Merrick G. Garland

Remarks on Charges Against China-Based Chemical Manufacturing Companies and Arrests of Executives in Fentanyl Manufacturings

delivered 23 June 2023

Good afternoon.

I am joined today by Deputy Attorney General Lisa Monaco, DEA Administrator Anne Milgram, U.S. Attorney for the Southern District of New York Damian Williams, and U.S. Attorney for the Eastern District of New York Breon Peace.

When I announced in April that the Justice Department had taken significant enforcement actions against the Sinaloa Cartel, I promised that Justice Department would never forget the victims of the fentanyl epidemic.

I also promised that we would never stop working to hold accountable those who bear responsibility for it.

That includes not only going after the leaders of the cartels, their drug and gun traffickers, their money launderers, security forces, and clandestine lab operators. It also includes stopping the Chinese chemical companies that are supplying the cartels with the building blocks they need to manufacture deadly fentanyl.

We are targeting every step of the movement, manufacturing, and sale of fentanyl -- from start to finish.

To that end, we are announcing several enforcement actions the Justice Department has taken to disrupt the flow of fentanyl precursor chemicals from China to Mexico and the United States.

In three separate indictments,¹ we have charged -- for the first time ever -- four chemical companies based in China and eight Chinese nationals for the trafficking of fentanyl precursor chemicals into the United States.

These companies and their employees knowingly conspired to manufacture deadly fentanyl for distribution in the United States. As alleged in our filings, just one of these China-based chemical companies shipped more 200 kilograms of fentanyl-related precursor chemicals to the U.S. for the purpose of making 50 kilograms of fentanyl -- a quantity that could contain enough deadly doses of fentanyl to kill 25 million Americans.

First, as outlined in the indictment unsealed today in the Southern District of New York, we have brought charges against a China-based manufacturer and supplier of fentanyl precursor chemicals, its principal executive, and two of its employees for their role in international fentanyl trafficking conspiracy.

As outlined in the indictment, we allege that the defendants openly advertised the sale of fentanyl precursors online and sought to evade law enforcement detection by using deceptive packaging. They went as far as to guarantee “100% stealth shipping.” And they provided proof of their success on their websites --including a screenshot of a shipping confirmation to Culiacan, Mexico, the Sinaloa Cartel’s base of operations.

The indictment also details correspondence and in-person meetings between the defendants and an individual purporting to be a fentanyl trafficker in Mexico with operations in the U.S.

In one message, one of the defendants responded to the admission that the chemicals were being used to make fentanyl, and that it was not safe, with: “I know.”

In another conversation -- which took place earlier this month -- two of the defendants allegedly discussed the need to take additional measures to protect themselves from detection and interdiction following a recent enforcement action by the U.S. government.

This was an apparent reference to the charges I announced against members and associates of the Sinaloa Cartel in April. One of the defendants indicated that the U.S. government had “seized some Mexican group” and “followed the routes to China” -- which was “bad news for us.”

Over the past eight months, the defendants are alleged to have shipped more than 200 kilograms of fentanyl-related precursor chemicals to the U.S. in order to make 50 kilograms of fentanyl. As I said, this is a quantity that could contain enough deadly doses of fentanyl to kill 25 million Americans.

What the defendants did not know at the time is that the purported traffickers they were dealing with were in fact DEA confidential sources. And the 200 kilograms of fentanyl-related precursors they shipped to the U.S. were received by DEA agents.

Two of the defendants -- the principal executive of the chemical company and one of its employees -- have been arrested by federal law enforcement.

Additionally, in two separate indictments in the Eastern District of New York, we have charged three other companies based in China and five of their employees with conspiracy to manufacture and distribute fentanyl.

As alleged in the indictments, each of these companies also supplies precursor chemicals to the U.S. and Mexico, among other places, knowing they will be used to produce fentanyl or other controlled substances. Like the company charged in the Southern District of New York, all three of these companies openly advertise their products all over the world and guarantee that the products they send to the U.S. and Mexico will not be detected or intercepted. To fulfill this guarantee, they likewise employ deceptive and fraudulent practices such as mislabeling packages and making false declarations at border crossings.

But these companies also went a step further to evade testing protocols and relevant regulations: they added what are known as “masking” molecules to their fentanyl precursor chemicals.

Once these masking molecules are added, the chemical signature of the precursor is changed. That means, when it is shipped, it appears to be a new, non-fentanyl precursor substance.

Upon receipt of the shipment, however, the purchaser is able to easily remove the masking molecules and return the chemical to its original form as a fentanyl precursor. As alleged in the indictment, these companies not only produced and distributed masked precursors, but also provided instructions about how to remove the masking molecules upon receipt.

The actions we are announcing today should make clear that the U.S. Justice Department is accelerating our efforts to disrupt the manufacture and trafficking of fentanyl at every stage and in every part of the world.

Our agents and prosecutors are working relentlessly to get fentanyl out of our communities and hold accountable those who put it there.

In 2022, the DEA -- together with our federal, state, and local law enforcement partners -- seized more than 50.6 million fentanyl-laced, fake prescription pills. That is more than double the amount seized in 2021. The DEA has also seized more than 10,000 pounds of fentanyl powder. Together, these seizures represent more than 379 million potentially deadly doses of fentanyl. That much fentanyl could kill every single American.

We are also putting our resources to work to confront the public health challenges of addiction and substance abuse by supporting prevention and treatment programs.

The U.S. government continues to do everything in our power to disrupt fentanyl trafficking and prevent more of our communities from being devastated by the fentanyl epidemic. We also continue to strongly urge the PRC government to take decisive action to address the role that China-based chemical and pharmaceutical companies play in fentanyl drug production and trafficking. We stand ready to work together to address this global challenge.

I want to thank the DEA agents for the extraordinary work that they did on these cases and for the difficult work they do every day to protect our communities from deadly drugs. I am also grateful to the U.S. Attorneys’ Offices for the Southern and Eastern Districts of New York, and to the Office of International Affairs of the Justice Department’s Criminal Division.

¹ “The cases are United Sta"tes v. Hubei Amarvel Biotech Co. Ltd., S.D.N.Y., No. 1:23-cr-00302, unsealed indictment 6/23/23, United States v. Anhui Moker New Material Tech. Co., E.D.N.Y., No. 1:23-cr-00263, unsealed indictment 6/23/23, United States v. Hefei GSK Trade Co., Ltd., E.D.N.Y., No. 1:23-cr-00264, unsealed indictment 6/23/23.”[Source: https://news.bloomberglaw.com/white-collar-and-criminal-law/multiple-chinese-manufacturers-charged-with-fentanyl-trafficking]

Original Text Source: Justice.gov

Page Created: 7/11/23

U.S. Copyright Status: Text = Public domain.