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Heroin and Money Laundering in Texas – Expecting More Charges in 2015

There’s been a lot of national news coverage in the past few weeks over the business of heroin and how the changing marijuana marketplace in the United States is causing changes in the illegal drug market. Specifically, news is spreading about how heroin and methamphetamine are growing product lines in the criminal drug trades, and how heroin and meth are expected to continue to rise in popularity and sales in 2015.

It’s main stream media news now (see Breitbart and the Washington Post as examples) and it’s something we’ve been discussing here as well.


Heroin Makes Money for Lots of People: Supply and Demand

From a criminal defense perspective, heroin for many is simply a product that is being sold for a profit. Heroin is considered an alternative good for prescription opioids (like Oxycodone) that were popular with drug customers but have become harder to supply because of law enforcement prosecutions and changing laws targeting pill mills.

Right now, you can buy heroin for $10/pill or oxycodone at $80/pill. It’s a no brainer.

This is a market built upon supply and demand, just like any other market. Demand goes up; business reacts by increasing the availability of the product that consumers want.

In Texas today, most if not all heroin originates in Mexico, with the Sinaloa Drug Cartel running the heroin operations. Opium poppies fill the fields of Mexico because heroin is a profitable product and the poppies are used to manufacture Mexican heroin.

The Sinaloa Drug Cartel and its subsidiaries, partners, and affiliates are in the business of producing and supplying a product that is growing in demand in Texas and elsewhere. (Last month, for example, there was a big bust in New Jersey where police connected the local drug traffickers to the Sinaloa Cartel.)

Heroin is a product manufactured in Mexico from their poppy fields. Then distribution networks move the product in Texas, including the Dallas – Fort Worth metroplex and North Texas, where regional sales managers send out their sales force to bring their product to customers ready and waiting to purchase it.

As legalized marijuana is reportedly lessening the demand for cannabis products, business is adapting by moving and developing new product lines. It’s all business and it’s operated as a profit-making enterprise.

From a law enforcement perspective, the terminology is different, of course. Illegal drugs are manufactured and packaged in Mexico, and then drug smuggling organizations work in drug trafficking operations to illegally sell and distribute and illegal drug where even its possession is a felony crime. Heroin isn’t a product to a prosecutor; it’s an illegal substance under state and federal law with a variety of serious felonies attached to it.

Money Laundering and Heroin

Since heroin is profitable, this means that heroin makes money. A key problem for the illegal drug business is converting illegal cash proceeds (few people buy their heroin with credit cards or personal checks, of course) so that the profits can be used to buy things or to re-invest in the business.

Law enforcement has all sorts of traps in place to catch illegal activities through cash proceeds. For instance, there’s the $10,000 cash deposit notification rule where banks must report any cash deposit of $10,000 or more to the federal government.  See, “STRUCTURED CASH DEPOSITS: WHAT DO I DO WHEN THE IRS CID AGENT COMES?.”

Converting cash revenues is the business concern of the heroin operations. Terminology under the law? It’s money laundering and that’s a huge crime, too.

Money laundering investigations are in play right now by the various Heroin Task Forces to fight against the growing heroin operations. Many of these investigations are reaping arrests of cartel-affiliates. Consider the following:

1.  In December 2014, there was a major New Jersey bust where Sinaloa Cartel operations were targeted and several were charged not only with heroin-related offenses but money laundering crimes, too. One of the defendants, the wife of a well-known local businessman, was charged solely with money laundering; no heroin charges.

2.  In November 2014, law enforcement swooped into San Antonio, and arrested Jorge Torres (said to be the son of a Sinaloa Cartel kingpin) on money laundering charges. Torres was in San Antonio with his wife on a vacation where they planned on visiting the Alamo and Seaworld.

3.  In September 2014, federal agents arrested several business people involved in the Los Angeles fashion industry for laundering money for the Sinaloa Cartel. See, “Millions in Cash Found in L.A. Fashion District Takedown of Alleged Drug-Money Laundering Operations.

What does this mean for us? In the future, the North Texas area should expect to see a growing number of money laundering arrests and prosecutions as the heroin charges (possession, distribution, trafficking) increase here.

Arrests Will Be Middle-Class Folk, Neighbors and Businesspeople

Bottom line, heroin is a huge international business enterprise and a Mexican cartel is understood to be the organization with a monopoly hold on that product market. Heroin arrests are going to happen for middle class folk in our area, who will be surprised to find that they are facing huge felony charges on even small amounts of heroin — a few pills or tablets, perhaps — because heroin is a much more heinous drug with much more serious sentencing ramifications that marijuana brings.

Heroin arrests in the future are also going to involve people higher up in operations, too. And prosecutions are not going to be based solely on heroin charges here.

Money laundering and possibly wire fraud / mail fraud charges are going to be brought against these defendants.

Thing is — all these future heroin defendants may be a shock to the local public. These aren’t going to be individuals in back alleys or the backwoods. They are going to be people living middle class lives with nice cars, nice houses, with kids in the local school and having dinner at the restaurant table next to you on Saturday night.


For more about heroin and drug crimes, visit our resources page.

For more about money laundering charges, check out our resources page.

Also see Michael Lowe’s Case Results.

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