Home AML AML News Co-Owner of Los Angeles County Toy Company Sentenced to Federal Prison in...

Co-Owner of Los Angeles County Toy Company Sentenced to Federal Prison in Drug Money Laundering Case

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A Diamond Bar woman who, along with her husband, owns a Los Angeles-area toy wholesaler, was ordered today to serve a total of 14 months in custody for participating in an elaborate scheme known as a Black Market Peso Exchange, which is an underground money-transfer system that enables international drug trafficking organizations to launder narcotics proceeds.

The scheme used “structured” cash deposits in the United States to launder illicit proceeds generated by drug trafficking organizations based in Mexico and Colombia. Structured deposits are cash deposits of $10,000 or less that are designed to avoid laws requiring all cash transactions over $10,000 to be reported to federal authorities. From 2005 through 2011, approximately $3 million in structured, out-of-state cash was deposited into Woody Toys’ bank accounts, according to court documents. During that same time, Woody Toys took in approximately $3 million in cash without filing the required federal documents.

As part of the Black Market Peso Exchange scheme alleged in this case, foreign toy retailers with Colombian and Mexican pesos would contact currency brokers to buy discounted U.S. dollars, which they used to purchase merchandise from Woody Toys. The dollars being “sold” were allegedly proceeds from illegal drug sales that had been deposited in the toy company’s accounts or delivered to the business. The Colombian or Mexican pesos the currency broker received from the foreign toy retailer were remitted to the drug trafficking organizations.

In a sentencing memo to the court, prosecutors described Woody Toys as “the last ‘spoke in the wheel,’ that cleaned illicit proceeds and enabled drug trafficking organizations to convert their dirty dollars into clean pesos.”

DEA press release link: click here