Jul.03, 2010

LOS ANGELES -- Federal officials announced a drug-money laundering case here Friday with an unusual twist: the laundering was allegedly done through the sale of Teddy bears and other toys.

An indictment was unsealed in federal court here charging a local company, Angel Toy Corp. and four individuals with conspiracy to launder money and other criminal-law violations. The indictment charges, among other things, that the defendants illegally structured cash deposits to Angel Toy accounts in ways to avoid federal reporting requirements, which call for notification for cash deposits over $10,000. The indictment said the money was derived from "the unlawful distribution of controlled substances." Cash deposits were made on behalf of "Colombian and Mexican clients," the indictment said. Besides possible prison sentences for the defendants, the government is seeking forfeiture of over $8.5 million.

In a press release, the U.S. Immigration and Customs Enforcement agency, which worked on the case with the U.S. Attorney's office here, said the cash was wired to China and then shipped to Colombia and sold. The Colombian pesos generated by those sales were used to reimburse the drug traffickers with "clean" local currency, ICE said. The agency referred to the scheme as a "black market peso exchange."

"It's no small irony that a multi-million dollar company which promoted itself as a retailer of cuddly stuffed animals was allegedly acting as a financial linchpin for drug trafficking operatives in Colombia and Mexico," said ICE director John Morton, in the agency's statement. "It may be a toy company, but we believe these defendants' pursuits were anything but child's play."

Authorities said that three of the individuals were associated with Angel Toy, including two of the company's co-owners, Ling Yu and Meichun Cheng Huang. The fourth individual defendant was identified as a Colombian businessman. The indictment also charged Ms. Huang with trying to prevent a person from providing information to authorities.

A woman answering the phone at Angel Toy said company officials weren't available for comment. Individual defendants couldn't immediately be reached for comment.

On its website, Angel Toy describes itself as "a manufacturer and distributor of fine quality plush toys and merchandise." The company added that it has "clients all over the world, including North America, South America and Europe."