no. 14-6102 for the fourth circuit zhenli ye gon ... · d. a rifle ak-47, caliber 7.62x39mm, btand:...

No. 14-6102 ___________________________________________

IN THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT ______________

ZHENLI YE GON,

Petitioner-Appellant,

v.

GERALD S. HOLT, U.S. Marshal for the Western District of Virginia, et al.,

Respondents-Appellees. ______________

On Appeal From The United States District Court

For The Western District Of Virginia (Case No. 7:11-cv-00575-JCT) ______________

SUPPLEMENTAL JOINT APPENDIX

______________

TIMOTHY J. HEAPHY United States Attorney ANTHONY GIORNO First Assistant U.S. Attorney Western District of Virginia VALINDA JONES Senior Trial Attorney Office of International Affairs Criminal Division

LESLIE R. CALDWELL Assistant Attorney General DAVID A. O’NEIL Acting Deputy Assistant Attorney General JOHN-ALEX ROMANO Attorney, Appellate Section Criminal Division U.S. Department of Justice 950 Pennsylvania Ave., NW, Rm. 1264 Washington, DC 20530 (202) 353-0249

__________________________________________________________________

Appeal: 14-6102 Doc: 35 Filed: 07/07/2014 Pg: 1 of 140

TABLE OF CONTENTS

Supplemental Joint Appendix (“SJA”)

Document Dkt. Entry Page No. Excerpts, Mexico’s Formal Submission in Support of Extradition Decl. of David O. Buccholz Diplomatic Note (Extradition Request) Certification by U.S. Consular Officer Affidavit of Mexican Prosecutor Exhibit D-9(b) (disposition of Unimed’s lawfully acquired pseudoephedrine hydrochloride) Exhibit D-35(b) (report of money-exchange transfers to Chifeng Arker) Exhibit D-36 (DEA report of petitioner’s gambling activity) Exhibit D-48 (Chemical analysis of samples taken from Toluca plant in March 2007)

D.50-1 D.50-1 D.50-1 D.50-1, 50-2 D.50-17 D.50-22 D.50-22 D.50-25

SJA-2 SJA-4 SJA-20 SJA-21 SJA-104 SJA-111 SJA-115 SJA-119

Memorandum Opinion and Order on petitioner’s motion to amend final judgment (Jan. 17, 2014)

D.137, 138

SJA-129


UNITED STATES DISTRICT COURTFOR THE WESTERN DISTRICT OF VIRGINIA

ZHENLI YE GON

Petitioner

Civil Action No :7 :11-CV -00575

ERIC HOLDER, JR ., AttorneyGeneral of the United States;HILLXRY RODHAM CLINTON ,United States Secretary ofState ; GERALD S . HOLT , U .S .Marshal for the WesternDistrict of Virginia; FLOYDAYLOR, Warden of the CentralVirginia Regional Jail;EDWIN D. SLOANE, U .S. Marshalfor the District of Columbia

Respondents

UN ITED STATES RESPONDENTS ' EXHIBIT 1 :MEX ICO 'S FORMAL SUBMISSION IN SU PPORT OF EXTRADIT ION

PART 1 OF 3

CONTENTS

Declaration of David 0. Buchholz, Attorney Adviser,Office of the Legal Advisor, United States Departmentof State, dated September l2, 2008

Diplomatic Note 04507, dated June 9, 2008

Certification by Edward McKeon,Consular Affairs, United StatesMexico, dated May 29, 2008

Minister Counselor forEmbassy, Mexico City,

Affidavit of Jorge Joaquin DiazPublic Prosecutor, dated May 27,

Lopez, Mexican Federal2008

Case 7:11-cv-00575-JCT Document 50-1 Filed 04/19/12 Page 1 of 50 Pageid#: 1260

SJA-1


q':

DTSTRICT OF COLUMDIA ,

DECLARATION OF DAVID d. BUCHHOLZ

1, bavid Buchholz, declare and say as follows:

am an Attorney-Advisër in the office of the Legal

Adviser for the Department State, Washington , This

office has responsiùility for exfradition requests, and am

charged with the extradition case of ZHENLY YE GON ZHENLI YE

GON or ZHENLI YE, aka HEl Chino'' (referred to Mexico's

forpal request as ZHENLI YE GON). make the following

statements based upon my personal knowledge and upon

information made available me iB the performance

official duties.

In accordance with the provisions of the extradition

full force and effect betwèen the United States andtreaty

- ' Mexico , the Emblssy of Mexico has Diplomatic Note No .

the extradition of

is àttached to

submitted

4507 dated June 2008, formally requesting

ZHENLI YE GON . A copy of the diplomatic note

this declaration.

The televant and applicable treaty provisions in full

force and effect between the United States an; Mexico are foùnd

in the Extradition Treaty between

and Mexicp of kay

of ùhe Treaty is attached to this declaration.

the United States of America

l 97 8 (TIAS 9656 ) ( nthe Tçeaty'' ) . A copy

accordance with Article 13(3) Treaty, the

Govevnment the United States of America represents the

intetests of the Government of Mexico in proceedings in U.S :


SJA-2


w'

. , J g .. , . vinL '

c ' ' 'J ) '

. . 11 ' .. ' z'%' ':

. ' .LL'. '' 'z . .. ..gy:.)))i.,'1'.j r

' j7.' . . :..!b . ... . 1* ' T' ' S 't: 1 r : .

. ..). F ..j';...5é ''' q. . '' ..

qg Mexico ' s extradition requests , and theysttourt J5 ari S inV OUt. . . (;: yf , .j;..

. jjyjv ; , .1f: . c ,) 1. . .r ..f ,f.'Jl:) Government of Mexico provides similar representation its(J .j .

courts with respect to extradition requests made by the United

States .

offenses for which extradition sought are

punishable accordance with the laws of both contracting

parties by deprivation of liberty for a period of at least one

and are covered under Article the Treaty .

The documents submitted by the Government of Mexico

its extradition request

Edward McKeon,

support

2008 ,

were certified on May 29,

Minister Counselor for Consular Affairs

at the U .S. Embassy Mexico, in

United States Code, Section 3190.

accordance with Title

McKeon, at the time he

certified the documents, was the principal consular officer

the United States in Mexico .

declare under the penalty of perjury that the foregoing

is true and correct.

Executed on September 'iX , 2008.

DAVID o . BUCHHOLZ -----

Attachments:1. Copy of Diplomatic Note

Copy of Treaty


SJA-3


UN O FFICIAL TM N SLAT IO N

04507

Washington, D.C., June 9, 2008

M adam e Secretary:

On behalf of my Govem m ent, 1 have the honor to refer to the Extradidon Treaty sir edbetv een the United M exican States and the United States of America, and to pedtion num beà05204, dated July 6, 2007, tegarding the ptovisional aztest fot ùatemational exttadition pumoses 9fZH EN LY YE GO N or ZH EN LI YE GON ot ZH EN LI YE, u.k a. AEL CH IN O ''. Tllispezson is wanted by M exican authozides for huving conulaitted the crimes of D elincuenciaOrganizada; Contra la Salud en 1as m odalidades de Introducciôn al pais y Transporte de 1ospsicotlépicos denom inadod N -Acetilpseudoefedrina y Acetato de Efedtina, detivados de lapseudoefedrina; Producci6n, y Posesi6n con lnes de ptoducci6n de 1os psicotr6picosdenom inados Pseudoefedrina, Efedrina, Clorhidrato de pseudoefedrina y Clorhidrato de

émetanfetamina; Desvio de productos quimicos ( cido sulfeico) esenciales para producirnarcéticos; Posesién de armas de fuego de uso exclusivo de1 Ejéêcito, Armada y FuetzaAérea; y Operaciones con Rectusos de Procedencia llicita (Orgaszed czv'veg Drurrelatedoffenses, yaazre/.!zi In/portation fzzrtp M exico and Fzuzl& /za ryb.rl ofpsychqtropic substancesArltpgzw as N -azlcez-yr//psezztfoe./vWelryWe acetate and Ephedrine acetate, den'vatives ofpseudoepheY he; m anufacture and possession w7'rW intent to m anufacturepseudoephedrine, e.pWelze ez pseudoephedtine hydrochloride and m ethamphetaminehydrochloride; Diversion ofchemicalproducts (klzMzzrg'c acid), essezJsz?./ for Me manuBctureofnarcodcs; Possesyon offzreazzzl.ç for the exclusive use of t:e Armyj NuZ.Jr and az.t/z Force;andM oneyLaundenhg).

In this regard, on behalf of my Govem ment, and on tlae basis of Ardcle 2 andy in pao culat,Article 10 of the Extzadidon Treaty, 1 hereby FO RM AI.IZE before Your Excellency's Govem ment

f ZHEN LY YE GON ot ZHEN LI YE GON or ZH ENLI YE a.ka.the extradidon request o ,JEL CH IN O ''

The accused is cturentlyW ashington, Disi ct of Cobxm bia.

itl the United States of Ametica, undet fedetal custody in

(ARRRST WARRANT., .)

To H er ExcellencyCondoleezza lkiceSecretaty of StlteW aslaington, D.C.

((-..aA- /n 36=


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ARREST W ARRAN T

On June 13, 2007, the Fotzrth Distlict Judge of Federal Criminal Cases in the State ofM exico issued a warrant for the arrest of ZH EN LY YE GON or ZH EN LI YE G ON otZH ENLI YE, a.k.a. GEL CHIN O'L as part of criminal case number 25/2007, for lais allegedcom mission of the crimes of:

a. Otganized crime (for the purpose of repeatedly commitdng drug crimes andoperatitms with illegal funds) (Ardcle 2, secdon 1 and Atticle 4, secéon 1, sub-paragzaph (a) of the Fedezal Law against Organiied Crime);

b. D rug-telated offenses in the forms of:

lntroducing into M exico of the psychotropic substances know n as N -Acetylpseudoephedtine acetate and ephedtine acetate, detivatives ofpseudoephedtine (Ardcle 13,1 section 111, and Ardcles 193 and 194, secdon11 of the M exican Criminal Code; Ardcle 245, groups I1, 1II and IV of the

2Gçneral Heylth Law ) ;

ii. Transportatioa of the psychottopic substances lœ own as N -Acetylpseudoephedrine, a derivative of pseudoepheddhe (Ardcle 13,secdon 111, and Ardèles 193 and 194, secdon l of the M exican CriminulCode; Aocle 245, gtoups II, l1I and IV of the Genexal Health LaW);

iii. M anufacturing psychotropics, nam ely Pseudoephedrine, Ephedtine,Pseudoephedtine H ydroclllotide and M edmm phetam inehydrochloride (aWdcle 13, section 111, apd Articles 193 und 194, section I ofthe M exican Criminal Code; Article 245, groups Il, I1I and IV of the General

Health Law);

iv. Possession of psychottopics for the purpöse of producittg natcotics(Azdcles 13, secdon 111, and Ardcles 193, 194, secdqn 1, and Azdcle 195 ofthe M exican Criminal Code; Ao cle 245, gtoups ll, 1Il and IV of the GeheralHealth Law); and

Diversion of essential chemical products (s.zlflxric Acid) to producenarcotics tAt'ticle 13, secdon 111, and Aldcles 193 and 19à-Tez of theM exican Ctiminal Code in reladon to Atdcle 4 of tlle Federal. Law to ContiolChemical Pzectusots, Essential Chem ical Ptoducts aqd M aclainezy toFotmG te Capsules, Tablets and/ot Chemical Compotmds)

l.Article 13 of the Mexica/ Criminal Code describes the individuals who may be held resm nsible for and charged with crimes2 These sections of the General Hea1th l-aw are adopted in accordance with Table 1 of the United Nations Convention Against lllicitTraffic in Narcotic Drugs and Psychotropic Substances, adopted at Vienna Austria, December 20, 1988, and with Annex B of theAgreement for Cooperation in the Control of Precursors and Chemical Substances frequently used in the illicit mantlfacture ofnarcotic drugs or psychotropic substances: signed by the European Communl' and the United Mexican Sktes at Brussels,Belgium, December 13, 1996, and ratified by the United Mexican Rates on April 29, 1997 and with Article 4 of the Federal Law toControl Chemical Precursors, Essential Chemical Products and Machinery to Manufacture Capsules, Tablets ancl/or ChemicalCompoullds.

,:-1)


SJA-5


c. Violations of the Federal Law on Fiveaêm s and Explosives in the form of:

Possession of firearm s fot the exclusive use of the Armyy N avy and AitFotce, namely:

a. a pistol caliber 9mm (9x19mm), btand: Hecklet & Koch GA/IBH,m odel P7M 13, serial no. 730639

b. a pistol, caliber 9 mm LUGER (9X19mm), bzand; lntzatec, modelTEC-DC9, serial no. D0 12785;

c. a pistol calibez .45 Auto, brand Heclder & K och GM BH , m odel:UPS Tactical, sezial no. 25-1406579 and

d. a rifle AK-47, caliber 7.62X39mm , btand: N orinco, model: M AK 90,sezial no. 37011250.

(Artkle 13, secdon Il1 of the Federal Criminal Code; Articles 8, 1 1, sub-patagraphs $) and (c), and Article 83-Tet, sectbns 11 and II1 of the FedetalLaw of ltirearms and Explosivéi);

Possession of a fireal'm for the exclusive use of the Arms N avy and AirFotce, namely, u. 9mm calibet Pazabellum pistol (9X19 mm), brand PiettoBereta, m odel 92FS, V'i:.IA serial number obliterated.(avticle 13, secdon III of the Fedezal Criminal Code; Aocles 8, 11, sub-paragraph (b) and Azdcle 83-Ter, secdons 11 and' 111 of ttle Federal Law ofFireat'ms and Explosives);

Possession of caen'dges for firearm s for the exclusive use of the Atm y,N avy and Ait Forcey namely 94 cartridges for ftreatms, calibet .223; 122cartsidges for ftrearm s, caliber .45 auto; 53 cartridgçs calibet 9mm and 69cattddges for Steatms calibet .327' AUTO, (with expanding poitats) (Atdcle13, secdon 1Il of the Federal Criminal Code; Ardcles 8 and 11 sub-paragzaph(f), and Ardcle 83-Qu?t, secdon II, of the Federal Law of Fitearms andExplosives); and

Possession of carttidges for frearm s intended for the exclusive use ofthe Annyy N avy and Ai# Force, nam ely, 40 9m m calibez Luget cnttridges,21 9mm Luger cattzidges, 3 9mm Luger cortvidges tAldcle 13, secdon 11 of

. .'

the Federal Cominal Code; Atdcles 11 sub-patagzaph .(f), and 83-Quata

secdon 11, de la Fedezal Law of Film t'ms and Explosivesl3. .

3 Wit.h regard to the charges ror possession of anamunition referred to in sub-pm graphs iii and iv, above, the Government of Me-x-ico recognizes thatthese charges, because they are based on fkenmnq Golations not punished by the United States, do not meet the dual ctizninality requirément of theExeadiuon Treaty. n erefore, h.fe-<' co does not seek extradidon for these Golations. With regard to the two charges agatns' t ZHENLI YE GON forpossession of fzreorvruq referred to in sub-pm graphs i cnd k above, it is our understanding that because the eddence shows that possession of tbesefzreornu wtus related to a dtazg traffickin- g offense, the conduct would Golate Title 18, United States Codea Section 924(c). 'In addidon, with regard tothe flrerlrm offense described in sub'-paragraph k above, this behador, pamely, possession of a 9mm. Pm bellum pistolz (9 x 19 mm1, P. ietro Berettwmodel 92FS, with an oblitemted gezial number, also would violate Title 18, United States Code, Section 922$-). Therefore, the Government of Mexi- cois requese. g extradidon for these two firerlrl'nK charges.


SJA-6


d. M oney Laundering, in the case of anyone who, eithet by him/herself orthtough an interm ediary, has custody of funds within the national tertitoryyknowing that the funds otiginate from illegal activityy with the intention toprevent knowledge of their souice, location, destination, or ownership (Arécle13, section ll1 and Article 400-Bis of the Federul Czitnirml Code)

These luws wete all in fotce at the time that the crim es wete comm itted.

w ith the exçeption of tavo of the charges ugainst ZH EN LY YE GON ot ZH EN LI YEGON or ZH EN LI YE, a.k.a. %GEL CH IN O'' for the crim e of possession of cartridges fot theexclusive use of the Army, Navy und Air Force, (sub-paragraph c. iii gnd iv, previously noted) thecrimes attributed to the accused, and foz which an arxest warrant was issued for him, azecontemplated by Artkle 2, secdons 1, 3 and 4(a) of the Extradidon Tzeaty, in relation to items 12,14, 15 and 19 of the Treaty's Appendix. (Hereinaftez, the defendant is refetted to as RZHENLI'YE GON'' unless t-he context requires otherwise).

In addidon, undex the laws of both countries, the conducts atttibuted to ZH EN LI 'YE.

'

GON are p'lnlshable witla a minimpm prispp qepltçpç: o.f no less than one year.

Because the ststazte of limitadons is doubled foz suspects who are outside M exico, if this factimpedes prosecudon, and since the crime with the longest statute of limitations (Orgao ed Crime,30 yeazs) dete= ines the applicable statute for all related charges in the same Ozdet of Artest, thestgttate of limitadons foz the charges ugainst ZH EN LY YE GON or ZH EN LI YE GON orZHENLI YE, a.ka. JEL CHIN O''does not expire untillune 13, 2067.

Elem ents of the Offenses

To prove the alleged violadon of the Federal Law sgairlst Ozganized Crime, M exico mustpzove that ZHENLI 'YE GON joined together with at least three other people to commit repeatedxriolatbns of the criminal ptovisions of the G eneral Health Law and money laundedng ptovisions oftlae M exican Criminal Code. For ZH ENLI YE GON to receive a stronger sentence, if convicted,the Govemment of Mexico must also ptove that he directed and/ot supervised the organizedczm inal acdvity.

To prove the specifed violadons of the Genetal Health Law, the Gove= ment of M exicomust establish that ZHENLI 'YE GON, alone or with others knowingly imported, and/ortranspozted, and/or manufâctured, and/or possessed with intent to produce conttolledpsychottopics tthe de6nidon fot wllich includes their ptecursors, dedvadves and salts). It mustflleher pzove that he did not have the pe= ission of the M exican M inistty of H ealth to import,and/ot transport, and/oz manufactare, and/or possess with ltent to manufacttue controlledpsychotzopic substances ot chemicals essendal for their manufactare.

To prove the alleged violadon of the Fedetal Law to Conkol Chemical Precursozs, EssendalChenaical Products and Macbinery to Formulate Capsules, Tablets and/or Chemical Compolmds,the government must esublisi that ZHENLI YE GON, alone or with othezs, diverted sulfilricacid for use in tlae illicit manufacttue of psychottopic substlnces.


SJA-7


Ephedrine, pseudoephedrine, ephedrine acetute, pseudoephedrine acetate, pseudoephedrinelaydrochloride and m etham plaetamine hydrochloride, and their salts, precursors and detivadves areall included witlnin the h'sted psyclaotropic substances, controlled by the Ministry of H ealth. Sulfuricacid is included in the list of essendal chelnicals used in the 1l1i* cit manufacture of psychotropicsubstances.

To prove the alleged violalions of the Federal Law of Firearm s and Explosives, theGovernm ent of M exico must prove that ZH EN LI 'YE GON possessed the described flzearm s,that tbose flrearm s are categozized as being intended for the exclusive use of the Arm y, N avy andAir Force, and that ZH EN LI YE GON did not have authority to possess those weapons.

An of the weapons for which ZH EN LI YE GON fuces charges are for the exclusive use ofhe Mexican Azmy, Vavy and Ait Fotce.t

To ptove the alleged commission of M onèy Laundeting, in accordance G :.IA the FedetalPenal Code, the Governm ent of Mexico must prove that ZH EN LI YE GON knowingly possessedxoceeds of unlawful acdvity and that he acted with the intention to impede knowledge tegardingPthei.r source, locadon, desdnadon, or ownerslaip.

I'he evidendary elements that prove the crimes, wiich ieè t'ie Juàge in charge ot tie case toissue the arrest warrant for the accused aze based, amongst othets, on the following facts, which aredescùbed ita mote detail, wit.h teferences to the attadhed exhibits, in the Affidavit of Jorge JoaqlainDiaz Lopez, Federal Prosecutor assigned to the Specialized Uait for the Investkadon of Crimesagainst Public Health in the Attorney General's Offce, that accom panies this Fotm al Request forthe Extzadition of ZH EN LY YE GON ot ZH EN LI YE GON or ZH EN LI YE, a.k a. 4GELCA TN O Q

F A C T S

lnaoducion

The itwesdgsdons carried out by the Federal Pvblic Prosecutor revealeci the existence of attansnadonal criminal otgnnimation 1ed by ZH EN LI 'YE GON that was devoted m ninly to theillegal irhpoztatbn into M exico and transpoztatbn to M exico City, D.F. snd Toluca, State of M exico,of ephedrine acetate, pseudoepheddne acetate and n-acetylpdeudoephedrine. These substances,being chemically dedved from ephedrine and pseudoephedrine, ate classiâed as psychotropicsubstances in tlae General Health Law. The object of tlfe importatbn was to tepeatedly manufactureephedrine, pseudoephedm'ne, ephedrine acetate and pseudoephedm'ne hydtoclllotide, which akeprecuzsots of methamphetamine. The manufactating was cazded out using tlae dedvadve ptecutsors,including N -acetyl pseudoephedm'ne, which were processed using divetted essential chemicalsincludin' g Sttlflaric acid, wlaich is also used to synthesize m ethamphetamine.

A11 imports, exports, m anufachaing or disttibudon of these psychoaopic substances requireia pezmit issued by the Fedezz Commission for the Protecdon against Sunitary Risks (heteinaftet'TCOFEPR-IS;') ttnder the Ministry of Health. Such pe= its wete nevet obtained by the accused.> .

From the m anufacture of psychottopic substances, ZH EN LI 'FE GON dedved illegal fllndstotlling millions of dolllrs, euros and M exicatl cturenc'y, which he used to prom ote the illegal


SJA-8


business (to buy muclainery and more chernical precursors) and to become zich. For these purposes,ZH EN LI YE GON transferred nnillions of dollars thtough currency exchange houses and othermetlaods to bunk accounts in the United States, Clnina and Europe.

ln oxder to carry out these illegal imports of precuzsors, the ttansportadon of precursors andthe manufacmre of illegal psychotropic substances, ZHENLI YE GON, joiring with laiscollaborators including some trusted business associates and ttalsted employees, disguisèd tlneunlaw ful activities through his comparlies ltnown as UNIM ED PI'IARM CHEM M EXICO , S.A.DE C.V. which imported the illegal psychotropics, CO NSTRUCTORA E IN M OBILIARIAFEDERAL S.A. D E C.V., wlaich was the holding compuny thut ptuchased the land for building thefactory in Toluca and was used to furmel som e of the millions of dollars out of M exico, andUN IM ED PHA RM ACEUTICAL, S.A. DE C.V., wlaich was the name of the fac'tory in Toluca thatmanufactured pseudoephedtine hydrochlozide, ephedrine and methamphetamine hydroclaloride(hezeinaftet, KTUNIMED PI-tAIkM CHEMR' KTCONSTRUCTORA E INMOBILLARIA'' andK'UNIMED PHARMACEUTICAL''). The continuing illegal acdvities of this criml'nal gtoup are asfollows:

Backgtound of the crim inal conduct

o.an',ag tlae tuee yeats péoz to J+ 1,-jtjù-!' t'rsft'ktio'pfulllccplEu a-s-a (ss-iiou'ioz-o' f; >zaw m atezials, impoêted more than 67 tons of ephedrine, pseudoepheclrine and ephedrinehydrochlozide for distribudon to pharmaceudcal manufactarers in M exico, through the BenitoJuarez lntemadonal Aimort in Mexico City, apparently V'î:.II the zequired petmits fzom COFEPRIS,.The prindpal supplier to UNIM ED PI-IARM CHEM dxltlng this period was Chifeng AzketPharmaceutical Technology Co., Ltd., lnner Mongolia, Peoples' Republic of Cbina qaexeinafter,t'Chifeng Arket'). '

On September 24, 2003, UNIMED PHARM CHEM (as buyer) and Chifeng Arker (as sellpr)signed a sales agteement fot an tv termediate product'' (pzecursoz) of pseudoephedtine, wllich theydesctibed as ffhydtoxy benzyl-N-meiylaceteiaml'ne'' (though, accorcling to expetts, tlae descdptiondoes not co=espond to any known chemical), vrit.h a yearly minimllm ptuchase of 50 tons. Underthe sam e contract Claifeng Arkez bound itself to provide technical support Tffor the producdon ofPseudoephedrine from the intetm ediate ptoduct7' includîng Kfdeslgri' of producdon workshops, . . . alist of manufachlring and testing equipment necessary foz the producdon plunt . . ..(and) guidanceregaraing the installadon . . . (andj a toiming pzogram for UNIMED petsonnel u.n61 the lattet canopetate the pzocess at the same level qs M ket, that is, between .90 and .95 lo s. of Pseudoeptaedm'neHCL from 1 Kg. of the intermediate product''

The September 2003 conàact was signed by the General Manager foz Chifepg Arkez and, oabehalf of UNIMED PHAIIM CHEM by ZHENLI YE GON Sole Administrator of thecomcyadon, and Bernatdo Mercado Jimenez, who had served as the xegistered chee st forUN IM ED PHARM CHEM since 1998. A shott time later, irl December 2004, CON STRUCTORAE IN M OBK G RTA, by ZH EN LI YE GO N , puzchased the pzoperty located on Bptzlevatd M iguelAlem an, ntzm bez 175, colonia San Pedto Totoltepec, Toluca in order to build the andcipated plant.

CHminal conduct aftet July 1, 2005

(--


SJA-9


On July 1 , 2005, as part of the Mexican Government7s effort to control the illegalmanufacmring of epbedrine, pseudoephedrine and m ethamphetamine, COFEPRIS announced thatLJN IM ED PHA RM CHEM and seven other warehouse disttibutors of tw ' materials fotharm aceuticals were no longet guthorized to import psychotropic substances or chenaicalPzecursors from Table 1 of the United Nations Convention Against lllicit Tzaffic in N arcotic DrugsPand Psychotropic Substances.

Despite the decision of CO FEPRIS to eliminate UNIM ED PI-IARM CHEM from its list ofauthorized importers, ZH EN LI YE GON and Bernardo M ercudo and other members of what canbe desctibed as the ''trusted team '; of ZH EN LI YE GON did not abandon the plan i.n process ofimpoxdng pzecursors of pseudoephedtine and ephedtine, classiied by M exican law ls regulatedsychotropic substances, and builcllng a plant in Toluca to carry out the m anufactare ofPPseudoephedrine hydrochloride. Since they no longer had the authorizadon o.f COFEPRIS toimport the precursors and never had authorizadon to manufacture the pseudoephedrine orepheclrine from the interm ediate m atetùls ot to distribute the manufuctured pzoduct, ZH EN LI YEGON and his trusted teum proceeded covertly. They did not obtain the zequired permits, used falsedocum ents and latet com pletely isolated the Chinese staff brought in to set up the factory, inaccozdance with the Cllifeng Arker contract.g ' .

ii ilk ?öctobe, ktlù! z-1L1E&12 YE GoN w' - b .'- 'In e mon o , as ejiimlng B biiilil liii--jhni izjiikChinese bluepzints and was buying the necessary machinery, in confo= ity with the Chifeng Azkercontract. ln October 2005, a slaipment of 20,000 kilos of a substance denominated T'M ethyl-Acetyhmine>' that was really N-Acetyl pseudoephedrine, a controlled substance, was loadeè onboatd for shipm ent fzom the Peoples' Republic of China to UNIMED PHA RM CHEM in M exico

City. It cat-tied a bill of hdirlg and itwoice from <'Emezald Import & Expoxt Companf' of HongKong. The evidence establishes that tlais company does not exist and ftom other evidence lawenfotcem ent ofEcials have concluded that, in teality, the expotting com pany was Chifehg Atker.

In D ecember 2005, UNIM ED PHA RM CHEM im ported the previously described 20,000kilo shipment of the product represented to be EfN-M ef.hyl Acetylamine'' witla Custom s declaraéonnumbet 5002544,4 tluough the Pott of M anzanillo, Colima The doctzments irlcluded the responsivagzcyzzzbtz (statement by a chenaist undez oath xegarding the chenaical contents), signed by BematdoM ercado, the registezed chenaist, confirming the idendty of the imported chemical substance as <rN-

' '' d tadn that it wss for use itl an anakesic. lnstead of ihe carla #, envomiendaMethyl Acetylamlne an s g(cetdEcadon of accutacy of customs doczlments) tequited from the legal tepresentaéve of theimpol-fing business, ZH EN LI Y.E GON attached a lettet, tmder oath, requesting that even thoughTrEm etald Import & Expot't Co.'' clid not have a taxpayez. idendûcadon code, that UNIM EDPHA RM CHEM be permitted to impot't Q'ol.tt m erchandise omitting this item .''

In December 2005, itl accordance with the term s of the contract of UN IM ED PHARMCHEM of Septembet 2003 W :.Ia Cltifeng Azker, a group of Chinese petsonnel aM ved in otder toinstall the machinery arziving from theit country at the UN IM ED PHARM ACEUTICAL factorpThey wete tmdet the ditecion of Fu Huaxitl, (a co-defendant) a new membet of the JTtlusted team''which was already organized to repeatedly comm it dnag-tehted crimes.

4 The nklmber was chmged by Ctzsto!ns from customs declamtion number 5002440, which appears on some documen? wirhin the case fzle.


