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City of Industry toy company accused of laundering drug money

April 16, 2012 |  2:11 pm

A surveillance photo shows bricks of cash changing hands at City of Industry-based Woody Toys Inc.

They were sellers of pastel-toned huggable plush toys with names like “Baby Frenz Forever” and “Jungle Pals.” At the same time, authorities say, they were receiving bricks of U.S. dollars wrapped in cellophane that were drug proceeds to be laundered into clean pesos for drug lords in Mexico and Colombia.

On Monday, authorities announced charges against the City of Industry-based Woody Toys and seven owners, employees and customers in what marks the second case in two years involving toy exporters allegedly acting as conduits for the drug trade.

Woody Toys was a piece in a sophisticated international financial scheme that converted U.S. dollars into pesos at a rate of millions of dollars each year, according to officials with the U.S. Immigration and Customs Enforcement. One of the company’s Mexican customers told a confidential informant he was able to get cheap exchange rates by buying “narco-money,” court papers allege.

With tighter banking regulations both in the U.S. and overseas, drug cartels are increasingly looking for innovative ways to move their lucrative proceeds across borders, and legitimate businesses are lured into illicit schemes in tough economic times, said Claude Arnold, special agent in charge of ICE in Los Angeles.

“This is the way they convert cash into seemingly legitimate income,” he said. “They can make all the money in the world, but it doesn’t do any good to have cash stacked in a semi somewhere.”

In all, the company is accused of funneling about $6 million in suspected drug profits since 2005, according to the indictment.

A woman who answered the phone at Woody Toys Monday afternoon said the company had no comment.

Those indicted and arrested are co-owners Jia “Gary” Hui Zhou and Dan “Daisy” Xin Li, both 43; accountants Kit Yee Lam, 51 and Jazmin Contreras, 33; sales manager Anabel Rufino, 32; as well as Guadalajara, Mexico-based clients Jose Miguel Yong-Hinojosa, 26, and Luis Ernesto Flores Rivera, 53.

The money laundering charge carries a sentence of up to 20 years in prison, according to ICE.

The owners of Los Angeles-based Angel Toy Corp. were accused in 2010 of receiving duffel bags stuffed with alleged cocaine sales proceeds and laundering them into pesos. They pleaded guilty to charges of "structuring" and were sentenced to three years in prison in January.

Some employees who formerly worked for Angel Toy later went on to work for Woody Toys, authorities said.

RELATED:

Toy firm owners get 3 years in money laundering case

Cartels use legitimate trade to launder money, U.S., Mexico say

Federal grand jury indictment names L.A. toy company execs in money laundering scheme

-- Victoria Kim

Photo: A surveillance photo shows bricks of cash changing hands at City of Industry-based Woody Toys Inc. Credit: Immigration and Customs Enforcement

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