Mexico, the DEA, and the Case of Zhenli Ye Gon
Wednesday, October 29, 2008; 12:00 AM
At a ceremony in 2002, then-Mexican President Vicente Fox awarded a certificate of Mexican citizenship to Zhenli Ye Gon, a Shanghai native who dreamed of building his company, Unimed, into Latin America's largest pharmaceutical manufacturer.
Ye Gon had gained legal residence in Mexico in 1997 and worked for two years as a technician at Laboratorios Silanes, a firm owned by Fox's longtime friend and political backer, Antonio López de Silanes Pérez.
When Ye Gon opened Unimed, he gained approval from the Federal Commission for Protection against Health Risks to import restricted chemicals for use in pharmaceutical manufacturing.
Today Ye Gon is in U.S. custody awaiting trial. But federal prosecutors have warned U.S. District Judge Emmet G. Sullivan that they are not yet ready to go to trial and are having difficulties gathering needed evidence from other governments.
Ye Gon was arrested a year ago at a Maryland restaurant, while dining with a friend. In an affidavit filed in U.S. District Court in Washington, authorities alleged that he illegally imported about 86 metric tons of restricted chemicals into Mexico "for the express purpose of manufacturing pseudoephedrine/ephedrine." Those chemicals can be used to make methamphetamine.
Ye Gon's defense lawyers now hope to detail his dealings with Mexican agencies to prove that he was a legitimate drug importer whose activities were sanctioned by the Mexican government -- not a key supplier for an international methamphetamine ring, as the U.S. Justice Department charged more than a year ago.
The U.S. Drug Enforcement Administration contended that Ye Gon's company was a front for drug cartels and that he should have known that the chemicals would be used in producing methamphetamine that would eventually be sold on U.S. streets. Ye Gon has not challenged one of the government's main accusations: that the amount of cash he had accumulated in Mexico, the United States, China and Hong Kong from the sale of ephedrine and pseudoephedrine to clandestine laboratories totaled $350 million dollars, far exceeding the original estimate of $205 million.
According to Unimed records introduced in the case, Ye Gon imported at least 8,000 tons of chemical substances into Mexico over five years; the chemicals were then resold to different laboratories.
Ye Gon's attorney in Mexico City, Rogelio de la Garza, said the defense intends to show that the imports were approved by the Mexican government.
Documents introduced in court show that from 2002 to 2004, Ye Gon imported 81 tons of pseudoephedrine, used in the making of methamphetamines. However, an audit by the Federal Commission for Protection Against Health Risks verified only 34 tons, leaving unaccounted for about 47 tons of the chemical that could have ended up on the black market.
In Mexico, it became illegal in 2005 to import pseudoephedrine.
On Oct. 18, 2006, Ye Gon traveled to the interior of Mongolia, near the Chinese border with Russia, to make another purchase, according to an invoice presented to the court.
He paid $692,895 for 19.797 tons of hydroxy-benzil-N-methyl-acetetamine from Chifeng Arker Pharmaceutical Technology, a subsidiary of Shanghai Industrial United Holdings, a company listed on the Hong Kong stock exchange. According to the invoice, the merchandise was shipped at the port of Tianjin and was supposed to arrive at the port of Lazaro Cardenas, in Michoacan state, in December 2006.
But authorities seized the shipment, which led to a search of Ye Gon's opulent Mexico City mansion in March 2007. Along with records of wire transfers in Mexico, Europe and the United States, they seized more than $207 million, mostly in stacks of $100 bills. Police at the time called it the largest seizure of drug cash in the world.
Using a Chinese passport, Ye Gon came to the United States in 2007 and intended to seek political asylum, court documents show.
Both in his response to the DEA's accusations and in his request for political asylum, Ye Gon claimed that representatives of Mexico's ruling National Action Party had forced him to hide part of the $205 million in his home. He said that the funds were left over from the financing of Felipe Calderón's presidential campaign. Calderón dismissed the charge as "pure fiction."
Ye Gon specifically accused Javier Lozano Alarcón, the current labor minister, who headed Calderón's campaign, of threatening to have him killed him if he refused to cooperate. Lozano rejected the accusation and said he planned to sue Ye Gon for slander in the United States. No lawsuit has been filed, according to a review of court records .
While living in the United States, Ye Gon gambled away nearly $126 million in Las Vegas casinos, according to the DEA. While there, the agency says, he told a female friend, a former employee of the Mirage Hotel Casino, that he was laundering money for Mexican drug traffickers. The government intends to call the woman as a witness when the case comes to trial.
Prosecutors have also tried to secure the cooperation of Ye Gon's wife and two of his former employees, who are being held in a prison outside Mexico City. On April 25, 2007, officials from the U.S. Justice Department and the U.S. Embassy in Mexico went to the prison to seek the prisoners' cooperation, according to court documents.