A Mexican national who allegedly led an organization that helped international narcotics traffickers launder more than $60 million in illicit drug proceeds was arrested recently, along with three of his associates.

Gustavo Barba, 59, of Guadalajara, was arrested May 3 as he attempted to enter the United States through the Otay Mesa border crossing in San Diego. Following Barba’s arrest, special agents with IRS Criminal Investigation and the Drug Enforcement Administration began arresting other defendants named in a 32-count money laundering indictment. A federal grand jury returned the indictment under seal on July 22, and the indictment was unsealed in early May after three other defendants were taken into custody.

Barba, who is also known as “Gus” and “Gustavo Barba Casillas,” is the lead defendant in the indictment that alleges a series of money laundering crimes, including conspiring to launder narcotics proceeds. Barba operates Barba International, Inc., which has offices in Guadalajara and the Los Angeles Jewelry District.

Three other defendants have been taken into custody in connection with the scheme, including Gervork Hagopian, 61, of the Windsor Square District. Hagopian owns a business in the jewelry district that allegedly received the money being laundered and facilitated the crime. Also facing charges are Isaias Navarro, 37, of Fullerton, who operated Barba International’s office in Los Angeles, and Vidal Gutierrez Vargas, 58, of Whittier, who is accused of facilitating the money laundering operation.

The indictment describes how Barba’s organization allegedly used a “Black Market Peso Exchange” (BMPE) scheme to convert millions of dollars generated by drug sales in the United States into pesos that are delivered to drug trafficking organizations in Mexico.

The BMPE is one of the primary methods used by drug cartels to launder proceeds from drug sales in the United States. The BMPE involves illegal drug trafficking and legitimate businesses. Drug cartels have massive amounts of U.S. currency – often in small denominations – that is difficult to transport in bulk or to deposit at financial institutions. At the same time, some legitimate businesses in Mexico want U.S. dollars in the United States to pay domestic suppliers and manufacturers so they can avoid incurring fees and taxes that result if they wire the money through legitimate channels.

In a BMPE scheme, a “peso broker” receives narcotics proceeds in the United States and uses the money to pay for goods ordered by Mexico-based businesses. Those businesses then pay the peso broker for the goods that will be shipped to Mexico. The peso broker then delivers the money, minus a service charge, to the narcotics traffickers in Mexico. Through a BMPE scheme, narcotics proceeds generated in the United States are moved to Mexico without having to physically cross the border or be sent through the banking system.

“Cutting off the flow of illicit profits to drug cartels is a key component in the battle against international drug traffickers,” said United States Attorney Eileen M. Decker. “As banks implement controls to shut down money laundering and as regulations make it more difficult for drug cartels to move money, these organizations seek out new ways to collect money from illegal drug sales.”