Las Vegas Man Convicted at Trial of Money Laundering and Fraud After Using Crypto to Launder Illicit Cartel Proceeds

This week Martin Mizrahi was convicted of wire fraud, bank fraud, money laundering, aggravated identity theft, and other offenses for his participation in multiple schemes to defraud banks and credit card companies of almost $8 million and to launder more than $4 million in fraud and illegal narcotics proceeds.  The verdict followed a 12-day trial in a New York federal courtroom.

According to the evidence presented in court, beginning in February 2021, Mizrahi began accepting bulk cash narcotics proceeds, which he laundered for a Mexican-based cartel by converting the money into bitcoin and then sending it to cryptocurrency wallets provided to him by co-conspirators.  In addition, Mizrahi laundered fraud proceeds sent to his company by wire transfer, which he also converted into cryptocurrency. Those funds were obtained through, among other things, a business email compromise scheme in which hackers stole more than $3 million from a non-profit organization.  Between February and June 2021, Mizrahi laundered a total of more than $4 million in fraud and narcotics proceeds.   

In addition, between April and June 2021, Mizrahi participated in a credit card fraud scheme in which he ran nearly $8 million in fraudulent credit card charges through his company.

Over the last several months we have seen an intense US law enforcement focus on the use of cryptocurrencies by drug cartels to launder illicit proceeds including the use of facilitators like Mizrahi.

In September 2023, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned nine individuals, including several Sinaloa Cartel affiliates and fugitives, for their involvement in the operation of the Los Chapitos faction of Mexico’s Sinaloa Cartel. According to OFAC, the Sinaloa Cartel is responsible for “a significant portion of the illicit fentanyl and other deadly drugs trafficked into the United States.”

In April 2023, the U.S. Department of Justice indicted seven of the nine individuals on a range of charges to include fentanyl trafficking, weapons trafficking, and money laundering. The State Department has offered rewards for their capture.

One of those indicted cartel members is Mario Alberto Jimenez Castro (Jimenez Castro) who, according to OFAC, operated a money laundering organization that used virtual currency and wire transfers, among other methods, to transfer proceeds from illicit fentanyl sales in the United States to Sinaloa Cartel leaders in Mexico. According to Treasury and DOJ, Jimenez Castro directed U.S.-based couriers to pick up cash in the United States and deposit it into various virtual currency wallets for payment directly to the Chapitos and for reinvestment in fentanyl production.

From OFAC sanctions to arrests and seizures, tracking the flow of illicit narcotics proceeds is a global effort in which cross border collaboration between the Drug Enforcement Administration, the FBI, Homeland Security Investigations, and the Government of Mexico’s La Unidad de Inteligencia Financiera (Mexico’s Financial Intelligence Unit) is critical. TRM Labs is proud to support these efforts.