What to Know
- Law enforcement executed search warrants at a home where they seized at least $80,000 in cash.
- According to the affidavit, down payments for most of the grow houses were traced back to wire transfers from China.
- The total purchase price for the seven homes, which were bought between July 2013 and September 2017, was $4,067,882.
Three Southern California men were arrested Thursday on federal charges alleging they took part in a scheme that used millions of dollars wired from China to purchase homes that were converted into illegal marijuana grow houses.
Lin "Aaron" Li, 37, of Chino, Ben Chen, 42, of Alhambra, and Jimmy Yu, 44, of Pasadena, were each charged in Los Angeles federal court with one count of manufacturing, distributing and possessing with the intent to distribute marijuana.
In conjunction with the arrests, law enforcement executed search warrants at Li's home, where they seized at least $80,000 in cash, and at seven suspected marijuana grow houses in Chino, Ontario and Chino Hills, where aboug 1,650 marijuana plants were seized, federal prosecutors said.
Federal authorities have begun the process to take possession of the seven homes -- worth a total of more than $5 million, according to the U.S. Attorney's Office.
Prosecutors allege that Li, a real estate agent, orchestrated the scheme to purchase residential properties through transactions designed to conceal the homes' true owners, converted the houses to marijuana grow operations, and trafficked marijuana, with most of the processed cannabis sold to customers in California and Nevada.
After receiving financing from China, Li "acted as the Realtor for the purchase of (seven residences), which he then converted into illegal marijuana grow houses," the case affidavit alleges. "Li coordinated the purchase of the properties, managed them after purchase, paid their utilities and taxes, and established shell companies for the purpose of managing the properties' finances."
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Investigators believe Li attempted to distance himself from the conspiracy by using Chen and Yu to manage day-to-day operations at the grow houses, to help with out-of-state distribution of the marijuana, and to return marijuana sale proceeds, according to court papers.
Li also allegedly used bypasses to physically divert electricity directly from power lines, thus stealing power from the utilities, hiding the grow houses' high power usage from law enforcement, and creating fire risks in neighborhoods.
According to the affidavit, Li's attempts to insulate himself from culpability allegedly went as far as creating fake leases for some of the properties, documents that included fake tenants, forged electronic signatures, and special clauses that purported to prohibit the fake tenants from cultivating marijuana at the homes.
"In states that have decriminalized marijuana, we have seen an influx of foreign money used to establish grow operations, with much of the marijuana being destined for out-of-state consumers," said U.S. Attorney Nick
Hanna. "By establishing illegal drug operations in residential neighborhoods, the defendants increased the risks to law-abiding homeowners, caused neighborhood blight, and stole power from utilities."
According to the affidavit, down payments for most of the grow houses were traced back to wire transfers from China, and several of the properties were bought by straw buyers who actually had nothing to do with the transaction.
The titles for most of the homes were transferred, shortly after they were purchased, to limited liability companies associated with Li, who served as the homes' property manager, prosecutors allege.
The total purchase price for the seven homes, which were bought between July 2013 and September 2017, was $4,067,882, according to the affidavit. Last June, law enforcement officers executed a search warrant and seized 1,038 marijuana plants at an eighth grow house in Chino Hills believed to be part of the same criminal scheme, according to the U.S. Attorney's Office.