SJA-10


Jn the montla of Janual'y 2006, UNIMED Pl-lxillhl CHEM, under Customs declataùon6000041, imported another 29,400 kilograms of a product denom inated KflqQ-ldethyl-zNcet-lrlanline.';hzough Customs in Manzanillo, Colima önce again the export compuny zppeared to be t<l-lmeraldtlmport & Export Co.'' of Hong Kong. Once again, the celljcate #- chemical J'tw/prz.f, signed byBernatdo M ercado conflrmed that the imported chernicals weze tçN -hlethyl-Acetylam ine.'' Thedocum ents discovered duzing the latez search at the hom e of ZH EN LI 'YE GON included animroice issued by Chifeng Arker Nvith tl)e same date as tlae invoice from Emerald lmport & ExpottCo., N ovembet 26, 2005, and with the same ûmount of N -slethyl-ztcetylamine sold to the selfsam eUNIM ED PHA RM CHEM , with transportation paid doot to door.

In 170th the December 2005 and January 2006 shipments, the slaipments were stopped forsecondazy custom s review because they hud received a 'dred lightyJ: the m euns used by M exicanCustom s to zandonaly choose cargo for inspection. ln 130th cgses, the Scientisc SerdcesAaministradon took samples of the chennical slzipments. Because Custom s did not have the facilidesto analyze the samples in M anganillo, the custom s authoxides released the shipm ents to the customsagency for delivery to UN IM ED PI-IARM CHEM in Mexico, D .F.

'rhe expert opinion on tlle samples taken from the tvvo shipm ents of impozts was delayedqptil ZPW 1. 4,. ?0-0.6...: ..On-.-.th. at.. d. a- .tea .1... d-u. s+. al c.hernist Jose Fernando Jauzegui Zavala, of the dentralCustoms Labozatoc,lssuez a cienzcal report zeterminlng 'fl'ikï ilie saiiiple-à ankly-i-èd fibifi èàklisbipment weze irz fuct N-Acetyl Pseudoephedtine, and not N -M ethyl-Acetylatnine, as had. pteviouslybeen declared to customs authorides. <'This substance is derived from pseudoephedrine, andthetefore is considered to be a psychotropic substance under the General Health Law .

consequently, its importadon is subject to authorizadon from public health authorities pttrsuant totlae G eneral Health Law.7' UN IM ED PHARM CHEM had never obtained that permission fot eidlersllipment.

There are indicadons that ZH EN LI YE GON teceived news of llis problems in the Port ofM anzanillo, because in M >y 2006 he accused one of his em ployees of telling a Custom s csfficei thatZH EN LI VE GON was bringing Trcrooked things': thtough the pozt, and that tlae employee hadasked Custom s to check all tlaè contqiners belonging to UN IM ED PI-IARM CHEM . Havingbecome aware of the problems of impozling O ough M anzanillo, UN IM ED PHARM CHEM m adeothex m angements for the new slùpm ent of N -Acetyl Pseudoepheclrine tlpt had already beenitwoiced and was teady to be expozted fzom China. In May or June 2006, Claudia Cruz Peinado,another UNIMED PHARM CHEM chemist (and co-defendaht) and a membet of the T<ttustedteam'' of ZH ENLI YE GON , m ade contact wit.h the general manager of Rom a Vazelli CustomsA encp' in the Port of Lazaro Cardenas

, to zequest custom s services for impozting sbipments ofchernical product addressed to UNIM ED PHARM CHEM , through the Port of Lazazo Cardenas.Previously, slaipments had entezed O ough M anzanillo.

Onltzly 3, 2006, the Srst container addzessed to UNIMED PHARM CHEM arzived throughthe Port of Lazato Cazdenas. On July 6, 2006, the shipment was presented to Customs where itteceived customs declatadon number 6000551. The docum ents that accompanied the sllipmentteptesented tlaat it was itwoiced on M ay 26, 2006 by Emerald Im port & Export Co. of Hpng Kong,exported from the Peoples' Republic of China wit.h destinadon UNIM ED PI'IAR.M CHEM itlM exico, D .F., and contained 20,067 kg net of T'Hydzoxy Benzyl-N -M ethyl Acetethamine'' a chemicaldescripdon somewhat diffetent ftom that used foz the Decembet 2005 and January 2006 slùpments


SJA-11


that had t'um ed out to be N--Acetyl Pseudoephedrine, but consîstent with the nam e of tlne''interm ediate': product in the Cllifeng Arker 2003 contract. Attached to the shipment were

inducling the cerùfication of chernicai contents, signed by the registered chernistdocumentsBernardo M ercado, confuaning that tlae substance was zzblidroxi .Bpr:rz'/.N M etilA cetamida,, and letterceréfying the accttracy of customs documents, signed by Matia Eugenia Mayolga Cano (co-defendant), ZHENLI YE GON's bzother-in-law's wife and member of the Tdtrusted team7'. Atranspovtation request was also included, since UN IMED PI-IARM CHEM had a fr oot to Doo/'delivery contract wit.h the m aritime service.

Because the shipment received the Tfred lkht'' in the customs review azea, the customsauthorides proceeded to take samples of the m erchandise for the pum ose of idenùfying itsualitative composidon. After taking the samples, and without having the results of the expertE1chenaical repozt, the shipm ent was released to the customs agency foz its delivery to UN IM EDPHARM CHEM which hud changed the delivet'y addtess to be the UN IM EDPHARM ACEUTICAL plant in Toluca that had been operating since April 2006 without M exicangovernmental authorization, usitlg employees trained by the Chinese personnel (:1 keeping wif.h thecllifeng Arker contract) and illicitly producing daily six hundred kilos of ffcrystallized powdez, likesnom '' that later chenaical analysis established was pseudoephedrine hyclroclllotide, the fmal productronaised bythe Chifeny Arker contract.

A s was desczibed in tlaeiz 2007 statem ents by some of the fued employees, the facilides of theUNIM ED PHARM ACEUTICAI, plant irl Toluca, State of M exico, were divided intö three secdons(workshops) foz tlae manufactating of one product. Approximately thirty drums, weighing 25 ldloseach, arrived daily at W orkshop One. The dtazm s contained a wlaite-colored substlnce M'it.I'I a hazdconsistency. Latez tlais substance was em pded into a reactor, the employees added watet andhydtoclalodc acid, and began to carry out Pzocess Num ber One, until they obtaitled a wlaite powder,wlaich was gathered by som e of the persons ftom W orkshop Two. The substance, wbich was placedin little catts, was in bags weighing 25 kilos each. These were latet em pded into a zeactoz, water andhydrochlotic acid wete added, to reach an acidiûcadon of a PH of 7.5 to 8; once this PH wasattained 3 kilograms of acdvated catbon were added and tfle temperaturè was raised from eighty tortinetjr degrees Cendv ade. Later the iron was eliminated, and then the reslzldng substance wascondensed and crystnllimed. This was done by beating the mix with mechaaical ' agitators for six .

hours at the sam e time that the faucet was opened so that cooling watet would enter to lower itstempetattue. Lastly, they sepazated the Equid 9om the solid.

Al1 of tlae liqttid that was left over was refetted to as ffmothet soludon,'' of which they obtainedapprovim ately 300 kilos per week. The soludon was stored itl the same wotkshop until they reached300 ldlos, when it was sent on to a zeactot where they added an equal amount of water to double theamotmt of the soludon. 'Then it was alkalized with causdc soda flakes to reach a PH of nine. Thenthree kilos of acdvated cazbon were put 1 , tlae iron was removed, the catbon was ftltezed. Themixttzre was then condensed, crystnllimed and separated. These last two steps weye caM ed out inW otkshop 'Thzee, whete the moist wllite powder obtained was washed XWt.IZ ethanol. The temniningliquid substance was tetutned to W orkshop Two. The point wat not to waste ata ' g, to tlae pointthat they wiped up spillage with a rag that was later wnm g out, and the liqttid was put into thezeactor of tlae ftrst step. These procedutes wete consistent wif.h the Chifeng Arker 2003 contractacalling for such a high level of effciency that tlaey wotlld obtain .90 to .95 kilos of pseudoephedrineacetate from one kilo of intermediate pzoduct. Fzom the odginal soh'd m atetial they were able to

l


SJA-12


obtain up to six lnundred kilos per da3.'. Tlae substance was a damp powder, f'wlzite in colot,

crystallized like snow77, wlaich was bugged with a double bag weiglaing 25 kilos.

After a sesrch of the site, the experts exalnined the raw m aterials, Gnished product, chem icalresidue samples tuken from the macbinel-y, snd the procedures used at UNIM EDPHARM ACEUTJCAL. Based on the pzececling, the experts concluded tlast ull of the above wezeconsistent with the illicit manufacture of psychottopic substances.

Euch day at around 6 p.m. the 25-1d10 bags of white powdez, manufactazred without

COFEPRIS authozizadon wel'e transported away from the plant by Jose Obed Olveta, anothqtmember of the 'rtrusted team7' (and co-defendant) ot, on occasion, by ZHENLI YE GON hl'mself.Armed security guards weze put into place so as to ensuz'e that no one could get close to the plantworkshops without the authorizadon of ZH EN LI YE GON , Bem ardo M ercado, Tom M at'x(anothet defendant, who was in charge of the plant), Fu Huaxitz (who was in chatge of theroduction) ot other members of ZHENLI YE GON's group. Somefimes, when ZHENLI YEPGON and/oz Jose Obed Olvera came to the location of UNIMED PHARM CHEM at AveaidaM ozelos 24-24A, M exico, D .F., ut a tim e when they tbought no employees were there, Obed Olveramrned off the lights to the entzy and the secudty cameras.

As to iùe wféte powdez now being pro:uced at tl&1:4E17 PIU RMACEtJ'rICAI,, ZHENLIYE GON and his collaboratots did not enter tlae ptoduct in the company's inventory noz nodfy theperson itn charge of keeping the UNIM ED PI-IARM CHEM wazehouse inventory oz the companyaccountant of any salès of the product. lnstead, Maria M ayorga Cano Suatez handled the sales ofthe product separately with Jose Obed Olyeza and Juan Manuel De La Rosa (co-defendant) In theyeat 2006, while 600 kilos a dày of white powder was being produced and trucked away ftomUNIM ED PHARM ACEUTIC.AL without being inventoried, and cash was beiflg tzansfezted out ofthe country ifl mttld-million dollar quanddes, neifiex UNIMED PHARMACEUTICAI, norUNIM ED PHARM CHEM tepotted any gtoss receipts foz the yeaz, although they did zepoztwithholding taxes on em ployees' salaties.

ZH EN LI VE GON closely m anaged every aspect of the company. He personallyinterdewed the candidates for jobs before lniring them. He itlsisted that thete be no exchange ofcriécal m anufactnaring infozmadon without him knowing it. He tepeatedly m ade miszepresentadonsto em ployees not on his <<trusted teazxf' regarding what they were really doing itz the plant and fttedthose he felt had too much informadon. W hen he was out of the countzy, he mainte ed constantcontact by m eans of Nextel telephone with Bernatdo M etcado, M qri. Eugenia M ayotra Cano, TomM am Claudia Cruz Peitmdo and other collabotators whom he % sted.

In August and Septembez 2006, UNIM ED PHA RM ACEUTICAT, impozted two m oreslaipments through the Port of Lazato Cardenas with customs declaradon nttmbers 6000651 arld6000737, for 18,000 kilos and 19,485 kilos, zespecdvely, of a chemical substance declated to berfl-lydroxy Benzyl-N -M ethyl Acetatham iney'' tlae sam e chemical descùpdon as appeated on the

shipment of July 2006 twitll customs declatadon n'lmbet 6000551) and the same chemicaldescripdon as the 'V term ediate product'' to be used to manufacture pseudoephedrinehydrochloride lmdez the 2003 Chifeng Axker contract. (In fact, Tfl-lydroxy Benzyl-N-MethylAcetathamine'' is not the name of any known chemical or chenaical compound).


SJA-13


The invoices for the t'q'' o Sllipnaents were pul-ported to be from 'fEm erald lmport & Exportcompanlr7Dr the respecGre ceréiicutions of chenaical contents were signed by Bernurdo M etcado andthe cerulicution of the accuracy of customs docum ents for the ftrst shipm ent wu.s signed byZH EN LI YE GO N . As they weze ghren the 'fgreen light'' in the reviev' area, the twp slaipm entsassed freely and weze transported directly to the UNIM ED PHA M IACEUTICaA.L plant in Tolucû,P

.

state of M exico. Luw enforcement officials believe that these tavo slupments wete N-Acetylseudoephedrine, like the prior shipm ents and the one that wottld follow.P

Dttring this period, ZH EN LI YE GON was becoming stupendously rich. H e purchasedand temodeled a luxutious hom e with a hermedcally sealed itanet room to one side of his bedroomto which only he had the key. There he concealed critical business and personal documents, andmillions of dollaxs and euros in cash, among other things. He paid many of lais employees at theToluca plant and llis suppliezs in Urtited States currency. UNIMED PHARM CHEM and UNIMEDPHA RM ACEUTICAL did not report any gross income to tlae Tteasuty d'lring this tim e. Thenumber of lais personal shares and the capital represented by these in the M exican businessesUNIMED PI-IARM CHEM, UNIMED PHARMACEUTI/AT,, CONSTRUCTORA EINM OBILIARIA and tavo otber businesses had incréased in value fzom $880,000 Mexican pesos irl1996 to $957,000,000 Mexi- can pesos in 2007. During the year 2006, he cartied out cash ttansfets itl

'

d nars and etztos through several Mexican currency exchanye houses irl amounts of more than' USDo$9i,(%t,ti0(), to tïank accounis in ihe Urki-ied Siktes of Ariieiic'k Etiioj-e à'fid Clalni. skbiiié-ikere Totthe benefh of the businesses which had sold laim the macbinery used to make the itlicit product iflthe factory irl Toluca. He also made transfers to his own accounts and to UNIMED, (Hong K, ong)Company Lirnl'ted, and in favor of Am ezican casino com oradons, where he had lost millions ofdollars. He also made transfezs ifl favor of lais partners and comparzies in the Peoples' Republic ofChina. Likewise, he m ade transfers yo the beneht of Cbifeng Azker in the amotmts of USD$630,000, $700,000, and $800,000 in the months of July, August and Septembet of 2006,tespecdvely, the same months when ZHENLI YE GON's factory received shipments of tlhechernical represented to be K'Hydrox'y Benzyl N M ethyl Acethanaide,'' ptuportedly from TrEm eraldImport & Export Co.'7 Law enforcem ent ofhcials believe the transfers were payment to ChifengAtket for the thtee sllipments. (Notably, the curzency exchange documents did not teveat a singleflansfer to TfEmerald Import & Export Company'').

On October 10, 2006, tbe experts fxom Custom s issued an expett opinion concezning thesamples taken from the slaipment tlu t entered the Port of Lazato Cardenas undez customsdeclazadon numbez 6000551 on July 6, 2006, xepotting that what had been declaxed as TfHydrox'yBenzyl N M ethyl Acetnmide'' was in zeality N -Acetyl Pseudoephedtine - the sam e chenaicalsubstance as contnined in the slaipments with customs declazadons numbezs 5002544 and 6000041thzough the Port of Manzanillo in December 2005 and January 2006.

In October 2006, the Chinese govem m ent inform ed the M exican consulate irl Hong Kongthat TrEmerald Import & Expozt Company'' was not a tegistezed com ozadon and that the businessaddress used in the itw oices and slaipping docum ents did not exist.

In Novem ber 2006, once Custom s in Lazato Cardenas realized that a new slaipm ent forUN IM ED PHARM CHEM , containet PONU 1424478, W f.IA customs declatation nllm bet 6000930,was ready for delivec and with documents exactly Eke those of customs declaradon 6000551,6000651 and 6000737, the customs offcial in charge of the Port of Lazazo Cardenas, Victor M onraz


SJA-14


Ponce, concluded tlnat it was probably another case in which ihe cargo was really pseudoephedrine.:

Therefore, he gave the order to detûin slrpment, PONU 1424478 until agents of the Federallnvestigutions Agency (hereinafter, TfAFl'7) and the preventive police could examine it.

W itlnin the container PONU 1424478, were 849 dtmm s, wlaich contained a white granulatedsubstance. Each drtzm had a gross weight of 28.5 kilos and one of these had gross weight of 27.3kilos. W hen the substance was analyzed by the chenlical experts of the Office of the M exicanAttomey General, it was found to be a miyttzre of Acethanaides N-(2-(Ace:rlo&)-1-MethJrl-2-Phenylethyl- and Ephedrine Zcetate, although it had been dçclured as Hydroxi-Bencyl-N -M etyl-Acetethamine''. The expexts stated that Ephedtine acetate found is a contzolled psychotropicsubstance undet the Genezal Health Law and a precuzsor chenlical undet the Fedetal Law for theContzol of Precttrsor Chenaicals, Essendal Chemicals and M acbinery for the M anufactazre ofCapsules, Tablets and/or Chenùcal Compounds The invesdgation estublished that the importer ofthis metchandise was UN IM ED PHARM CHEM , and that the total weight of the metchandise was19,497 kilos. For this reason, said substance was seled on D ecembez 2, 2006.

'Fhis criminal enterprise repeatedly naisstated the chenaical substances they were impozdng inordez to evade the requirements for permits foz importadon of psychotropic substances (for whichthey were not eliyible). They thus avoided scrutiny of thei.t business opetadons while ZHENLI YE

s for-iiine i.il èash ahd jèibjè'if'j ihè-féiàéë. Ekéfï if bhè lèakks àjide tlië 37,000 'tiihj isfchenaic:ls fhat weze imported itl August and September, 2006, and were not analyzed, UN IMEDPH-AR.M CHEM and UN IM ED PHARM ACEUTICAL, in 2006, imported mote than 79 tons ofPseudoephedrine acetate, an amount in excess of the 70 tons per year that the M exican goveznm enthad calculated would falftll all of M exico's legitimote needs.

On M azch 15, 2007 and the days following, the Fedezal Prosecutor assigned to theSpecialized Unit for tlae lnvesdgatbn of Crimes against Public H ealth irl Attom ey General's Office,executed search watrants on properdes related to the case. 'Those searches included the UN IM EDPHARM ACEUTICAL plant in Toluca, Sute of M exico, ZH EN LI YE GON 's pezsonal residencein Lom as de Chapukepec, M exico City, D.F. and G e UN IM ED PHARM CHEM ofhces andwarehouse at Avenida M otelos 24-24A in M exico City, Federal District.

In the seatch of tlae UN IM ED PHARM ACEUTICAI, factoty in Toluca, expett staffattached to the M exican Prosecutor Genezal's Ofûce obtained samples of the ptoducts itl thewarehouse, and samples of residue from machinery and the substances found in the reactors in eachof the tluee wozkshops. Som e of the samples obtained ftom W otkshop One tum ed out to bePseudoephedrine, Ephedrine, N-Acetyhnethamphetamine and a m ivture of Ephedtine N-Acetyhnethamphetamine and Epheclrine Aceyate. In W orkshop Two, the experts fotm d EphedrineHCI, Pseudoephedrine and N-Acetylmetham phetamine. The sam ples from W orkshop 2 alsoincluded slzlfuric acid wllich is classifed as an Cfessendal chemical'' itl the manufactire of contzolledpsychotzopic substances under tlae Fedetal Law to Conttol Chemical Ptecm sors, Essendal ChemicalProducts and Machinery to Formulate Capsules, Tablets and/or Chemical Compolmds. Lastly, inW orkshop Three, they found Pseudoephedtine, among other substances. AII these substances ateclassiEed as psychottopics under the Genetal Health Law and/ot ptectusots of psyciottopics tmderthe Federal Law to Conttol Cherlaical Precursors, Essendal Chem ical Products and M achinery toFormulate Capslzles, Tablets and/oz Chemical Compolmds,


SJA-15


Expert industzial biochenaical engineer M oises Rzmirez Medirm and expert chelnist-harmacobioiogist Alejandro Romero Ayon have concluded that it is lnkhly pzobable that synthedcPdrugs were being m antpfuctured at the building locatèd at the Toluca plant, based on the substances,reagents and industrial eqttipm ent found at the site. M oreover, they concluded that the mateziuls and(1.n* dustriul equipment found at the abovem entioned pzoperty, that contaihed traces of the above-described cbemicals, are suited for organic syntlnesis processing, and therefote aze susceptible toillicit use in the manufactazre of synthetic drugs.

After Jtzly 1, 2005, ZHENLI 'FE GON7s companies nevex had perrnits fzom the Ministry ofH ealth to im pott or transport psychottopic substances and theiz precursors and the compaaiesowned by ZH EN LI 5'E GON have never had pexnaits ftom the M inistry of' H ealtln for them anufactute and ptepatation any of the psychottopic substances.

During the seazch carried out at the property located at Colonia L,ZJZCU deChapultlpec, Delegation Mtep/ Hidako, Mexico City, Fedezal District, (ZHENLI YE GON'S personalrèsidence) the Federal Public Prosecufot found and seized several ftrearms, including a 9mm caliberpistol (9x19mm), btand: Hecklet & Koch GMBH, model P7M13, series 73063, a 9mm calibetLUGER pistol (9X19mm), brand: lntratec, model TEC-DC9, Selial no. D012785, a .45 Autocalibez pistol, bêand Heckler & Koch GM BH, m odel: UPS Tucdcal, Serial no. 25-140657 and anXttkzft éièe, caLber V.42X39mm, brand: Noritaco, mokilbli MAI4 90, Seiiàl iB. 57011250. THé federzftrearm s experts believed that all of these weapons are all categorized as being for the exclusive useof the Armed Forces, Navy and Air Force und tlaat ZH EN LI YE GON did not have autlaodty toossess any of them .P

The Public Ptosecutor also found luxury vehicles and designer jewelry. In the locked inner zoomoff ZH EN LI YE GON 7s bedroom to which only ZH EN LI YE GON had a key, the federaloficials found the following am ounts of cash:

1. $ 205,564,763.00 tfnvo htmdred :ve million five htmdred sixty fou.r thousand seven hundtedsixty three) United States Dollats;

2. 12 201,460.00 thvo hundred one thousand four hundted sixtyl Ettros; .3. $ 17,306,520.00 (seventeen million thtee hundred six thousand Sve htmdted tventy)

M exican Pesos; .

4. $ 180.00 (one hlmdred ekhty) Canadian Dollars.

Dllring the seatch of the ofhces and warehouse of UN IM ED PI-IARM CH EM located atAvenida M oxelos 24-24+, Colonia Centto, D elegacion Cuauhtemoc, M exico City, Fedçtal DisG ct,1aw enforcem ent offcials found incriminating doc'zments including exchange house receipts for cashtansfers to foreign bank accounts in 2006 exceeding $91.000,000 dollars. ln a Gll'ng cabinet inZHENLI YE GON's private offce they fotmd a ftrearm, namely a 9mm caliber #arabellum pistol9x19m m, brand: Pietro Betetta, with oblitezated serial nllmbez. Firenrm s experts detennined tlaatthe weapon is for the exclusive use of the A= ed Fozces, Navy and Ait Fotce and that ZH EN LIYE GON had no authodty to possess that weapon. O ffcials also found bags of wldte powdet,which chemical expetts dete- ined was pseudoephedrine hydrochlodde.

In sttm , tlze eddence desctibed clearly establishes probable cause to believe that ZH EN LIYE GON is. zesponsible for the crimes of: otgqnized clme, importadon, ttansportaûon, posjession

l Z,


SJA-16


wîth intent to manufucruren and manufacttzre of psychotropic drugs, without authorizaùon, anddiverting essendul chenaicals (sulfuric acid) for that purpose; unauthorized possession of flrearmsintended for the exclusive use of the Army, NaAzy and Air Force; and naonel

.' laundering of theroceeds of narcotics vioiutions.P

D rug-related offenses, including participating in organimed crime to prom ote violadons ofdrug laws, are extraditable offenses pursuant to Article 2, section 1 of the Extradidon Treaty, inrelation to items 14 and 15 of the Treatfs appenclix. Money laundering offenses incluaingparticipating in organimed crime to commit m oney laundering offenses, are extraditable offensespuxsuant to Atticle 2, secdon 3 of the Extradition Treat'y, or ulternadvely pursuant to Ardcle 2,Secéon 1 of the Extradition Treuty in reludon to item 12 of its appendiv. The illegal possession offtrearms is an extludituble offense, pursuant to Ardcle 2, secdon 1 of the Extradition Treaty anditem 19 of its appendix. The purdcipation in an extzaditable offense, gs an accomplice to that crimeis an extraditable offense putsuant to Arécle 2, section 4(a) of the Extzadition Treaty.

In compliance with Azdcles 3, 10(3)(a), 10(3)$) und 10(5) of the Extradidon Tteaty signedbetween the United M exican States and the United States of Amelica, the following are attachedhevewith:

yx jp-utxjys

The sworn affdavit of Jorge Joaqlzin Diaz Lopez, Fedetal Public Prosecutor, along withthe appendices to wllich he refers, in which he states, am ong other things, that he is familiar with thepending criminal case against ZH ENLY VE GON or ZH EN LI YE GON or ZH EN LI YE,a.k a. JEL CH IN O ': H e also explains the charges against that sam e petson and the applicablelaws in the case, provides a summary of the criminal acts and describes the evidence whichestablishes the probable tesponsibility of ZH EN LY YE GON ot ZH EN LI YE GON orZH EN LI YE, a.k a. GCEL CH IN O '' for the crimes for which llis extradidon is sought.(Exttsdition Treaty, Article 10, secdon 2, subsectbn a);

I1. A cextifed copy of the Arrest Warzant entered Jtme 13, 2007 by the Fouzthludge ofihe District Court fot Penal Mm ers in the State of M exico against ZH ENLY YE GON orZHENLI 'YE GON or ZHENLI YE, a.ka. <<X.f, CHINO'', wllich is found in Appendix A ofthe Swom Affdavit of Jotge Joaquin Diaz Lopez, Attomey-at-Law (Extradidon Tteaty, Atdcle 10,Secdon 3, subsecdon a));

111. The exact texts of the laws establishing the elements of the crim es and thecortesponfling penaldes, wlnkh are found in Appendix B of the Swom Afldavit of Jotge JoaquinDiaz Lopez, Attorney-at-Law (Exttaclidon Treaty, Ardcle 10, Secdon 2, subsecdon b) and c));

1V. The exact texts of the laws establishing the stam te of limitxéons, wltich are found irlAppendix C of Volllme 11 of the Sworn Affdavit of Jo' tge Joaquin Diaz Lopezs Attomey-at-t-aw(Extradidon Treaty, Article 10, Secdon 2, subsecdon b) and c);

V. The evidence labeled as Exhibits D-1 thtough D -49, and index, which are fotmd in

Appendix D of Vobzme 11 of the Appendices to the Swom Affdavit of Jorge Joaquin Diaz Lopez,


SJA-17


Attorney-at-Law Txtradition Treaty, Aricle 10, Section 2, sub-sec:on a) and Section 3, sub-sectionb)).

The elem ents of proof, as well as the legal provisions and procedures m endoned ubove, hûvebeen duly certified, legalized and sworn, and are hereby attached with their correspondingtransladon into the English language, in accordance with Ardcle 10, secdon b) paragraphs 5 and 6 oftlae Extradiéon Treaty between the United M exican Ststes and the United States of Am ezica.

GEN ERAL PERSON AL DATA

ln compliance witla Ardcle 10, pazagraph 2, section e) of the Extradition Treaty signedbetween the United M exican States and the Uaited States of Am erica, upon which this request isbased, the following aze the general personal data available on the accused:

Name:

Nationality:Ozigm' ally fzom :Race:Date of Btrtla:Agè:He' ht'lg .Face:Eyebrows:Syes:N ose:M outh:H O ..Ears:Skin:

ZH EN LY YE GON or ZH ENLI YE GON oi ZH EN LIYE, a.k.a. REL CH IN O''Natatalized M exicanShanghai, ChinaAsian-yellow

963 years

1.70 metexs (5 feet, 7 inches)OvalSenai-tkickDark BxownSlightly largeM eclitmaDatk and straightM editun-sizedWhite/Yellow, no distingaishing marks

Attached 'to tlais Request itz the Appendices, under Appendix E, Volume II, please Snd aphotocopy of a cetdfcate of nattuilizadon of ZH EN LI YE GON that contains a photogzaph andhis signatute. Also in Appendix E is a copy of anodaet photograph in wlziclk ZHENLI YE GONwas idendfied from among a gtoup of pezsons with Asian feattues. The eyewimess idend:ed theperson in a photogtaph as ZH EN LI YE GON and drew a line and a m xmbez 1 as a tecotd of ltisidEhtificadon.

In compliance wifh Atdcle 19 of the Extraclidon Treaty slgn' ed between the Uniied M exicanStates and the United States of Amedca, the M exican govem ment requests the cpnEscadon andsurrendet of all items, itastntments, and objects of value, ot atay documents related to tlw' crime, evenif they were not used to cazry out said crimes, that were itl the possession of the accused, ZH EN LYYE GON or ZH EN LI YE GON or ZH EN LI YE, a.k.a. GEL CH IN O'' at the o'me of llis'

.

atrèst, oz at a later date, which could be used as evidence witlnin the criminal invesoga' don beingcq/ried out againbt bim .

Based on tlae abpve, 1 am enclosing in a duly legalized package, along vrit.h ttansladons into


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English, the docum ents that indicate, apart from the crim e of which the accused is charged, theelements of said crime, the pigçe, tim e und circum stances in which the crim e was committed, andthe inform ation resulting from the criminal proceedings instituted by M exican authotities to pxovethe cl'ime and to determine the alleged culpability of ZH EN LY YE GON ot ZH EN LI YE GO Not ZH EN LI YE, a.ka. GLEL CH IN O''. The package, which also includes the arrest warrant forthis person, is subrnitted to Your Excellency as the tt'ue informadon that it is.

ln light of the above, M adam e Secretars and since this petition sadsfes the copditionsdeschbed in tlle Extraclition Treaty curzently in force between our two countzies and, to the best ofmy knowledge, also sztishes the interrml ptocedutes of the M exican State as well as the ptocedm esestablished by the Extradiùon Treaty to process this pedtion of EXTRAD ITION , I hereby requestYottr Excellency's ldnd m ediadon so ss to secttre fxom the competent U.S. authorities, inclucling thejudicial autilozides, the extzadition of ZHENLY YE GON or ZRENLI YE GON ot ZHEN LIYE, a.k a. &GEL fl.F./.f.N o ''from the United States to M exi' co.

