Federal authorities have arrested three individuals, including two Chinese nationals, for their alleged involvement in a $13 million money laundering scheme linked to fraudulent investment scams known as “pig butchering.”
Details of the Arrest
The suspects, identified as Mingzhi Li, 24 (aka “Zheng Lin”), and Zeyue Jia, 23 (aka “Jiao Jiao Liu”), both of downtown Los Angeles, along with Jun Shi, 55, of San Gabriel, appeared in U.S. District Court in Santa Ana on Tuesday, according to the U.S. Department of Justice (DOJ).
How the Scheme Worked
The scam, commonly referred to as “pig butchering,” involves criminals building trust with victims over time, persuading them to invest increasing amounts of money—often in cryptocurrency—into fraudulent platforms. Victims see fake investment returns on online dashboards, encouraging them to invest more before the scammers disappear with their funds.
Shell Companies & Money Transfers
Prosecutors say Shi established two shell companies—Magic Location Trading LLC and Stone Water Trading LLC—in 2022. These companies were never registered as legal financial service providers with the Financial Crimes Enforcement Network (FinCEN) or the State of California, as required by law.
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Authorities found that bank accounts controlled by Li and Jia received dozens of wire transfers from victims, funneling:
- $7.6 million to Stone Water Trading LLC
- $5.4 million to Magic Location Trading LLC
From there, the money was transferred to other accounts, sent overseas, or used for personal expenses, even as victims believed their funds were being invested in gold contracts or cryptocurrencies like Bitcoin.
Example of a Victim’s Loss
One victim, a 72-year-old man from Minnesota, was deceived into “investing” in a digital trading platform called Enkuu. He transferred $75,000 to Stone Water and $250,000 to Magic Trading, only to discover later that he was unable to withdraw any of his money.
Legal Consequences
- Li and Jia, both Chinese nationals who entered the U.S. on student visas that have since expired, are currently detained without bail.
- Shi was released on a $20,000 bond.
- All three are charged with operating an unlicensed money-transmitting business, which carries a maximum sentence of five years in federal prison.
Their arraignment is scheduled for March 17.
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