As of Friday, December 29, 2017
More than three years after some 1,000 federal and state agents fanned out across the Los Angeles Fashion District to curtail a long-running money-laundering scheme benefiting two Mexican drugs cartels, two brothers who own a Los Angeles textile company pleaded guilty to federal money laundering and tax charges.
Morad “Ben” Neman and Hersel Neman, who own Pacific Eurotex Corp., admitted in court documents that they failed to report to federal authorities the receipt of bulk cash divided up for frequent bank deposits that were less than $10,000 to avoid a bank-reporting requirement that would have tipped off law enforcement. They were indicted more than three years ago for receiving bulk cash they knew or believed to be money coming from drug traffickers.
The Nemans, who pleaded guilty in U.S. District Court on Dec. 21, also admitted to conspiring to defraud the United States by maintaining two sets of business records in order to conceal income for tax purposes.
In court papers, Pacific Eurotex also was accused of receiving, laundering and structuring approximately $370,000 in bulk cash delivered on four different occasions over a more than two-month period in 2013 by an undercover agent posing as a money courier. The defendants admitted in court that they laundered this money after being advised by special agents with Homeland Security Investigations that bulk cash payments were frequently derived from illegal activity and that they were required to report cash transactions that totaled more than $10,000.
Also named in the indictment was Pacific Eurotex, which, as a business, pleaded guilty to conspiring to launder money and structuring monetary transactions with a domestic financial institution.
The Nemans admitted they instructed other individuals to deposit the cash into the personal Wells Fargo bank account of Hersel Neman’s wife, Mojgan Neman. “These deposits, 384 in all, were divided into increments less than $10,000 each” with the intent to prevent Wells Fargo from filing currency transaction reports, the U.S. Attorney’s Office said.
The Nemans have agreed to forfeit to the United States nearly $3.18 million, which includes the narcotics proceeds they received and deposited in structured cash transactions.
The brothers are scheduled to be sentenced on June 14 in the courtroom of U.S. District Judge John Kronstadt.
Morad Neman, 57, chief executive of Pacific Eurotex, faces a maximum sentence of 21 years in federal prison. His brother, Hersel, 58, chief financial officer of Pacific Eurotex, faces a mandatory sentence of up to 28 years.
Pacific Eurotex faces a statutory maximum sentence of up to 10 years’ probation and almost $2 million in fines.
The indictment in this case also named two other defendants, scheduled to go on trial on March 6. Mehran Khalili, 49, who is a brother-in-law of Hersel Neman, is charged with conspiring to structure cash transactions. Alma Villalobos, 55, the in-house accountant and bookkeeper for Pacific Eurotex, faces several charges, including conspiracy to launder money.
When federal agents raided 75 fashion and textile companies in 2013 in the Los Angeles Fashion District, the total amount of cash and property they seized was $140 million.
During the raid, called Operation Fashion Police, law enforcement officers found $35 million in cash stuffed in cardboard boxes at a condo. At a Bel-Air mansion, another $10 million in cash was found stuffed in duffel bags, and four safes were still to be opened. More than 30 bank accounts with approximately $19 million were seized.
The investigation started in 2013 after confidential informants alerted federal authorities to the scheme. The money-laundering scheme worked this way: Los Angeles companies would import apparel and textiles into the United States with U.S. dollars left by the drug cartels. Those goods were then exported to Mexico via wire transfers and then sold at local stores for pesos. Those pesos were then deposited in Mexican bank accounts, reportedly for the Sinaloa and Knights Templar drug cartels.
This elaborate kind of transaction became increasingly popular after 2010, when Mexico changed its banking regulations stipulating that deposits in U.S. dollars for regular customers must be limited to no more than $7,000 in cash a month. The regulations were devised to stop drug cartels from shuffling their drug money into Mexico.