W e thank you in advance for Your Excellency's valuable assistance concem ing this m attet. Iavail myself of tllis opportutaity to renew to Your Excellency the asskuances of my highest and m ostdistinguished consideraùon.

Arturo SarulthanAm bassador


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ce te to b'e Ateached co Documentary Evldence J-ccqnlpanyin/gulsit ions in t.' he Uni t ed states f or' Ext rad it ifonq

AMERICAN FOREIGN SERVICE

Mexico, D.P. Mexico, May 29, 2008

Edward McKeon, Minister Counselor for Consular Affairs of

th d States of America at Mexico, D.F., Mexico, hereby certify

th annexed papers, being supporting documentation proposed to

be pon an application for the extradition from the United

St America Zhenly Ye Gon, also known as Zhenli Ye Gon, also

kn Zhenli Ye, also known as E1 Chino, charged with the crime

of zed Crime, Drug Offenses, Offenses in Violatiqm - -pf.. wthp

Fe w on Firearms and Explosives. Operations with Proceeds of

I11 tivity (Money Laundering), alleged to have been ccmmittedo

'

in ted Mexican States, are properly and lègally authenticated

so ntible them to be received in evidence for similar

pur Y the tribunals of the United Mexican States, as required

by 8, United States Code, Sectlon 3190.

itness whereof hereunto sign my name and cause myseaY fice to be affixed this 29Lb day of May e 2008.

. ''

. '

. ' ; <.Z',.' '% ,- - .. ( ) '. .. .e. . ...- -- .t.. l ' . ... . '$$. . .

''- ' '.' . -'. 7. ..=

Edward MeKeonMinister Counselor for Consular Affairs

:


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UNITED MEXICAN STATESVS

ZHENLY YE GON OR ZHENLI YEGON OR ZHENLI YE also known as'IEL CHINO''

CRIMINAL CASE: 25/2007

FOURTH FEDERAL DISJRICT COURTFOR CRIMINAL PROCEEDINGS IN THESTATE OF MEXICO.

SW ORN AFFIDAVIT IN SUPPORT OFTHE FORMAL EXTRADITION REQUEST

1, Jorge Joaquin Diaz Lopez, having signed the following statement under oath,

do declare as follows:

I-NTR- ODUCTION

I am a citizen of Mexico and Iive and work in Mexico City in the Federal

District. l am an attorney and of Iegal age..*

Since October 1993, l have held various positions in the Office of the

Attorney General of the Republic (hereafter UPGR,'' for its initials in Spanish), such asa federal assistant Public Prosecutor, Assistant to the Attorney General, assigned to

the Ofice of the Director General for Legislation and Legal Opinion from October

1993 to December 1994*, as an assistant Public Prosecutor ass.igned to the Office of

the Special Prosecutor for the ''Colosio Case'' from January 1995 to October 1998., as

a Supervisory Public Prosecutor assigned to the Office of the Director of Legislation

and Regulations of the Attorney General of the Federal District, from October 1998 to

October 1999', as Prosecutor assigned to the Attorney General's Specialized Unit on

Organized Crime from October 1999 to December 31, 2006., and from then on to the

present, as Coordinator General of Investigations assigned to the Specialized Unit for

lnvestigation of Drug Crimes.


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Because of my experience as a federal Public Prosecutor in my position in

the PGR and as an exped in criminal Iaw, I am fully familiar with the federal criminal

laws involving organized crime offenses, drug offenses, (offenses involvingl illegal use

of the proceeds of specified criminal activity (money Iaupdering), and offensesinvolving the illegal possession of firearms as well as the Iaws of Mexican Crim inal

.'''.*'-' Procedure. In carrying out my responsibilities, I have become fully fam iliar with the

charges and evidence in the case against ZHENLY YE GON, or ZHENLI YE GON, or

ZHENLI YE, also known as 'IEL CHINO'', Criminal Case No. 25/2007 before the

Foudh Federal District Coud in the State of Mexico, Mexico.

Powers and Duties of the Federal Public Prosecutor

4. Under the Iaw of the United Mexican States, the duties of a Public

Prosecutor include conducting the preliminary investigation of federal crimes and

presenting federal criminal prosecutions before the couds. During the preliminary

investigation, the Public Prosecutor receives accusations and complaints presented to

him that could constitute a criminal violation. Thereafter, the Public Prosecutor carries

out the investigations and proceedings necessary to obtain the evidence in order to

request coud orders authorizing related searches and arrest warrants.

5. During the course of the preliminary investigation, the Public Prosecutor is

authorized to seek court approval for precautionary orders of attachment or seizure

necessary to complete the preliminary investigation, as well as orders for related

search warrants. For these purposes, the Public Prosecutor may be assisted by

agents of the Federal lnvestigative Agency (hereinafter denominated ''AFI'' or ''AFIagents'') and by the appropriate expeds.

6. AIl of the proceedings carried out by the Federal Public Prosecutor are


SJA-22


carried out in the presence of two attending witness who attest that said proceedings

are done in accordance with law. This verification signifies that what is done by the

Public Prosecutor is true and may be used as evidence in the judicial proceeding.A witness is sworn to tell the truth. The Public Prosecutor is required to

accurately reproduce (the witness' statement) and, to the extent possible, to use the.'-''- same words as those used by the witness. After the witness gives his statement, the

Public Prosecutor has the right to question the witness regarding those points, which

the prosecutor deems relevant. Once the proceeding is concluded, the witness'

statement is read back, or the witness reads his/her own statement, if he/she prefers,

so that the witness may ratify or modify it. Later the witness and the person

accompanying the witness, if there is one, sign the statement.

8. During the preliminary investigation, if the Public Prosecutor concludes that

it is necessary to conduct a search, the Public Prosecutor appears before the coud to

make a written request, setting fodh the basis and the purpose (of the search). Therequest also precisely describes the Iocation of the place to be searched, the persons

or persons to be Iocated or detained, and those objects sought or that should beseized, as well as any Iimitations to be placed on the search or seizure ordered.

Once the search is concluded, a full record of the circumstances of the

search is prepared, in the presence of two witnesses who have been suggested by

the occupant of the Iocation searched or, in the absence of the occupant or the

occupant's refusal to do so, by the entity authorized by the coud to carry out the

search. Officials of the Public Prosecutor's Office and their assisting AFI agents, as

designated in the judicial order, may padicipate in the execution of the search order.

1O. During the search, (executing authorities) collect instruments and objects ofthe crime, as well as the books, papers or any other thing that may be found in the

home searched that is relevant to' the success of the investigation. An inventory is


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made of the objects that are collected as they relate to the crime that was the basis forthe search.

1 1. AII the preceding is set out to demonstrate that under Mexican Iaw, the

Public Prosecutor has a central role in directing and padicipating in the formal

investigation. Therefore, this official may present the facts and evidence in the case

to the coud, under oath, in the same manner as a federal investigative agent does

when requesting a search warrant or arrest warrant or padicipating in other

preliminary proceedings in the United States.

PROCEDURAL HISTORY

12. On May 2006, upon receiving a detailed anonymous accusation

regarding ZHENLY YE GON, (aka) ZHENLI YE GON, (aka) ZHENLI YE, (aka) C'EL

CHINO'' (hereinafter referred to as I'ZHENLI YE GON'' unless the context requires

otherwise) Ethe Public Prosecutor) opened an investigation, in accord with the FederalLaw Against Organized Crime. According to this Iaw, if the Public Prosecutor receives

an anonymous complaint charging that crimes have been committed that fall within

the (Federal Law Against Organized Crimej, he must attempt to verify the criminalallegations. Once the facts alleged have been verified, he initiates a preliminaly

investigation (averiguacion previa), in which he gathers evidence, including thequestioning of witnesses.

In the case of ZHENLI YE GON, in May 2006, an anonymous male

complainant repoded that a company called UNIMED PHARM CHEM MEXICO, S.A.

DE C.V., represented by I'ZHENLI YE GON,'' had impoded ephedrine from China in

containers that arrived at the port of Manzanillo, State of Colima. The anonymous

person fudher stated that this ephedrine had been diveded and sold for illicit use,

4


SJA-24


including the manufacture and sale of 'tcrystal.'' On the basis of this complaint, the

Federal Public Prosecutor ordered an investigation.

14. On October 13, 2006, the National Center for Planning, Analysis and

Information to Combat Crime (CENAPI, from its initials in Spanish), repoded that theyhad corroborated the information regarding ZHENLI YE GON and his organization.

According to their information, ZHENLI YE GON had impoded what was described in

the customs declarations as ''Methyl. Acetylamino (metilacrilamidal'' but in reality ''is a

mix of Acetamine (N-ztAcetyloxyl-l-Methyl-z-phenylethyl- and Ephedrine Acetate,which is a chem ical derivative of ephedrine and pseudoephedrine, which are

considered psychotropic substances and chemical precursors for making

methamphetam ine.'' The Public Prosecutor for the Specialized Unit for lnvestigation of

Drug Crimes initiated prelim inary investigation No. PGR/SIEDO/UEIDCS/I9I/ZOO6.

1 5. As a result of the investigations carried out by the Federal Public Prosecutor,

evidence was developed that showed the existence of an international crim inal

organization, led by ZHENLI YE GON. This organization was principally dedicated to

illegally impoding into Mexico and transpoding to Mexico City in the Federal District

and to Toluca in the State of Mexico, Ephedrine Acetate, Pseudoephedrine Acetate

and N-pseudoephedrine acetate, aII substances that are classified as derivatives and

as psychotropic substances under the Federal General HeaIth Law and as precursors

of methamphetam ine under the Federal Law for Control of Precursor Chem icals,

Essential Chemical Products and Machinery for the Manufacture of Capsules, Tablets

and/or Chem ical Compounds. After July 1, 2005, ZHENLI YE GON's purpose in

impoding these materials and transpoding them to Toàuca was to use them to

repeatedly produce ephedrine, pseudoephedrine and pseudoephedrine hydrochloride,

which are also classified as psychotropics and precursors of methamphetamine. The

roduction was carried out using diverted chemicals, including sulfuric acid which isP ,

5


SJA-25


used to synthesize methamphetamine and is classified as an ''essential chemical''

under the Federal Law for Control of Precursor Chemicals, Essential Chem ical

Products and Machinery for the Manufacture of Capsules, Tablets and/or Chem ical

Compounds.

16. Each impodation or expodation or production or distribution of these

psychotropic substances, precursors and derivatives requires the individual

permission of the Federal Commission Against Risks to Public Health (hereinafter

''COFEPRIS'' based on its initials in Spanish) on behalf of the Secretary of HeaIth.ZHENLI YE GON never obtained this authorization.

From this production of psychotropic substances, ZHENLI YE GON obtained

millions of dollars, euros and Mexican pesos in illegal proceeds, which he used to

advance his illegal business (by buying machinery and more chemical precursors and

constructing a Iaboratory and producing pseudoephedrine hydrochloride), and toenrich himself and his criminal confederates. He transferred m illions of dollars

through Mexican currency exchanges and other means to bank accounts in the United

States, China and Europe.

18. To carry out these illegal importations of illegal precursors and psychotropic

substances, ZHENLI YE GON, with his criminal confederates, including some

business padners and employees in his ldtrusted group,'' disguised his illegal activities

through his businesses: UNIMED PHARM CHEM MEXICO, S.A. DE C.V., which

impoded the illegal psychotropic substances', CONSTRUCTORA E INMOBILIARIA

FEDERAL S.A. DE C.V., which was responsiblç for obtaining the propedy to build the

plant in Toluca and was used as an instrum ent to send m illions of dollars in cash out

of the country', and UNIMED PHARMACEUTICAL, S.A. DE C.V., which was the name

of the illegal plant in Toluca, where they produced Pseudoephedrine hydrochloride,

Ephedrine and Methamphetamine hydrochloride. (Hereafter, these three companies


SJA-26


are referred to as UNIM ED PHARM CHEM, CONSTRUCTORA E INMOBILIARIA, and

UNIMED PHARMACEUTICAL). The criminal activity that was detected was beingcarried out repeatedly by this crim inal group.

19. On June 13, 2007, the Fourth Federal District Court for Criminal

Proceedings in the State of Mexico, issued an arrest warrant for ZHENLY YE GON or

ZHENLI YE GON or ZHENLI YE, also known as 'dEI Chino,'' for the following

violations:

a. organized crime (for the purpose of committing drug crime and

operations with funds from illegal sources) in which ZHENLI YE GON

exercised powers of an administrator, director or supervisor (adicle 2,

section I and adicle 4, section 1, sub-paragraph (a) of the Federal Law against

Organized Crime);b. drug offenses, specifically:

i. introduction into the country the psychotropics, nam ely,

N-Acel te-pseudoephedrine and ephedrine acetate,

derivatives of pseudoephedrine (adicle 13, section 111, andarticles 193 and 194, 11 of the Federal Criminal Code; adicle

245, groups ll, lll and IV of the Federal General Health

Law); and

transpoA tion (within Mexico) of psychotropicsubstances, namely, N-Acetyl-pseudoephedrine, a

derivative of pseudoephedrine (adicle 13, section 111, andarticles 193 and 194, section I of the Federal Criminal

Code; article 245, groups II, III and IV of the General HeaIth

Lawl',iii. production of psychotropic subsu nces, nam ely


SJA-27


Pseudoephedrine, Ephedrine, Pseudoephedrine

Hydrochloride and Metham phehm ine Hydrochloride

(adicle 13, section 111, and adicles 193 and 194, sectionof the Federal Criminal Code; adicle 245, groups lI, l1l and

IV of the General HeaIth Law); andpossession of psychotropic subst nces for the purpose

of producing narcotics (adicles 13, section 111, andadicles 193, 194, section 1, and adicle 95 of the Federal

Criminal Code; adicle 245, groups III and IV of the

General Health Law); and

diversion of essential chemical product (Sulfuric Acid)

to produce narcotics (article 13, section 111, and adicles193 and 196-Ter of the Federal Crim inal Code in relation to

adicle 4 of the Federal Law to Control Chemical Precursors,

Essential Chem ical Products and Machinery to Formulate

Capsules, Tablets and/or Compounds).c. Offenses in violation of the Federal Law on Firearms and Explosives,

specifically:

possession of firearm s for the exclusive use of the

Army, Navy and Air Force (regarding a pistol, caliber 9mm

(9x19mm), brand: Heckler & Koch GMBH, model P7M13,

serial no. 73063', a pistol, caliber 9 mm. (9X19mm), brand:LUGER Intratec, model TEC-DC9, serial no. D012785*, a

pistol caliber .45 Auto, brand: Heckler & Koch GM BH, model:

UPS Tactical, Series 25-140657., and a Rifle AK-47, caliber

7.62X39mm , brand: Norinco, model: M AK 90, serial no.

8


SJA-28


3701 1250) (adicle 13, section lll of the Federal Criminal

Code', adicles 8, 11, sub-paragraphs (b) and (c), and adicle83 Ter, sections 11 and lll of the Federal Law of Firearm s and

Explosivesl; andii. possession of a firearm for the exclusive use of the

Army, Navy and Air Force (regarding a pistol, caliber 9 mm.

Parabellum (9X19 mm), brand Pietro Beretta, model 92FS,

serial number obliterated) (adicle 13, section lll of the

Federal Criminal Code; adicles 8, 11, sub-paragraphs (b)and article 83 Ter, sections 11 and IlI of the Federal Law of

Firearms and Explosivesl; andiii. possession of cartridges for firearms for the exclusive

use of the Army, Navy and Air Force (regarding 94cadridges for firearm , caliber .223', 122 cadridges for firearm,

caliber 45 auto; 53 cadridges caliber 9m m. and 69 cartridges

for firearm caliber .32'' AUTO, with expanding point) (adicle13, section III of the Federal Criminal Code', adicles 8 and

11 sub-paragraph (9, and adicle 83 Quat, section II, of the

Federal Law of Firearms and Explosives); andiv. possession of cartridges for firearms for the exclusive

use of the Army, Navy and Air Force (regarding 40cadridges caliber 9mm Luger, 21 cadridges 9mm. Luger, 3

cadridges 9mm. Luger) (adicle 13, section 11 of the Federal

Criminal Code', adicles 11, sub-section (9, and 83 Quat,section ll, de la Federal Law of Firearms and Explosives).

d. operations with proceeds of illegal activity, namely alone or using an

9


SJA-29


intermediary, having possession of and concealing within IMexico)funds, knowing that the funds were proceeds of an illegal activity, for

the purpose of im peding knowledge regarding their source, Iocation,

destination, or ownership (adicles 13, section III and article 400 Bis of the

Federal Criminal Code).The arrest warrant for ZHENLI YE GON remains in force and executable for

the previously described crimes. This arrest warrant may be found in Appendix A of

Volum e I of the Appendices.

21. The relevant Iegal provisions, including the Iaw regarding persons who may

be held responsible, the crimes and the applicable penalties are included in

Appendix B in Volume 11 of the Appendices. Each one of these Iaws carries a

penalty of no Iess than one year of imprisonment and was in force at the time of the

comm ission of the crimes and at the time the arrest warrant was issued for the person

sought, and they continue in force.

22. W ith regard to the charges of possession of ammunition referred to in sub-

paragraph 19(c), sub-sections iii and iv, above, the Government of Mexico recognizesthat because these charges are based on acts with firearms that are not punishable

under United States law, they do not satisfy the dual criminality requirement of the

Extradition Treaty between the United States of America and the United Mexican

States of May 4, 1978, (hereinafter referred to as ''the Extradition Treatyn), Adicle 2,sections 11 and 111. For this reason, the Government of Mexico is not seeking

extradition on these charges.

23. W ith regard to the two charges against ZHENLI YE GON for possession of

firearms, as referred to in sub-paragraph 19(c), sub-subsections i and ii above, weunderstand that because the evidence indicates that the possession of these

weapons was in relation to a drug trafficking offenses, this conduct would violate Title

10


SJA-30


18, United States Code, Section 924(c). In addition, we understand that with respect

to possession of the Pietro Beretta 9 mm. Parabellum (9 X 9 mm.) pistol, model 92FS,with obliterated serial number, possession of that weapon would violate Title 18,

United States Code, Section 922(k).Therefore, with the exception of the two charges against ZHENLI YE GON

for possession of ammunition, the Government of Mexico seeks extradition of ZHENLI

YE GON for aIl the crimes with which he is charged and for which his arrest has been

ordered. These crimes are covered by Adicle 2, sub-paragraphs 1, 3 and 4(a) of theExtradition Treaty and clauses 12, 14, 15 and 19 of the Treaty's Appendix. ln addition,

under both Mexican and United States law, the criminal conduct attributed to ZHENLI

YE GON is punishable for a maximum period of imprisonment of not Iess than one

yea r.

ELEM ENTS OF THE OFFENSES

To aid in consideration of the evidence that follows as it relates to the

elements of the crimes that must be proved, I briefly describe the elements for each

crime with which ZHENLI YE GON is charged.

26. To prove the charged violation of the Federal Law against Organized Crime,

Mexico m ust prove:

a. that ZHENLI YE GON joined together with at Ieast another threeother persons, and

b. that they had as their purpose to commit repeated violations of

the criminal provisions of the Federal General Health Law

regarding narcotics and psychotropic substances and/or money

Iaundering provisions of the Mexican Federal Criminal Code.


SJA-31


c. For ZHENLI YE GON to receive the enhanced sentence,

convicted, the Government of Mexico m ust also prove that he

directed and/or supervised the organized criminal activity.

27. To prove the specified violations of the Federal General Health Law, the

government must establish:

a. that ZHENLI YE GON, alone or with others,

knowingly,

impoded, and/or transpoded, and/or produced, and/or possessed

with intent to produce controlled psychotropic substances and/or

precursors of psychotropic substances (which term includes their

precursors, derivatives or salts), andd. that ZHENLI YE GON did not have the permission of the Mexican

Ministry of HeaIth to impod, transport, produce or possess with

intent to produce controlled psychotropic substances.

28. To prove the charged violation of the Federal Law to Control Chemical

Precursors, Essential Chemical Products and Machinery to Formulate Capsules,

Tablets and/or Chemical Compounds, the government m ust establish:

a. that ZHENLI YE GON, alone or with others,

b. knowingly,

diveded sulfuric acid for use in the illicit production of psychotropic

substances.

d. that sulfuric acid is one of the chemicals classified as an 'sessential

chemicaî'' under this Law.

29. To prove the charged violations of the Federal Law of Firearms and

explosives, the government must prove:

12


SJA-32


a. that ZHENLI YE GON possessed the described firearms',

b. that those firearms are classified for the exclusive use of the Army,

Navy and Air Force; and

c. that ZHENLI YE GON did not

Weapons.

have authority to possess those

30. To prove the charged violation of the Mexican Federal Criminal Code on

operations with proceeds of unlawful activity (money laundering), the governmentm ust prove:

a. that ZHENLI YE GON, alone or with others;

b. knowingly possessed proceeds of unlawful activity; and

c. that ZHENLI YE GON acted with the intention to impede knowledge

regarding the source, Iocation, destination, or ownership of the

referenced proceeds.

FACTUAL SUMMARY OF THE CASE

31. The evidence that suppods aII these elements of the crimes charged and

which caused the judge in the case to issue the arrest warrant against ZHENLI YEGON includes relevant extracts of witness statements, for instance those of his wife,

various of his employees, Customs personnel and personnel of customs forwarding

agencies. also includes repods of AFI agents' activities and expeds' repods',

physical evidence such as chemical samples, guns, jewelry, vehicles and currency',documents relevant to the impodation, transpodation and production of psychotropic

substances, including official documents, documents from ZHENLI and his

confederates, and those of third parties; and photographs and inventories of the items

13


SJA-33


seized (machinery, firearms, cash, various documents) during the searches carried1 The suppoding evidence being presented in this extraditionout by the authorities.

proceeding is annexed to this sworn declaration (APPENDIX D, Exhibits D-1 through

D-49).

Introduction

32. ZHENLI YE GON, a national of the People's Republic of China, began to

visit Mexico using a Non-lmmigrant Visitor with Business Activities visa in 1994 or

before and extended this visa various times. He married Mexican citizen Tomoiyi Marx

Yu on August 14, 1995. In October of 1997 he requested a change of immigration

status to that of an immigrant so that he could hold the position of general director of

UNIMED PHARM CHEM MEXICO S.A. de C.V. On November 11, 2002, he became a

naturalized Mexican citizen. (Exhibit D-1).

ZHENLI YE GON's Corporations

33. On October 6, 1995, ZHENLI YE GON incorporated Unimed Pharm Chem

(USA) Corp. in the State of New York, (Exhibit D-2 (a)). On November 28, 1996, in

Hong Kong, ZHENLI YE GON incorporated UNIMED (Hong Kong) Company, Limited,of which he is one of the two shareholders (Exhibit D-2 (b)).

34. By at least 1995, ZHENLI YE GON was operating a company called Unimed

L

1 idence presented to the Foudh District Judge for Federal Criminal Matters in the State ofThe evMexico includes a basis for aII of the investigations against aII of the defendants. This sworn declarationincludes only those declarations and documents relevant to establishing Zhenli Ye Gon's probableresponsibility for the crimes that are necessary to suppod his extradition. The petition uses relevantextracts of the sworn statements of the witnesses, rather than the full statement. There are alsooccasions when the petition uses extracts or sum maries of expert or surveillance repods, instead ofusing the complete document. Ellipses are inseded I ... .) to indicate excised portions. ln the case ofsummaries, reference is made to the full documentts) on which each is based.

14


SJA-34


Pharm Chem in Mexico. On March 14, 1997, ZHENLI YE GON incorporated UNIMED

PHARM CHEM MEXICO, S.A. de C.V. The initial corporate capital of the company

was $1 ,600,000.00 Mexican pesos. Its stated corporate purpose was the buying and

selling, marketing, brokering, distribution, impodation and expodation of aII kinds of

raw materials, products and merchandise related to the textile industry, nutrient

supplements and pharmaceuticals in general. ZHENLI YE GON was named the sole

administrator of said company (Exhibit D-3).35. In the years after its incorporation, ZHENLI YE GON's company prospered.

On March 28, 2003, UNIMED PHARM CHEM , increased its corporate capitai to

$28,000,000.00 Mexican pesos and broadened its corporate purpose to include

manufacturing medicines. (Exhibit D-3). However, UNIMED PHARM CHEM never

obtained the required Iicenses from COFEPRIS to produce medicine or

pharmaceuticals in Mexico. The business was authorized to act only as an

intermediary to distribute medicines, raw materials and pharmaceuticals

pharmaceutical Iaboratories. (Exhibit D-5(a)).36. On December 11, 2003, ZHENLI YE GON incorporated CONSTRUCTORA

& INMOBILIARIA FEDERAL S.A. DE C.V., with a corporate capital of $40,000,000.00

Mexican pesos, with shareholders ZHENLI YE GON (24,000 shares) and his wife

Tomoiyi Marx Yu (16,000 shares) and ZHENLI YE GON as sole administrator. Thecorporate purpose was stipulated to be ''the construction, building, remodeling,

development, dem olition, refurbishing, buying and selling, administration, marketing,

promotion, brokerage and in general the carrying out of juridical acts related to realpropery '' The corporate domicile was Avenida Morelos Num. 24 A, Colonia Centro,

Mexico, D.F., the same domicile as that of UNIMED PHARM CHEM. (Exhibit D-4). OnNovember 1 , 2004, CONSTRUCTORA E INMOBILIARIA increased its corporate

capital from $60,000,000.00 Mexican pesos to a total of $100,000,000.00 Mexican

15


SJA-35


pesos (Exhibit D-4).

UNIMED PHARM CHEM'S Im port of Pseudoephedrine and Ephedrine

before July 1, 2005

37. During the three years prior to July 1, 2005, according to the records of

COFEPRIS, UNIMED PHARM CHEM, as a distributor of raw and intermediate

materials to pharmaceutical factories in Mexico, Iegally imported 33.875 tons of

ephedrine, pseudoephedrine and pseudoephedrine hydrochloride through Mexico

City's Benito Juarez International Airpod, with the required permits from COFEPRIS.

At the time, the principal supplier for UNIMED PHARM CHEM was Chifeng Arker

Pharmaceutical Technology Co., Ltd. of Inner Mongolia in the People's Republic of

''Chifeng Arker Ltd.'') (Exhibit D-5(a), D-5(b)).2China (hereinafter,

38. On September 24, 2003, the Iegal representative of Chifeng Arker, Ltd., as

seller, and UNIMED PHARM CHEM as buyer, signed a purchase-sale agreement for

the purchase of a precursor of pseudoephedrine hydrochloride, referred to in the

contract as ''hydroxy benzyl-N-methylacetethamine, H.S. Code 2921 4990. The

'tintermediate'' Eproduct) was to be used by UNIMED PHARM CHEM to produce

'sfinished APIs (Pseudoephedrinel.'' The contract established sales of 50 metric tons ofthis ''intermediate'' product per year as a minimum , at a progressive price of USD

$41 .50/ Kg for the first year; USD $40.5O/kg. for the second', and USD $39.50/kg. forthe third year, after the 'tfacility of UNIMED is in normal production status and at the

same productive Ievel of Arker's facility.'' The foudh and successive years the

contracting padies would renegotiate the contract. (Exhibit D-6(a)).

L

2 'In Septem ber 2007, in a working group meeting in Las Vegas, Nevada, in which federal authoritiesfrom Mexico, the United States, Germ any and China participated, the Chinese authorities reported thataccording to their records, from 2002 to 2006, Chifeng Arker, Ltd. exported 215 tons of ephedrine andits derivatives to UNIMED PHARM CHEM in Mexico. (Exhibit D-5(c)).

16


SJA-36


39. ln the same contract Chifeng Arker, Ltd, bound itself to provide t'technical

support'' for the ''manufacturing from the intermediate to Pseudoephedrine,'' inciuding

''workshop housing design,'' $$a list of manufacturing and also testing equipment

needed for this facility'' and ''guidance of the installation and also adjustments of theequipment at the UNIMED facility to a normal production status...the corresponding

manufacturing procedure from the intermediate product to Pseudoephedrine'' and a

training program for UNIMED personnel until the Iatter can 'drun the process at the

same Ievel (of efficiency) as Arker, i.e. between .90 and .95 kgs. of PseudoephedrineHCL from 1.00 kg. of the intermediate.'' The cost of transpodation and expenses of

the Chinese technical assistants was to be paid by UNIMED PHARM CHEM. The

obligation to purchase the ''intermediate'' product was to become effective when the

plant was up and running. (Exhibit D-6(a))4O. The contract was signed by the General Manager on behalf of Chifeng

Arker, Ltd., and by ZHENLI YE GON, sole adm inistrator, and Bernardo Mercado

Jimenez, UNIMED PHARM CHEM'S registered chemist, signed on behalf of UNIMED

PHARM CHEM .

Until the plant for manufacturing this pseudoephedrine HCL was

constructed, Chifeng Arker, Ltd. continued expoding ephedrine, pseudoephedrine

hydrochloride and pseudoephedrine sulphate to UNIMED PHARM CHEM. On

January 2, 2004, Chifeng Arker, Ltd. communicated with UNIMED PHARM CHEM in

reference to three impodations of llpseudoephedrine sulfate USP26'' noting that the

first impodation was for 10,000 kilos at a price of USD $594,000, the second for

24,000 kilos, valued at USD $1 ,008,000, and the third was for 10,000 kilos for USD

3$420,000. (Exhibit D-6(b)).

42. lt is apparent from the evidence that ZHENLI YE GON was fully familiar withL

3 After Chifeng Arker, Ltd. sent only a podion of one of these shipm ents, the perm ission for the balancewas Iater cancelled by CO FEPRIS.


