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Mexican businessman pleads guilty in drug money-toys scheme

A businessman in Guadalajara, Mexico, pleads guilty in a money laundering operation involving drug proceeds and a toy wholesaler in the city of Industry.

August 02, 2012|By Victoria Kim, Los Angeles Times

A Mexican toy businessman on Wednesday pleaded guilty to playing a role in a cross-border scheme that laundered millions of dollars in drug proceeds from Mexican narcotics trafficking organizations.

According to federal prosecutors, Luis Ernesto Flores Rivera, a 54-year-old man who ran a toy store in Guadalajara, was a cog in the elaborate operation to funnel and conceal drug proceeds by way of pastel-colored plush toys.

Rivera was one of eight defendants indicted in April for the scheme that authorities said was centered around city of Industry wholesaler Woody Toys. Through a set-up known as the Black Market Peso Exchange, Woody Toys allegedly converted more than $1 million to pesos each year, officials said at the time.

Rivera, a customer of Woody Toys, admitted Wednesday to conspiring with others to launder between $70,000 and $120,000 between 2008 and 2011. Authorities allege Woody Toys funneled close to $6 million since 2005 as part of the scheme.

Rivera referred to the black market U.S. dollars he was purchasing to pay for his toys as "narco dollars" to a witness and to the owner of Woody Toys, said Assistant U.S. Atty. Christine Bautista.

Although he did not directly take part in or witness drug deals, Rivera "conducted financial transactions with cash that he knew, or should have known, to be drug proceeds" and "deliberately avoided learning the truth" about where the money was from, according to his plea agreement.

Bautista said Rivera was a legitimate toy businessman but one who enabled drug traffickers to launder proceeds in return for cheaper exchange rates. She said many Los Angeles businesses accept suspicious cash, allowing such schemes to thrive.

"A lot of people are just willfully blind," she said. "They choose not to ask where the money is coming from when the circumstances clearly indicate it's dirty money."

Rivera is scheduled to be sentenced Oct. 15. According to sentencing guidelines, he faces eight to 14 months in prison, Bautista said.

Also facing charges in the case are Woody Toys owners Dan "Daisy" Xin Li and Jia "Gary" Hui Zhou, as well as several employees.

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