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Feds Raid Illegal California Grow Houses Run by Chinese Mob

April 5, 2018
This isn't Sacramento, but the houses used to grow unlicensed, illegal cannabis were located in subdivisions similar to those pictured here. (jeremyiswild/iStock)
California is now home to the largest legal state-regulated cannabis marketplace on the planet. But massive federal raids near Sacramento this week are serving as a reminder that the state is still home to an enormous unlicensed and unregulated market, too.

More than 100 properties in and around Sacramento, financed by Chinese companies, are thought to be part of the illegal grow operation.

On April 3 and 4, hundreds of federal agents and local law enforcement officers descended on 74 houses in the Sacramento region, and filed civil forfeiture actions against more than 100 properties, in what’s being characterized as one of the largest residential forfeiture efforts in the nation’s history.

According to the U.S. Attorney for the Eastern District of California, this week’s raids and arrests targeted a vast and meticulously organized black market cannabis network.

According to authorities, that network involved millions of dollars in suspicious money transfers from China, large purchases of California real estate and the gutting hundreds of homes in quiet suburban or rural neighborhoods for use as secretive cultivation rooms. Ultimately, authorities say, the scheme shipped huge quantities of cannabis far from California’s regulated market to illicit distributors on the East Coast, where cannabis remains largely illegal.

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‘A Blight in Our Communities’

“These grow houses are a true blight in our communities, bringing with them increased crime rates, environmental damage, extraordinary consumption of electricity – and just a rotten, lousy place to have to live,” Scott McGregor, the U.S. Attorney for the Eastern District of California, said at a Sacramento press conference announcing the enforcement actions Wednesday.

In a separate prepared statement, McGregor decried “criminal organizations, funded by money from China,” permeating residential communities near Sacramento. “The scope of this enforcement operation sends a clear message to international organized crime: get out of our neighborhoods.”

This week’s operation included raids in Sacramento, the city of Elk Grove in Sacramento County, and communities in surrounding Placer, El Dorado, Amador, Calaveras, Yuba and San Joaquin Counties. Agents seized 61,050 plants and more than 440 pounds of cannabis flower, along with 15 guns and $100,000.

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Sessions Denounces the Mob

The announcement of the large-scale raids, which involved more than 500 law enforcement officers, was accompanied by a statement from Attorney General Jeff Sessions. Blasting “transnational criminal organizations” for “trying to impose a false sovereignty over our neighborhoods,” Sessions said the federal government will seek to seize tens of millions of dollars in California real estate believed purchased for illicit cultivation as part of the trafficking operation.

The raids have 'nothing to do with' California legalization, says the local US Attorney. 'This is illegal under anybody’s law.'

Sessions, no friend of state-regulated cannabis economies, particularly legal adult use states such as California, chose neither to disparage nor mention the state’s legal cannabis sector when discussing the trafficking case.

However, McGregor specifically pointed out that the raids, including some in which officers used flash-bang grenades to burst into homes, had no connection with California’s state-permitted cannabis sector and that authorities weren’t conducting actions interfering with state cannabis laws.

“It has absolutely nothing to do with that,” Scott said. “This is illegal under anybody’s law.”

Chinese Influence in Illicit Operations

The Sacramento region for decades has attracted illicit cannabis operations, sometimes associated with Chinese or Asian-trafficking networks, due to the area’s proximity to San Francisco, diverse ethnic communities and decidedly lower housing costs than the Bay Area.

Straw buyers purchased homes in California on behalf of multiple investors, often completing purchases with money wired from banks in China, prosecutors say.

Thirteen immigrants from China were arrested in raids on suburban cultivation sites last September and another 10, including U.S. citizens and individuals with Chinese passports, were arrested in raids in neighboring Yuba County in March and May, 2017.

Court documents filed this week case describe an elaborate scheme in which straw buyers purchased homes in California on behalf of multiple investors, often completing purchases with money wired from banks in China. Federal authorities reported tracking 125 wire transfers, totaling $6.3 million, to facilitate the real estate purchases, many closed with minimum down payments of $5,000 to $10,000.

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Mr. Yang Buys 7 Houses

According to a civil forfeiture filing obtained by Leafly, an Ohio man named Leonard Yang “used hard-money financing and tens of thousands of dollars wired to the United States from China” to facilitate acquisition of seven Sacramento area houses that were all used for illicitly growing cannabis.

