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McGregor Scott, right, the United States Attorney For the Eastern District of California, flanked by FBI Special Agent in Charge Sean Ragan, discusses the months-long investigation that led to the raids. Photo: AP

100 Chinese-run ‘pot-growing’ houses seized in one of the largest residential drug busts in US history

Raids were part of an investigation that began in 2014, when police began to notice down payments on houses financed by wire transfers mainly from Fujian Province, on China’s southeast coast

Drugs
Agencies

Federal agents seized more than 100 homes in one of the largest residential drug busts in US history in a bid to combat Chinese-run marijuana operations.

The raids culminated a months-long investigation focusing on dozens of Chinese nationals who bought homes in seven California counties. 

Most of the buyers were in the country legally and were not arrested as authorities investigate if they were indebted to Chinese gangs and forced into the work, US Attorney McGregor Scott said.

Much of the pot was shipped to Georgia, Illinois, New York, Ohio and Pennsylvania through Atlanta, Chicago and New York City, he said. 

The drug is legal in California but requires permits to grow and can’t be sent across state lines. It is still banned by the US government.

Black-market pot-growing houses have proliferated in the inland California region where authorities carried out the raids, and many of them were traced to Chinese criminal organisations from the San Francisco Bay Area in the mid-2000s, Scott said. 

The high number of grow houses in the area may be because of low property prices compared with the Bay Area and the state’s large Chinese population, the prosecutor said.

Scott called the recent crackdown “a game-changer” that may have cost the criminal organisation “hundreds of millions of dollars” in lost drug profits and the money it spent on the homes.

“It hits the criminals right where it counts – in the pocketbook,” he said.

Trays used to grow marijuana seized in a 2006 raid outside a home converted into a hydroponic garden in Elk Grove, California. File photo: AP

Authorities tracked at least 125 wire transfers totalling US$6.3 million from Fujian Province in China, all just below the US$50,000 limit imposed by the Chinese government.

Officials are trying to learn if the homebuyers are what Scott called “indentured servants” – indebted to Chinese gangs and brought to the United States to buy and tend the grow houses. Many speak only Mandarin.

“We’re treating them as victims” who may have been “forced or coerced” to work in what can be toxic environments, FBI Special Agent in Charge Sean Ragan said.

The buyers generally used the same Sacramento real estate agents, borrowed from private lenders instead of traditional banks, and used straw buyers who bought the properties on behalf of the real owners.

The US crackdown comes as California is months into creating the world’s largest legal marijuana market amid uncertainty about whether the US government will try to shut it down.

More than 500 officers, including SWAT teams, fanned out over two days to search and seize 81 houses and two real estate businesses. Another 25 houses were raided previously.

They seized more than 61,000 marijuana plants, 200 kilograms (440 pounds) of processed marijuana, at least US$100,000 in cash and 15 firearms, including one that had been stolen.

The US Department of Justice said it was one of the largest residential forfeiture operations ever. Prosecutors will now ask judges to transfer ownership of the houses to the US government to resell while they track the enterprise back to its roots, Scott said.

Most of the suburban houses were valued at US$300,000 to US$700,000, though some were in rural areas and some in more upscale neighbourhoods.

US Attorney General Jeff Sessions said in a statement that transnational criminal organisations are “a blight on our communities, bringing dangerous drugs to our streets and trying to impose a false sovereignty over our neighbourhoods”.

The Chinese consulate general’s office in San Francisco did not respond to multiple requests for comment.

Illegal grow houses have been a widespread problem in Northern California for at least a dozen years. Sacramento officials have estimated that there might be as many as 1,000 illegal grow houses in California’s capital city.

Authorities previously said the practice of growing marijuana in homes instead of outdoors originated along Canada’s West Coast and migrated south as border restrictions increased after the September 11 terror attacks.

Suburban tract homes get transformed with high intensity lights and irrigation pipes, gutted to add ventilation pipes and air filtration systems to vent the telltale smell, and stacked with tables full of marijuana plants that could produce multiple crops each year.

“It’s like industrial agriculture,” Scott said.

Agence France-Presse, Associated Press

This article appeared in the South China Morning Post print edition as: authorities seize pot houses tied to china
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