SJA-37


the norms and Iaws of Mexico that had been adopted in conformity with the United

Nations Convention Against Illegal Trafficking in Narcotics and Psychotropic

Substances, adopted in Vienna, Austria, December 20, 1988 (hereinafter t.1988 United

Nations Convention'') and other international agreements related to trafficking ofchemical of narcotics. He had to obtain permission from COFEPRIS and send a copy

of the perm it to China before the Iatter country would allow the controlled precursors

of ephedrine and pseudoephedrine, the salts and derivatives to Ieave China. His

knowledge is established by a Ietter dated February 23, 2004, from ZHENLI YE GON

to the Mexican Director for Evaluation of Medicines asking that COFEPRIS notify

China that his company had the requisite permissions to impod pseudoephedrine

(Exhibit 7(a)). His knowledge is also shown by documents related to ZHENLI YE

GON's complaint regarding the robbery of 5 drums of a 440-drum (10,000 kilograms)shipment of Pseudoephedrine sulphate expoded by Chifeng Arker, Ltd. to UNIMED

thrpugh Benito Juarez International Airpod on April 14, 2004. (Based on theComplaint, the PGR had detained the remainder of the drums from the shipment as

evidence.) ZHENLI YE GON, as Iegal representative of UNIMED PHARM CHEM,requested that the drums of pseudoephedrine be deposited with UNIMED PHARM

CHEM , since they were the lawful propedy of the company. ZHENLI YE GON

presented as evidence of his legal impodation the corresponding COFEPRIS permit,

and explained in detail a1l the requirements with which he had complied. (Exhibit D-(7)

(b)).

Lim itations on the im poe tion of ephedrine and pseudoephedrine

43. During 2004, in com pliance with the 1988 United Nations Convention that

regulates trafficking in the precursors of methamphetamine, the Mexican government

18


SJA-38


carried out an epidemiological study respiratory illness and impods

pseudoephedrine. The study calculated the annual amount of ephedrine and

pseudoephedrine needed in Mexico for legitimate uses and the total amount of these

substances that was being imported into the country. The study concluded that 70

metric tons per year would supply Mexico's legitimate needs and that whatever

exceeded this volume of impods was entering the black market for illegal use. (Exhibit

D-5(c)). One can deduce from the amount of pseudoephedrine impoded in this periodby UNIMED PHARM CHEM, the increases of corporate capital invested in ZHENLI

YE GON's companies during the period from 2003 to 2005 (Exhibit D-3), the increase

in ZHENLI YE GON's personal wealth (Exhibits D-18, D-39) and by his conductsubsequent to July 1 , 2005 that ZHENLI YE GON was diveding at Ieast a podion of

the precursors he was impoding from Chifeng Arker, Ltd. to this illegal market.

44. Based on its studies, the Secretary of HeaIth decided to reduce impods of

these chem ical precursors into the country by 40 percent. On October 24, 2004, in

official Ietter number COFEPRlS/SEPQ/0173/04, COFEPRIS announced that the Pod

of Lazaro Cardenas was not among the 11 customs ports authorized to impod

psychotropic substances. As another front in this e@ort to diminish illegal trafficking,

the Government began to control these psychotropic substances and their precursors,

defivatives and salts not only by means of customs controls and other COFEPRIS

elorts, but also by applying the criminal laws prohibiting their im portation,

transpodation, production and the diversion of chemical precursors of

methamphetamine without the permission of the Ministry of Health.

July 1, 2005: COFEPRIS withdrew UNIMED PHARM CHEM'S perm ission to

im port Pseudoephedrine and Ephedrine


SJA-39


45. On July 1, 2005, the Secretary of HeaIth, acting through COFEPRIS, issued

official Ietter no. CAS/EPQ-3/0R/0252-/50, announcing that it had withdrawn

perm ission to import psychotropics or chemical precursors mentioned in the tables of

precursors of the 1988 United Nations Convention, from various brokerage companies

distributing precursor substances. COFEPRIS' purpose was to increase control over

the pharmaceutical manufacturing laboratories and limit imports ''solely to meet

therapeutic needs and avoid unnecessary surplus in the market.'' Among the

companies elim inated as an authorized impoder of ephedrine and pseudoephedrine

and their precursors was UNIMED PHARM CHEM MEXICO, S.A. (Exhibit D-9(a)).Chem ist Estela Ramirez Flores remembered that Bernardo Mercado Jimenez said

that an official from COFEPRIS had informed him of the prohibition. (Exhibit D-13).

COFEPRIS' records from an inspection in March 2006 corroborate this. (Exhibits D-49(b), D-9(c)).

46. Even with this prohibition, ZHENLI YE GON did not abandon his plans to

continue enriching himself by impoding the precursors of pseudoephedrine, ephedrine

and methamphetam ine. Because it would be illegal, he would carry it on in secret.

Likewise, he did not abandon the plan contained in the September 2003 Chifeng

Arker, Ltd. contract to build a production plant to produce Pseudoephedrine HCL from

the ''intermediate'' product. (Exhibit 6(a)).

L

4 COFEPRIS records show that UNIMED PHARM CHEM had a balance of 9 tons of pseudoephedrine HCL and 8O6 kilos ofpseudoephedrine sulfate in stock at the time of COFEPRIS'S inspection in February 2005 and had not filed a year-end repodregarding this baîance at the end of 2025, as required. W hen questioned about this during a March 2006 audit, BernardoMercado explained that after UNIMED PHARM CHEM received notice of their exclusion from importing and distributingpsychotropic substances, he did not know what to do with the Ieqovers. COFEPRIS gave permission to UNIMED PHARMCHEM to sell off this material in amounts COFEPRIS designated and to the customers that they specised. W hen COFEPRISdid another inspection of UNIMED PHARM CHEM at 24A Morelos, Mexico City in late July 2006, records showed that thepseudoephedrine HCL of record at the end of 2005 had been sold. (The 806 kilos of pseudoephedrine sulfate were sold bysupewised sale in November 2006. (Exhibit 5(c)). Therefore according to COFEPRIS records, UNIMED PHARM CHEM no1Ionger had any psychotropic substances in stock from the perlod before July 1 , 2005 and it did not have permission to acquireany. As will become apparent from what follows, COFEPRIS did not know that by April 2006, ZHENLI YE GON was operating anew unlicensed plant manufacturing psychotropic substances in Toluca, State of Mexico. (Exhibit D-9(b), D-9(c)).


SJA-40


Preparations to continue illicitly im porting precursors and to build a plant

in Toluca to produce illegal pharmaceuticals

47. After COFEPRIS eliminated UNIMED PHARM CHEM MEXICO from the Iist

of the companies authorized to import pseudoephedrine and ephedrine, ZHENLI YE

GON's continued working with his i'trusted team'' in their earlier positions and added

new employees, as that became necessary. This ''trusted team'' was composed of

ZHENLI YE GON, sole administrator, who managed the tiniest detail of the company

and Bernardo Mercado Jimenez, who from 1998 onward had signed as the registered

chem ist for UNIMED PHARM CHEM in com pliance with the requirements of the

Secretary of HeaIth. He also had signed the 'Jcedifications of chemical contents'' for

UNIMED PHARM CHEM'S impods, which were filed with the Customs Service at the

pods of entry. Together with ZHENLI YE GON, Mercado Jimenez had signed the

September 2003 contract with Chifeng Arker, Ltd. providing for importation of 50 tons

of pseudoephedrine HCL precursor per year and for technical assistance in

construction of a factory to produce pseudoephedrine HCL in Mexico from that

''intermediate'' (producj (Exhibits D-11 , D- 6(a)).48. The trusted team also included Maria Eugenia Mayorga Cano, ZHENLI YE

GON's sister-in-law, who was in charge of credit and collections and, in the absence

of ZHENLI YE GON, served as Iegal representative of UNIMED PHARM CHEM, and

Iater of UNIM ED PHARMACEUTICAL, incorporated in October 2005. lt included Jose

Obed O lvera Salguero, who worked as the driver for ZHENLI YE GO N and in the

warehouse of UNIMED PHARM CHEM, and after the UNIMED PHARMACEUTICAL

plant began operating in Toluca, also transpoded raw materials to the plant and

finished products from the plant to UNIMED PHARM CHEM in Mexico, D.F. and to

21


SJA-41


some buyers', Maria del Carmen Morales, who was the receptionist, kept the

company's files, oversaw al1 that was related to impods and had contacts with the

Customs agents, until she was replaced in the latter by another member of the team,

biochemical engineer Claudia Cruz Peinado, at the beginning of 2006,. and engineer

Susana Gomez, who served as a confidante to ZHENLI YE GON and sometimes filled

5 Exhibits D-12,in for the person in charge of the ofice, Maria del Carmen Morales. (

D-13, D-14, D-15).49. On Decem ber 22, 2004, CONSTRUCTORA & INMOBILIARIA, through sole

administrator ZHENLI YE GON, purchased propedy located at Boulevard Miguel

Aleman, number 175, Colonia San Pedro Totoltepec, Toluca, State of Mexico. (Exhibit

D-4). At the beginning of July of 2005, shodly after COFEPRIS excluded UNIMEDPHARM CHEM from the Iist of authorized impoders of pseudoephedrine and related

chemicals, ZHENLI YE GON began talking about leaving the Iaboratory and

warehouse of UNIMED PHARM CHEM in downtown Mexico City, building a Iaboratory

and pharmaceutical plant on the propedy in Toluca and moving everything belonging

to UNIMED PHARM CHEM to Toluca. (Exhibit D-13). He also applied to Customs forspecial impoder status for CONSTRUCTORA E INMOBILARIA, which applications

were rejected. (Exhibit 10). From what follows and what would become even clearerin the Iast months of 2005, one can see that ZHENLI YE GON had secret plans to

continue impoding psychotropic substances and to build a pharmaceutical plant in

conformity with the contract with Chifeng Arker, Ltd. dated September 24, 2003.

(Exhibit D-6(a)). There, they were going to conved N Acetyl Pseudoephedrine and N-Acetyl Ephedrine, apparently illicitly imported from Chifeng Arker, Ltd., under the

name of ''Emerald Impod & Expod Companyj'' into Pseudoephedrine, Ephedrine and

Pseudoephedrine HCL, precursors of Methamphetamine and Methamphetamine

5 f the 'itrusted team'' are nam ed among ZHENLI YE GO N'sEach of the persons named as mem bers ojointly responsible co-defendants in the arrest warrant issued on June 13, 2007.


SJA-42


Hydrochloride.

50. A few days after UNIMED PHARM CHEM was eliminated from the Iist of

authorized impoders of pseudoephedrine and ephedrine to Mexico, ZHENLI YE GON

hired new employees to help him execute the plans. The new employees included the

chemist Estela Ram irez Flores, engineer Madin Lopez Castillo, the new person in

charge of sales Sonia Galicia Vîllar, and the new accountant Maria de1 Rosario

Jimenez Vargas. (Exhibits D-12, D-13, D-14).ZHENLI YE GON personally interviewed and chose the new employees. He

was very careful to choose people recommended by the 'ltrusted team'' so as to

safeguard operations. He attempted to avoid hiring members of the same fam ily, as

he could not control their interchange of information. As evidence of this, when

Bernardo Mercado Jimenez, the registered chemist for the company, invited his

neighbor, Israel Jesus Gonzalez Hernandez, to apply for employment as a chemist to

work at the new plant in Toluca, he cautioned his neighbor not to tell ZHENLI YE GON

that he was the husband of employçe Sonia Galicia Villar, who worked in the Mexico

City office of UNIMED PHARM CHEM. (Exhibit D-16). One can infer from thesemeasures that ZHENLI YE GON intended to isolate the employees and thereby

preclude any exchange of information from which they could conclude they were

involved in something illegal.

52. A week after the new employees arrived on the job, ZHENLI YE GON leftMexico, Ieaving Maria Eugenia Mayorga Cano as the person in charge. YE GON

entered China on July 22, 2005 (Exhibit D-5(d)). Estela Ramirez Flores noticed thatdespite his prolonged absences, ZHENLI YE GON was in constant comm unication

with Maria del Carmen Morales and with Maria Eugenia Mayorga Cano, central

members of the tùtrusted team.'' (Exhibit D-11).53. Upon his return, ZHENLI YE GON proceeded with his plans to build the

23


SJA-43


pharm aceutical plant in Toluca. On October 10, 2005, ZHENLI YE GON, incorporated

UNIMED PHARMACEUTICAL S.A. DE (hereinafter ''UNIMED

PHARMACEUTICAL''), with ZHENLI YE GON as sole administrator and with his wife

Tomoiyi Marx Yu and Hongjun Ye, his brother living in China, as minorityshareholders. The corporate domicile was in Boulevard Miguel Aleman, no. 175,

Colonîa San Pedro Totoltepec, Toluca, State of Mexico. The company had corporate

capital of $600,000,000.00 Mexican pesos. ZHENLI YE GON designated Maria

Eugenia Morales Cano to have general power of attorney, in order to substitute for

him during his absences. (Exhibit D-17)54. By October 25, 2005, total capital invested by ZHENLI YE GON in his

Mexican companies and the capital invested in his wife's name had grown from

$1,600,000 Mexican pesos on March 14, 1997 to $2,729,600,000 Mexican pesos in

October of 2005. (Exhibit D-18).55. In September of 2005, ZHENLI YE GON had contacted Eduardo Dominguez

Vargas who worked as a broker in the purchase and sale of machinery, to meet with

him in the osices of UNIMED PHARM CHEM in Mexico City, indicating that he

planned to purchase a tablet-making machine. After their initial meeting, they met

again several times. In each one of the meetings, ZHENLI YE GON asked for a

different product. Finally, on November 22, 2005, ZHENI YE GON bought six tablet-

making machines. W hen Eduardo Dominguez Vargas asked for the specifications as

well as the size of the tablet, ZHENLI YE GON indicated that he would have to subm it

that question to China. (Exhibit D-19).56. lh one of ZHENLI YE GON's meetings with Eduardo Dominguez Vargas,

ZHENLI YE GON showed him a blueprint for a very Iarge plant in Toluca that he said

had been drawn up by Chinese architects. (Exhibit D-19). These plans wereconsistent with the contract dated September 24, 2003, by the terms of which Chifeng


SJA-44


Arker, Ltd. would provide Chinese technical assistance to UNIMED PHARM CHEM to

build a plant in Mexico to produce pseudoephedrine hydrochloride. (Exhibit D-6 (a)).57. ln the last months of 2005, Blas Carlos Enriquez, the engineer first in charge

of construction at Boulevard Miguel Aleman, number 175 in Toluca, was confronted

with impodant changes in the plans. Enriquez was building offices when ZHENLI YE

GON brought new Chinese blueprints that showed industrial spaces for heavy

machinery. Blas Carlos Enriquez invited engineer Rafael Mendoza Galvan to prepare

new drawings in order to implement the Chinese blueprints. After they installed

bathrooms and modified two central support columns, it turned out that ZHENLI YE

GON had directly contracted Chinese personnel to be in charge of special

installations, just as provided for in the contract of 2003 with Chifeng Arker, Ltd.

(Exhibits D-6(a), D-20).58. In December of 2005, consistent with the terms of the 2003 contract with

Chifeng Arker, Ltd., a group of Chinese personnel arrived to install the machinery that

was arriving from their countfy Fu Huaxin, a new member of the I'trusted team,'' was

in charge of them. At the beginning of 2006, Tom Marks joined the ''trusted team'' tobe in charge of the construction in Toluca. Tom Marks was ZHENLI YE GON's wife's

brother and Maria Eugenia Mayorga Cano's husband. (Exhibit D-20) Another newmember of the ''trusted team'' was the biochemical engineer Claudia Cruz Peinado,

who had returned to work as pad of the team in the first months of 2006. Claudia Cruz

Peinado had been the first chemist who had worked for ZHENLI YE GON after

UNIMED PHARM CHEM was incorporated. She was put in charge of dealing with

Customs and suppliers and had responsibility for the chemical materials being

i ded by ZHENLI YE GON. (Exhibit D-12).6mpo

59. ZHENLI YE GON continued to develop the plant in Toluca. Eduardo

L

f' Fu Huaxin, Tom Marks and Claudia Cruz Peinado are co-defendants with ZHENLI YE GON in the June 13, 2007 arrest order.

25


SJA-45


Dominguez Vargas testified that after his initial sale of machinery in November 2005,

his business relationship with ZHENLI YE GON continued. He served as a broker for

purchases of powder mixers and tablet-making machinery from German and ltalian

suppliers. The first orders were made in the name of the UNIMED PHARM CHEM

MEXICO, Morelos 24A, Uol. Centro, Mexico, D.F. Later on, in either March or April2006, when ZHENLI YE GON bought four more machines in Germany; he changed

the name of the purchasing company to be UNIMED PHARMACEUTICAL in Toluca.

Eduardo Dom inguez Vargas noticed that when ZHENLI YE GON was not available

because he was traveling, engineer Claudia Cruz Peinado was his direct contact with

YE GON (Exhibit D-19).6O. In March 2006, engineer Blas Carlos Enriquez and architect Rafael

Mendoza Galvan returned to work on construction of some floors and pla#orms to

suppod water storage tanks and a cistern to purify and filter water, as well as a base

to hold an elevated tank. (Exhibit D-20). By the end of April, the machinery had beeninstalled and the Chinese were processing crystalliàed white powder and teaching

Mexican workers to replace them. (Exhibit-l6).

Illegal im poA tions of N-Acetyl Pseudoephedrine alter July 1,

2005 to the end of October 2006

61. From July 1, 2005 onwprd, UNIM ED PHARM CHEM was prohibited from

impoding ephedrine and pseudoephedrine and their precursors and derivatives. In

spite of this, one of the new employees stated that from at least April 2006 when he

began to work at the plant in Toluca, thidy drums, containing 25 kilos each of '1a white

substance of a hard consistency,'' arrived each day from which the employees were

producing a white crystalline powder tllike snow''. (Exhibit D-16). W here did this hard

26


SJA-46


white intermediate material come from ?

62. By the m iddle of October 2005, ZHENLI YE GON had begun to purchase

chemical precursors, classified as psychotropic substances, to make

pseudoephedrine HCL in Tolucai even though he did not have the required perm ission

from COFEPRIS. He had everything arranged to import 20,000 kilos of the precursor

chemical, N-Acetyl Pseudoephedrine from China, through the Port of Manzanillo, to

UNIM ED PHARM CHEM, Mexico, D.F. He was going to use false documents

regarding the exporter, contents of the shipment, the applicable Customs regulations

and the stated value, so as to prevent the authorities from detecting the rea! contents.

(Exhibits D-21 (a), D-21(b), D-21(c)).63. On Decem ber 5, 2005, a shipment of 20,000 kilos of chemicals described as

''N-Methyl-Acetilam ino'' arrived at the Port of Manzanillo. It had a stated value of

ICUSD $110,000,'' impoder UNIMED PHARM CHEM, Morelos 24A, Mexico D.F. and

named exporter ttt'Emerald Impod & Export Co.'', Dong Nei Chung Road No. 51,

Wanchi, Hong Kong (China),'' The shipment entered Customs with Customs

declaration number 5002544 on Décember 12, 2005 (Exhibit D-21 (a)). The invoicefrom ''Emerald lmpod & Expod Co.'' was dated October 26, 2005, a shod time after

ZHENLI YE GON returned to Mexico from abroad to focus on construction of the plant

in Toluca. (Exhibit D-21 (b)). The shipment was stopped by Customs because ofinconsistencies in the customs numbers. The accompanying documents included the

cedification of chemical contents, signed by the registered chemist for UNIMED

PHARM CHEM , in which, under oath, Bernardo Mercado Jimenez confirmed that the

chemical substance was t'N-Methy-Acetilamino,'' and fudher described as

''intermediate products for pharmaceutical analgesic''. (Exhibit 21(c)). Instead of therequired ''carla de encomienda'' Icertification of the truth of the documents and

appointment of a customs forwarding agent) there was a Ietter, signed by ZHENLI YE

27


SJA-47


GON, also under oath, which was addressed to the Administrator of the Customs Pod

of Manzanillo. YE GON informed him that the supplier ''Emerald Import & Expod

Company'' did not have a tax identification code, and requested that the impod be

permitted to enter ''Ieaving out this item''. (Exhibit 21 (d)).64. Because the shipment received a red stop Iight - the means used in

Mexican pods to determ ine which of the shipments Customs officials are going to

inspect at the second inspection stage - officials detained the shipment and took

samples of the bagged chemicals (sampling record 160-03026/2005 dated December13, 2005). Due to the Iack of equipment and personnel to analyze the samples onsite, Customs allowed the shipment to be transferred to the customs forwarding

agency for Iater transpod and delivery to the impoder, UNIMED PHARM CHEM .

65. The samples taken from the drums in the December 5, 2005 shipment were

not analyzed until April 2O, 2006. On that date, the chemical expeds concluded that

the samples taken under record number 160- 03026/2005 dated December 13, 2005

were ''N-ACETYL PSEUDOEPHEDRINE'' and not, as stated, S'N-METHY-

ACETYLAMINE.'' The Customs Administration's chemical exped added that upon

treating the substance N-ACETYL PSEUDOEPHEDRINE ''with heated hydrochloric

acid, one obtains Pseudoephedrine hydrochloride, which is a chemical precursor used

for the clandestine form ulation of amphetamines'' and is controlled by the Secretary of

Health. (Exhibit D-22).66. On January 3, 2006, another shipment arrived at the Pod of Manzanillo for

UNIMED PHARM CHEM , Mexico, D.F., apparently from the same exporter ''Emerald

lmpod & Expod Company,'' with the same Hong Kong address. This shipment

entered Customs on January 6, 2006 with customs declaration number 6000041

(Exhibit 23(a)) and an ''Emerpld Impod & Expod Co.'' invoice dated November 26,

2006 (Exhibit 23(b)). The declared weight was 29,400.05 kilos with a declared value

28


SJA-48


of USD $147,000. As in the case of the shipment of December 12, 2005, the

chemical substance was describèd as t'N-Methyl-Acetilamino (Metilacrilamidal'' andthe cedification of the registered chemist, confirming the contents, was signed by

Bernardo Mercado Jimenez. (Exhibit 23 (c)). Because the shipment received the redstoplight, Customs detained it so as to inspect it and take samples. Once again, after

taking samples of the chemical substances and receiving the impod duties, based on

the stated value and the section of the Customs Law on lmpod and Expod Taxes

cited, the shipment was transferred to the Customs forwarding agency to be delivered

to UNIMED PHARM CHEM .

67. It is significant that among the documents found by the AFI in the March 17,

2007 search of ZHENLI YE GON's house was an invoice from the expoder Chifeng

Arker, Ltd. of Inner Mongolia, People's Republic of China addressed to importer

UNIMED PHARM CHEM MEXICO, with the same date as the invoice from S'Emerald

lmpod & Expod Co.'' (November 26, 2005), that accompanied the January 3, 2006

shipment. The invoice had approximately the same weight (29,406.26 kilos), the

same description of the contents of the shipment ('tN-Methy-Acetylamine''), but with adiierent stated value. Instead of stating that the value was CIUSD $147,000,'' as on

the ''Emerald lmpod & Expod Co.'' invoice, it stated that the value was USD

$1,029,219.10 (at the price of USD $35.00/ kg.), a price similar to that agreed to in the

September 2003 Chifeng Arker, Ltd.- UNIMED 'PHARM CHEM contract (Exhibits D-1 Based on this document

, the evidence that Chifeng Arker, Ltd. was23(d), D-6(a)).involved in installing the machinery in Toluca and the evidence of transfers of dollars

to Chifeng Arker, Ltd.'s accounts in China in July, August and September of 2006

(Exhibit 35(a)), which pjralleled shipments of precursor chemicals, one also mayL

1 It is clear that not only were the contents and the expoder false, but also the declared value of the shipments was false. If onecalculates the value the value of the shipments based on the price per kilo that appears on the November 26, 2005 Chifeng ArkerCo. invoice (Exhibit D-23(d)) -USD $35.00/kilo-, the value of the two shipments of December 12, 2005 and January 3, 2006should be USD $700,000 and USD $1'029,175, respectively and not USD $110,000 and USD $147,000, as declared.

29


SJA-49


conclude that, in fact, the product impoded in January 2006 was coming from expoder

Chifeng Arker, Ltd., disguised under the name ''Emerald Impod & Export Company.''

68. Once again the exped opinion regarding the sam ples from the shipment

under Customs declaration number 6000041 were delayed. The exped opinion

issued on April 20, 2006 concluded that the samples analyzed were ''N-Acetyl

Pseudoephedrine which complete chemical name is N-Acetil-D-z-Metilamino-l-Fenil-

Propan- l-ol-, a derivative of the Ephedrine group'' and not 'dN-Methyl-Acetilam ino.''

The opinion continues: d'Upon treating the sample with heated hydrochloric acid, one

obtains pseudoephedrine hydrochloride, which is a chemical precursor used in the

clandestine manufacture of amphetamines'' (Exhibit D-24). It is wodh noting that inthis same period chemist Estela Ram irez Flores, as directed by ZHENLI YE GON,

was purchasing hydrochloric acid for the plant in Toluca, and that lsrael Jesus and

Jose Luis Perez Castro in their statements described the process of mixing

hydrochloric acid and water with the raw m aterial, and heating the m ixture, as part of

the process to produce the final product - ''crystalline snow-like powder.'' (Exhibits D-

13, D-16, D-32).69. Because no samples were taken from shipments to UNIMED PHARM

CHEM from January of 2006 to July of 2006, there is no information regarding the

contents of whatever other chemical shipments ZHENLI YE GON im ported during this

period through the Pod of Manzanillo. There is also no direct evidence of when

ZHENLI YE GON was notified about the April 20, 2006 opinions from Customs in

which the experts concluded that the substances described as ltN-Methyl-Acetilamino''

in the shipments of December of 2005 and January of 2006, in fact, were N-Acetyl-

Pseudoephedrine.

70. However, there is circumstantial evidence that ZHENLI YE GON knew his

illicit activity had been detected. Chemist Estela Ramirez Flores repoded that in May


SJA-50


or June of 2006 ZHENLI YE GON accused her of telling a Customs officer named

'dlesus'' from Manzanillo that ZHENLI YE GON was bringing Sscrooked things'' through

the pod. Also ZHENLI YE GON accused her of signing a letter in which she asked

Customs in Manzanillo to check the containers belonging to UNIMED PHARM CHEM

i 8 And in June 2006, Claudia Cruz Peinado,(Exhibit D-13). (She denied everyth ng.)

for UNIMED PHARMACEUTICAL contacted Roberto Quintanilla Salazar, general

manager of Roma Vazeli Customs (Brokerage) Agency, to request customs forwardingservices at the Pod of Lazaro Cardenas for chemicals that it had previously been

importing through the Pod of Manzanillo. (Exhibit D-25(a)),71 . UNàMED PHARM CHEM had contracted with Maersk Maritime Agency, the

m aritime shipping agency, to transpod the shipping containers of chemicals ''door to

dooq'' that is, from the Iocation of the exporter in China through the depadure pod in

China to the Mexican Port at Lazaro Cardenas and from there, after passing Customs

inspection, to UNIMED PHARM CHEM in Mexico City or UNIMED

PHARMACEUTICAL in Toluca, depending on instructions from the impoder. (Exhibits

D- 25(b), D-27).72. On July 3, 2006 the first shipment arrived addressed to UNIMED PHARM

CHEM by way of the Pod of Lazaro Cardenas. That pod had not been authorized to

receive shipm ents of pseudoephedrine, ephedrine and its chemical precursors since

October 2004, COFEPRIS/SEPQ/0173/04. On July 6, 2006, using the customs

forwarding services of Roma Vazeli Customs Agency, the shipment was presented to

Customs where it received customs declaration number 6000551. (Exhibit 28(a)).73. The docum ents that accom panied the shipm ent represented that it was

invoiced on May 26, 2006 by ''Emerald Impod & Export Co.'' of Hong Kong (expoder)with destination UNIMED PHARM CHEM (impoder), in Mexico, D.F. The described

B It w@s in May 2006, that AFI had received the anonymous complaint that ZHENLI YE GON had diveded pseudoephedrine,imported illegally through the Port of Manzanillo.

31


SJA-51


contents of the shipment were 20,067 kilos net of d'Hydroxy Benzyl-N-Methyl

Acetethamine'' with a declared value of USD $100,335.50. (Exhibit 28(b). Documentsaccompanying the shipment included the cedification of chemical contents signed by

the registered chem ist for UNIMED PHARM CHEM , Bernardo Mercado Jimenez, in

which he confirmed that the chemical substance was uHidroxy Benzyl-N-Methyl-

Acetethamine. (Hidroxi Benzyl-N-Metil-Acetamidal.'' (Exhibit 28 (c)). The documents

also included a cada de encomienda y valor Ea cedification of the truth of the

documents, statement of value and appointment of a customs forwarding agency)signed by Maria Eugenia Mayorga Cano in her capacity as Iegal representative of

UNIMED (Exhibit D-28 (d)). lt also included a request for land transportation fromthe Customs pod to ''UNIMED PHARM CHEM , Mexico, Morelos 24A, Mexico, D.F.

(Exhibit 28(e)).Because the shipment received a red stoplight, Customs took sam ples from

the merchandise for purposes of chemical identification. (TEXU 7074154) After takingthe samples and without waiting for the results of the exped analysis, Customs

released the shipment to Roma Vazeli Customs Agency for delivery to UNIMED

PHARM CHEM, Mexico, D.F, The agent from Roma Vazeli Customs Agency

explained to Sonia Galicia Villar that although the shipment was addressed to

UNIMED PHARM CHEM at Morelos 24A in Mexico City, the agent received

instructions to transpod it to UNIMED at Boulevard Miguel Aleman Valdez, numero

175, Colonia San Pedro Totoltepec, Toluca. (Exhibits D-12, D-25(b)).75. Prior to October 10, 2006, when the chemical analysis by Customs expeds

regarding Customs declaration no. 6000551 was finally issued stating that the

substance sampled was N-Acetyl Pseudoephedrine and not 'dHydroxy Benzyl-N-

Methyl-Acethamine'' (Exhibits D-29(a), D-29(b)), two more shipments. of chemicalsdestined for UNIMED PHARMACEUTICAL in Toluca arrived via the Port of Lazaro


SJA-52


Cardenas (Customs declaration nos. 6000651 and 6000737). The first consisted of

788 drums weighing 25 kilos net each (19,700 kilos net), (D-30 (a)); the second of 840

drums weighing 25 kilos net (21,000 kilos net). (Exhibit D-31 (a)). ln these two cases

the seller named again was 'dEmerald lmport & Export Company'' (Exhibits D-30(b), D-

31(b)), and the chemical substance of the shipments was described as ''HydroxyBenzyl-N-Methyl-Acetethamine,'' the same description as that for the shipment of July

3, 2006 (customs declaration number 6000551). Each set of documents includedcedifications of chemical substance signed by Bernardo Mercado Jimenez, confirm ing

that the substance was 'tHydroxy Benzyl-N-Methyl-Acetethamine.'' (Exhibits D-30 (c)

and D-31(c)). Maria Eugenia Mayorga Cano signed the carla de encomienda,attesting to the truth of the value and documents and appointing the forwarding agent

for the shipment under customs declaration number 6000651. (Exhibit D-30(d)).Since these two shipments with customs declarations dated August 25 and

September 29, 2006 received d'the green light,'' they passed freely through Customs

(without samples being taken) to the Roma Vazeli Customs Agency for delivery toUNIMED PHARMACEUTICAL in Toluca, in accord with the transpodation requests.

