Las Vegas Sands Corp, the casino giant owned by billionaire Sheldon Adelson, is in a spot of hot water this week.The Wall Street Journal reports that the company is being investigated by the US attorney’s office in Los Angeles for a series of large money transfers in the mid-2000s by a Chinese-born Mexican businessman Zhenli Ye Gon.
Zhenli, who owned a number of pharmaceutical companies in Mexico, was apparently a high roller during his heyday in Las Vegas. He reportedly spent more than $125 million at various Vegas casinos, and was such a good customer at the Sands-owned Venetian casino that they gave him a Rolls Royce.
Unfortunately for Adelson, Zhenli was also suspected of being a key associate of the Sinaloa drug cartel, responsible for the import of key ingredients into Mexico. The DEA believes these ingredients were used for the mass manufacture of methamphetamine that was then smuggled into the United States.
Zhenli was the legal representative of Unimed Pharm Chem México, a company he founded in 1997. He became a Mexican citizen in 2002, but had been was born in Shanghai. His company had legally been allowed to import a limited amount of pseudoephedrine and ephedrine products into Mexico, but he hit trouble in 2005 when Mexican authorities accused Zhenli and his associates of illicitly importing more than was allowed.
In 2007, Zhenli was arrested at P.J. Rice Bistro in Wheaton, Maryland. According to the Washington Post he and his wife had just ordered a meal of codfish and carrots when they were surrounded by DEA agents. He was indicted on a single count of conspiracy.
A raid of his home in the wealthy neighbourhood of Mexico City produced what police described as “the largest single drug cash seizure the world has ever seen.” Almost $207 million sat in the house in cash. Seven high-powered firearms were also in the house, the New York Times reported.
The victimZhenli has a different version of events. He argued that Mexico’s labour secretary, Javier Lozano Alarcón, had threatened to kill him if he didn’t agree to hide duffel bags stuffed with tens of millions of dollars in his house. Far from a fugitive, he had come to the United States in 2007 to seek political asylum.
This version of events has gained some support in Mexico. A poll from La Reforma magazine found that most Mexicans either believed Zhenli’s version of events of thought none they had heard was true. Bumper stickers saying “I believe the Chinaman” began to appear in Mexico.
Whether or not Zhenli’s version of events holds much water, the US charges against him apparently don’t. In 2009 the National Law Journal wrote that they “federal prosecutors admit they don’t have much of a case”. In 2010 the case against Zhenli was dropped due to problems with evidence and witnesses.
He is still being held in the US, pending extradition to Mexico for drugs charges. Zhenli was reportedly disappointed when his case in the US was dropped, as he didn’t believe he’d get a fair trial in Mexico.
While it isn’t clear whether Zhenli was transferring money to Las Vegas for laundering purposes, if the money was obtained illicitly it may still be considered money laundering, the Wall Street Journal reports. A court filing suggests that Zhenli’s mistress gave him the idea of transferring money there.
Apparently Sands either failed to flag the suspicious money-transfers coming in from Zhenli or wilfully ignored them. The company say it was only a 2007 newspaper article about Zhenli, by then an international fugitive) that caused them to contact the Nevada gambling regulators.
Las Vegas Sands isn’t the only company facing controversy for associating with the suspected drug lord. Zhenli was also a long term client for HSBC, and was just one aspect of a wide-ranging Senate-report into the bank’s links with money-laundering.
While Adelson himself isn’t suspected of any crimes in the Zhenli case, it’s certainly another headache for a major Romney donor. His company is also facing investigation for bribery in Macau, and reports that he personally approved prostitution at his Macau Sands resorts.
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