It’s becoming abundantly clear that some of the world’s most talented and sophisticated entrepreneurs are Chinese black-market operators. One of these mysterious figures was recently profiled in an eye-opening investigative report by ProPublica, detailing the criminal life of Xizhi Li. The alleged drug smuggler and money launderer was described as having “the acumen of a financier and the tradecraft of a spy” whose prolific criminal activity spanned several continents and helped fortify drug smuggling operations that run from China through Mexico to the US.
Journalists Sebastian Rotella and Kirsten Berg used interviews and an array of evidence to piece together a portrait of Li that shows he wasn’t just another run-of-the-mill thug shoveling dope across the border. Li was an innovator. A pioneer, in fact, because he helped solve a problem that had “long bedeviled” the drug underworld, which is how to transform “the mountains of grimy twenties and hundreds amassed on U.S. streets into legitimate fortunes they can spend on yachts, mansions, weapons, technology and bribes to police and politicians.” The brilliance of Li’s illicit operation was that it simultaneously provided a solution for two urgent market forces: Mexican drug lords who needed to get rid of dollars, and wealthy Chinese elites desperate to acquire dollars.
For decades the cartels had implemented schemes that involved smuggling truckloads of cash into Mexico; fraudulent bank transfers and stash houses to move the cash around; and payoffs to an entourage of international middlemen to launder the cash through legitimate financial channels. These methods were risky and often time-consuming, so Li offered the cartels a different option that was cheaper, faster, and more efficient. With Li, the cartel would simply deliver suitcases of dollars to couriers operating covertly in the Chinese immigrant enclaves of large US cities. Once an exchange was confirmed, the couriers would alert their “Chinese bosses in Mexico” who in return would pay the cartel using pesos. Li would then seal the deal by executing “a chain of transactions through China, the United States and Latin America to launder the dollars.”
Li’s one-stop money-laundering shop quickly grew so profitable that he guaranteed the cartels that any cash lost during transit would be fully replaced for free. This was a level of customer service the cartels had never seen, and a new partnership was born. Li’s powerful international connections further assured the cartel access to a new and more lucrative way of doing business.
Retired DEA Special Ops agent Thomas Cindric claims that, “At no time in the history of organized crime is there an example where a revenue stream has been taken over like this, and without a shot being fired…this has enriched the Mexican cartels beyond their wildest dreams.” Li and his Chinese accomplices were equally well-compensated.
The ProPublica report asserts that in addition to drug smuggling and money laundering, Li had a substantial side racket producing fraudulent documents such as passports, identity cards, and birth certificates, which he accomplished by infiltrating corrupt bureaucracies in Latin American through bribery and other means. When Li bought a Guatemalan casino in 2011, he didn’t just buy the den of iniquity itself. No, Li’s deal required the owner to hand over his casino and his identity. At the time, Li was a U.S. fugitive on the run from the authorities; so like any seasoned fraudster, he transformed himself through the ruse of a real estate sale into an entirely different person. According to court documents, “The U.S. fugitive became a Guatemalan gambling entrepreneur.”
The report’s most concerning revelation is that many Chinese government officials and Communist Party leaders knew about and helped facilitate Li’s criminal ring. Some were even directly involved in it. It’s likely that many of these corrupt officials are still secretly operating around the world using fake passports and IDs purchased from Li for $15,000 a pop.
After years of laundering an estimated hundreds of millions of dollars, Li was eventually caught and sentenced to prison. One hopes the extraordinary case of Xizhi Li serves as a wakeup call to U.S. security officials, because Li was recruited into the criminal underworld right here on American soil, when as a young immigrant he joined the Chinese Triad 14K, a secretive but powerful Chinese gang operating in California at the time.
One can only guess how many more Americans are entangled in the global web of Chinese organized crime, but no doubt it’s more pervasive than we want to believe.
