In a big step to stop the Sinaloa Cartel’s money activities, the U.S. Treasury Department recently put sanctions on two Mexican businesses linked to the cartel’s illegal drug trade. These businesses, which include a chain of ice cream shops and a pharmacy, are accused of using money from selling fentanyl to run their operations. The U.S. government hopes these sanctions will help stop the cartel’s money laundering and reduce the harmful effects of fentanyl in the U.S.
The Sinaloa cartel, named after the Mexican state where it originated, is one of the oldest and most powerful drug trafficking groups in Mexico. It has supplied much of the marijuana, cocaine, heroin, meth, and fentanyl sold on U.S. streets, according to a report from Congress.
In the early 2010s, experts said the cartel controlled about 40% to 60% of Mexico’s drug trade, making up to $3 billion each year.
The cartel was founded in the late 1980s and led by the ruthless drug lord El Chapo Guzman. Guzman was caught again in 2016 and sent to the U.S. the following year. Now, he is serving a life sentence in a U.S. federal prison.
The cartel has been blamed for playing a significant part in Mexico’s drug war, which has killed tens of thousands of people and continues to cause high levels of violence across the country.
The Sinaloa Cartel has been a significant player in the global drug trade for many years, but its involvement in making and selling fentanyl makes it a serious threat. Fentanyl is a synthetic opioid that is 100 times more potent than morphine and causes tens of thousands of overdose deaths in the U.S. every year. Government data shows that fentanyl is responsible for about 70,000 deaths annually in the United States, worsening the opioid crisis.
The cartel gets the chemicals needed to make fentanyl from China and India, then produces the drug in secret labs in Mexico. Once it’s made, fentanyl is smuggled over the U.S.-Mexico border and sold illegally, often disguised as prescription pills. The Sinaloa Cartel is a crucial player in this dangerous supply chain, making a lot of money from selling this harmful drug.
The Office of Foreign Assets Control (OFAC), a part of the U.S. Treasury that enforces economic sanctions, named two businesses connected to the Sinaloa Cartel: Nieves y Paletas, a chain of ice cream shops in Sinaloa and a pharmacy in the state of Sonora. These businesses are thought to have been started with money from drug trafficking, showing how the cartel hides illegal money by running businesses that appear to be legitimate.
These cartels hide drug money by investing in real businesses, mixing the ill-gotten funds into the regular economy. This makes it harder for law enforcement to track where the funds originated.
The Treasury Department sanctioned Nieves y Paletas, an ice cream chain in Sinaloa’s capital. According to the Treasury, Jesús Norberto Larrañaga Herrera, also called “El 30,” and Karla Gabriela Lizárraga Sánchez started the business with money made from illicit fentanyl sales.
The Treasury also put sanctions on a pharmacy and convenience store in Sonora. This business is connected to José Arnoldo Morgan Huerta, known as “Chachio,” who is accused of using drug money to run it. His brother, Juan Carlos Morgan Huerta, manages the Sinaloa Cartel’s activities in the border city of Nogales, an essential spot for smuggling drugs into the U.S.
These businesses are only part of the Sinaloa Cartel’s money-laundering operations. The cartel also invests in restaurants, timeshares, and other businesses to hide its illegal money.
The sanctions against the ice cream chain and pharmacy are part of a larger U.S. plan to fight the opioid crisis and the threats from Mexican drug cartels. In July 2023, President Joe Biden announced a proposal to create a registry for pill presses—machines used to make fake pills—and stricter penalties for drug traffickers dealing with fentanyl.
These actions also show rising tensions between the U.S. and Mexico over violence from cartels and drug trafficking. Mexican President Andrés Manuel López Obrador has criticized the U.S. for its part in the drug crisis, pointing out that American demand for illegal drugs and the flow of guns into Mexico contribute to the problem. However, the Biden administration holds the cartels responsible, especially the Sinaloa Cartel, which plays a significant role in making and smuggling fentanyl.
Of course, the Biden administration refuses to acknowledge its role in the crisis. For now, Biden’s win is bittersweet. Sanctioning an ice cream parlor must be heartbreaking for the commander-in-chief.