May 14, 2024

Chinese citizen settles with federal prosecutors in California to resolve money laundering allegations

Federal prosecutors in California recently reached a plea agreement with Lu “Nikki” Zhang, a U.S. resident and citizen of China, to resolve money laundering charges for her role in a cryptocurrency investment scheme and other fraudulent schemes against victims with U.S. bank accounts.  Zhang, who was arrested in December 2023, was charged with conspiracy to commit money laundering, concealment money laundering, and international money laundering.  Under the terms of her plea agreement, Zhang pleaded guilty to conspiracy to commit money laundering, and agreed to cooperate with federal prosecutors to resolve the charges.  More specifically, Zhang admitted that she knowingly conspired with others to launder funds that were proceeds of wire fraud and other cryptocurrency scams.   A sentencing date for Zhang has not yet been set.

In December 2023, shortly after Zhang was arrested in the United States, the Department of Justice announced the indictment of Zhang and her co-defendants – Justin Walker, Joseph Wong, and Hailong Zhu – for their roles in a scheme known as “pig butchering” in which scammers find potential victims through dating sites or social media platforms and establish professional and romantic relationships to gain their victims’ trust and then convince them to make business investments using cryptocurrency.  According to the DOJ, Zhang and her co-defendants ran the scheme for several months, collecting more than $20 million in direct deposits from their victims, which resulted in a total of $80 million in victim losses.

Under the plea agreement, Zhang admitted that, from at least September 2022 to March 2023, she “managed a network of money launderers” in California and elsewhere to facilitate the fraudulent schemes.  She also admitted that she and her co-conspirators concealed or disguised the nature, location, and source of the fraudulently obtained funds by using bank accounts established in the name of shell companies registered with the California Secretary of State, including Sea Dragon Trading and Sea Dragon Remodel.  She also admitted that at least $20 million in victim funds were deposited in bank accounts that she and her co-conspirators controlled, including $2.2 million that were associated with Sea Dragon shell entities.

Plea Agreement | DOJ Press Release (December 2023) | Indictment