In Sept. 2015, Yang was indicted on federal narcotics and money-laundering charges. Some 5,000 plants were seized at his Sacramento homes. Yang was arrested with $10,000 in his Cadillac, along with four garage door openers and multiple house keys.

For one of the houses tied to Yang, the purported buyer was identified as a 25-year-old woman, Yan Bing Li. According to court documents, she was the listed purchaser of a $416,000 house in the suburb of Elk Grove, having qualified for a loan based on reporting earnings of $5,000 a month managing a liquor store in Brooklyn, N.Y. But authorities say there is no evidence of any association with the liquor store; she worked for a restaurant in Texas.

$49k Wired for Travel

However, the seizure notice said Li was able to secure the purchase of the house with help of $48,999 wired from the Agricultural Bank of China. The filing said Yi had even listed the bank transfer on her 2016 U.S. tax return as funds for “travel.”

Li’s aunt, Xiu Ping Li, listed as a Sacramento homeowner, is in bigger trouble. In June, she was indicted on international money laundering charges that can carry a sentence of up to 20 years in federal prison. She is accused of receiving three wire transfers of $48,985 each from the China Construction Bank to her Bank of America account to facilitate other Sacramento real estate purchases for illicit cultivation.

“This was a large-scale operation, with millions of dollars coming into the US from China,” Internal Revenue Service Assistant Special Agent Cindy Chen said in a statement on this week’s federal actions. “This criminal organization used foreign money to purchase homes and turned them into marijuana grow houses, all at the cost of innocent neighborhoods.”

Peter Hecht's Bio Image

Peter Hecht

Peter Hecht, former political writer and Los Angeles bureau chief for the Sacramento Bee, has been reporting on cannabis since 2009. His coverage has been honored for explanatory reporting in the "Best of the West" journalism awards and earned an Excellence in Journalism prize from the Northern California Chapter of the Society of Professional Journalists. Hecht is the author of the book “Weed Land: Inside America’s Marijuana Epicenter and How Pot Went Legit.”

View Peter Hecht's articles

  • Jeffrey

    Time to get in touch with the local government and get a nice house on the cheap. Just gotta get the smell of weed out of it.

    • TheEndGameIsNear

      You really still think this is about a plant? No, it is about the stripping process and the stoves these people use to cook up those vaping extracts out of solvents. Those people, they don’t eat and some only eat food spiked with the THC compound or BHO Butane Hash Oil.. They are so sucked up. They are skinnier than the fentanyl and meth cooks and its pretty sickening to see it. That stench, you can’t get rid of it. Its like meth residue with PCP and rat poison.If you use your stove to fry chicken instead of cook hash enjoy being SWATTED and lied about by the Afghan race boys in the local courts as the juries nod out. Bulldoze it.

      Oh and the local government will sue the hell out of you and buy another house with the proceeds their attorneys pull from the checks and put the Saudis and the India hash and heroin Afghani tradesmen in there and lay everyone on cots for $1000 a piece per month, its like a human wet PCP manufacturing slaughterhouse inside their THC concentrate cook houses. You will want to grab a riot shield and take 5 showers the smell you will never ever forget the smell. Every doc who writes the prop 215 scripts works out of their house making extracts with embalming fluid and is on fentanyl. Even touching fentanyl can kill. Up until a few weeks ago I couldn’t figure out what that smell was, now I KNOW. They’re cooking up dab labs in there. I bet if you test up some of the recreational shops you WILL find fentanyl. Smells like Ether down the block.. All them body shops, eh?

  • Etidorhpa

    Build the wall now for goodness sakes.!

    • William

      Not a single Chinese person involved here, walked from Mexico or Central America, where the drug war of us, has created yeah, the horror of war.

      • Ray_Ping

        So there’s not a Chinese railroad?

        • William

          RP; wow, there is a story there, and it’s an American story, and a great one, and yet to be told. Someone call a good writer friend looking for a book to write. I think Hari’s book “Chasing the Scream” should be made into a movie called : “Anslinger”. Anslinger mentored Arpaio. It’s a great book. How two old queens can cause so much suffering.

          • Ray_Ping

            Thanks for this! I’m ready to read something new and diffferent.

