US Sanctions Mexicans Linked to Cartel Fuel Smuggling

The U.S. Treasury imposed sanctions on two Mexican nationals and nine entities tied to a cartel-linked fuel smuggling scheme that moves fuel from the United States into Mexico without paying hefty taxes, according to reports from Reuters, Los Angeles Times, and CBS News. The scheme is linked to Mexico's Jalisco New Generation Cartel (CJNG) and part of an illegal enterprise generating hundreds of millions of dollars annually for the cartel. Smuggled fuel has become the second-largest revenue source for Mexican cartels after drugs, according to the U.S. government.

Secretary of the Treasury Scott Bessent stated that this action highlights how Mexico's cartels are expanding beyond traditional drug trafficking to generate revenue for their criminal organizations. The sanctions target Oscar Juraidini and seven companies he owns or controls, as well as J. Refugio Ruiz and his two logistics companies, Jomadi Logistics & Cargo and Ahavat Logistics Solution.

The Treasury's Office of Foreign Assets Control imposed sanctions on the individuals and entities involved in transportation, financial services, and real estate, accused of being tied to a cartel-linked fuel theft ring. The scheme involves misclassifying customs documentation and bribing government officials to evade taxes. Complicit U.S. companies leverage their relationships with major refineries and fuel distributors at home to purchase fuel and then divert it using networks of front and shell companies.

Once in Mexico, the smuggled fuel is sold through cartel-controlled petrol stations and unregulated roadside fuel stops at a steep profit. Complicit U.S. fuel distributors obscure their proceeds through money laundering by purchasing luxury goods, real estate, and investment assets. The Treasury also issued new guidance to help banks and other financial institutions identify red flags in the cross-border fuel trade.

The Jalisco New Generation Cartel has been acknowledged by the U.S. Drug Enforcement Agency as operating in 21 of Mexico's 32 states, surpassing the powerful Sinaloa Cartel, which is estimated to operate in 19 states. Last year, President Trump designated the Jalisco New Generation Cartel and five other Mexican cartels as foreign terrorist organizations.

Mexican authorities have seized millions of gallons of stolen diesel, gasoline, and petroleum distillates from states bordering Texas. Organized crime taps pipelines and diverts fuel to service stations forced to buy from cartels or sells it directly in the streets. U.S. authorities have even accused the Jalisco New Generation Cartel of operating its own service stations.

Last month, a U.S. federal grand jury expanded charges against the cartel's second-in-command, known as 'The Gardener,' accusing him of methamphetamine trafficking and conspiracy to launder money. Mexican drug kingpin Audias Flores Silva was arrested on April 27 in the western state of Nayarit in an operation by Mexican Navy special forces based on information provided by U.S. agencies.