(Exhibit D-31(e)).

Illegal m anufacturing in Toluca

76. As provided for in the September 2003 contract between UNIM ED PHARM

CHEM and Chifeng Arker, Ltd., before they depaded in May or June of 2006, some of

the Chinese were training a group of approximately fifteen Mexican employees in the

handling of the machines and manufacturing procedures. As a result, by the end of

April, the new Mexican personnel were producing the ''final product''


SJA-53


(''pseudoephedrine HCL'') in the

and D-32).Among the new employees was chemist lsrael Jesus Gonzalez Hernandez

Castro, husband of Sonia Galicia Villar, who was in charge of the warehouse of

UNIMED PHARM CHEM in Mexico City. ZHENLI YE GON hired Gonzalez

Hernandez in March 2006, immediately after personally interviewing him . Gonzalez

Hernandez went to Toluda the following day with ZHENLI YE GON, Ricardo de Ia O

(another chemist and friend of Bernardo Mercado Jimenez) and some other people.After a waîk-around and an explanation of the entire plant, he and other new

employees spent a week observing how the Chinese personnel worked. The week

following, each one of them began to try his hand in three separate procedures of the

new plant in Toluca.g(Exhibits D-6(a), D-16, D-20

production process. The third week they divided the process among three production

workshops (Workshop: One, Two and Three). (Exhibit D-16).78. Jose Luis Perez Castro, another Mexican employee interviewed and hired

by ZHENLI YE GON, came to work in April 2006. He was a friend of Israel Jesus

Gonzalez Hernandez. He worked for three weeks in W orkshop One before he was

moved to W orkshop Two. ln his sWorn witness statement, Jose Luis Perez Castro

described in detail the machinery installed in each of the workshops in the plant in

Toluca. (Exhibit D-32).79. Perez Castro noted that in W orkshop One, there were a total of 15 Iarge

steel reactors, one of which was used to store water. He also noticed that these

reactors were worked exclusively by the chemist Bernardo Mercado and by He Gion

Bu, and no one else. W hen two of the workers tried to get close to look at the work of

Bernardo Mercado and He Gion ' Bu were doing, the latter two became angry.

W orkshop One also had two steel centrifugal machines that Iooked like washingL

S As shown in Exhibit D-48, Iater samples of residue from the machinery in Toluca confirmed the presence of

pseudoephedrine HCL


SJA-54


machines, and a vedical centrifugal machine that extracted the water, Ieaving powder.

The extracted solution was referred to as the ''mother solution. There was also a

vedical centrifugal machine. A very Iarge tank approximately 3 meters high by

l.8meters diameter had a Iabel saying ''storage tank.'' (These machines were alsohandled by Bernardo Mercado and Ricardo de la O and two of the Chinese). ln a

room inside the workshop there were controls to operate the reactors and centrifuge

machines. (Exhibit D-32)8O. Perez Castro stated that there were two water tanks in W orkshop Two that

were used to create à vacuum in the reactors. There were also two storage tanks --

one to store the extracted, twice filtered ''mother solution'' and the other for filtering the

solution through activated charcoal. He observed that another tank stored water that

was sent by Bernardo Mercado Jimenez from W orkshop One. (Exhibit D-32).81. Jose Perez Castro described two centrifugal machines in W orkshop Two

and a Iarge tub with filters fudher back that served as a carbon filter. As with

W orkshop One, W orkshop Two had a control room for aII of the machines in

Workshop Two. Workshop Two also had four reactors including a small tank for tiepreparation of caustic soda. A storeroom in the same workshop was used to store the

raw material. Perez Castro's job in this workshop was to operate a metal centrifugalmachine to extract the water from the solution so that only the pure powder ('tfinal

product'') would remain. The powder was kept in 25-kilo bags and stored in the plant

warehouse until it was picked up daily by Jose Obed Olvera Salguero. (Exhibits D-16,

D-32)82. Perez Castro worked with lsrael Jesus Gonzalez Hernandez and a Mr.

''Gabriel'' in W orkshop Two. During the time that he was in W orkshop Two, he also

worked with five Chinese, among whom were Li Zhu Shue, who was a supervisor and

reviewed everything going on in that workshop', Hu Chang Yang, an electrician who


SJA-55


did everything regarding electricity and electronics,' and Chang Yin Fu, a plumber who

repaired the connections for aII the reactors. (Exhibit D-32).83. Employee Israel Jesus Gonzalez Hernandez also described in great detail

the intermediate materials and the procedures followed in the three workshops in the

plant. Every morning thidy drums, weighing approximately twenty-five kilos each and

containing a white-colored substance with a hard consistency, arrived at the plant. He

observed that in order to get the white substance out of the drum , they had to hit it

very hard with a pipe. Assistants to chem ist Ricardo de Ia 0, who was in charge of

W orkshop One, performed this act. Thereafter, they emptied the substance into a

reactor, added water and hydrochloric acid, and began to carry out process number

one, until they obtained a white powder. Personnel from Workshop Two (of which

Jesus Gonzalez Hernandez was in charge) collected the powder, using Iittle cads.They emptied the powder from the carts into a reactor to which they added water and

hydrochloric acid to reach an acidification of PH of 7.5 to 8. Once this PH was attained

they added three kilos of activated carbon and the temperature was raised from 80 to

90 degrees Centigrade. They eliminated the iron and condensed and crystallized the

resulting substance. They did this by beating the mixture with mechanical agitators for

six hours at the same time that they opened the faucet so that cooling water would

enter and Iower its temperature. Finally, they separated the Iiquid from the solid. They

were able to obtain up to six hundred kilos per day of a damp powder ''white in color,

crystalline, Iike snow,'' which they placed in double bags weighing twenty-five kilos.

(Exhibit D-16).84. They called all of the left-over liquid accumulated the ldmother solution,'' of

which they obtained approximately three hundred kilos per week, which they stored in

the same workshop. Then they placed it in a reactor where they added water to

double the amount of the solution and alkalized it with caustic soda to reach a PH of

36


SJA-56


9. They added three kilos of activated carbon to the substance, removed the iron,

filtered it through carbon, and condensed, crystallized and separated it, obtaining a

damp, white powder. These Iast two steps were carried out in W orkshop Three. After

they washed the powder with ethanol, the remaining Iiquid substance was returned to

W orkshop Two. The point was to not to waste an/hing', even if a Iiter of the solutionwere spilled, it was picked up with a vacuum, or if there were only a little, it was wiped

up with a rag that was Iater wrung out, and the liquid was put into the reactor to repeat

the first step. The process described brings to mind the obligation contained in the

contract with Chifeng Arker, Ltd. that it was going to train the personnel ''until (the

factory! can operate the process to the maximum Ievel of Arkeq that is to say .90 and.95 kg. of pseudoephedrine HCL from 1 kg. of the intermediate product.'' (Exhibit D-

6(a)).85. lsrael Jesus Gonzalez Hernandez estimated that from April until July of

2006, the amount of ''final product'' in the form of crystallized powder bagged in 25-kiIo

bags, was six hundred kilos daily. The majority of the time, at the end of the day,Gonzalez Hernandez delivered the day's production of the white powder to C'Oved''

(Jose Obed Olvera Salguero, ZHENLI YE GON's driver and a member of the ''trusted

team''), who would take it in a van marked tCUNIMED PHARMACEUTICAL.'' GonzalezHernandez stated that on two occasions, ZHENLI YE GON, himself, took four

hundred kilos in packages of 25 kilos each in his Mercedes Benz van. (Exhibit D-16).

The efforl to conceal the nature of production operations in Toluca

86. During this same period from May 2006 onward, Sonia Galicia Villar noticed

some changes in the way the com pany was run. She understood that the company

was impoding chemicals described as ''N-Metilacetalamina'' through the Port of


SJA-57


Lazaro Cardenas, but the drivers never delivered the material to the UNIMED PHARM

CHEM warehouse in Mexico City. Instead, according to the customs forwarding agent

in Lazaro Cardenas, they received directions to transpod it to UNIMED

PHARMACEUTICAL in Toluca. She knew from her husband Jesus Gonzalez

Hernandez that on three occasions after the chemicals impoded through the Pod of

Lazaro Cardenas, arrived at the plant in Toluca, the workers had operated the

machinery continuously, taking a month to finish the product. But when Galicia Villar

went over her Iist of inventoried medicines in order to see what type of new medicine

there was, she realized that no new medicine was listed, that is to say, that they had

not registered any purchase or acquisition of any medicine, which seemed odd.

(Exhibit D-12).87. Sonia Galicia Villar also observed that in May and June of 2006, ZHENLI YE

GON's driver, Jose Obed Olvera Salguero, always came to the Mexico City offices

and warehouse at about 6:00 p.m., when most of the employees had Ieft. In May, she

observed that Olvera Salguero approached the on/off switch and shut off two security

cameras, the one that was focused towards the entrance and exit door of the

warehouse and the other on the door towards the street, an act that struck her as

strange. In August 2006, at an hour when they thought that no one else was present,

she observed Obed Olvera arrive at Morelos 24A with ZHENLI YE GON and switch off

the security camera. (Exhibit D-12).88. In June of 2006, ZHENLI YE GON, apparently with the intention of isolating

his Toluca employees even more, asked engineer Blas Carlos Enriquez if he and

Rafael Mendoza Galvan could design a hotel as a residence for the employees.

Mendoza Galvan noted that during the period that his group was working on the hotel

building and on the inside details of the hotel, they had to remain in this work area.

The security personnel prohibited them from approaching the warehouse or the


SJA-58


pharmaceutical plant. (Exhibit D-20). Two of the Mexican employees repoded thesame thing. W hen they tried to get close to that pad of the area of the reactors where

chemist Bernardo Mercado and a Chinese person named He Gion Bu were working in

order to see their work, the two became angry. (Exhibits D-16, D-20, D-32).89. Other employees also noticéd difficulties in collecting information critical to

fulfilling their responsibilities, so that, in turn, the company could fulfill the Mexican

government's requirements. For example, when she began working, the chemist

Estela Ramirez Flores noticed that officials of the Ministry of Agriculture, Livestock,

Rural Development, Fishery and Alimentation (SAGARPA, from its initials in Spanish)apparently had noticed deficiencies in UNIMED PHARM CHEM'S documentation of

quality. On her first day of work, ZHENLI LE GON asked Estela Ram irez Flores how

soon she could have the required documents on quality ready for SAGARPA and

urged her to have them within a month. She responded that that would not be

possible. She noticed that UNIMED PHARM CHEM did not have the procedural

manuals required by the Mexican regulation, IiGood Manufacturing Practice,'' nor even

a file on procedures. ZHENLI YE GON told her that she should ask employee Maria

del Carmen Morales for the materials. W hen Maria del Carmen Morales gave her a

binder with only two pages, Estela Ramirez concluded that she would have to stad

from zero. (Exhibit D-13).90. W hen Estela Ramirez Flores began to review the documentation, she found

it disorganized, and even though to comply with the SAGARPA requirement she

needed access to the files, she ran into many difficulties in getting them . Maria deI

Carm en Morales did not let Estela Ramirez Flores nor the engineer Madin Lopez see

any kind of documentation, such as the customs entry numbers, which the chem ists

needed to put together the file to deliver to SAGARPA. Even when Ram irez Flores

explained to M aria deI C arm en M orales that she needed the documents, M orales


SJA-59


insisted that Ram irez Flores prepare an explanatory e-mail requesting authorization

from ZHENLI YE GON. (Exhibit D-13).91. On another occasion in May of 2006, Maria deI Carmen Morales gave Estela

Ramirez Flores a piece of paper with the name of a chemical com pound, ''N-MetiI-

Acetil-Aminoj'' written on it, in order to ask her about the applicable Customs tariff for

the product. Ramirez Flores looked up the chemical compound in 'tcetar/W in'' (a

computer program index for chemical substances) without finding it. Because she didnot find the information, she asked Maria deI Carmen Morales to give her more data

so that she could research the answer. Maria deI Carmen Morales took out a sheet of

paper from her desk, which Estela Ramirez Jimenez noticed was a cedificate of

analysis with the word ''ephedrine'' at the top and incomplete below. But at that

mom ent Morales took away the paper. Later, Estela Ramirez Jimenez told them that

she was sure that a Iicense was necessary to import this substance. Maria deI

Carm en Morales told her to ''forget it, they were not going to import it and that it was.,10 Exjjjbjt D-13).no more than a curiosity that she had. (

92. Shodly after chemist Claudia Cruz Peinado returned to work at UNIMED

PHARM CHEM, Estela Ramirez Flores observed that approximately two or three

times per month a chemist named Hortencia arrived at the offices of UNIMED PHARM

CHEM , where they worked. She would arrive accompanied by Dr. Dom inguez and Dr.

Paty Gurrola, who worked in COFEPRIS. She observed that Maria deI Carmen

Morales would talk to them ky telephone to ask for their help and advice, regardingthe documentation required for an impod permit. Generally they arrived with ZHENLI

YE GON, and went to the conference room ; no one else entered the meeting unless it

was necessaly

L1 () lj IdN-Metil-Acetil-Amino was the same chemical description used for the chemical shipments to UNIMED PHARMCHEM in December 2005 and January 2006, that expeds determined were, in fact, the regulated psychotropicsubstance N-Acetyl pseudoephedrine.

40


SJA-60


93. Estela Ramirez Flores remembered that on one occasion during a meeting

around August 2006, Hodencia arrived and told ZHENLI YE GON that she had

brought with her the list of products, so that he could choose which he wanted to

i ter first. Ram irez Flores knew that it was not proper to proceed that way, as thereg s

basic iriformation for registration was not ready. W hen Ramirez Flores comm ented to

ZHENLI YE GON that it would be preferable to wait, the chemist Hodencia

immediately responded and, referring to the requirement, stated uthat'' was not

necessary. Making a hand gesture in the form of money, she said that the matter was

solved. Ramirez Flores then cautioned ZHENLI YE GON that if he gave money one

tim e he was going to have to give it always, and that if he wanted to run his company

properly, he should not agree. ZHENLI YE GON then asked the chemist Hodencia for

the sheet of paper. Ramirez Flores realized that the chem ist Hodencia was angry

because (Ramirez Flores) had intervened Iin the matterl. (Exhibit D-13). LucianoLopez Horcasitas also attended the meeting and knew that it was improper to handle

the matter in that way. (Exhibit D-15).94. Another day, Maria Eugenia Mayorga Cano delivered invoices to Ramirez

Flores so that she could prepare the check requests. Estela Ramirez Flores noticed

that were various invoices with respect to the purchase of hydrochloric acid, caustic

soda and other solvents. Estela Ramirez Flores stated that at that moment she

doubted whether what ZHENLI YE GON had said - that those chem icals were to

calibrate the reactors in Toluca -- were true. She proceeded to ask ZHENLI YE GON if

they were still calibrating the reactors, and he answered that they were, because

there were various reactors and that they had to calibrate them one by one. (Exhibit

D-13). ZHENLI YE GON did not inform Estela Ramirez Flores that in reality the plantin Toluca had been functioning and using the machinery to make pseudoephedrine

HCL since the end of April 2006. (Exhibits D-16, D-20, D-32).


SJA-61


95. Beginning in July or August 2006, Luciano Lopez Horcasitas, who worked

for UNIMED PHARM CHEM and UNIMED PHARMACEUTICAL as an outside projectconsultant regarding the installation of machinery for making tablets, capsules and

filling Iiquids and their operation, also noticed that the plant was not being managed

properly and that he had difficulties in receiving the information necessary for him to

fulfill his responsibilities. ZHENLI YE GON told him that he was interested in his

advice regarding requirements for actively producing medicine and pharmaceuticals.

ZHENLI YE GON represented to him that although he was not yet producing

medicine, he would pay Lopez Horcasitas fifteen thousand pesos per month, a high

amount for a pre-startup period. (Exhibit D-15).96. Later ZHENLI YE GON asked Lopez Horcasitas what days he could go to

the office at Morelos 24A, to prepare the documents or procedures required for

pharmaceutical production in Toluca. Lopez Horcasitas noted that the Iaw clearly

states requirements that m ust be fulfilled, and one of those requirements is to have a

documented procedure for each stage of production. Therefore, he commented to

ZHENLI YE GON that he needed to know what procedures were going to be used out

in Toluca and what equipment he had. ZHENLI YE GON answered with a description

of the m achinery and the procedures without telling Lopez Horcasitas either what

substance was going to be produced or that ZHENLI YE GON, in fact, was already

producing it. ZHENLI YE GON showed Lopez Horcasitas a binder with the

specifications of the machinery purchased and installed in the Toluca plant, and more

that was on the way. W hen they talked over a Iist of products that ZHENLI YE GON

wanted, what struck Lopez Horcasitas' attention, as contrary to his knowledge of

regulations and experience, was how UNIMED PHARMACEUTICAL could have a

product registered if it did not yet have a Iicense to produce it. (Exhibit D-15).97. Lopez Horcasitas understood that the laboratory in Toluca was running pilot

42


SJA-62


tests during the period from approximately June to August 2006, and producing pilot

Iots of the products they planned to produce. Lopez Horcasitas Iearned this from

comments he overheard. But the people directly responsible, Ricardo de la 0, chief of

production in Toluca, and Bernardo Mercado Jimenez, the registered chemist, never

informed him what UNIMED PHARMACEUTICAL was producing. W hen Lopez

Horcasitas prepared a description of the procedures, they never signed off on those

procedures. (Exhibit D-15).98. Lopez Horcasitas noted that when they bought hydrochloric acid, caustic

soda, another organic solvent and other substances, ZHENLI YE GON told him they

were for the tests in Toluca -- the same thing he had told Estela Jimenez Flores. This

was also not in accord with Lopez Horcasitas' experience because operating the

plant, even to do pilot tests, required permits granted by the health authorities,

namely, COFEPRIS. Lopez Horcasitas never saw this perm it', therefore, he

it (Exhibit D- 15).11concluded that they did not have .

99. Just as Ramirez Flores and Lopez Horcasitas could not get the necessary

information to fulfill government requirements for pharmaceutical production, similarly

Maria del Rosario Jimenez Vargas could not obtain the necessary information to fulfill

her responsibilities as the UNIM ED accountant. Jimenez Vargas began to work in the

position of accountant on July 12, 2005, after personally interviewing with ZHENLI YE

GON and Maria Eugenia Mayorga Cano. She understood that her responsibilities as

an accountant included activities such as calculating federal and local taxes, social

security and withholding from the personnel payroll of UNIMED. Even when she

requested the information from Maria Eugenia Mayorga Cano, whom she described

as very ''imperious,'' she did not receive it. Nor did she receive cooperation from other

11 COFEPRIS has confirmed that neither UNIMED PHARM CHEM nor UNIMED PHARMACEUTICAL ever hadauthorization to manufacture pharmaceuticals. (Exhibit 5(a)

43


SJA-63


members of the ''trusted team .''

100. After receiving some files, Jimenez Vargas became aware that UNIMED

was not maintaining correct accounting controls, nor proper internal controls, nor an

accounting system for the sale and delivery of chemical materials that she knew were

being sold by the Juan Manuel De La Rosa and Jose Obed Olvera Salguero. Maria

Eugenia Mayorga Cano would only hand her the bank account statement and an

incomplete list of the deposits made by the clients so that Maria del Rosario Jimenez

Vargas could do the bank account reconciliation. Maria Eugenia Mayorga Cano

herself coordinated, separately with Olvera Salguero and De Ia Rosa, payments for

what the Iatter nam ed persons sold. W hen Maria deI Rosario Jimenez Vargas sent a

memo to Maria Eugenia Mayorga Cano requesting that accounting requirements be

satisfied and stating that Mayorga Cano had not delivered alI the documentation

requested, she began to have problems at work with Mayorga Cano. (Exhibit D-14).

The use ofcash

101. Maria del Rosario Jimenez Vargas was pad of a group of employees who

realized that ZHENLI YE GON was operating the business in Toluca using Iarge

amounts of cash in Mexican currency and United States dollars. She noted that

payments to suppliers were made in cash, in dollars. (Exhibit D-14). Sonia GaliciaVillar saw Susana Gomez pay for the purchase of chemical materials in United States

dollars. W hen Sonia Galicia Villar substituted for Susana Gomez, Galicia received

envelopes with cash in dollars that she delivered to ZHENLI YE GON. She also noted

that many of the engineers who worked in UNIMED PHARMACEUTICAL in Toluca

were paid in cash. (Exhibit D-12). Jose Luis Perez Castro confirmed that he and aII of

the personnel who worked in the laboratories were paid in cash (Exhibit D-24).


SJA-64


Documents recovered during the search of the house of ZHENLI YE GON show that

som e employees, such as Bernardo Mercado Jimenez, were receiving cash

payments. (Exhibit D-33)102. The amount of cash that ZHENLI YE GON and the UNIMED companies

were using and transferring during this period of 2006 was enormous even though the

companies UNIMED PHARM CHEM, UNIMED PHARMACEUTICAL and

CONSTRUCTORA & INMOBILIARIA did not repod any income to the Mexican tax

authorities for the periods 2004, 2005, 2006 and 2007. Nelly Odega Pena, who

worked in the Currency Exchange House Tiber, S.A. de C.V. (hereafter, tt-riber

Currency Exchange''), met ZHENLI YE GON through Maria Eugenia Mayorga Cano,who contracted the services of the currency exchange at the beginning of 2006. In

order to verify the Iocation and the business activity of their new client, Odega Pena

and her supervisor went to the oiices of UNIMED PHARMACEUTICAL in Toluca.

ZHENLI YE GON falsely explained to them that he was engaged in using raw

materials to produce aIl types of medicines for livestock, chickens, etc. and that he

needed to pay his suppliers in the United States. ZHENLI YE GON stated that for

this reason the currency exchange house was going to make transfers of dollars to a

bank account, the number for which he was going to provide. (Exhibit D-34 (a)).103. Nelly Odega Pena stated that beginning approximately three months after

the first contact, with everything arranged, the client arrived with thousands of dollars

that were received in the security vault. Thereafter, Odega Pena proceeded to record

the required information and make the transfer. Odega Pena recalled that at the

beginning ZHENLI YE GON made a transfer per week of approximately USD

$400,000. After a time these transfers increased to two times per week. She identified

her own signature on a December 19, 2006 receipt, confirming that she received USD

$980,000 from Maria Eugenia Mayorga. (Exhibit D-34 (a)).

45


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104. In August 2006, Nelly Ortega Pena received, and then faxed to ZHENLI YE

GON, an e-mail, dated August 4, 2006, that referenced ''Unimed Pharmaceutical.'' The

e-mail asked for an explanation of USD $23,808,683 in bank transfers by Tiber

Currency Exchange to individuals and other companies other than the com pany

''Bosch.'' (Exhibit D-34(b)). (Previously, Zhenli Ye Gon had explained his need totransfer dollars in order to purchase machinery from Bosch). In total, ZHENLI YE

GON transferred abroad more than USD $35,000,000 through the Tiber Currency

Exchange. The last transactions of Tiber Currency Exchange with ZHENLI YE GON

were in January 2007. (Exhibît D-34(a)).105. The transfer of United States dollars was not lim ited to the Tiber Currency

Exchange. ZHENLI YE GON also used the b & b Currency Exchange, Tamibe

Currency Exchange, Nuevo Leon Currency Exchange and various others. Using only

the receipts recovered from the searches of ZHENLI YE GON's house and office in

March 2007, the purchases and transfers of dollars and euros through currency

exchange houses in Mexico as agents for UNIMED PHARM CHEM, UNIMED

PHARMACEUTICAL, and CONSTRUCTQRA & INMOBILARIA totaled more than

USD $84,000,000 and more than Euros 6,469,000 in the period from June 2006 to

March 2007. Some of these transfers were for the benefit of European companies for

the machinery bought to make the d'crystalline powder, Iike snow.'' Other millions of

dollars were transferred to ZHENLI YE GON's own bank accounts and to the benefit

of various businesses and casinos in the United States, where ZHENLI YE GON Iost

millions of dollars. Transfers of dollars to his brother and partner Hongjun Ye in Chinafor the period July, August and Septem ber 2006, rose to USD $6,790,000*, in the same

period his companies transferred another USD $6,580,000 to the account of UNIMED

PHARM CHEM (Hong Kong) (Exhibit D-35).

106. On April 19, 2007, the Drug Enforcement Agency (''DEA''), informed the


SJA-66


PGR that in the years 2004, 2005, 2006 and 2007, ZHENLI YE GON had Iost

approximately USD $125,917,839 in the casinos of Las Vegas, Nevada. DEA noted

that ''that in many cases the money was sent to bank accounts in the United States by

means of cable transfers that originated from currency exchange houses in Mexico.

Once the money was in a bank account in the United States, a cashier's check would

'' Exhibit D-36).12be issued to the casino to collect the Iosses from the bets. (

107. lt is worth adding that Chifeng Arker, Ltd., in China, received three transfers

of dollars in the amounts of USD $630,000 (July 26, 2006)., $700,000 (August 7, 2006)

and $800,000 (September 11, 2006) during a period when UNIMEDPHARMACEUTICAL received three shipments described as 'tl-lydroxy Benyl-N-Methyl

Acetethaminej'' totaling 66.77 tons, supposedly from tdEmerald Impod & Expod Co.''

Among the receipts for transfers of dollars by currency exchange houses, there was

f f funds to this Iatter company.l3 (Exhibits D-35(b), D-not one receipt for trans ers o

' 28(b), D-30(b) and D-31(b).

October 2006: ZHENLI YE GON's knowledge of the developing crim inal

case against him and the firing of the employees Estela Ram irez Flores,

Martin Lopez Castillo, Sonia Galicia Villar, Maria deI Rosario Jimenez

Vargas, Israel Jesus Gonzalez Hernandez and Jose Luis Perez Castro

108. On October 10, 2006, the chemical exped provided his analysis of theL

12 Among the documents discovered at ZHENLI YE GON's house were many invoices that showed his use ofthousands of dollars in cash for personal items and to pay his accounts at hotel-casinos in Las Vegas. andelsewhere.

13 lf one divides the amount transferred to Chifeng Arker by the number of kilos of the substance described as

lHydroxy Benzyl N Methyl Acethaminej'' one arrives at a price per kilo very similar to the price in the contractbetween Chifeng Arker Co. and UNIMED PHARM CHEM for the sale of the ''lntermediate'' product to manufacturepseudoephedrine HCL, that is between $39 and $41 dollars per kilo.


SJA-67


sam ples of chemicals taken from the UNIMED PHARM CHEM shipment of July 7,

2006 (ccustoms declaration number 6000551). ln his repod, he stated that thesubstance was not ''Hidroxi Bencil N Acetanilida,'' as stated, but instead was N-Acetyl

Pseudoephedrine, regulated by Mexican Iaw as a psychotropic substance and as a

precursor of amphetamines. (Exhibits D-29(a), D-29(b)). By October 13, 2006,CENAPI also had received the chemical expeds' opinions regarding samples

gathered from the December 7, 2005 and January 3, 2006 shipments, Customs

declarations numbers 5252544 and 6000041, respectively. These opinions stated that

the product described as ''N-Methyl-Acetylamino,'' in fact, was N-Acetyl

Pseudoephedrine. (Exhibits 0-22 and D-24). CENAPI issued a notice entitled''Possible diversion of 'd N-Acetyl Pseudoephedrine''. (Exhibit D-37). Also in October of2006, the Mexican consulate in Hong Kong repoded that it had been informed by the

government of Hong Kong (China) that neither the corporation l'Emerald Impod &Expod Company, Ltd.'' nor its claimed domicile were registered with said government

in Hong Kong (Exhibit D-38)109. The evidence shows that at Ieast by the end of October of 2006, ZHENLI YE

GON knew that the Mexican officials had become aware that the real contents of the

shipments to UNIMED PHARM CHEM were N-Acetyl Pseudoephedrine. On

approximately October 27, 2006, ZHENLI YE GON informed various employees that

the day before he had been the victim of an d'express kidnapping'' by agents who said

that they were from the AFI. ZHENLI YE GON stated that these people had

demanded money from him and warned him that he had problems because of his

impodations through Manzanillo and that they knew that he trafficked in

pseudoephedrine. Therefore, they had an order to Iocate him. They advised him that

he should flee for at Ieast a month. ZHENLI YE GON told the gathered employees

that for this reason he was going to go to the United States. (Exhibits D-12, D-13, D-

48


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14, D-39).1 10. ZHENLI YE GON also demonstrated his awareness of his problems

stemming from his violations of the Iaws related to impoding, transpoding and

processing the precursors of methamphetamine by the actions he took against Estela

Ram irez Flores and other employees who did not belong to the ldtrusted team'' and

who were beginning to perceive that the company was not acting in conformity with

the Mexican norms and Iaws.