          • William

            Perkins grew a conscience and wrote “Confessions….” and Secrets of the American Empire” He also offers solutions, which is probably the best of it all. The mechanisms of empire revealed. My heart is with America, as are my tears

          • Ray_Ping

            These are great details for when I read through these. Thanks.

          • William

            You’re welcome. Who are you?

          • Ray_Ping

            Rob. Great first book so far.

          • William

            Rob; Perkins, Bacevich and Hari answer a lot of questions.

          • William

            if you have any concern for history, McMaster’s “Dereliction of Duty” is a beauty. “Let’s go win Vietnam in……where? Syria now?”

          • Ray_Ping

            We need your tears here, they will be added to the millions more already here.

          • William

            ??

  • 360dunk

    Much as I despise a lot of the garbage Jeff Sessions spews, he’s spot on this time. The whole idea of marijuana dispensaries is to:

    1. collect tax revenue for cash-strapped communities.
    2. ensure citizens are consuming mold and pesticide-free products.
    3. free up law enforcement to focus on violent crimes.

    Trans-national criminal gangs do none of the above and in fact, steer people AWAY from dispensaries. The more illegal grows that are halted, the healthier our legal dispensary industry becomes. Don’t buy black market weed if you live in a legal state.

    • christopher rose

      Will you say the same thing about the 99% of the growers who didn’t or can’t sign up ” legally ” because of stifling regulations.
      Will you capitulate as the FED’s does a huge asset forfeiture so the state can get a backdoor percentage to show growers what happens when you screw with their tax base on money they already projected and spent.
      Will you sleep better knowing all this goes on , but give the state a pass for your buying convenience.
      Ballot measure ” Decriminalization ” …..Grow 6 plants and give it away till it happens , or pay the price.

      • William

        C.rose: thoughtful, well said, I think; a bit weighty for fast analysis, but, and made me think. And I say beware the cannapigs. Simple freedom, and freedom to grow a plant is the message we sacrificed so much for. Let it grow.

      • 360dunk

        Not sure where you get that 99% number but the fact is, dispensaries are NOT supplied by the Sinaloa cartel or similar.

        On the contrary, every bit of taxable cannabis is grown and packaged legally by American citizens. Unless you’re able to grow your own, either you support this fledgling cannabis industry by making purchases at dispensaries or you support the black market. I choose to buy at dispensaries and will gladly pay the tax in order to keep this great thing we have going for us these days.

        • TheEndGameIsNear

          Recreational weed is ISIS weed. Good luck.

    • William

      Keep your money at home. grow small, buy craft, buy the best: American

      • 360dunk

        Growing your own is not an option for many, if not most. It’s a felony in a lot of states for some. It’s hard to find a safe place to grow for others, especially apartment dwellers. It can be an expensive ordeal to get all the needed equipment. Even in some states that have gone legal, growing your own is not. In Nevada, for example, it’s against the law to grow unless you are over 25 miles away from a dispensary. Nope, there is no easy solution to this.

        • William

          Remember to vote. It may be messy, much of it corrupt, etc. And it’s still the best there is. It’s Mueller Time

          • TheEndGameIsNear

            You should have voted no.

        • TheEndGameIsNear

          ISIS funds almost all of it. All the shops are packed with people who look middle eastern now, I don’t know about Chinese money but we know ISIS is in China with the people who are in deep state Sacramento.

  • William

    The wall would not have affected this gang, whatsoever. Growing plants in a house meant to have a family in it. Plants, how horrible. Must have filled the neighborhood with flower fragrance; who wants that? I’d rather smell the flesh of roasting corpses, burgers and such. The Chinese, and the Russians look at America as easy pickings. Babes in toyland they consider us. So does the Mossad, by the way. Heads up folks, the adversaries we have are smart, and they are not kind. (I wanted to say this when I first wrote it): Except perhaps for the Israelis in some places. Don’t ask a Palestinian. Better yet, do ask a Palestinian. You become what you hate.

    • Excuse me

      Great. Are you another fucking idiot who see “Joos” around every corner?

      • William

        Uhmm, no; my daughter is Jewish. I wanted to say “son”, but, and gotta be completely honest; not “to be honest”… no. Don’t know what to say to you kids…have fun?

      • William

        Uhhmn, no.

  • Steven

    Good work Sessions. Thank you for letting the state sell weed (which I enjoy), while getting rid of these Chi-Com thieves.

