Chinese organized crime increasingly becomes an issue in the US

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Chinese organized crime is becoming an increasing problem in the United States, with gangs involved in sectors ranging from illicit drugs to fraud.

Here are some of the major categories of crimes being committed by Chinese nationals:

Drug cartels

The Justice Department this week announced that 24 people were charged in connection to a scheme involving Los Angeles-based associates of the Sinaloa drug cartel allegedly conspiring with Chinese underground bankers to launder drug trafficking money in the U.S.

Since 2021, more than $50 million in drug proceeds have passed between the Sinaloa Cartel, one of the most powerful and violent drug trafficking groups in the world, and Chinese underground money laundering, according to the indictment. The Sinaloa Cartel is the primary gang responsible for the recent influx of fentanyl into the U.S., and for the accompanying increase in violence at the U.S.-Mexico border.

Wealthy Chinese nationals who live in China drove the scheme, as they looked to evade their country’s law that bars them from transferring more than $50,000 a year out of China. “Drug traffickers increasingly have partnered with Chinese underground money exchanges to take advantage of the large demand for U.S. dollars from Chinese nationals,” the Justice Department said.

It’s not just on the finance side of drugs, either. Chinese organized gangs are “dominating” the illegal marijuana market in the U.S., according to an investigation earlier this year by ProPublica.

The Chinese mafias have operated in Oklahoma since 2018, when the state legalized medical marijuana. There is no limit on the number of growing operations, and now, regulators say that the industry is second only to oil and gas in the state.

Oklahoma is the top supplier of illegal marijuana, which is estimated to generate between $18 billion and $44 billion a year. Foreign mafias – more than 80% of which originated in China – have been linked to more than 3,000 illegal growing operations in Oklahoma, state investigators found.

“The profits from the marijuana trade allow the Chinese organized criminal networks to expand their underground global banking system for cartels and other criminal organizations,” former senior DEA official Donald Im said.

Technology

The recent arrest of five Chinese nationals for an alleged trans-Pacific counterfeit technology scheme that cost Apple at least $12.3 million highlighted the issue of Chinese organized crime.

Homeland Security Investigations Los Angeles Special Agent in Charge Eddy Wang said earlier this month that the people who were arrested were part of a “transnational criminal organization,” which had been coordinating with co-conspirators in China for the fraudulent return scheme for nearly a decade.

The defendants, who were residing in California, are charged with more than 20 crimes, including wire fraud, mail fraud and aggravated identity theft. The scheme involved having counterfeit Apple products with identification numbers matching genuine products shipped to the U.S., prosecutors alleged. The defendants are accused of then going to the Apple store with the products, which were under the store’s warranty program, and returning the devices, which were then repaired or replaced with a genuine device. The actual Apple device was then shipped to co-conspirators and resold at a substantial profit, according to U.S. officials.

Those who were indicted include alleged ringleader Yang Song, 40; Junwei Jiang, 37; Zhengxuan Hu, 26; Yushan Lin, 30; and Shuyi Xing, 34.

In another incident, two Chinese nationals were charged last month with conspiring to illegally export U.S. technology, including a semiconductor manufacturing machine.

In January, four Chinese nationals were charged with a years-long conspiracy to illegally smuggle electronic components from the U.S. to Iran’s Islamic Revolutionary Guard Corps and Ministry of Defense and Armed Forces Logistics.

Gift Card Fraud

Chinese organized crime may be responsible for a gift card fraud scheme that has cost U.S. consumers hundreds of millions of dollars or more, according to another ProPublica investigation.

The scheme, which is known as “card draining,” involves using stolen card numbers to take money off of gift cards before the owner can use it.

The Department of Homeland Security launched a task force to combat the scheme, and it has resulted in the arrests of about 100 people, including 80 to 90 Chinese nationals or Chinese Americans. Another 1,000 people are estimated to be involved.

While it is unclear how many illegal immigrants from China may be involved in organized crime, the number of U.S. Customs and Border Protection encounters with Chinese migrants is skyrocketing.

From fiscal year 2021 to fiscal year 2023, encounters of Chinese nationals increased 125%, from approximately 23,500 to 52,700, data shows.