1 1 1 . Estela Ramirez Flores began to have more problems with ZHENLI YE GON

in October 2006, when she and Luciano Lopez Horcasitas requested general

information regarding the company in order to provide it to the Ministry of Environment

and Natural Resources (SEMARNAT, from its initials in Spanish). W hen sherequested information directly from ZHENLI YE GON, he said yes, but he never gave

them any information. ln order to speed up the process, Estela Ramirez Flores

telephoned engineer Ricardo de Ia 0, who was being trained by the Chinese in the

procedures and use of the reaqtors in Toluca. She asked for his suppod in making a

very general diagram of the procedures being used. De la O answered that he would

send it to her. Only a few minutes had gone by when ZHENLI YE GON called her by

Nextel. W hen Estela Ramirez Flores answered, he asked her why she was

requesting information. She answered that that they needed a description of the

procedures used to present to SEMARNAT. He responded to her in an angry tone

that she did not need to know the procedure that he would provide her with the

information, and therefore she never should have talked to Ricardo de Ia 0. Shodly

thereafter, on October 28, 2006, she was fired at the order of ZHENLI YE GON.

Maria Eugenia Mayorga Cano paid her $50,000 pesos as severance pay. (Exhibit D-

13)1 12. W ith regard to Sonia Galicia Villar's dismissal, she had noticed the amount

49


SJA-69


of cash they were using at UNIMED PHARM CHEM and observed in May and August

of 2006 how Jose Obed Olvera Salguero manipulated the security cameras in

UNIMED PHARM CHEM to conceal his activities and those of ZHENLI YE GON. She

also noticed that they were receiving daily telephone calls from currency exchange

houses asking for ZHENLI YE GON. Maria deI Carmen Morales told her that she

should not answer the telephone in the customary manner - ''UNIMED, good

afternoon'' - because ZHENLI YE GON did not permit this. (Exhibit D-12).1 13. Sonia Galicia Villar testified that on October 27, 2006, ZHENLI YE GON,

very serious, called her to his office and asked her what she had to do with ''Jesus in

Toluca.'' She told him that he was the father of her children. A Iittle Iater, Maria

Eugenia Mayorga Cano notified aII of the employees to go home. According to Sonia

Galicia Villar, on Friday, October 28, 2006, about 6:00 p.m ., after ZHENLI YE GON

informed them of the. d'express kidnapping'' and had Ieft for Toluca, Erik Raymundo

Campos called Sonia as she was leaving to tell her that he had orders from ZHENLI

YE GON to fire her and Estela Ramirez Flores. (Exhibit D-12)114. W ith respect to Galicia Villar's husband, Israel Jesus Gonzalez Hernandez,

on Sunday afternoon, October 30, 2006, Erik Raymundo Campos came and accused

Jesus Gonzalez Hernandez of Iying to ZHENLI YE GON by not telling him that he was

Sonia Galicia Villar's husband. Raymundo Campos brought a document with a

different name, salary and number of days worked, which Gonzalez Hernandez

refused to sign. Gonzalez Hernandez also informed Raym undo Campos that his

salary for that bi-weekly pay period had not been paid. Raymundo Campos called

ZHENLI YE GON by Nextel who answered, 'dGive it to him , ask Fu for the money.''

(Exhibit D-16).1 15. It is clear that ZHENLI YE GON did not want any investigation by Iabor

officials. After Gonzalez Hernandez stated that he was going to go to conciliation and


SJA-70


arbitfation because his firing was unjustified, Erik Raymundo Campos called him tofind out what he wanted. W hen Gonzalez Hernandez told him that he wanted to be

reinstated in the job, Campos Iaughed, said ''never'' and hung up. But a Iittle whilelater, Erik Raymundo Campos called him to say that he had talked with Tom Marks

and that they were going to give him three months' salary. (Exhibit D-16)1 16. Jose Luis Perez Castro was also fired. He understood that ZHENLI YE

GON fired him solely because he was a friend of and had been recomm ended by

Israel Jesus Gonzalez Hernandez, with whom ZHENLI YE GON was very angry

because he had not told YE GON that he was Sonia Galicia Villar's husband. (Exhibit

D-32)Regarding accountant Maria deI Rosario Jimenez Vargas, in October of

2006, she had taken note of theraccounting problems caused by the widespread use

of cash, omission of cash sales from the books and paying suppliers in United States

dollars without making a record of the transactions. According to her recollection, in

the Iast week of October they sent aII of the personnel home without giving them an

explanation. On October 26, they called her to come in on Friday, October 28. On

Friday, she traveled to Toluca with ZHENLI YE GON to pay the workers' payroll. He

explained to her that he had been the target of an ''express kidnapping'' and that was

the reason for the break. She realized from comments by Erik Raymundo Campos

and assistant accountant Analia Zetina that they had fired Estela Ramirez Flores, who

had been handling proceedings before the Ministry of HeaIth as well as the

receptionist Sonia Galicia Villar, who was responsible for impods. The following

Monday, without giving her an explanation, assistant accountant Analia Zetina

informed Maria deI Rosario Jimenez Vargas that, on the orders of Maria Eugenia

Mayorga Cano, she should turn over aII of the accounting documentation because she

was fired from her job. (Exhibit D-14).

51


SJA-71


118. Once ZHENLI YE GON had made arrangements to fire Estela Ram irez

Flores, Martin Lopez Castillo, Sonia Galicia Villar, Maria deI Rosario Jimenez Vargas,

Israel Jesus Gonzalez Hernandez and Jose Luis Perez Castro, he Ieft for the United

States. Luciano Lopez Horcasitas and Erik Raym undo Campos noted that ZHENLI

YE GON, apparently from the United States, was in daily contact with Maria DeI

Carmen Morales and Maria Eugenia Mayorga by Nextel, giving instructions to

everyone. (Exhibit D-15 and Exhibit D-39)1 19. ln the first days of November of 2006, some remaining employees,

including Luciano Lopez Horcasitas, were told that it was best that they take time off,

that the com pany would continue pay them and would call them later and tell thèm

when they could come back. (Exhibit D-15).

The November 2005 shipment (Customs declaration 6513288-6000930)through the Port of Lazaro Cardenas

120. On November 24, 2006, after the Roma Vazeli Customs Forwarding Agency

in Lazaro Cardenas had become aware that the chemical exped opinion regarding the

July 3, 2006 shipment stated that the sam ples tested turned out to be N-Acetyl

pseudoephedrine, the forwarding agency informed Customs officials for the Port of

Lazaro Cardenas that goods in container no. P0NU1424476 were pending dispatch

to UNIMED PHARMACEUTICAL under customs declaration importation number

6000930. They noted that the goods carried the identical description of the chemical

contents as that for chemicals that had entered on July 3, 2006, under customs

declaration number 6000551 . (Exhibit D-26). The customs forwarding agency's agentprepared photocopies of the docume.nts for shipments in July, August and September

2006 that had had similar descriptions and were destined for UNIMED PHARM CHEM

52


SJA-72


or UNIMED PHARMACEUTICAL through the Port de Lazaro Cardenas (customs

declarations numbers 6000551, 6000651 and 6000737). (Exhibit D-25(b)).121.After receiving this information and information from the government of Hong

Kong (China) that neither ''Emerald Impod & Expod Company'' nor the company's

domicile were registered in the registry of Hong Kong corporations (Exhibit D-38), theCentral Customs Investigation Administration instructed the Customs representative

for the Pod of Lazaro Cardenas to alert the Preventive Police so that they would take

charge of container P0NU1424478 (customs declaration number 6000930) (Exhibit

D-40 (a)) and examine the goods. The Customs Administration concluded that therewas sufficient evidence to believe that the merchandise would turn out to be illegal

pseudoephedrine (Exhibits D-27, D-40(a)).122. On Decem ber 2, 2006, the police opened the drums and took samples in

the presence of the Federal Public Prosecutor. (Exhibit D-41 (a)). The shipmentconsisted of 200 cardboard drums, declared as 6.19,797 kilos net'' of a chemical

substance described as ''Hydroxy Benzyl N-Methyl Acetethamine.'' The declared

expoder was ''Emerald lmpod & Expod Company'' of Hong Kong. (Exhibit D-4O (b)),even though the company does not qxist in Hong Kong. The documents indicated

that container P0NU1424478, already sealed by the expoder had disem barked not

from Hong Kong, as show on the invoice, but from Xiangang, China (the pod used by

shipments from the nodh interior of China), to Kwangyang Pod in Korea, and from

there to Lazaro Cardenas. (Exhibit D-26). The cedification of chemical contents wassigned by Bernardo Mercado and confirmed that the chemical substance was

''Hydroxy Benzyl N-Methyl Acetethamine.'' The carla de encomienda and declaration

of value was signed by Maria Eugenia Mayorga Cano. (Exhibits D-40 (c), D-40 (d)).The transpodation request, with a letter signed by Mayorga Cano, instructed that the

delivery address be changed from Morelos 24A in Mexico City to the address of the


SJA-73


UNIMED PHARMACEUTICAL factory at Boulevard Miguel Aleman Valdez, number

175, Colonia San Pedro Totoltepec, Toluca. (Exhibit D-40 (e), D-40(9).123. The exped chemical analysis dated December 4, 2006 regarding the

shipment concluded that the substance was ''a mixture of Acetamine N-tzlacetyloxyl-l-methyl-z-phenylethyl) N-methyl- and Ephedrine Acetate.'' The repod continued:''Ephedrine Acetate is a chemical derivative of Ephedrine, the Iatter considered a

Psychotropic by the General HeaIth Law and a Chemical Precursor by the Federal

Law for the control of Precursors, Essential Chemicals and Machines for Making

Capsules, Tablets and/or Compounds.'' (Exhibit D-41(b)).124. Although notice was delayed for internal reasons, on November 28, 2006,

the representative of Robedo Vazeli Customs Agency notified impoder UNIMED

PHARMACEUTICAL of the results of the chemical exped's analysis regarding the July

2006 cargo entering Lazaro Cardenas under customs declaration num ber

60000551. (Exhibit D-26). After receiving a copy of the December 4, 2006 expertchemical opinion, stating that the chemical substance of the samples taken from the

new shipment with customs declaration number 6000930 were a m ixture of

''Acetamida N-tztacetyloxyl-l-methyl-z-phenylethyl) N-methyl- and EphedrineAcetate,'' the customs forwarding agency notified UNIMED PHARMACEUTICAL of

these results also. The customs forwarding agency waited until December 9, 2006,

for their client, UNIMED PHARMACEUTICAL, to give it an explanation for the

discrepancies between the documents and the contents of the cargo. W hen there

was no explanation fodhcoming, on December 9, 2006 the customs forwarding

agency proceeded to withdraw the request for impodation, number 6000930. (Exhibit

D-25(b)).125. Attorney Erik Raymundo Campos, who worked for ZHENLI YE GON,

remembered that a newspaper adicle appeared saying there had been a seizure in

54


SJA-74


Lazaro Cardenas of a container of almost 20 tons of ephedrine, destined for UNIM ED

PHARMACEUTICAL. The next day, engineer Susana Gomez picked up the

documentation related to this shipment and entered ZHENLI YE GON-s office. Later,

chemist Bernardo Mercado Jiinenez reassured various employees that the shipment

did not belong to the company and that they should continue working. (Exhibit D-39).126. Luciano Lopez Horcasitas stated that from November of 2006 until the

beginning of January of 2007, he and others were not working even though UNIMED

PHARM CHEM continued to pay them bi-weekly. In the month of January he was told

that the problem had ended and that he could return to work. He noticed in January

that Claudia Cruz Peinado, Maria Eugenia Mayorga, Jose Obed Olvera Salguero and

the attorney Erik Raym undo Campos were working, and that ZHENLI YE GON

continued to give everyone instructions by means of Nextel. (Exhibit D-15).127. Even though Bernardo Mercado Jimenez told employees that the detained

shipment did not belong to UNIMED PHARMACEUTICAL, in January 2007, attorney

Erik Raymundo Campos mentioned the idea of going to the Pod of Lazaro Cardenas

in order to investigate. He said he was worried by the newspaper adicles that the

company UNIMED had impoded pseudoephedrine illegally. A shod time Iater, he

received a call from engineer Susana Gomez saying the following: dlYou're a real fool,

or you have a lot of money to fix this matter, because l have already fixed it with the

Iawyers, and if you want to keep your Iife and Iiberty, keep behind the Iine,'' and

abruptly hung up the telephone. (Exhibit D-39).128. It should be noted that among documents the AFl agents found at ZHENLI

YE GON's house, when it was searched in March 2007, was a handwritten note to

ZHENLI YE GON that appeared to make reference to the seizure of cargo on

December 6, 2006 and the same ''arrangement'' regarding the seizure to which

Susana Gomez made reference in her telephone conversation with Erik Raym undo


SJA-75


CampOS'.

''ATTENTION ZHENLI ***

t$Mr. Zhenli. I hope that you are well; given that right after they detained

the flour, my friends and I had some problems for which we had to spend

the three books that you gave us', now I am fine and I have a contact in

Customs. Call me to work. Cell phone number 044-55-29-575116

*** RespecWully, FRIENDS '' (Exhibit D-43(a)).129. Despite what had been said to Lopez Horcasitas by Bernardo Mercado,

''the problem'' for UNIMED PHARM CHEM and UNIMED PHARMACEUTICAL had not

disappeared. In reality, during the months of January, February and March of 2007,

progress was being made in the investigation. The Public Prosecutor from SIEDO and

the AFI agents were gathering relevant documents and other evidence. During the

same period, AFI agents were conducting surveillance at UNIMED PHARM CHEM at

Morelos 24A, Mexico City, UNIMED PHARMACEUTICAL in Toluca and ZHENLI YE

GON's house in Lomas de Chapultepec Mexico City, and the Public Prosecutor was

preparing search warrant requests for those propedies and others.

130. On March 11, 2007, the AFI agents received a copy of a notice from the

investigative office of the Customs Agency informing them of the Februafy 27, 2007

arrival of a shipment carrying five tablet-making machines from Germany destined for

UNIMED PHARMACEUTICAL in Toluca. Because the machines were already en

route to Toluca, the agents set up surveillance there. After establishing that the

machines already had arrived at Toluca, the AFI agents went to UNIMED PHARM

CHEM , at Morelos 24A in Mexico City to investigate further. There they observed a

black Suburban carrying armed occupants that they had observed the previous day

and had followed. This time they observed four armed guards in the Suburban

accom panying a Mercedes Benz registered to ZHENLI YE GON. A man whose

56


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physical features matched a photograph of ZHENLI YE GON from the investigation

emerged from the Mercedes Benz and entered UNIMED PHARM CHEM. W hen the

man left UNIMED PHARM CHEM approximately 20 minutes later, he was carrying a

black briefcase in each hand. AII of the individuals entered their vehicles, and the

Mercedes Benz, followed by the Suburban, proceeded to ZHENLI YE GON's house at

Colonia Lomas de Chapultepec, where the Mercedes

entered through the gate Ieaving the armed men guarding the house. (Exhibit D-44).On March 14, 2007, the Eleventh District Judge for Federal Criminal

Proceedings in the Federal District issued search warrants, among which were for the

following propedies:

a. , Colonia Lomas de Chapultepec, Mexico,

D.F. (the house of ZHENLI YE GON and his wifel',

b. Calle Morelos, Number 24 and 24A, Colonia Centro, Mexico D.F. (thedomicile of UNIMED PHARM CHEM S.A. de C.V.).

132. On that same day, the First District Judge for Federal Criminal Proceedings

in the State of Mexico authorized the search of the real propedy Iocated on Boulevard

Miguel Aleman Valdez, number 175, Colonia San Pedro Totoltepec, Toluca, State of

Mexico (the address of UNIMED PHARMACEUTICAL S.A. de C.V.).133. On March 15, 2007 and the following days, the Public Prosecutor and

agents assisting him executed the search warrants and detained several of UNIM ED

PHARM CHEM and UNIMED PHARMACEUTICAL'S employees and ZHENLI YE

GON's wife, Tomoiyi Marx Yu.

134. During the searches of ZHENLI YE GON's house on

, Colonia Lomas de Chapultepec, the Public Prosecutor and AFl agents

found a concealed room that one entered through ZHENLI YE GON's bedroom .

There, among other things, they found cash that totaled $205,564,763.00 United

57


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States dollars, 201,460 Euros, $17,306,520 Mexican pesos, $113,260 Hong Kong

dollars, and $180 Canadian dollars. They also found counterfeit United States dollars

in the amount of $5,300, other damaged bills totaling $15,200, and American Express

traveler's checks amounting to $20,000 United States dollars. (Exhibit D-45(a)).ZHENLI YE GON's wife stated that this room was hermetically sealed and that only

ZHENLI YE GON had the key. (Exhibit D-8). They also found the previouslydescribed note received by ZHENLI YE GON from d'friends'' informing him of the

seizure of the December 3, 2006 shipment (referred to as l'flour'') and of the paymentof ''3 books'' that ZHENLI YE GON had given them in order to settle the matter.

(Exhibits D-43(a), D-43(b)).

135. Officials also Iocated a quantity of jewelry (Exhibit D-45(b)), severalMercedes Benz cars and other luxury vehicles, documents showing ZHENLI YE

GON's various bank accounts, his purchases and other information regarding his

finances and losses in the casinos of Las Vegas, personal documents, travel and

im migration documents, and documents from Chifeng Arker, Ltd., including the

September 24, 2003 contract to provide technical assistance in the manufacture of

Pseudoephedrine HCL from the ''intermediate product''. (Exhibit D-6(a)), and a copy ofa Chifeng Arker invoice dated November 26, 2005 for 29,406.26 kilos of ''N-Methy-

Acetilam ino,'' and cedifications of chemical contents for packages of chemicals, for a

shipment from Chifeng Arker, Ltd. to UNIMED PHARM CHEM. (Exhibits D-23(d), D-

23(e), D-23(9).136. In the house, the Public Prosecutor and AFl agents also found a collection

of firearms and cadridges, including a 9mm. (9X19 mm) Heckler & Koch pistol, model

P7M13, serial number 73063., a Luger 9 mm Intratec pistol (9X19), model TEC-DC9,serial number D012785*, a Heckler & Koch .45 automatic pistol, model UPS Tactical,

serial number 25-140657', and a Norinco AK-47 rifle, 7.62X39 caliber, model MAK 90,

58


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serial number 37011250, (Exhibits D-46(a), D-46(b)). The firearms expedsdetermined that aII of these arms were for the exclusive use of the Army, Navy and Air

Force, and ZHENLI YE GON had no right to possess them. (Exhibit D-46(c)).137. ln the search of the UNIMED PHARM CHEM offices at Morelos 24-24A,

Mexico City, in a file cabinet in ZHENLI YE GON's private office, the Public Prosecutor

and AFl agents found a 9 mm (9X19mm) Pietro Beretta Parabellum pistol model 92

FS, with obliterated serial number, with two ammunition cadridges, (Exhibit D-47(a)).The experts determ ined that this firearm was for the exclusive use of the Army, Navy

and Air Force, and ZHENLI YE GON therefore had no right to possess them. (ExhibitD-47(b)). They also found the earlier described documents showing the transfer ofm illions of United States dollars and hundreds of thousands of Euros in cash through

Mexican currency exchange houses, to bank accounts belonging to ZHENLI YE GON,

foreign gam bling houses, associates and companies involved with him in the illegal

importation of pseudoephedrine and ephedrine, and to companies abroad from which

he purchased manufacturing equipment for Toluca. (Exhibit D- 35(a)). Officials alsofound 12 plastic bags containing a white powder which, when tested, turned out to be

pseudoephedrine hydrochloride. (Exhibit D-47(c))138. During a search of the UNIMED PHARMACEUTICAL plant in Toluca, under

the supervision of the Public Prosecutor, the AFI agents and expeds took samples

from various machines, tanks, barrels and bags in the three workshops described by

lsrael Jesus Gonzalez Hernandez and Jose Luis Perez Castro, who had worked there

manufacturing 60O kilos daily of ''white crystalline powdec'' In the samples analyzed,

chemical experts identified the presence of Ephedrine, Pseudoephedrine and

Ephedrine Acetate, as well as Methamphetamine Acetate, which are substances

defined as Psychotropics by the General Health Law. In addition, the first three

substances are considered to be essential chem ical precursors of methamphetamine

59


SJA-79


under the Federal Law to Control Chemical Precursors, Essential Chemical Products

and Machines to Manufacture Tablets, Capsules and/or Chemical Compounds. From

other samples taken in the installations of UNIMED PHARMACEUTICAL, expeds also

identified hydrochloric acid, charcoal and Sulfuric Acid. The first and last substances

are considered to be an Essential Chem icals under the Federal Law to Control

Chem ical Precursors, Essential Chemical Products and Machines to Manufacture

Tablets, Capsules and/or Chemical Compounds. (Exhibit D-48).139. These results demonstrate conclusively that ZHENLI YE GON and the

''trusted team'' which he directed and controlled were repeatedly impoding

transpoding, processing, manufacturing, diveding and selling these controlled

psychotropic substances and diveding essential chemicals, including sulfuric acid, in

violation of the criminal laws of Mexico. They were also dealing with enormous

amounts of cash, money that a Iegitimate business would not have sent by money

exchanges or used for gambling in the United States.

REVIEW OF THE EVIDENCE THAT ESTABLISHES THE ELEMENTS OF THE

CRIMES W ITH W HICH ZHENI YE GON IS CHARGED

140. The evidence described in the previous section establishes aII of the

elements of aII the crimes with which ZHENLI YE GON is charged. (The elements of

the crimes are detailed at paragraph 19, above). Briefly reviewing the evidence as itrelates to those elements:

a. Organized Crime:

Narcotics crim es. In September 2003, UNIMED PHARM

CHEM through ZHENLI YE GON . and Bernardo Mercado

60


SJA-80


contracted with Chifeng Arker, Ltd. to establish a plant to

produce pseudoephedrine hydrochloride from the precursor N-

Acetyl pseudoephedrine and to purchase and impod at Ieast

fifty tons per year of that precursor to Mexico. (Exhibit D-6(a)).Both pseudoephedrine hydrochloride and its precursor, N-

Acetyl pseudoephedrines are classified as psychotropic

controlled substances and narcotics under Mexican law, and

may not be impoded or produced without authority from the

Ministry of HeaIth.

ii. Despite the fact that UNIMED PHARM CHEM was prohibited

from impoding these psychotropic substances after July 1,

2005, and that it never had authority to manufacture

psychotropic substances, ZHENLI YE GON went forward

with his illegal plans to repeatedly impod, transpod, and

produce psychotropic substances, including

Pseudoephedrine, Pseudoephedrine hydrochloride and

ephedrine, at his unlicensed factory in Toluca, State of

Mexico. (Exhibits D-5(a), D-9(a), D-9(b), D-12, D-13, D-14,

D-15, D-16, D-19, D-20, D-32).To carry on this illegal business, ZHENLI YE GON

continuously worked together with more than three other

people. Those included: chemist Bernardo Mercado

Jimenez, w ho padicipated in the m anufacturing of

psychotropic substances and falsely cedified the nature of

impoded chemicals', Maria Eugenia Mayorga Cano,

GON's sister-in-law, who was in charge of credit and finance


SJA-81


and had power of attorney in ZHENLI YE GON's absence',

the receptionist Maria deI Carmen Morales who was

responsible for maintaining the files of the company',

engineer Susana Gomez who was a confidante to ZHENLI

YE GON and acted as a facilitator when the company had

problems with the Customs Service; and chemist Claudia

Cruz Peinado who was a contact person arranging for illicit

shipments of N-Acetyl Pseudoephedrine through the Port of

Lazaro Cardenas that were disguised by using false

paperwork as to content, expoder, value and applicable

customs regulation. (Exhibits D-12, D-13, D-14, D-15, D-16,D-19, D-20, D-21, D-22, D-23, D-24, D-25, D-28, D-29, D-32,

D-4O) .iv. ZHENLI YE GON was also associated in the illegal business

with Tom Marks who helped him with the construction of the

illegal factory and Fu Huaxin, who directed the installation of

the machinery and the operation of the plant for unlicensed

production of pseudoephedrine HCL from precursor

chemicals. The criminal group also included Jose Obed

Olvera Salguero, who assisted ZHENLI YE GON by picking

up daily 600 kilos of the newly produced crystalline white

powder d'Iike snow'' and by distributing it to some buyers, with

the assistance of Juan Manuel de Ia Rosa. Instead of Iisting

the ''new product'' in the company's inventory or the sales in

the company's accounting books, Olvera Salguero y de Ia

Rosa provided sales information to Maria Eugenia Mayorga


SJA-82


Cano so that she could maintain separate records of the

proceeds of the illicit business. Exhibits D- 12, D-14, D-16,

D-20, D-32).W ith regard to the element in Article 4, paragraph 1, sub-

paragraph (a) of the Law Against Organized Crime, ZHENLIYE GON acted as an administrator, director and supervisor

and demonstrated his absolute control. He personally

signed impod documents concealing the illegal contents of

the shipments. He chose the employees, and controlled

information given to employees who were not members ofe

'

L 'his 'trusted group.'' He decided who would be fired and

when, and when he was outside the countly he maintained

constant contact with Susana Gomez, Maria Eugenia

Mayorga Cano, Claudia Cruz Pained, Maria del Carmen

Morales, Bernardo Mercado and Tom Marks via Nextel in

order to be in charge of evel'y aspect of the impodation of N-

Acetyl pseudoephedrine and the production of

pseudoephedrine HCL and to keep himself informed of any

problems with Customs. (Exhibits D-12, D-13, D-14, D-15, D-

39).vi. Offenses involving the use of proceeds of unlawful

activity Imoney Iaunderingl. ZHENLI YE GON alsorepeatedly violated Mexican Iaws relating to the use of and

concealment of unlawfully obtained proceeds, in which crime

Susana Gomez, Maria Eugenia Mayorga Cano and Maria deI

Carmen Morales aided him . They paid some of the


SJA-83


employees and suppliers with dollars obtained through illicit

sales of chemicals and assisted in the transfer of millions of

dollars in illicit proceeds through Mexican currency exchange

houses to bank accounts of ZHENLI YE GON, Chifeng Arker,

Ltd companies that sold him the' machines to illegally produce

the prohibited psychotropic substances and those of his

business associates in China. (Exhtbits D-12, D-14, D-33, D-

34(a), D-35(a)).vii. W ith respect to the currency exchange houses, which were

required to report to the government concerning Iarge

transfers of currency abroad, ZHENLI YE GON provided

deceptive explanations. For example, he explained to Tiber

Currency Exchange that the company was 'ddedicated to

producing raw materials for making medicines for cattle,

chickens, etc''. and that it was necessary to pay his suppliers

in dollars, when in fact the transfers were made to advance his

production of pseudoephedrine HCL, to pay his personal debts

and to fill his foreign bank accounts. (Exhibits D-34(a), D-

34(b)).viii. W ith regard to his millions of dollars of proceeds of unlawful

activity, ZHENLI YE GON also Iost more than $100 million

dollars in Las Vegas casinos and maintained a cash hoard,

which by March 2007 had reached more than USD $205

m illion dollars, always ready for his use in his business or for

his pleasure. He hid this cash hoard in his house in a Iocked,

concealed room to which only he had the key. (Exhibits D-8,

64


SJA-84


D-36, D-45(a)).In sum , ZHENLI YE GON was part of a group of three or more

persons that was permanently organized to repeatedly commit

violations of the General Health Law and Iaws against the use and

concealment of proceeds from illegal activity. ln a1l of this activity,

ZHENLI YE GON acted as an administrator, director and supervisor.

b. Narcotics crimes Illegal introduction of controlled

psychotropic subslnces into IMexico).The evidence from COFEPRIS is clear that after 2004,

ZHENLI YE GON never made a request nor was he granted

permission to im pod ephedrine or pseudoephedrine or the

derivatives or precursors of those substances. (Exhibit 9(b)).From July 1, 2005, UNIMED PHARM CHEM was off the Iist

of the companies that Iegally could import these substances.

(Exhibit D-9(a)).ii. There is no doubt that ZHENLI YE GON and his registered

chemist knew of this prohibition because, during an audit by

COFEPRIS of UNIMED PHARM CHEM'S warehouse in

March 2006, Bernardo Mercado acknowledged receiving

notice of the prohibition from COFEPRIS in August 2005.

(Exhibits D-9(c), D-13). Therefore, from at Ieast August 2005onward, ZHENLI YE GON and his ''trusted team''

(padicularly Bernardo Mercado, Maria Eugenia MayorgaCano and Claudia Cruz Peinado) disguised the repeatedimpodations of N-Acetyl Pseudoephedrine with incomplete

chemical designations (''N-MethyI Acetamine'' and ''Hydroxi

a <


SJA-85


Bencil N-Methyl Acetamine''). They falsely used the name''Emerald lmpod & Expod Company'' as expoder, and

provided a false value, false cedification of chemical

contents and an inapplicable customs tariff to Customs

osicials.

iii. W hen they realized that the Customs officials in Manzanillo

knew that they were impoding N-Acetyl pseudoephedrine

through that pod, they changed their customs forwarding

agency so that they could impod through the Pod of Lazaro

Cardenas, which was not authorized to receive shipments of

psychotropic substances after October 2004. (Exhibits D-

9(b), D-26). And after receiving notice in November 2006that expeds had determined that the July 2006 shipment was

N-Acetyl pseudoephedrine and in early December 2006, that

the Customs Service had seized a cargo destined to

UNIMED PHARMACEUTICAL of 19,797 kilos net that was

tested and turned out to be a mixture containing Ephedrine

Acetate and not ''Hydroxi-Bencil N-Methy! Acethamine,'' as

declared, UNIMED PHARMACEUTICAL abandoned the

valuable shipment rather than providing an explanation to

the Customs officials.

iv. Of the total number of shipments destined to UNIMED

PHARM CHEM UNIMED PHARMACEUTICAL and

purpoding to be ''Hydroxi-Benzyl N-Methyl Acethamine,''

samples were taken from four. Of the four, the Customs and

AFl expeds concluded in every case that the chemical

66


SJA-86


substances were psychotropic substances (N-acetyl

pseudoephedrine or Ephedrine Acetate) and precursors ofmethamphetam ine, aII controlled by the Secretary of HeaIth.

lmportation of b0th these substances was prohibited without

the express and individual permission of COFEPRIS.

