the structuring scheme as part of a widespread and long-running money laundering scheme. The investigation into ATC began in 2008 after multiple sources informed federal law enforcement authorities "that ATC was internationally known for laundering narcotics proceeds." ATC was part of the BMPE – "a method of trade-based money laundering that exchanges drug money in the United States for 'clean' Colombian pesos through the international purchase and shipment of goods (in this case, toys)," according to one sentencing memorandum.

The BMPE is a complex, money laundering scheme in which drug proceeds enter the legitimate financial system through numerous "structured" cash deposits into accounts held by a legitimate business in the United States. The money is returned to drug traffickers when actual goods – in the case of ATC, stuffed animals such as Teddy bears – are exported to foreign countries and sold to generate local "clean" money.

The investigation revealed two primary ways in which ATC received and structured cash: in some cases, people affiliated with drug traffickers simply dropped cash at ATC's offices in downtown Los Angeles; the second method involved cash deposits made directly into an ATC bank account, sometimes by individuals located as far away as New York. During one four-year period, the investigation tracked more than $8 million in cash deposits into ATC accounts, and not a single transaction was for more than $10,000, according to court documents.

For more information, visit www.ice.gov.