OFAC: “Treasury Sanctions Members of a Chinese Synthetic Drug Trafficking Organization”

The U.S. Treasury Department’s Office of Foreign Assets Control on July 29, 2014 released the following:

Sanctions Target Manufacturer, Owner, and Associates Responsible for Shipping Thousands of Kilograms of Synthetic Drugs and Controlled Substances Worldwide

WASHINGTON – The U.S. Department of the Treasury today designated members of a synthetic drug trafficking organization led by Chinese national Zhang Lei (a.k.a. Eric Chang) under the Foreign Narcotics Kingpin Designation Act (Kingpin Act). Through his company, CEC Limited, Zhang manufactures and sells substances over the internet to consumers internationally, including bath salts (mephedrone), other synthetic psychoactive substances, and chemicals that can be combined with other substances to create synthetic psychoactive substances (precursors). In addition to designating Zhang, the Treasury Department also designated today CEC Limited and three other individuals who work for the company and Zhang. As a result of today’s action, all assets of those designated today that are based in the United States or are in control of U.S. persons are frozen, and U.S. persons are generally prohibited from engaging in transactions with them.

“Global synthetic drug suppliers like Zhang Lei have fueled an epidemic of hospitalizations, paralysis, and deaths, especially among young adults,” said Adam J. Szubin, Director of the Office of Foreign Assets Control. “We intend to disrupt these networks’ operations and deny them the ability to conduct international trade.”

For over a decade, Zhang has shipped thousands of kilograms of synthetic drugs and controlled substances, including mephedrone, into the United States and other countries – including Australia, Austria, France, Germany, the Netherlands, and Italy. According to its website, Zhang’s company, CEC Limited, is a manufacturer of various chemical compounds. The company has been the source of supply for synthetic drugs sent throughout the United States and Europe. Shipments to the United States earned Zhang roughly $30 million. As the United States and other countries banned new psychoactive substances, Zhang and his associates developed replacement chemicals or used fraudulent shipping labels to continue to traffic illicit narcotics. Chinese authorities arrested Zhang on November 7, 2013 under charges of teaching criminal methods to others.

Other individuals designated today include Chinese nationals Wang Guoying, Zhang Jicheng, and Hu Yongan. Wang Guoyang is Zhang Lei’s mother and part owner of CEC Limited. She received of hundreds of thousands of dollars in payments for illicit synthetic substances. The other two individuals, Zhang Jicheng and Hu Yongan, are employees of CEC Limited and had previously been incarcerated in the United Kingdom for their role in establishing a clandestine laboratory in the United Kingdom for the industrial-scale production of synthetic drugs.

Today’s action is the result of a joint investigation by OFAC and the Drug Enforcement Administration (DEA). These designations complement law enforcement actions through the DEA’s Project Synergy, an ongoing investigation of worldwide synthetic drug manufacturers and distributors.

Since June 2000 more than 1,600 individuals and entities have been named pursuant to the Kingpin Act for their role in international narcotics trafficking. Penalties for violations of the Kingpin Act range from civil penalties of up to $1.075 million per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.

To view a chart of the Zhang Lei and CEC Limited network, click here.

For a complete listing of designations pursuant to the Kingpin Act, click here.

For information from the DEA about synthetic psychoactive substances, click here.”

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Douglas McNabb – McNabb Associates, P.C.’s
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To find additional global criminal news, please read The Global Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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