(Exhibits D-22, D-24, D-29, D-41(b)).After July 1, 2005, neither ZHENLI YE GON, nor UNIMED

PHARM CHEM, nor UNIMED PHARMACEUTICAL had

perm ission from the Secretary of HeaIth to import

psychotropic substances (including pseudoephedrine,

ephedrine, their precursors, derivatives or salts) nor any

precursor of methamphetamine. (Exhibit D-9(a), D-9(b)).c. Narcotics offenses - Illegal transpoe tion of controlled

psychotropic subslnces within IMexico)As explained by the representatives of the Maersk Line,

which transpoded the cargos of N-Acetyl Pseudoephedrine

and N-Acetyl Ephedrine from China to the Pod of Lazaro

Cardenas, the contract of UNIMED PHARM CHEM with the

maritime agency was ''door to dooq'' that is, representatives

of Maersk Line received the containers filled and sealed from

the expoder in China and arranged the transpodation to

deliver the sealed container to UNIMED PHARM CHEM at

Calle 24-242 en Mexico City. (Exhibit 26).On some occasions after April 2006, with explicit directions

from Maria Eugenia Mayorga Cano or Claudia Cruz Peinado,

the customs forwarding agency changed the destination of


SJA-87


the shipments to the UNIMED PHARMACEUTICAL plant in

Toluca. (Exhibits D-12, D-25(b), D-31(e), D-40(e), D-40(f)).iii. Every day, 75 bags of 25 kilos each of intermediate hard

white substance was arriving by ground transpod at the

UNIMED PHARMACEUTICAL plant in Toluca where, after

pulverizing it, mixing it with water, adding hydrochloric acid,

heating it, filtering it through charcoal and extracting the

water, using the machinery in the workshops, the workers

were producing 6O0 kilos daily of a white crystalline snow-

like powder. (Exhibits D-16, D-32). At the end of th: day,Jose Obed Olvera Salguero or, at times, ZHENLI YE GON

himself, transpoded the packages of the final product from

the factory in company vehicles or in ZHENLI YE GON's

Mercedes Benz van. (Exhibit D-16)iv. After taking samples of residue from the machiney

packages and bags in the factory's three workshops during

the search of the factory on March 15, 2007 and the days

following, the expeds examined the residue and found

pseudoephedrine, ephedrine, pseudoephedrine

hydrochloride (pseudoephedrine HCL), which are alIpsychotropic substances covered underArticle 193, pursuant

to Article 245, Group III of the General HeaIth Law. (Exhibit

D-48., Appendix B).Neither ZHENLI YE GON nor UNIMED PHARM CHEM nor

UNIMED PHARMACEUTICAL had permission of the

Secretary of HeaIth to transpod these psychotropic

68


SJA-88


substances or precursors of methamphetamine in Mexico.

(Exhibit 9(b)).d. Narcotics offense lllegal production of psychotropic

subsl nces and precursors of metham phel m ine

The earlier described evidence establishes that ZHENLI YE

GON deliberately intended to illegally produce the

psychotropic substances pseudoephedrine, ephedrine,

pseudoephedrine hydrochloride and methamphetam ine

hydrochloride. Those proofs begin with the September 24,

2003 contract between UNIMED PHARM CHEM and

Chifeng Arker, Ltd., which had as its specific purpose the

manufacture of the pseudoephedrine hydrochloride, from

the ''intermediate'' (precursor), N-Acetyl Pseudoephedrine,which was also classified as a regulated psychotropic

substance by Mexican Iaw. (Exhibit D-6(a)). ZHENLI YEGON pursued the plan after COFEPRIS eliminated UNIMED

PHARM CHEM from the list of impoders authorized to impod

psychotropic substances including derivatives and

precursors. (Exhibit D-9(a)). He never obtained permissionfrom the Secretary of HeaIth to produce psychotropic

substances (Exhibit D-9(b)).ii. From at Ieast December 2005, ZHENLI YE GON, with his

criminal confederates, continued impoding the prohibited

chemicals to use in the new plant under construction in

Toluca. He signed Ietters falsely certifying the truth of his

customs documents (cartas de encomienda) and provided

69


SJA-89


false certifications of chemical contents. He used a false

name as the exporter and an incorrect customs tariff num ber.

(Exhibits D-21(a), (b) and (d), D-23(a) y (b), D-28(a) y (b), D-

3O(b), D-31(b)).iii. W ith the help of his accomplices, ZHENLI YE GON arranged

for the delivery of precursor materials to the factory in

Toluca. In accord with the 2003 contract with Chifeng Arker,

Ltd., from approximately March 2006, a group of Chinese

employees were manufacturing psychotropic substances

with the machinery impoded and installed by Chinese

technicians for this purpose. By early April, the Chinese

were also training Mexican employees Iike Israel Jesus

Gonzalez Hernandez and Juan Luis Perez Castro on how to

manufacture the llwhite crystalline snow-like powder'' until

they were producing six hundred kilos per day of the powder.

These two witnesses described the manufacturing process in

detail (Exhibits D-16, D-32).iv. ZHENLI YE GON's chauffeur Jose Obed Olvera Salguero,

and occasionally ZHENLI YE GON himself, came to collect

the finished product at the end of the day, when most

employees were not present. They did not register the new

product in the inventory of products of UNIMED

PHARMACEUTICAL or UNIMED PHARM CHEM. They also

did not include the sales income in the accounting records

even though the amount of currency received, hidden and

transferred abroad was growing to an amount in the


SJA-90


hundreds of millions of dollars. (Exhibits D-12, D-35(a).Upon inspecting the machinery in the three workshops of the

Toluca factory, expeds concluded that it was appropriate to

use for the production of illegal psychotropic substances.

(Exhibit D-49).vi. Expeds also examined the liquids and the chem ical residue

on the machinery found in the three workshops of the plant

in Toluca and determined that a large number of the samples

contained psychotropic substances including

Pseudoephedrine, Ephedrine, and Pseudoephedrine

hydrochloride and hydrochloride of methamphetamine, a

precursor of methamphetamine. (Exhibit 48).The productionof aII these substances without the permission of the

Secretary of HeaIth (permission which ZHENLI YE GON

never obtained) was prohibited.vii. Because he knew that Estela Ramirez Flores and Luciano

Lopez Horcasitas knew that the business Iacked permission

from COFEPRIS to produce these pharmaceuticals, ZHENLI

YE GON misled the two employees. At the end of July 2006,

he told Lopez Horcasitas that he was going to pay him a

good salary even though the plant was not yet functioning,

which was not true. In response to a direct question from

Estela Ramirez Flores concerning the large amounts of

hydrochloric acid and of caustic soda that they were using,

ZHENLI YE GON Iied to her, saying that they were using

them to calibrate the machinery in Toluca. (Exhibits D-13, D-


SJA-91


15). In reality, the workers in the factory had been usingthese essential materials to produce pseudoephedrine HCL

since April of that year. (Exhibits D-16, D-32, D-48).e. Narcotics offenses. Possession with intent to produce

psychotropic subsl nces.

i. The evidence set fodh in the preceding sub-paragraphs

establishes aII of the elements of this crime.

Narcotics offenses. Diversion of essential chemicals (Sulfuric

acid) to produc: narcotics.i. Pursuant to Adicle 4 of the Federal Law for the Control of

Chemical Precursors, Essential Chemicals and Machinery

for Producing Capsules, Tablets and/or Compounds, Adicle

245, Gfoups ll, IIl and lV, sulfuric acid is classified as an

''essential chemical'' to produce narcotics, specifically

metham phetam ine.

ii. The exped analysis of samples taken from thè machinery in

the three workshops at UNIVERSAL PHARMACEUTICAL in

Toluca establishes that ZHENLI YE GON was manufacturing

pseudoephedrine hydrochloride and ephedrine hydrochloride

there. Both are precursors of metham phetam ine. The

Public Prosecutor also found a quantity of the essential

chemical sulfuric acid in W orkshop Two. The expeds

confirmed that it was sulfuric acid. (Exhibit 48, sample 40).g. Violations of the Federal Law on Firearms and Explosives:

Possession of firearms intended for the exclusive use of the

Army, Navy and Air Force.


SJA-92


i. In the search of ZHENLI YE GON's personal residence in

Lomas de Chapultepec, Mexico City, the AFI agents

recovered various firearms in areas accessible to ZHENLI

YE GON, including in his private bedroom and a sealed

room which is entered through the bedroom . These

weapons included a 9mm. (9X19 mm) Heckler & Koch pistol,model P7M 13, serial number 73063', a Luger 9 mm Intratec

pistol (9X19mm), model TEC-DC9, serial number D012785.,a Heckler & Koch .45 automatic pistol , model UPS Tactical,

serial number 25-140657*, and a Norinco AK-47 rifle,

7.62X39 mm. caliber, model MAK 9O, serial number

37011250. (Exhibit D-46(a)).ln the search of a file cabinet in ZHENLI YE GON's private

office at UNIMED PHARM CHEM , Morelos 24-24A , Mexico

City, the Public Prosecutor found another firearm -- a 9 mm

(9X19mm) Pietro Beretta Parabellum pistol, model 92 FS,with obliterated serial number, with two ammunition clips.

(Exhibit D-47(a), D-47(b)). Also at this Iocation agents foundbags which were found to contain pseudoephedrine

hydrochloride. (Exhibit D-47(c)).Because the weapons were found in ZHENLI YE GON's

personal residence and in a file cabinet in his private o'ice of

his business, there is a basis to conclude that ZHENLI YE

GON had the weapons under his personal control, and that

they were used to facilitate his crim inal activities such as the

illicit production and sale of pseudoephedrine hydrochloride


SJA-93


made from illicitly im poded psychotropic substances.

iv. In their repods, the firearms expeds concluded that every

one of the firearms from ZHENLI YE GON's house and office

were classified for the exclusive use of the Army, Navy and

Air Force, and that ZHENLI YE GON never had permission

to possess these firearms. (Exhibits D-46(b), D-47(b)).h. Transactions with proceeds of unlawful activity -- Money

Laundering.

Based on the results of the searches of ZHENLI YE GON's

office and residence and the exped accountants' repods with

regard to his various companies -- UNIMED PHARM CHEM,

CONSTRUCTORA & INMOBILIARIA, UNIMED

PHARMACEUTICAL, UNIVERSAL TRANSPORTATION and

UNIMED NUTRITION --, the value of jewels, cars and otherbelongings purchased by ZHENLI YE GON and the amount

of his Iosses in Las Vegas casinos, one can see that from

the end of 2003 onward ZHENLI YE GON's monetary

resources were growing impressively. W itness statements

confirm that after ZHENLI YE GON began to impod huge

quantities of ephedrine and pseudoephedrine to Mexico in

2003 and 2004, ZHENLI YE GON and his wife were living

extravagantly. . (Exhibits D-3, D-4, D-17(a) D-17(b) D-17(c),

D-18, D-35, D-45(c), D-45(d)). li3 2004, ZHENLI YE GON

Iost USD $22,832,338 in the casinos in Las Vegas. (Exhibit

D-36).ii. These extravagances increased even more after ZHENLI


SJA-94


YE GON began to illegally impod tons of N-Acetyl

pseudoephedrine in December 2005 and thereafter, and the

factory in Toluca began to process this 'dintermediate''

product to produce 600 kilos daily of a dtfinal product'' that the

evidence shows was Pseudoephedrine Hydrochloride

(Pseudoephedrine HCL), as promised in his September2003 contract with Chifeng Arker, Ltd. From this conduct

and by his efforts to mislead, cover up and hide the proceeds

from this period, one may conclude that these available

proceeds were the illicit proceeds of his sale of

Pseudoephedrine HCL from the factory in Toluca. (Exhibits

D-12, D-15, D-16, D-19, D-22, D-24, D-29(a, D-29(b), D-32,D-34(a), D-39).

iii. From 2006 to the middle of 2007, ZHENLI YE GON Iost

more than USD $77,000,000 in the Las Vegas casinos while

he still had millions in his own accounts and the bank

accounts of UNIMED PHARM CHEM (Hong Kong) andmore than USD $205,000,000 in currency hidden in his

residence in Mexico. (Exhibits D-35, D-36, D-45(a)).In the middle of 2006, at the same time that ZHENLI YE

GON was Iosing m illions of dollars, he was transferring other

millions of dollars to his own bank accounts abroad, to the

accounts of his business associates in China, to the sellers

of the machinery and equipment for m anufacturing

pseudoephedrine HCL in Toluca, and to Chifeng Arker, Ltd.

for the ''intermediate'' Eproduct) (N-Acetyl pseudoephedrine),


SJA-95


that he was conveding to pseudoephedrine, ephedrine and

pseudoephedrine hydrochloride. (Exhibits D-35, D-36, D-

45(a)).lt is clear from the evidence that ZHENLI YE GON was using

the proceeds of sales of illegally produced psychotropic

substances to advance his illegal business, while concealing

the origin and use of the funds. He used false invoices and

cedifications chemical contents to import N-Acetyl

pseudoephedrine purchased from Chifeng Arker, Ltd. His

confederates in crime did not record the illicitly impoded

chemicals, nor the illicitly produced pseudoephedrine HCL in

the inventory of the business. Nor did they record the sales

proceeds from their production of 600 kilos daily of their t'final

product.'' He Iied to the currency exchange houses regarding

the reasons for transferring so much money abroad,

representing that it was to develop his veterinary medicine

business for chickens, Iivestock, etc. For future business and

personal use ZHENLI YE GON also concealed USD

$205,574,763, 201,460 Euros and millions of pesos in

EMexican) currency and currency of other countries in hissecret sealed room off his bedroom, to which he had the only

key. His purpose was to avoid detection of the funds and in

this manner hide its criminal origins. (Exhibits D-8, D-12, D-

14. D-21(b), D-21(c), D-23(b), D-23(c), D-28(b), D-28(c), D-4O(b), D-40(c), D-12, D-45(a)).It is notewodhy that during aII those years that he was

76


SJA-96


making himself rich, ZHENLI YE GON, as sole administrator

of his companies, did not repod to the Mexican tax

authorities any income for the companies.

In sum , ZHENLI YE GON, with others, knowingly possessed and

concealed proceeds of unlaM ul narcotics activity and acted with

the intent to impede knowledge regarding their source, use,

Iocation destination or ownership.

Identification of ZHENLI YE GON as the person responsible for the

crim es charged in the Arrest W arrant

141. The signature of ZHENLI YE GON that appears on his Mexican cedificate

of naturalization appears to be the same signature of ZHENLI YE GON that appears

on documents that show his knowledge of the legal requirements for impoding

pseudoephedrine and ephedrine. lt also appears to be the same signature that

appears on various false documents presented to Mexican Customs authorities that

accompanied illicit shipments of N-Acetyl Pseudoephedrine in December 2005 and

thereafter. (Exhibits D-1, D-7(a), D-7(b), D-21(d), D-30(e)).142. The naturalization cedificate issued by the Mexican authorities to ZHENLI

YE GON contains a photograph the features of which match the person identified as

ZHENLI YE GON in a group of people with Asian features by witness Jose Luis Perez

Castro, who worked in W orkshop Two of the Toluca factory from April through

October 2006 m anufacturing l'white, crystalline powder - Iike snow.'' Perez Castro

marked the photo with a number ..1'' to indicate his identification of ZHENLI YE GON

among others whom he identified at the same time. (The marked photo and the Iist of

those identified are attached to the statement of Jose Luis Perez Castro. (Exhibit D-


SJA-97


32) and also appear separately with other identifying

Volume 11 of the Appendices).

materials in Appendix E in

APPLICABLE PENALTIES

143. The violation of any of the previously described laws constitutes a crime

under the laws of Mexico that is punished with imprisonment for a period of not Iess

than one year. The previously described crimes are punishable as follows:

a. Punishm ent for organized crime:

i. The applicable penalty for violating Adicle 2, section 1 and

Adicle 4, section 1, subsection a) of the Federal Law againstOrganized Crime is a period of 20 to 40 years of prison and

from 500 to 25,000 days- m inimum salary as a fine.

b. Punishment for violations against health (narcotics violationsl:i. The applicable punishment for violation of Adicles 193 and

194, sections l and 11 of the Federal Penal Code, as specified

in Adicle 194 of the Federal Penal Code (introduction intoMexico, transpodation, production or possession with intent

to produce narcotics), is a period of incarceration of 10 to 25years and a fine up to 500 days' minim um salary.

ii. The applicable punishment for violation of Article 196 Ter of

the Federal Penal Code (diversion of chemicals essential to

the production or preparation of narcotics), as specified inthe sam e adicle, is a period of incarceration of 5 to 15 years

and a fine of 1OO to 300 days' minimum salary.


SJA-98


Punishm ent for possession of firearms intended for the

exclusive use of the IMexican) Army, Navy and Airforce:i. The applicable penalty for violating Adicle 11, sub-section

(b) and Adicle 83 Fer, section 11 of the Federal Law onFirearms and Explosives, is a period of incarceration of one

to seven years and a fine of 20 to 100 days' minimum salary.

d. Punishment for Operations with the proceeds of unlawful

activity. IMoney Laundering):The punishment for violating Adicle 40O BIS of the Federal

Penal Code is 5 to 15 years' incarceration and 1,000 to

5,000 days of minimum salary.

144. The relevant podions of the Iaws that set out the applicable penalties can

be found annexed in Appendix B in Volum e 11 of the Appendices.

THE APPLICABLE STATUTES OF LIM ITATIONS

145. Volume 11 of the Appendixes also includes Appendix C-1, which is the

exact text of the Iaws that govern the statute of Iimitations for prosecuting each one of

the crimes for which Mexico seeks ZHENLI YE GON's extradition.

146. I am also attaching Appendix C-2, prepared by Lic. Alejo Isaac LemusMora, an attorney assigned to the Office of Extraditions and Mutual Legal Assistance

in the Office of the Attorney General of the Republic, responsible for extraditions,

including that of ZHENLI YE GON. Lic. Lemus Mora calculated the relevant statute of

Iimitations dates and concluded that for alI crimes the statute of Iimitations does not

run until June 13, 2067. His calculations are as follows:

a. Lic. Lemus Mora first calculated the applicable statute of limitations

79


SJA-99


for each of those crimes, if each were prosecuted separately.

Article 105 of the Federal Penal Code provides: ''The period of the

statute of Iimitations shall run based on the arithmetic median of the

penalty of incarceration set fodh for the specified crime, but in no

case shall be Iess than three years.'' Lic. Lemus Mora determined

that the crime with the longest statute of Iimitations is Organized

Crime, with a statute of lim itations of 30 years, which is the

arithmetic median between 25 and 35 years.

b. Because ZHENLI YE GON is in the United States and therefore his

prosecution in Mexico cannot go forward, Lic. Lemus Mora then

redid these calculations based on application of Adicle 101 of the

Federal Penal Code, which provides: U he statute of limitations is

doubled with respect to those (fugitives) found outside the national

territory (Mexico) if for this circumstance it not possibleto...conclude a proceeding or execute a sentence.'' He concluded

that the 30-year statute of limitations for Organized Crime, because

it is doubled to 60 years does not expire until June 13, 2067.

c. Lic. Lemus Mora then applied Article 108 of the Federal Penal

Code, which provides: d'In those cases in which there are multiple

charges, the prosecution of (aII) those (crimes) is proscribed whenthe statute of Iimitations expires for the crime with the greatest

enalty.''P

d. Therefore, using the June 13, 2067 statute of Iimitations for the

charge of Organized Crime, Lic. Lemus Mora identified June 13,

2067 as the expiration date for prosecution of aII the crimes for

which extradition is sought.

80


SJA-100


PERSONAL IDENTIFICATION INFORMATION

147. In compliance with Article 11, paragraph 1 of the Extradition Treaty upon

which this request is based, the following are the general personal information

available on the accused:

Name: ZHENLY YE GON or ZHENLI YE GON or

ZHENLI YE, a.k.a. CCEL CHINO''

Nationality'. Naturalized Mexican

Originally from :

Date of Bidh:

Shanghai, China

,1963

years

Asian - Yellow

Age:

Race:

H e ig ht:

Face:

5 feet, 7 inches

Oval

Eyebrows'.

Eyes:

Nose:

Semi-thick

Dark Brown

Slightly Iarge

MediumMouth:


SJA-101


H ''alr.

Ears :

Dark and straight

Medium-sized

Medium , no distinguishing marksS k 1 n '

CONCLUSION

The foregoing evidence provides probable cause to believe that ZHENLY YE

GON or ZHENLI YE GON or ZHENLI YE, a.k.a. C'EL CHINO'' is probably responsible

for aII the crimes for which his etradition is sought from the United States of America

to the United Mexican States. The Iegal provisions presented also establish that the

penalties for each of the crimes is not Iess than one year, that he has not been tried or

sentenced for these crimes and that the statute of Iimitations has not expired for any

of the crimes for which extradition is sought.

The judge presiding over the case analyzed and weighed each and every pieceof the evidentiary elements offered by the investigative public prosecutor which allow

said trier of fact to conclude that ZHENLY YE GON or ZHENLI YE GON or ZHENLI

82


SJA-102


YE, a.k.a. ''EL CHINO', carried out a series of acts leading to the commission of the

crimes which are mentioned in the body of the present sworn affidavit, and the reason

due to which the judge issued the corresponding arrest warrant for him.

The person sought in extradition had full knowledge that 'his conduct wàs

unlawful since he knew the harm that he would cause and executed his intentions.

Likewise, there does not exist in the record of the proceedings any justification thatwould exculpate him from responsibility, neither is there observed therein that he

attempted to prevent commission of the crimes which form the basis of the extradition

request.

The foregoing, for the pedinent Iegal purposes.

Mexico, Federal District, May 27, 2008

(Illegible signature)

JORGE JOAQUIN DIAZ LOPEZ

83


SJA-103


EXHIBIT D-9 (b)


SJA-104


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SJA-106


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SJA-110


EXHIBIT D-35 (b)


SJA-111


EXHIBIT D-35 (b)

(A seal that resembles a buil head and reads: b&b!(On the left side reads', Av. Horacio 185, desp. 203, a Polanco. Mexico. DF. (unreadablel4gog . 5395-4725. 5395(unreadàble). s3gstunreadable). 5395..4675, Fax: 5395-4699)

b&b CASA DE CAM BIO S.A. DE C.V.

Mexico Federal District, July 26th 2006' 1

W e received from Mr. Zhenli Ye, representative of UNIMED PHARM CHEMMEXICO SA DE CV the amount of $630,000.00 USD (six hundred and thidythousand Dollars) to be exchanged by means of bank transfer according toinstructions received by Agricultural Bank of China Inner Mongolia Branch, for theBeneficiary Chifeng Arker Pharmaceutical.

(Signed)Lic. F. Carlos Ramirez Galan

Secretary of the Board of Directors

(Signed)Lic. Jose A. Garcia Rojas

General Director


SJA-112


CASA DE CAM BIO TAM IBE S .A. DE C.V .BRANCH: REFORMA

M ico Federal District, Auqust 7th 2006.eX , ,

EXCHANGE OPERATIO NS FORMAT

PLEASE CARRY OUT THE OPERATION DESCRIBED HEREIN BELOW :

DATE VALUE:

DEAL No.

CURRENCY:

SAME DAY.

R24378.

DOLLARS. AMOUNT: 7O0.QO0.00

APPLICANT: UNIMED PHARM-CHEM MEXICO, S.A. DE C.V.

ADDRESS: AV. MORELOS No. 24 A COL. CENTRO, CP 06040.

FEDERAL TAXPAYERS' REGISTRY: .

BENEFIC IARY: CHIFENG ARKER PHARM-A--C -E-UTI-CAL TECHNOLOGY CO .. LTD

CHI/ENG, INNER MONGOLIA, CHINA

BENEFICIARY'S ACCOUNT:

ACCOUNT BANK:

CITY, COUNTRY:

ABA or SW IFT:

BROKER BANK:

CITY, CO UNTRY:

ABA BROKER BANK:

NOTES:

AGRICULTURAL BANK OF CHINA.

ONGOLIA BRAQCH. CHINA.INNER M ,ABOGCNBJOSO.

NAME OF PROMOTER (FAC): FELIPE ALMARAZ CRUZ.

(Signature) (Signature

2


SJA-113


(A seal that resembles a bull head and reads: b&b)(On the Ieft side reads', Av. Horacio 185, desp. 203, a Polanco. Mexico. DF. 53(unreadable)909 . 5395-4725. 5395(unreadablelo7. 5395468(unreadab+). 5395-4675. Fax: 5395-46991

b&b CASA DE CAMBIO S.A. DE C.V.

Mexico, Federal District, September 1 1lb 20061

W e received from Mr. Zhenli Ye, representative of UNIMED PHARM CHEMMEXICO SA DE CV the amount of $800,000.00 USD (eight-hundred thousandUSD) to be exchanged by means of bank transfer according to instructionsreceived, for the benefit of Chifeng Arker Pharmaceutical Technology co LTD.

(Signed)Lic. F. Carlos Ram irez GalanSecretary of the Council

(Signed)

Lic. Jose A. Garcia RojasGeneral Director

3


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/ - 3 6


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EXHIBIT 0-36

Em bassy of the United States of Am ericaMexico DF, on April 19, 2007

PG R707-O189

Noe Ramirez MandujanoAss'istant Adorney General for Organized Crime (SIEDO)Paseo de Ia Reforma No. 75 piso 2Col. Guerrero06300 M exico, D.F.

BY HAND

Dear Ramirez Mandujano:

l am hereby sending you additional information we have found outregarding the activities of Zhenli YE GON in the United States.

Our DEA office in Las Vegas, Nevada has identised the betting recordsin several casinos in Las Vegas from approxim ately 1997 to 2007. ln m anycases the money was sent to bank accounts in the United States through cabletransfers originated in Money Exchange Houses in Mexico. Once the moheywas deposited in a bank account in the United States, a cashier's check would 'be issued in the name of the casino to pay the betting Ioss. W hat follows is a Iistof the casino and the am ount of money won or Iost by YE GON:

The following information summarizes the estimated betting activities atthe Venetian Hotel and Casino from 1999 to 2007:

1999- YE GON won $ ,4 OOOXN'2000- YE GON Iost $194, 7502001- YE GON lost $9. 0002002-2004 There are no records of YE GON's betting

during this period.2005- YE GON fost $2, 119, 8502006- YE GON Iost $71, 915, 75O2007- YE GON Iost $13, 770, 250

rNAIl amounts stated are United States dollars.


SJA-116


The following information summarizes the estimated betting activities inMGM Mirage Propedies from 1997 to 20072

1997- YE GON lost $5, 3OO1998- ' YE GON lost $6, 50O1999- YE GON lost $2, 563, 8602000- YE GON Iost $11, 6002001- YE GON Iost $.139, O002002-2003- There are no records of YE GO N's betting at

'

M GM Mirage Properties during this period.2004- YE GON lost $22, 832, 3382005- YE GON lost $12, 447, 8012006- YE GON won $8, 12 ,5 8002007- There is no record of YE GON's betting at the

MGM Mirage Properties in this year.

According to the records obtained from the W ynn Hotel and Casino, YEGON started to bet at the W ynn Hotel and Casino in 2005. The followinginform ation summ arizes YE GON's estim ated betting activities at the casinoin Las Vegas (approximate amounts):

2005- YE GON lost $10, 957, 650

The following is a summary per year for YE GON's betting activities atcasino installations in Las Vegas (approximate amounts):

1997-1998-1999-2000-2001-2002-

2003-

2004-2005-2006-2007-

YE GON Iost $5, 3O0YE GON Iost $6, 500YE GON Iost $2, 559, 860YE GON Iost $206, 350YE GON Iost $148, 000There is no record of YE GON's bettingactivities in this year.There is no record of YE GON's bettingactivities in this year.YE GON lost $22, 832, 338YE GON Iost $25, 525, 301YE GON Iost $63, 789, 950YE GON Iost $13, 770. 250

To date, YE GON has Iost more than approximately $125, 917, 839 inbetting activities from 2004 to 2007. Our offices in the United States are still


SJA-117


developing lines of investigation with my office in order to establish probablecause for violations of United States 1aw against money laundering. l willappreciate your m aintaining this matter in contidence.

Should you have a question or a request related to this matter, pleasecontact the undersigned or Special Agent Eduardo Chavez at 50-80-2600.ln the nam e of the DEA office in M exico I wish to take advantage of theoppodunity to send you warm greetings and the assurances of my highestesteem .

Respeclully,(signed)

David L. GaddisRegional Director

3


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p'CN.R M A C G . 1 4.

EXHIBIT D-48

CHEMICAL EXPERT OPINION, dated June 8, 2007 signed by the Chem icalExperts Moises Ramirez Medina and Alejandro Romero Ayon.

Relevant part of the Expert Chem ical Opinion, dated June 8, 2007, in which anopinion js issued regarding 105 samples of different substances, w hich were collectedin the building located on Boulevard Miguel Aleman Valdez, number 175, colonia SanPedro Totoftepec, Toluca, State of Mexico, in order to determine whether thesesamples correspond to any of the psychotropic drugs or narcotics considered as suchby the General Health Law and/or the Federal Law to Control Chem ical Precursors,Essential Chçmical Products and Machinery to Formulate Capsules, Tablets and/orChemical Compounds, same that in relevant pad states: RESULTS. Upon applyingthe aforecited m ethodology regarding the sam ples in question, there were obtainedthe following results:

SAMPLING LOCATION - W ORKSHOP ONE

Descrktion

W hite Solid Substance Naproxcn

Result Class6cation

Negative

NegativeW hite solid substance Naproxen

White Solid Substance Pseudoephedrine Psychotropic DrugAnd Chemica!

Ow hite Solid Substance L-pseudoephedrine Psychotropic Drug

&nd ChemicalPrectlrsor

Beige Solid Substance Pseudoephedrine Psychotropic DrugAnd ChemicalPrecursor

Beige Solid Substance Pseudoephedrine Fsychotropic DrugAnd ChemicalPrecursfnr

1 0

1 2 Lipper I-ine

Colorless Liquid

PoNvder

Carbonates

Con tains Ephedrf ne

Negative

Psychotropfc DrugAnd Chcm icalPrecursor

l 2 i - ( ) 5 5. d r l . i n e Colorless Liquid Naproxcn N e tt a t 1 v eI

Sample N o.

