$200 Million Mystery: The Weird Case Of Zhenli Ye Gon
The fortune was 205 million dollars. It took authorities two whole days and nights to count the money. This is the story of how the largest cash bust in the history of the war on drugs didn’t actually involve any drugs being recovered at all.
The so-called ‘Operation Dragon’, which took place in 2007, implicated the Mexican-Chinese businessman Zhenli Ye Gon.
“You either cooperate or the neck.” — Zhenli Ye Gon
It’s the story of how a Chinese-Mexican businessman went from being celebrated by world leaders to being imprisoned in multiple countries, how Las Vegas casinos used to help cartels launder hundreds of millions of dollars, and of how the drugs we take actually get made.
The Weird Case of Zhenli Ye Gon
Zhenli Ye Gon was born in Shanghai in 1963. In the 90s, he moved to Mexico and founded several companies, in particular the highly successful chemical importer Unimed Pharm Chem México. He was a well-known figure, and it was considered a national story when President Vicente Fox personally presented him with citizenship papers in 2002, officially making him a Mexican citizen.
But then everything changed.
Yesterday they seized more than 250 million dollars in cash. Which is the largest seizure, not only in Mexico, but perhaps in the world.
In 2007, Mexican federal agents raided Zhenli’s Mexico City mansion, and inside they found more than $200 million. The money was mostly in one hundred dollar bills. There were piles of cash lining the corridors, stuffed into wardrobes, and strewn throughout the entire house. All in all, the cash weighed over two tons and reportedly took the agents two full days just to carry it out of the house. Along with various international currencies, there was also a small arsenal of automatic weapons and seven luxury cars. Mexican police originally reported that 175,000 Mexican pesos had also been discovered. But when journalists pointed out the video footage appeared to show a lot more cash than that, that figure was hastily revised to 1.5 million. The DEA hailed this as a major triumph, calling it “the largest single drug cash seizure the world had ever seen” and “the ultimate jackpot for law enforcement.”
But what was going on here? Why was a random expat businessman in Mexico City now the ultimate jackpot for the DEA? Well, through his company, Unimed Pharm Chem, Zhenli had been importing the chemicals ephedrine and pseudoephedrine from labs in China. These are products that go into making common cold medicines like Sudafed, but they’re also the most important precursor chemicals for making crystal meth. The suspicion here was that Zhenli was, in fact, a ranking member of the Sinaloa cartel bringing these chemicals over from Chinese labs and supplying them to organized criminal groups across Mexico.
But at the time his house was being raided, Zhenli Ye Gon wasn’t actually there. He was in Vegas. Zhenli was a big fan of high-stakes poker, and a particularly valuable patron of the Sands Hotel. In fact, according to the US Department of Justice, by 2007, he was the single largest all-cash-upfront gambler the casino had ever had. And he claimed to have lost $157 million there. The Sands appreciated this business so much, they even laid on a complimentary Rolls-Royce.
What many people believe is that Zhenli’s high-rolling gambling habit was actually part of an elaborate but fairly common money laundering scheme through which organized crime groups clean their dirty cash. He knows that he can bring cash from selling precursors for crystal meth to a Sinaloa cartel drug trafficker, take that cash to Vegas, and then get back checks that he can put into banks and get a check from Las Vegas.
That’s kind of like something you can cover, so it’s a way of laundering money.
Under US law, casinos are meant to alert authorities when they come across suspicious activity. But not only did the Sands not report Zhenli, they actively courted him, and not just by giving him luxury cars. They allowed Zhenli to buy chips through transferring money to the casino via anonymous services in Mexico and Hong Kong, and even allowed him access to separate bank accounts
usually used by the hotel to pay pilots, all in order to help them obscure the sources of the money flowing in.
After a case initiated by the DEA following the Zhenli raid, the Sands Casino “agreed to return” $47.4 million to the US Treasury. Zhenli himself was eventually arrested by a swarm of DEA agents while eating at a small restaurant in Maryland in July of 2007. Once again, the DEA heralded this as a major success,
putting out a statement that, “With the arrest of Zhenli Ye Gon, we’ve apprehended not only the man behind the money but the man behind the meth.”
But for all the fanfare, it wasn’t long before the DEA’s case began to fall apart. Key witnesses recanted their testimony, the Chinese government refused to hand over documents, and crucially, for a guy accused of being a kingpin of the meth trade, no meth was ever actually found. Though precursor chemicals were discovered in Unimed Pharm Chem’s warehouse, these could have been part of the company’s legitimate business. And there were issues with how Mexican investigators had handled the samples. A federal judge eventually dismissed the US case against Zhenli in August of 2009. But he remained in jail while trying to fight extradition to Mexico, where he was obviously also wanted.
Despite having beaten the American charges, Zhenli had to try to explain why he had 205 million bucks’ worth of $100 bills just lying around his house. While Zhenli admitted the money had originated with the cartels, he claimed that he’d been ordered to hide it by the Mexican politician Javier Lozano Alarcón, then secretary of labor, because it was meant to be used for President Felipe Calderón’s election campaign.
I first met Mr. Javier Alarcón in the first week of May 2006. He showed me two suitcases. I opened one, it was full of money, and then he said, “You either cooperate or the neck.” — Zhenli
He claimed that this order had come with a death threat and that it meant he should not be extradited as he could never receive a fair trial in Mexico.
So I asked him why, he said, “Now you know all of our secrets the only option you have is to cooperate. If you don’t, then the neck. There’s no choice.”- Zhenli
The famous phrase he said in the interview was, “Cooperar o cuello,” which means cooperate or you’ll be strangled. And this became a big joke around that time. Zhenli’s claims may sound ludicrous, but Mexican politics is so wildly corrupt that many people in Mexico actually believed him. A poll by the newspaper Diario Reforma showed that a majority of respondents either believed Zhenli or at least didn’t doubt that the government was in some way involved. Mexico’s extremely corrupt, and everyone immediately has suspicions of the government because if the government says, “The sky is blue,” people say, “No, it’s not, it’s green.
Zhenli managed to fight extradition to Mexico for nine years. But eventually, American courts ruled against him, and he was flown back to face trial in 2016. But even now, five years on, Zhenli Ye Gon has still not had his day in court. Associates of his business, including his wife, have been found guilty. But as of last year, he’s still being held on remand, awaiting trial on money laundering and weapons charges. In 2019, the Mexican government auctioned off his now infamous mansion for 102 million pesos or over US$5 million.
Today, the fugitive from Mexican justice Zhenli Ye Gon was extradited. He is considered responsible for the crimes of organized crime, possession of firearms for the exclusive use of the army, navy, and air force, and operations with resources of illicit origin. — Salvador Sandoval, Deputy Attorney General
The case of Zhenli Ye Gon is really emblematic about the money laundering and the way that money moves in the drug trade. In the United States, some meth user spending $50 on a bag of meth and then, say, $30 of it going south over the border while $20 is kept by a local dealer. $10 of that staying in Mexico, being used to bribe police, to pay hitmen. $10 going over to China, being used to buy the precursors for crystal meth. So you see the money going through all these directions, and it becomes like all money is dirty money.
To this day, no methamphetamine has actually been recovered or conclusively linked to his operations. Like the war on drugs itself, the story of Zhenli Ye Gon is a story of globalization. A Chinese businessman who became a Mexican citizen, allegedly working with cartels to flood the US with drugs, all while laundering money through Las Vegas casinos and accusing Mexican politicians of high-level corruption. He’s not the first and certainly not the most violent person thought to have made millions of dollars through the illicit drug trade, but he definitely won’t be the last. As long as the war on drugs continues, these global pipelines of money will just keep on growing.
