LAREDO — The high walls of Alexander Estates, an affluent development nestled near this border city’s country club and golf course, were supposed to keep the narcotics world at bay. But when federal agents raided the stately home of a downtown perfume salesman in January, it reinforced a notion that is feared by Texas leaders: the drug war spillover from Mexico is much broader than shootouts and kidnappings — it is cloaked in the seemingly routine business transactions of the border economy.

Neighbors stood, mouths agape, as federal agents seized loads of cash from the home of Vikram Datta, a polite family man who acquaintances said was so concerned with the quality of Laredo schools that he moved his teenage daughters back to their native New York. Federal agents leveled an accusation that shocked other residents: that Mr. Datta, 51, was a major player in the Black Market Peso Exchange, a decades-old system of laundering drug money and reinvesting it back into the economy.

According to Mr. Datta’s lawyers, who declined to make him or his family available for interviews, their client is a legitimate businessman who was entrapped by other drug-connected defendants to get lesser sentences for their own money-laundering schemes. But prosecutors contended, and a federal jury agreed in September when it convicted him on two counts of money-laundering conspiracy and one count of conspiracy to violate the travel act, that Mr. Datta’s sales of millions of dollars worth of perfume to corrupt buyers in Mexico were fueled by greed. He knew, they said, that the underground drug economy — involving some of the world’s largest suppliers of narcotics to North America — would make him rich.

Getting Inside

The Black Market Peso Exchange has been on the federal government’s radar for years. The system was perfected by Colombian drug lords and later adopted by Mexican drug cartels: When drugs are sold in the United States, the proceeds, in American dollars, are smuggled back into Mexico or Colombia, where they are exchanged for pesos at a discounted rate.