    • William

      Yep, keep Mr. Sessions busy doing what he is supposed to. You can bet he wasn’t involved in the application of resources to develop this case. Nice work, we gotta fight for ours. I agree. And we also have room for every immigrant who wants to come here just about. As Tim Cook said DACA is not about immigration, it is a moral issue. If every single American lived as closely together as Singaporeans do, we would all fit in land the size of Texas. That’s a lot of people, and even way, way more room. Our police agents should be chasing the really bad characters considering bringing violence into this country, or corruption, and leave everyone else alone.

    • TheEndGameIsNear

      Yeah you love the Afghani fentanyl so much.

  • farmerlion

    The Chinese government and the organized crime aspects of that country. Have never cared for anyone but themselves. Dangerous chemicals and pesticides being used. Not to mention the damage to rented properties. Much of this will go away with legalization of marijuana and private home growers entering a legal market. Private organic growers are essential to a broad tax base providing the best cannabis.

    • William

      Speaking of chemicals and pesticides, Glyphosate (Round Up). Executives of Monsatano say you can drink it. They wouldn’t. Monsatano has developed a soy bean genotype that is Round Up resistant. If Monsatanos pollen affects your crop, (wind pollination-nearly unstoppable), you gotta pay them for their patented plant genetics. And they “weed” using glyphosate. All over, “someplace else”. Soy and quinoa are the two plants known to provide all essential amino acid proteins. The Japanese nearly conquered half the planet on soy and rice; the Inca did conquer the Andes with quinoa as their protein base. Leave the soy be…(too late?)

    • TheEndGameIsNear

      Take a walk around your hood and breathe in the solvents they use in illegal dab labs. I bet you didn’t know the stuff Sessions did not raid is tainted with PCP and the chemical they use to embalm the dead.

  • horsemannv

    Let’s see now, we have the Chinese cartels, the Russian cartels, the former Russian satellite cartels, the Mexican cartels and their network of people that form the basis of distribution of cannabis. Close down one and another pops up. Illegal drugs, especially plants that hurt no one, provide a void that must be filled from start to finish. Make cannabis LEGAL and take away the stupid reasons for enforcing current laws that make it illegal in so much of the United States. Cannabis is not your enemy…big pharma and opioids and their derivatives can be and all too often are but are protected by government big monied interests.

    • William

      horse; you would love “Chasing the Scream”., perhaps. The reasons we have the drug war in the first place. It’s nothing to do with drugs. The opioid battle in the drug war is not about opium; it is about the control that can be enacted depending upon the propaganda of the times, as we are seeing now. The Chinese were not enslaved by opium; they were enslaved by the British. I’m not supposed to be figuring all this out, and I’m not out to worry anyone, anywhere. I just like to state the obvious. And I wish I were still naive.
      The drug war is going on primarily for social control. Only if we make it that way. Anslinger, a racist sadist, involved in murdering Billie Holiday, set the drug war on fire, and has caused much pain on this earth. He saw what he could do to suppress drugs, and medicine, both, worldwide. (sound familiar?) Anslinger traveled the world, threatening countries if they did not suppress. His men worked for drug gangs who were delighted at the war. Anslinger dies with morphine in his system for angina, and he supplied Joe McCarthy with pharmaceutical heroin. (ya gotta have read the book). “Chasing the Scream” J. Hari; I would give them away if I had the money.
      Nixon gave it a bump, and Nancy pushed it along, and fear came, as the towers fell, and stopping fear is not an easy thing. Opioids are of a very serious plant; it saddens me to see it misused, hence maligned. Used properly, Papaver somniferum is a lifesaver, saving you from the pains you will experience as you age. Such began with the first bicycle crash you had. We were not meant to go as fast as our machines allow us now, and for the many thousands who must either use opioid pain medication, or suffer without a life: we have mercy upon the dying, as we give pain medicine, opioid to them. Can we not have mercy upon the living, as well? Those of us in serious pain beseech you. May you live long enough to know.
      Speaking of heroin; who has the juice to suppress legal opioids like they are (the”crisis” has phony numbers), while the Afghans are flooding infidel Russia and infidel Europe, and America is being flooded, with cheap, potent diacetylmorphine, heroin, from the south. We think we can win the drug war. It’s easy. We can win the drug war. Look at Portugal; look at the many countries who are winning the drug war. We are not. They are. Less crime, less disease, purity controls, tax monies large. Here, Colorado, Washington state, and all. If it really is all about money, get smart. Can such be in any way bad? Less crime, less disease, more dollars for governance (re-building infrastructure, and raising monies to education. And that’s just the immediate results they are experiencing. It’s a wave of the times, a move of the pendulum, I have been told. Opioid; opium must be quite pleasant. And heroin must be a pain killer too good. That’s what has happened when we play with our chemistry sets kids. Not always a good idea.
      Look at what works, what can actually win the war. Many lead normal lives. The cowboy hard boys, bless ’em, will have plenty of work to do; that is, stop the bad guys from hurting anyone. Addiction goes down, and sometimes away. Etc. etc. Diacetyl of the primary molecule, morphine. In 1910 it was called “calming powder” Hmmm..uhm,ok. It is not allowed for wounds of the psyche, and I don’t think it probably should be. Not at all. No. But, and who am I to say that? Don’t know, so.. There are other ways to deal with psychological pain. But, and when your body is hurt, there are many things to try before you turn to opioid. Only if you must, in order to have a life beyond the pain of damage to your body. “May you die from pain” is an old barbarian’s curse. Are we to be so barbarian? We are being so now? welcome to the opioid crisis.