1


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F C3 n u .& C G - 1 A

Pseudoephedrine

16

White Solid Substance Naproxtm

White Solid Substance Naproxen

Grey Solid Substance Naproxen

W hite Solid Substance Naproxen

Beige Solid Substance Pseudoephedrine

Psychotropic DrugAnd ChemicalPrecursor

Negative

Negative

Negative

Negative

Psychotropic DrugAnd ChemicalPrecursor

Psychotropic DrugAnd ChemicalPrecursorNegative

Negative

Grey Solid Substance Ephedrine

Salts

18

W HITE SOLID EPHEDRINESUBSTANCE

SALTS CHEM ICALPRECURSORNEGATJVE

PH/DRINE PSYCHOTROPICSUBSTANCE DRUG AND

CHEM ICAL

PSYCHOTROPICDRUG AND

COLORLESS LIQUID EPHEDIUNE RESIDUEPRECURSORPSYCHOTROPICDRUG AND

W hite Solid Substance Naproxen

COLORLISS LIQUID EPFIEDRINE

CHEM ICALPRECURSORPSYCHOTROPICDRUG ANDCrIEM ICALPRECURSORPSYCHO'FROPICDILLIG AN DCHEM ICALPR E(2U RSORN EGAT I V E

GREY SOLI DSUBS'I-AHCE

EPI-IEDRINE

GREY SOI-IDSU BSTANCE

CA L.C I U M OXA LA'I'E

2


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fr r.:l a fd A. C G . ! A

BROWN LIQUID PSEUDOEPHEDRINE PSYCiIOTROPIC .DRUG ANDCI'IEM ICALPRECURSORN EGATIVENEGATIVE

PSYCHOTROPICDRUG ANDCHEM ICALPRECURSORPSYCHOTROPICDRUG ANDCHEM ICALPRECURSOR

33

COLORLESS LIQUID WATERCOLORLESS LIQUID CALCIUM CARBONATE,

WATERBROWN LIQUID EPHEDRINE

35

COLORLESS LIQUID MIXTURE OFEPHEDRINE, N-ACETYLM ETHAM PHETAM INEAND EPHEDRINEACETATE

COLORLESS LIQUID N-ACETYLM ETHAM PHETAM INE

COLORLESS LIQUID N-ACETYLM ETHAM PHETAMINE

PSYCHOTROPICDRUG ANDCHEM ICALPRECURSORPSYCHOTROPICDRUG ANDCHEMICALPRECURSORNEGATIVE38

394041

COLORLESS LIQUID W ATERCOLORLESS LIQUID W ATERW HITE LIQUID WATERBLACK LIQUID EPHEDRINEW ITH W HITE

NEGATIVENEGATIVEPSYCHOTROPICDRUG AND

- CHEMJCALPRECURSOR

42 BROWN LIQUID SULFUR AND NEGATIVE.LN- ACETYL PSYCHORROPIC

M ETHAMPHETAMINE DRUG ANDCHEM ICALPRECURSORNEGATIVE

44'4546

GREENISH W HITE SALTS OF SODIUM DESOLID SUBSTANCE SODIUM SLILFATE AND

SODIUM CHLORIDECOLORLESS LIQUID XLKYLAMIDE SOLUTION NEGATIVECOLORI.ESS LIQUJD ETI IYLENE GLYCOL NEGATIVEYELLOW LIQUID DILUTED SOLUTION ()F PSYCI IO'I'ROPIC

IEPIIEDRIN E DRUG AN DCIIEM ICALPRECURSOR

W'l'l 1.1-122 SOt-I D NAPROX EN NEGA1'I VES ( j B S 1-/4 NC E

34


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FwT.bR > .h C t7 . , 4

48

49

50

52

W HITE SOLIDSUBSTANCEW HITE SOLIDjUBSTANCEW HITE SOLIDSUBSTANCEBEIGE SOLIDSUBSTANCEW HITE SOLIDSUBSTANCE

NAPROXEN

SODIUM CARBONATE

NAPROXEN

NAPROXEN

PSEUDOEPHEDRINE

N EGATIVE

NEGATIVE

NEGATIVE

NEGATIVE

PSYCHOTROPICDRUG ANDCHEM ICALPRECURSOR

SAMPLING LOCATION:

SAM PLE No.1

W ORKSHOP TW0

DescriptionBROW N SOLIDSUBSTANCE

ResultEPHEDRINE HCL

COLORLESS LIQUIDWITH BLACKSEDIM ENTSGREY SOLIDSUBSTANCE

EPHEDRINE HCL PSYCHOTROPICDRUG ANDCHEM ICALPRECURSORPSYCHOTROPIC

WHITE SOLID AxDDRUGSUBSTANCE EM jCALCH

PRECURSOR

LID EPHEDRINB HCLGREENISH SO puc Axo5 D

SIJBSTANCE jyMjcz:l-CH

PRECURSOR

EPHEDRINE HCL

BROWN LIQUID CONTAINSEPHEDRINE

PSYCHOTROPICDRUG ANDCIIEM ICALPRECLIRSORPSYCI-IOTROPICDRUG ANDCIIEM ICALPRECURSOR

EPI'IEDRINE l lCLBROW N SOLID

SUBSTANCE

8 COLORLESS I-IQUID CONTAINS(t P H E D R l N E

PSYCI IOTROPICDRUG ANDCI l E M I Cr: LI'RECURSOR

PSEUDOEPHEDRINE

ClassscationPSYCHOTROPICDRUG ANDCHEMICALPRECURSORNEGATIVE

4


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F t'J a M A r G - 4 A

CONTAINS PSYCIIO'I'ROPICPSEUDOEPREDRINE DRUG AND

CHEMICALPRECURSOR

GREY SOLID CARBONATES NEGATIVE

SUBSTANCEPSEUDOEPHEDRINE PSYCHOTROPIC

DRUG ANDCHEMICALPRECURSOR

BROWN LIQUID PSEUDOEPHEDRINE PSYCHOTROPICDRUG ANDCHEM ICALPRECURSOR

GREEN SOLID PSEUDOEPHEDRIN E PSYCHOTROPICSUBSTANCE DRUG AND

CARBONATES CHEM ICALPRECURSORNEGATIVE

W HITE SOLID EPHEDIUNE HCL PSYCHOTROPICSUBSTANCE DRUG AND

CHEMICALPRECURSOR

W HITE SOLID EPHEDRINE HCL PSYCHOTROPICSUBSTANCE DRUG AND

CHEMICALPRECURSUR

18 BROWN LIQUID N-ACETYL PSYCJIOTROPICM ETHAMPHETAM INE DRUG AND

CHEMICAL

19 BROW% LIQUID PSEUDOEPHEDRINE PSYCHOTROPICDRUG ANDCHEM ICALPRECURSOR

20 COLORLESS LIQUID ETHANOL, NEGATIVEEPHEDRINE RESIDUE PSYCHOTROPIC

DRUG ANDCIIEMICALPRECUrSOR

W HITE SOI-ID EPHEDRINE HCL PSYCHOTROPICSUBSTANCE DRUG AN D

C H EM l C,4 LPRECURSOR

22 W'HI-I'E SOLID EPI'IEDRINE I lCL PSYCI IOI'ROPICSU BSTANCE DRUG AN D

CI I EM ICAL

Y E L LO W (- I QU 1 D

5


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6 CJN N A C S - # A

PRECURSORCOLORLESS LIQUID EPIIEDRINE PSYCHOTROPIC

DRUG ANDCHEM ICALPRECURSOR

COLORLESS LIQUID PSEUDOEPHEDRINE PSYCHOTROPICDRUG ANDCHEM ICALPRECUkSOR

BROW N SOLID EPHEDRINE PSYCHOTROPICSUBSTANCE DRUG AND

CHEM ICALPRECURSOR

BROWN SOLID EPHEDRINE PSYCHOTROPICSUBSTANCE DRUG AND

CHEM ICALPRECURSOR

COLORLESS LIQUID PROCAINE NEGATIVECOLORLESS LIQUID MIXTURE OF: NEGATIVE

SODIUM HYDROXIDEAND SODIUMCARBONATE

W/ITE SOLID EPHEDRINESUBSTANCE

PSYCHOTROPICDRUG ANDCHEM ICALPRECURSOR

YELLOW SOLID EPHEDRINE PSYCHOTROPICSUBSTANCE DRUG AND

CHEMICALPRECURSOR

D w

37 GREEN LIQUID PSEUDOEPHEDRINE PSYCHOTROPICDRUG ANDCHEMICALPRECURSOR

YELLOW SOLID EPHEDRINE PSYCHOTROPICSUBSTANCE DRUG AND

CHEM ICALPRECURSOR

COLORLESS LIQUID BARIUM CIILORIDE NEGATIVECOLORLESS LIQUID SUI-FURIC ACID ESSENTIAL

C1 IEM ICALCOLORLESS LIQUID SODILIM NEGATIVE

'1-1 IIOSULFATE ANDSODI U M N EGATIV E8 l C-A R 8 () N A T E

Y E L LO W? ( - l t',) U l D F E IkRI C C I l LO R l D E N EG h' rl V E

6


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F IDr4 >! A c fi - 4 .k

43

44

45

46

47

48

50

52

53

W HITE SOLID EDTA NEGATIVE

SUBSTANCEW EIITE SOLID PSEUDOEPHEDRINE PSYCHOTROPICSUBSTANCE DRUG AND

CHEM ICALPRECURSOR

W HITE SOLID NAOH NEGATIVESUBSTANCEBLACK SOLID ACTIVATED CARBON NEGATIVESUBSTANCEYELLOW SOLID SALTS NEGATIVESUBSTANCEW HITE SOLID NAPROXEN NEGATIVESUBSTANCEW HITE SOLID SODIUM SACCHARIN NEGATIVESUBSTANCECOLORLESS LIQUID O1L BASED ON NEGATIVE

HYDROCARBONSW HITE SOLID BARIUM CHLORIDE NEGATIVESUBSTANCEW HITE SOLID LEVAM ISOLE NEGATIVESUBSTANCEW HITE SOLID PSEUDOEPHEDRINE PSYCHOTROPICSUBSTANCE DRUG AND

CHEM ICALPRECURSOR

BLACK SOLID ACTIVATED CARBON NEGATIVESUBSTANCE

SAMPLING LOCATIQN: WORKSHOP THREE

SAM PLE IV/.l 1-3

DescriptionBROWN LIQUID

3-1-3

BROWN LIQUID

BEIGE SOLIDSUBSTANCE

4T3 B E I GE S()Ll DSL; BSTANCE

B 1-.- I G E S O L I D

Result C'fflâ's't/dctz////lPSEUDOEPIIEDRINE PSYCHOTROPIC

DRUG ANDCHEMICALPRECURSOR

O1L BASED ON NEGATIVEl IYDROCARBONSPSEUDOEPHEDRINE PSYCHO'I-ROPIC

DRUG AN DC1 IEM ICALPRECURSOR

PSEUDOEPI'IEDRINE PSYCIIOTROPICDRUG AN DCI 1 EM ICA LPRECU RSOR

IASELJIIOEP! IEDRINE PSYCI'IOI'ROPIC

7


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F'r--)n hf w C 5 - # A

SUBSTANCE DRUG ANDCHEM ICALPRECURSOR

SAMPLING LOCATION:

SA:HPL E No.A 1

A3

A4

A6

AB

DescriptionCOLORLESSLIQUIDCOLORLESSLIQUIDW HITE SOLIDSUBSTANCEW HITE SOLIDSUBSTANCEW HITE SOLIDSUBSTANCEW HITE SOLIDSUBSTANCEYELLOW SOLIDSUBSTANCEW HITE SOLJDSUBSTANCE

W HITE SOLIDSUBSTANCE

W HITE SOLIDSUBSTANCE

49

W AREHOUSES

ResultETHANOL

XYLENE

OXALIC ACID

A l 0

ClassecationHEGATIVE

NEGATIVE

NEGATIVE

POLYDIM ETHYLSILOXANE NEGATIVE

SODIUM CHLORIDE NEGATIVE

SODIUM CHLOIUDE NEGATIVE

DERIVATIVE OF SULFUR NEGATIVB

SODIUM HYDROXIDE NEGATIVEPOTASSIUM CARBONATE

NEGATIVESODIUM HYDROXIDE NEGATIVEPOTASSIUM CARBONATE

NEGATIVEOXALIC ACID NEGATIVE

CONCLUSIONSBased on the foregoing, the following are formulated: CONCLUSIONS. FIRST. -In the samples analyzed (see Results chad), there was identified the presence ofEPHEDRINE, PSEUDOEPHEDRINE AND EPHEDRINE ACETATE, substancesconsidered as Psychotropic by the General HeaIth Law, in addition, thesesubstances are considered as essential chemical precursors by the Federal Lawto Contrôl Chemical Precursors, Essential Chemical Products and Machinery toForm ufate Capsules, Tablets and/or Chem ical Com pounds. SECO ND. - In thesamples analyzed (see Results chad) there was identified the presence ofSULFURIC ACID, substance considered an Essential Chemical in accordance

. with the Federal Law to Control Chemical Precursors, Essential Chem icalProducts and M achinery to Form ufate Capsules, Tabfets and/or Chem icalCompounds. FOURTH. - In the samples analyzed (see Results chart) there wasidentified the presence of different chemical substances commonly used in

8


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FORM A c tt . : A

, ws D().ç. .V. V ' r'D c x zo . ./4 e' A .. qx z'n44 2. .. . ra N z u .. . .. =' s.' z v' . .%.;f. .

'

,. 11 .. ,... .

'

li .'...

d

.

'

.,!!''

'

. zzk'' .â -' . -*%x # kc . ' T:C.4 .'J . %$ -.,q e: . t . . . lti .. '' ' ' ' * ' f;.i 5 '. ' .. ' ' ' '' - .... x % ..;x . 1 1 t 4. . . ) J .* y î' 'k ' ' mp ' ' !'P -' -- * l '* d *. / + ' h *

$ - -. I # ' ' '5 ..#'t ; j o ' . . . x - r .. . -' e rt. ' . . - -. t '' .

'

o -. t .. ' ) 'e' X ' ' ' ' '

Chemical Laboratories, which are NOT considered psychotropic narcotics by theGeneral HeaIth Law NOR as chemical precursors or essential chem icals by theFederal Law to Control Chemical Precursors, Essential Chemical Products andMachinery to Formulate Capsules, Tablets and/or Chemical Compounds .. .''.

9


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*7

R > œ8 OFFICE U.$. Dl8m O URTAT ROANCu , VA

r: k jr: t * 4

JA8 1 ? 2214JULIA C.T CILJSY, CLERK

BK kDEP CLERK

IN TH E UNITED STATES DISTRICT COURTFOR THE W ESTERN DISTRICT OF VIRGINIA

ROANOKE DIVISION

ZHENLI YE GON,

Petitioner,

V.

GERALD S. H OLT. U.S. M arshalfor the W estern District of Virginia, andFLOYD AYLOR, W arden of theCentral Virginia Regional Jail,

)Respondents. )

)

Case No. 7:11-cv-00575

M EM OM NDUM O PINION

By: Jam es C. TurkSenior United States District Judge

By M emorandlzm Opinion and Order entered November 25, 2013, this Court denied

Petitioner Zhenli Ye Gon's (1tYe Gon'') petition for habeas comus tmder 28 U.S.C. j 2241. ECF

No. 1 17, 1 18. On December 5, 2013, Ye Gon filed a M otion to Alter, Amend or Correct Final

Judgment, ECF No. 120, in which he requests that this Court nm end or clarify its prior

M emorandum Opinion regarding several specific issues, addressed herein. See ECF No. 121.

The Respondents (hereinafter (lthe Govemmenf') has filed a response. ECF No. 129, and

Petitioner has filed a reply, ECF No. 133. The parties have agreed to the submission of the

motion without a hering, see ECF No. 120 at 1, and therefore it is ripe for disposition. For the

reasons set forth herein, the motion is GM NTED IN PART and DENIED IN PART.

Petitioner seeks claritication or nmendment of the Court's prior opinion and order as to

three issues. First, he seeks a specific ruling on çtwhether M exico's separate criminal charge

related to sulfuric acid may be prosecutedl,l'' or whether extradition is improper on this separate

Mexican criminal charge because dual criminality is lacking. ECF No. 12 1 at 1-2 (citing his prior

argument at ECF No. 63 at 48-50). Second, he requests a ruling on whether tçthe legal rule that

Case 7:11-cv-00575-JCT Document 137 Filed 01/17/14 Page 1 of 8 Pageid#: 5009

SJA-129


declares that all Scontradictory' evidence must be excluded in extradition proceedings, expressly

applied by U.S. M agistrate Judge Facciola, violates constitutional due process.'' ECF No. 121 at

2 (citing his prior argument at ECF No. 63 at 93-94). Third, Petitioner requests an nmendment of

ttits Order and Memorandum Opinion to clarify that only charges on which this Court has

authorized extradition may be prosecuted by M exican officials.'' ECF No. 121 at 2-3. Finally, in

a footnote, Petitioner also correctly notes that the docketed copy of the Opinion contains two

page different versions of page 31 and that only the second of these should appear in the opinion.

Rule 60(a) allows a court to correct 61a clerical mistake or a mistake arising from

oversight or omission whenever one is found in a judgment, order, or other part of the record.''

Fed. R. Civ. P. 60(a). Clearly, the error concerning page 31 is a clerical mistake and the

1Government agrees that an Am ended Order would be appropriate to correct this error.

Accordingly, the Court will docket an Amended Opinion consistent with its rulings herein and

also incorporating its separate ruling on Petitioner's M otion to Stay.

W ith regazd to the more substantive issues raised by Petitioner, the Court addresses each

of them in the order in which they were raised, after first addressing a procedural argument half-

heartedly raised by the Government.

1. W hether Fed. R. Civ. P. 59 or 60 Are Available in Extradition Proceedings

ln its response to Petitioner's m otion, the Government begins with the couched statement

that çipetitioner's invocation of Federal Rules of Civil Procedure 59(e) and 60 mav be

misplaced.'' ECF No. 129 at 1 (emphasis added). It is unwilling to say çtthat the Rules of Civil

Procedure can never be used in a habeas proceeding involving an extradition decisionlsl'' but

argues that Edthe broad use of either Rule 59 or Rule 60 to reopen the completed habeas

l Likewise the Government correctly notes that the docketed version of the Opinion is missing page 38>

and contains instead two copies of page 39. See ECF No. 18. This error, too, will be corrected with theCourt's Amended Opinion.

2


SJA-130


proceeding should be avoided.'' ld. at 2-3. The Court does not interpret Petitioner's motion-

which was narrowly drawn, brief, and mostly asked f0r clarification of the Court's nllings- as

any such tsbroad'' attempt to tsreopen the completed habeas proceeding.'' ln any event, both

because the Court largely denies the relief sought by Petitioner and because the Government has

not expressly argued that Rule 59(e) and Rule 60 are inapplicable here, the Court will assume,

without deciding, that it has authority under both or either of those rules to address Petitioner's

m otion.

ll. Sulfuric Acid Drug Charge

Turning now to Petitioner's specific requests, he first asks for a specific ruling on

ttwhether Mexico's separate criminal charge related to sulfuric acid may be prosecutedl,j'' or

whether extradition is improper on this separate M exican criminal charge because dual

crim inality is lacking. By way of additional background, one of the charges against Ye Gon

encompassed a claim that he diverted sulfuric acid, which is treated as an tsessential chemical

product'' under M exican law, for the unlawful production of psychotropic substances. See ECF

No. 50, Ex. 1 at 5 (including in the listed drug offenses tçDiversion of essential chemical products

(sulfuric Acid) to produce narcotics'). The extradition court made factual findings that Sttraces''

of sulfuric acid had been found in the Toluca pharmaceutical plant, and other factual tindings

suggesting that sulfuric acid may have been used to produce illegal narcotics.

Petitioner contends that the possession or use of sulfuric acid to manufacture a controlled

substance is not a violation of U.S. law, and thus that dual criminality is lacking as to the charge

of diversion. He further points to the testim ony of Dr. Lectka before the extradition court that

sulfuric acid is a widely-available, comm on chem ical substance found in virtually every

operating chemical lab. ECF No. 63 at 49.


SJA-131


In is Answer to his habeas petition, the Govelmment did not reference any specitk

arguments regarding the sulfttric acid, nor did it make any argtlment that sulfuric acid is a

controlled substance or a listed chemical under U.S. law. See zenerallv ECF No. 65 at 29-37

(arguing that dual criminality is met for the drug-related charges). Instead, it simply argued that

dual criminality is satisfied for the diversion charge because the çûsnme basic evil'' is proscribed

under United States law, as well, i.e., the use of precursor chemicals to create illegal substances.

lt continues: Cl-l-hat the United States chooses to regulate a slightly smaller subset of that category

of chemicals goes more to the elements of the offense than to the criminal natlzre of the

underlying conduct, and, thus, that difference should not defeat dual criminality.'' 1d. at 35

(citing Choe v. Torres, 525 F.3d 733, 738 (9th Cir. 2008)).

ln its response to the M otion to Alter or Am end Judgm ent, the Government again makes

no argument that the diversion of sulfuric acid specitk ally would be illegal in the United States.

lnstead, it argues that this Court sufficiently addressed the charge of diverting sulfuric acid by

tdadopting the factual findings of the extradition court as its om A,'' which included facts

supporting extradition on the sulfuric acid charge. ECF No. 129 at 4-6. The Government also

suggests a revision to one sentence of this Court's opinion regarding this issue, if the Court

wishes to make its holding Edabundantly clear.'' ECF No. 129 at 6.

ln the Court's view, Defendant's arguments that dual criminality on this specific charge

is lacking may be stronger than its other dual crim inality challenges. N onetheless, the Court

intended for its prior opinion to include a rejection of this argument. Thus, the Court agrees with

the Govemment that the best course is simply for the Court to amend its prior opinion to make

clear its intended nzling, which is that al1 of the drug charges satisfy the dual crim inality

requirement. Accordingly, the Court will nm end page 30 of its prior opinion to include the

4


SJA-132


following underlined language, so that it will now read: çithe first grotmd given by the extradition

court is sufficient to establish dual criminality for a11 of the dl'ug charges, includina the charce of

diverting sulflzric acid for the unlawful production of psychotropic substances.''

111. The Contradictory Evidence Rule

ln his Amended Petition, Petitioner argued that his constitutional due process rights were

violated when the Extradition Court refused to consider allegedly ûscontradictory evidence'' that

he offered. ln response, the Government first contends that Petitioner failed to make or preserve

a due process challenge to the nzle against contradictory evidence because he made çtonly passing

reference to that claim in the extradition proceeding and his habeas petition.'' ECF No. 129 at 6.

lt argues that, in any event, the extradition magistrate did not exclude any of Petitioner's

evidence on this basis and further, that the claim fails Sçin light of the longstanding Supreme

Court cases that created the nlle against the introduction of contradictory evidence.'' ECF No.

129 at 7.

ln its prior M em orandum Opinion, the Court did not expressly state that the contradictory

evidence rule does not violate due process. To the extent that the Extradition Court applied the

contradictory evidence rule at all, however, the Court concludes that Petitioner has failed to show

that the application of that rule violated his due process rights. In particular, as the Government

correctly notes, there is ample authority that holds that the rule prohibiting the introduction of

contradictory evidence is applicable in extradition proceedings. See. e.c., ECF No. 129 at 10-12.

Thus, the Court denies Plaintiff's motion insofar as it requests a ruling that the contradictory

evidence rule violated his constitutional right to due process.


SJA-133


lV. Rule of Specialty Request

Petitioner's third and final request seeks an order from this Court clarifying tçthat only

charges on which this Court has authorized extradition may be prosecuted by M exican officials.''

ECF No. 121 at 2-3. This appears to be a reference to the rule of speciality, a Eidoctrine of

international comity'' that states the fsrequesting state, which secures the surrender of a person,

can prosecute that person only for the offense for which he or she was surrendered by the

requested state or else m ust allow that person an opportunity to leave the prosecuting state to

which he or she has been surrendered.'' Gallo-chamorro v. United States, 233 F.3d 1298, 1305

(11th Cir. 2000) (citations omitted); United States v. Day, 700 F.3d 713, 722 (4th Cir. 2012)

(describing the doctrine and noting that the extradition treaty between the United States and

M exico tlprohibits the trial of a person for çan offense' for which extradition has not been

granted''). Petitioner notes that he has seen press reports from Mexico claiming that ççthe

M exican government has filed additional, separate charges against M r. Ye Gon- including one

report of alleged tax violation charges, and another more recent press report describing new

tsmuggling' charges.'' ECF No. 121 at 2. He further notes that no extradition has even been

sought by Mexico on these other charges and thus tdgaj risk . . . exists that, if extradited to

M exico on the charges this Court has authorized, M r. Ye Gon might then also face prosecution

on these other, separate charges on which no extradition was ever sought or obtained.'' Ld..a at 2-3.

The Governm ent tirst responds that Petitioner failed to preserve any nzle of specialty

argument in his habeas proceedings.Specifically, after the extradition proceeding, Petitioner

filed a motion to dismiss the extradition case on the grounds that M exico had reportedly brought

additional crim inal charges against him and intends to prosecute him on those charges without

requesting extradition, in violation of Article 17 of the Treaty. The Extradition Court denied the

6


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motion. See ln re Extradition of Zhenli Ye Gon, Misc. No. 08-596, (D.D.C.), ECF Nos. 162,

173. Petitioner did not challenge the denial of that motion in these proceedings. The

Government further argues that, even if the argument has been properly preserved and raised

before this Courq it is meritless.

The Court does not deem the argument waived, but in considering it, it concludes that

Petitioner is not entitled to the relief he seeks. Obviously, the Court's M emorandum Opinion and

its nzlings in this proceeding relate only to the charges for which extradition has already been

sought. Nonetheless, the Coul't agrees with som e of the Governm ent's argum ents set forth in its

response, ECF No. 129 at 12-17, and thus declines to amend its order to include a specitic

statement that tionly charges on which this Court has authorized extradition may be prosecuted

by Mexican oftk ials.'' M ost notably, the issue of whether or not M exico could prosecute

Petitioner for additional charges is not yet ripe, as Article 17 of the Treaty is triggered after

extradition, which has not yet occurred. Additionally, there are circumstances set forth in the

treaty pursuant to which an extradited person may be prosecuted for charges outside those for

which he was originally extradited. See. e.g., Treaty at Article 17(1) (allowing prosecution if

extradited person leaves the Requesting Party (here, Mexico) after his extradition and voltmtarily

rettums to it, or if he does not leave the territory of the Requesting Party within 60 days after

being free to do so). Thus, the Court declines to amend its order to protectively issue on order

prohibiting anothèr sovereign country from taking an action that it has not even indicated it

intends to take. See. e.g., Kellv v. Griftin, 241 U.S. 6, 15 (1915) (declining to modify extradition

documents before extradition because the Court çtassumelsj, of course, that the government in

Canada will respect the convention between the United States and Great Britain, and will not try

the appellant upon other charges than those upon which the extradition is allowed''); see also Lq

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Re Sainez, 2008 WL 36615 (S.D. Cal. Feb. 8, 2008) (declining to require Mexico to provide

advance assurances that it will comply with Rule of Specialty).

V. Conclusion

For the reasons explained in this M emorandum Opinion, Petitioner's M otion to Alter,

Amend or Correct Final Judgment, ECF No. 120, is GM NTED IN PART and DENIED IN

PART. The Cottrt will issue an Amended Opinion to correct the noted clerical errors. The

Court's rulings in this M emorandum Opinion, combined with the Amended Opinion entered

herewith, shall constitute the final opinion of the Court in this case.

ENTER: This ;./- ay of January, 2014.

. JJ es C. TurkSenior United States District Judge

8


SJA-136


e F*œ: OFFICE Q.S. DI8X c rAT 9OANOKE, VA

ù. q'''

JAN 1 2219JULIA C. ' ,-k 't JLERKBY:DEP CLERK

IN TH E UNITED STATES DISTRICT COURTFOR THE W ESTERN DISTRICT OF VIRGINIA

ROANOKE DIVISION

ZHENLI YE G ON,

Petitioner,

V.

GER ALD S. H OLT, U.S. M arshalfor the W estern District of Virginia, andFLOYD AYLOR W arden of theCentral Virginia Regional Jail,

)Respondents. )

)

Case No. 7:11-cv-00575

By: Jam es C. TurkSenior United States District Judge

For the reasons explained in this Memoranddlm Opinion, it is hereby ORDERED that

Petitioner's M otion to Alter, Amend or Correct Final Judgment, ECF No. 120, is GRANTED IN

PART and DENIED IN PART.

ENTER: This/) ay of January, 2014.

S JJames C. TurkSenior United States District Judge


SJA-137


CERTIFICATE OF SERVICE I, John-Alex Romano, do hereby certify that, on July 3, 2014, I filed an

electronic copy of the foregoing Supplemental Joint Appendix with the Court

using the CM/ECF system, which will send notice of docket activity to the

following counsel for defendant, who are registered CM/ECF users:

Counsel for Appellant Zhenli Ye Gon Gregory Stuart Smith Law Office of Gregory S. Smith 913 East Capitol Street, SE Washington, DC 20003 (202) 460-3381 John C. Lowe John Lowe, P.C. 5920 Searl Terrace Bethesda, MD 20816 (202) 251-0437

Counsel for Appellee Floyd Aylor Alex Francuzenko Cook Craig & Francuzenko PLLC3050 Chain Bridge Road Suite 200 Fairfax, VA 22030 (703) 865-7480

s/ John-Alex Romano

______________________________ JOHN-ALEX ROMANO Criminal Division, Appellate Section U.S. Department of Justice 950 Pennsylvania Ave, NW, Rm. 1264 Washington, DC 20530 Tel. (202) 353-0249 [email protected]
