Chinese chemical manufacturer is targeted by federal prosecutors trying to stop flow of fentanyl

Before harmful and deadly drugs such as fentanyl and xylazine reach the streets of cities such as Los Angeles, they must first make their way into the country.

An indictment unsealed last month in federal court in Los Angeles seeks to slow the flow of such drugs into the U.S. by targeting a Chinese company and its executives accused of manufacturing the chemicals used to make the drugs. Instead of focusing on street drug dealers, the indictment goes after Wuhan-based Hubei Aoks Bio-Tech Co. and four of its executives.

“What’s important to see with this indictment is that we are really taking a comprehensive approach to fighting the fentanyl epidemic,” Martin Estrada, U.S. attorney for the Central District of California, said in an interview with The Times. “We’re not just going after mid-level sellers on dark web and going after cartels seizing large amounts of pills, we’re also going after these precursor companies.”

The indictment targets the company’s owner, Xuening Gao, along with Guanzhou Gao, who handled the companies cryptocurrency wallets, as well as Yajing Li and an unnamed defendant, who were salespeople for the company. It hits the front end of the supply chain process, Estrada said. Chemical precursors are largely sourced from chemical companies in China that sell their products internationally.

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1. An image sent to an undercover federal agent by a Hubei Aoks executive appears to show fentanyl precursor. 2. Federal prosecutors allege in their indictment against Hubei Aoks that the company disguised drugs they sent to the United States as make up foundation. (Court Documents)

“These chemical companies ship fentanyl precursors and adulterants around the world, including to the United States and Mexico, where drug cartels and traffickers use the precursors to synthesize and manufacture fentanyl into powder and pills, mix the fentanyl with various adulterants, and distribute it throughout the United States,” federal prosecutors wrote in the indictment.

Between 2016 to 2023, the company sold 11 kilos of fentanyl precursor and two kilos of xylazine — an animal tranquilizer often mixed with fentanyl — to an American buyer and falsely labeled the drugs as furniture, makeup, vases and apparel, according to the indictment. The buyer was not a drug trafficker but was an undercover federal agent, prosecutors said.

The company explained to the undercover agent that most of its clients were in Mexico. Prosecutors said that the Sinaloa and New Generation Jalisco cartels are major buyers of precursor chemicals and that they then turn the substances into fentanyl pills and powder.

An executive from Hubei Aoks allegedly sent this image to an undercover federal agent in the United States who posed as a drug trafficker.

(Court Documents)

“Fentanyl precursors sold by China-based chemical companies enable such cartels and other drug trafficking organizations to produce fentanyl on a massive scale for importation into and distribution within the United States,” Assistant U.S. Atty. Mack Jenkins wrote in the indictment.

Estrada said it’s not a big leap to suggest that Hubei Aoks was knowingly selling to the cartels.

Although opioid deaths plateaued in Los Angeles County in 2023, according to data, the country is still in the “worst overdose crisis in history,” said Gary Tsai, the director of the substance abuse prevention and control division at the L.A. County Department of Public Health.

In the county, 3,092 people died of drug overdoses or poisoning in 2023, a slight drop from the 3,220 who died in 2022.

California

In the fentanyl crisis, infants and toddlers become unsuspecting victims

In Bakersfield, a 2-year-old died from acute fentanyl toxicity, and his father has been charged with murder. In California, there were 11 fentanyl-related deaths for children younger than 5 in 2023, according to preliminary data.

July 10, 2024

Estrada said that the indictment was particularly notable because it was the first federal case that charged a China-based company with selling the precursor chemicals for xylazine, a sedative known on the street as “tranq.”

Xylazine has been a growing issue in Los Angeles and other metropolitan areas as well. The drug is not an opioid and is authorized only for veterinary use but has been detected in a growing number of California overdose deaths. It can also cause painful ulcers on skin.

An executive with Hubei Aoks allegedly sent this photo to an undercover federal agent to show that the chemical company had a real office in China.

(Court Documents)

The indictment was the latest against a Chinese company accused of distributing fentanyl precursors for sale in the United States. In 2023, the U.S. Department of Justice charged more than two dozen people and companies in eight separate indictments with distributing opioids and methamphetamine.

Atty. Gen. Merrick Garland said at the time that “the global fentanyl supply chain, which ends with the deaths of Americans, often starts with chemical companies in China.”

The charges had an effect on Hubei Aoks.

“Your USA government i[s] not kind to our Chinese suppliers,” one of the defendants, Li, said to the undercover agent who was trying to make a purchase in October 2023. “So now we are very sensitive to American customers, your American government always likes to make some trumped-up charges to sanction us.”

None of the defendants has been arrested and all are in China, Estrada said.

Estrada said he hopes the indictment will lead to some collaboration with the Chinese government.

“We have seen some willingness from the People’s Republic of China to cooperate on this issue,” he said. “Fentanyl is making its way to people of the PRC. The government doesn’t like that. It’s certainly our hope that by announcing this they will work with us to help stop this.”