    • TheEndGameIsNear

      You’re nuts if you think they don’t chemically treat that junk.

  • Sonny Cole

    make cannabis legal it would put them out of business.

    • Ray_Ping

      And they are.

      • TheEndGameIsNear

        Are you happy with the product you now receive?

  • farmerlion

    Marijuana doesn’t need to be monopolized by the same people that prorated it.
    Every legal aged person should be able to grow and sale. Providing it’s organically grown .
    Peace

  • Clipfiske

    There is nothing surprising about that most illegal grow houses in states that have legalized marijuana has attracted organized crime. In California, almost all illicit marijuana operations that have been shutdown by law enforcement were run by Chinese Mandarin speakers and the the Chinese mafia are involve. The new immigrants from mainland China are cash rich. This is because most recent immigrants from mainland China are former high ranking members of the former Communist China government. When China supposedly privatized large manufacturing operations previously owned by the Communist government. The people chosen to run these newly “privatized operation” were all high-ranking, politically connected members of the Communist Party, most of them were former government officials. China also gave loans to these new “private” operators to run and grow their business. This resulted in a regular private citizen being cut out of a significant role in the newly privatized industries and caused the former high-ranking government officials of the Communist Party to grow rich. Many of these newly rich Chinese leave China with their family and suitcases of case. Most settle in the San Gabriel Valley in California where the Taiwanese had created Mandarin speaking enclaves in the cities of Monterey Park and Anaheim. Most of the Taiwanese returned to Taiwan and the Mandarin speaking businesses, media, supermarkets, real estate agents, insurance agents, restaurants as well doctor and attorney offices established by the Taiwanese were taken over by these new immigrants from mainland China, Almost 100% of the new Chinese immigrants buy homes with cash and all the businesses that run by them run on a cash only basis (which allows them to evade taxes). The network established in the San Gabriel Valley makes it possible for an immigrant to do conduct to buy a house, buy insurance, run a business, consult with a doctor or attorney, shop for food, etc. without ever learning English. This was explained to be a Taiwanese former USC professor who says that the San Gabriel network allows the Chinese to operate just like them do in mainland China with the only change being the currency used is American dollars instead of the yen. Also, since these newly rich Chinese immigrants are used to rampant corruption in their society (such as the Win at all costs mentality has created a cultural where the fact that most Chinese students cheating openly in front of their teachers is accepted and unpunished since a Chinese student must the higher score possible on the national exam which will determine their career path and lifetime earning). American universities are now aware that most Chinese students have paid some one to write their college admissions exam and papers in high school. (Some have even paid another Chinese person to take the SAT for them) and continue the practice of paying someone to write their papers continues in college. American Universities are trying develop policies that will keep these cheaters about of their schools like requiring a personal essay for admission to their university and personally interviewing all applicants. Many professors now use software that detects plagiarism and identifies the source that was plagiarized. This is also true of Indian and Iranian international students at U.S. universities. As a rule, Southern American students do not tend to cheat and students from Hungary, Bulgaria and former members of the Soviet Bloc do not cheat while the Russians cheat all the time.