



Agents from the FBI and ICE swept through downtown L.A.’s fashion district on Wednesday, grabbing $65 million that allegedly belongs to Mexican drug traffickers.

Assistant U.S. Attorney Robert E. Dugdale said in a statement, “Los Angeles has become the epicenter of narco-dollar money laundering with couriers regularly bringing duffel bags and suitcases full of cash to many businesses.”

The Los Angeles Times explains that a 2010 decision by the Mexican government to restrict the use of dollars has forced the cartels to convert their earnings into pesos.

By working with exchanges, importers and textile companies in the U.S., the feds allege, the cartels are able to convert their loot to Mexican currency.

Here’s an explanation, from the Times, of how it works:

Black market peso brokers suddenly found themselves in high demand. The brokers contact legitimate Mexican importers who want to buy goods in Los Angeles. If an importer wants to buy $30,000 worth of shirts, for example, the broker directs a drug contact in the United States to pay the bill to a shirt wholesaler in dollars. The importer in Mexico then pays the broker in pesos, who takes a cut, and pays the rest to a cartel.

The L.A. fashion district is home to all sorts of legitimate businesses, including, most famously, American Apparel.

— Posted by Peter Z. Scheer