US$65m raid on Los Angeles' garment district in drug cash laundering probe

US federal agents launched a series of raids in the downtown Los Angeles fashion district and seized an estimated US$65 million in cash and other assets they allege were part of a widespread attempt by Mexican drug cartels to launder narcotics profits.

Nine people were arrested on Wednesday in raids targeting 70 locations, many of them businesses in the fashion district. Those arrested included two members of the Chen family who import clothing from China and are accused of laundering US$75,000 for drug traffickers and federal agents posing as traffickers.

Federal officials said they believe the drug organisations have used numerous businesses in the garment district to convert their vast earnings into pesos, turning Los Angeles into a hub for "trade-based money laundering".

"Los Angeles has become the epicentre of narco-dollar money laundering with couriers regularly bringing duffel bags and suitcases full of cash to many businesses," Robert Dugdale, the assistant US attorney in charge of federal criminal prosecutions in the region, said.

Wednesday's seizures included piles of cash and money stashed in bank accounts around the world, federal authorities said.

Agents with the FBI and Immigration and Customs Enforcement (ICE) infiltrated several peso brokerages operating in Los Angeles, officials said. The undercover officers delivered bundles of cash, sometimes shrink-wrapped in grocery bags, to stores in the district, even telling business owners the money came from drug trafficking.

The indictments accuse three businesses - Yili Underwear, Gayima Underwear and Pacific Eurotex Corp - of laundering drug trafficking proceeds.