A Chinese-Mexican businessman arrested after police found a $205 million stash of cash in his Mexico City mansion has told U.S. prosecutors that he sold tons of a chemical used to make methamphetamine on the black market, a top Mexican official told the Associated Press.
Zhenli Ye Gon’s lawyers, who are fighting efforts to extradite him to Mexico from the United States, vehemently deny their client admitted anything illegal and call the report misinformation intended to sway public opinion against him.
Mexico’s deputy attorney general in charge of extraditions, Leopoldo Velarde Ortiz, said U.S. prosecutors told him about conversations with Mr. Ye Gon in which he said he sold tons of a chemical used to make methamphetamine on the black market.
The information was given to Mexican authorities “informally” and U.S. officials have not yet provided transcripts of the conversations or specifics of Mr. Ye Gon’s account, Mr. Velarde said.
“We know that in the interviews he had with prosecutors in the United States, he admitted his responsibility in the commission of the crimes he was accused of,” Mr. Velarde told AP in an interview last week.
Asked whether Mr. Ye Gon, 46, had admitted selling methamphetamine precursors on the black market, Mr. Velarde said: “That’s it, exactly.”
Spokeswoman Laura Sweeney said the Justice Department would have no comment.
The case against Mr. Ye Gon burst open in March 2007 when police raided his house in Mexico City’s fanciest neighborhood and found more than $205 million in cash — mostly in $100 bills — stuffed into a closet and a wall. It was the largest drug-related cash seizure in history.
Mr. Ye Gon, who was born in Shanghai and became a Mexican citizen in 2002, was in the United States at the time; he kept a mistress and a Lamborghini in Las Vegas.
The U.S. Drug Enforcement Administration (DEA) says Mr. Ye Gon lost more than $120 million gambling over the years, and Mr. Ye Gon himself spoke of betting $150,000 a hand at baccarat. He said he was such a treasured customer that the Venetian Resort Hotel Casino gave him a small token of its appreciation: a Rolls-Royce.
Authorities arrested Mr. Ye Gon’s wife, other relatives and some employees in Mexico. His wife, Tomoiyi Marx Yu, remains in prison while she is tried on charges of using illicit funds; she says she did not know about the money.
As a fugitive, Mr. Ye Gon gave an interview to the AP in New York in May 2007 in which he claimed much of the money found at his house was a campaign slush fund belonging to Mexico’s ruling party.
He said party officials forced him to store the cash with a threat that has since become famous in Mexican vernacular: “Cooperate, or neck,” he said with a throat-slashing motion in heavily accented Spanish. Mexican officials call the story preposterous.
Two months after the interview, Mr. Ye Gon was arrested at a restaurant in Maryland and charged in U.S. federal court with conspiracy to import drugs into the United States.
U.S. District Judge Emmet Sullivan threw out the case in August after one prosecution witness recanted and another refused to testify. Judge Sullivan, who had criticized prosecutors for taking months to reveal the witness problems, ordered that Mr. Ye Gon never be charged in the U.S. again.
He remains in a prison in suburban Washington as he battles extradition.
Prosecutors in Mexico think their case is much stronger because they won’t have to prove Mr. Ye Gon conspired to move the drugs into the United States. Mexican prosecutors are hoping Mr. Ye Gon’s conversations with U.S. prosecutors can be used as evidence in Mexico.
Mr. Ye Gon’s lawyers accuse Mexican authorities of deliberately putting out false information.
“We believe this is misinformation on the part of the Mexican government in preparation for his possible arrival there,” said Eduardo Balarezo, one of Mr. Ye Gon’s attorneys in Washington. “This is why we’re fighting his extradition. We do not believe he can get a fair trial there. We believe Mexico is trying this case in the media.”
Asked whether Mr. Ye Gon had made the admission to U.S. authorities, Mr. Ye Gon’s lawyer in Mexico, Rogelio de la Garza, said: “I assure you this is a complete lie.”
The accusations revolve around 96 tons of chemicals Mr. Ye Gon purportedly imported from China in 2005 and 2006. Mr. Ye Gon, who owned a pharmaceutical factory west of Mexico City, told the AP that import records prove they were legitimate chemicals intended for use in cold medicines.
Mexican prosecutors say he never made any medicine, instead using his factory to transform the chemicals into pseudoephedrine and selling it to drug gangs for hundreds of millions of dollars for use in the manufacture of methamphetamine.
In court documents, U.S. drug agents call Mr. Ye Gon one of the largest pseudoephedrine traffickers in the Western Hemisphere and say he provided the gangs with enough chemicals to make 41 tons of methamphetamine - enough for 185 million typical doses.
A person familiar with the case, who spoke on the condition of anonymity because he was not authorized to discuss it, said Mr. Ye Gon met over many days in late 2008 and early 2009 in a conference room at the Department of Justice with at least two prosecutors, one DEA agent and Mr. Ye Gon’s lawyers, including Mr. Balarezo.
Mr. Balarezo denies the conversations took place; two others allegedly present said they could not comment.
The source said Mr. Ye Gon provided detailed information about the black market sales, admitting he sold the chemicals for $1,100 to $1,400 per pound. Import documents show the chemicals cost Mr. Ye Gon less than $22 a pound, meaning his margin in the operations in question would have been more than $200 million.
The source also said Mr. Ye Gon provided the names of some of his buyers, though he would not disclose their identities to the AP out of fear they might take revenge on people involved in the case. Mexican officials have linked Mr. Ye Gon to the powerful Sinaloa Cartel.
Mr. Velarde, the Mexican deputy attorney general, stressed that Mr. Ye Gon’s admission was made during informal interviews and not in open court. As such, he said, it did not constitute an official confession. Still, he described it as potentially useful if Mexican officials are successful in winning Mr. Ye Gon’s extradition.
“If we decide we need that evidence for our case, then we’ll have to make a formal request to the U.S. government that it send us those interviews with the prosecutors,” he said.