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Chinese Counterfeit Fentanyl and the U.S. Overdose Epidemic

On October 16, 2019, an article titled, “The China Connection: How One D.E.A. Agent Cracked a Global Fentanyl Ring,” was published in the New York Times Magazine. (The article is written in long-form: almost 13,000 words.) 

In view of the recent arrest of nine (9) Chinese nationals by Chinese authorities a few days ago for the illegal sale of fentanyl to distributors in the U.S., I thought it would be useful to examine the details of the investigation specified in the October 16th New York Times piece to help us put the recent arrests into historical context.

The article follows the U.S. Drug Enforcement Administration (D.E.A.) investigation of a counterfeit fentanyl criminal enterprise that originated in China.

There were an estimated 30,000 U.S. Fentanyl deaths in 2018.

EXCERPTS FROM THE NEW YORK TIMES

The article provides a true insight—in painstaking detail—of how the sale of counterfeit fentanyl was distributed in the United States.

What follows are excerpts from the New York Times article with the exception of the sub-titles:

HOW POTENT IS FENTANYL?

“Fentanyl…the most potent opioid in the world, 100 to 200 times stronger than morphine.

STATISTIC: FENTANYL DEATHS IN THE STATE OF OHIO

“Despite their efforts, the pace of the fentanyl epidemic in the United States was accelerating. In Ohio, fentanyl-related deaths rose to 1,155 in 2015 from 75 in 2012.

FENTANYL SEIZURES AT THE U.S. BORDER

United States border agents reported seizing 32 kilograms of fentanyl in 2015; the next year, they confiscated more than 270.

HOW MANY CHEMICAL COMPANIES ARE THERE IN CHINA?

“According to the State Department, China has between 160,000 and 400,000 chemical companies operating legally, illegally or somewhere in between.

ARE THE COMPANIES INSPECTED?

“The agency responsible for overseeing production of drugs and detecting malfeasance in China is understaffed and overwhelmed: As of 2017, there were around 2,000 inspectors at the agency, and they conducted a total of only 751 inspections that year…

ARE DRUG DEALING OPERATIONS ORIGINATING FROM CHINA EFFICIENT?

“China’s rapidly expanding drug industry changed the equation. The simplicity of the new organizational structure that Buemi [DEA agent] had begun to uncover — dealer, shipper, buyer…

HOW DOES CHINESE DRUG DEALING COMPARE TO MEXICAN DRUG DEALING?

” ‘If Mexican cartels were the big-box stores of the drug market,’ says Dr. Bryce Pardo, a drug-policy researcher at the RAND Corporation, ‘the Chinese are Amazon’ — cheap, convenient and ubiquitous.

NOTORIOUS INTERMEDIARY FREIGHT FORWARDERS

“The shipment on its way to Mexico had been sent through five separate freight forwarders, the nameless middlemen of international shipping, who handle all the paperwork and logistics of export.”

“Fentanyl manufacturers used these companies to ship their product anonymously and disguise its point of origin with layers of anonymity and dead-end addresses.”

SHIPMENTS TO THE U.S. GOOD BUSINESS FOR FREIGHT FORWARDERS

“For freight forwarders, any shipment to the United States was good business. They earned a healthy profit even while accepting no risk — they had no responsibility for checking the contents of the shipments they were given, or ensuring that the information provided by the sender was accurate or complete.”

NOTORIOUS PUBLIC STORAGE LOCATIONS

“The next day, D.E.A. agents in California raided a storage unit and arrested Resnik and three other men, who were later indicted on charges including possession of drugs for distribution. (Resnik pleaded guilty and was sentenced with a co-conspirator to nearly 27 years.)

At the storage unit, agents found bulk imports of acetyl fentanyl from China — imported as “toys” or “children’s clothes” — and a makeshift lab equipped with five pill presses capable of making 40,000 pills, enough product for the operation to net more than $3.6 million a year in street sales alone.”

WHAT IS LIKELY THE LARGEST DRUG TRANSPORTATION SERVICE IN THE WORLD?

“The Postal Service suddenly became perhaps the largest drug-transportation network in the world, delivering fentanyl from China straight to American homes. Catching an illicit shipment in transit was nearly impossible.

HOW HAS PARCEL VOLUME INCREASED?

“According to a 2018 report by the United States Senate Committee on Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations, Chinese parcel volume increased to 20.6 billion units in 2015 from 1.2 billion in 2007. The United States Postal Service’s.”

WHAT DID DEA NEED TO GET THE INTEREST OF CHINESE AUTHORITIES?

“Buemi {D.E.A. agent] needed irrefutable proof that the drugs being shipped from China were killing users, as well as a clear chain of possession stretching from overdose victim all the way back to the Chinese source.

DID THE D.E.A. AGENT FIND THE CASE TO TRY ESTABLISH THE SUPPLY CHAIN?

“In early January 2015, Buemi received a phone call: A young man named Bailey Henke in Grand Forks, N.D., had died of a fentanyl overdose. Buemi thought he’d found his case.

DID THE STATESIDE DRUG DEALER COOPERATE?

“He confessed to his drug dealing and gave investigators his login information for Evolution, a site on the dark web, allowing them to track the purchase back to its source.

D.E.A. BROUGHT CASE TO CHINESE AUTHORITIES

“The time was right, Buemi thought, to bring the case to the Chinese.

HOW COOPERATIVE WERE THE CHINESE IN THE PAST ON THIS ISSUE?

“The State Department found that it, too, had little room to maneuver. Serious conversations about fentanyl began around 2013 and went nowhere. The Chinese vehemently denied any role in the epidemic sweeping across the United States.

WHAT WAS CHINESE REASONING?

“They pointed out that opioids were tightly controlled in China, and that only a handful of firms were licensed to produce or export medicinal fentanyl. Chinese officials, moreover, seemed to have fresh memories of the opium scourge imposed on their country by Western merchants; they had little sympathy for rich countries battling drug-abuse scandals of their own making.

AND DID THEY STICK TO THAT ARGUMENT?

“Even while countless Chinese companies were producing illicit powdered fentanyl for sale to American customers, the Chinese maintained their stance, and the companies continued to operate unimpeded. “It was like talking to a stone wall,” one former United States diplomat told me. The Chinese were unequivocal: “We don’t know what you’re talking about,” the United States diplomat recalls being told. “We have no fentanyl problem.”

FOR CHINESE LAW ENFORCEMENT FENTANYL WAS NOT A PROBLEM

“Just like law enforcement officers in the United States, investigators with China’s Ministry of Public Security (M.P.S.) were evaluated for their accomplishments in solving crimes and closing cases. China has drug abuse issues of its own, especially involving meth, heroin and ketamine. Whatever toll fentanyl was taking in the United States wasn’t reflected in China, where the drug’s analogues and precursors weren’t considered illegal.”

CHINESE LAW ENFORCEMENT DID NOT WANT TO WASTE THEIR TIME ON FENTANYL

“How would an investigator feel about being put on a U.S. case that isn’t even against the law?” Schoeman says. They’d naturally wonder: “Why am I wasting my time on this? I’m tripping over meth and heroin cases.”

WHEN DID CHINESE LAW ENFORCEMENT START TO TAKE AN INTEREST?

“…in October 2015, the situation changed. That month, the Chinese government said that it was adding 116 synthetic chemicals to its list of controlled substances. A huge majority of these were new psychoactive substances, but the list also included six fentanyl analogues. The D.E.A. had asked for the analogues to be controlled, but part of the impetus for the move seemed internal.”

WHAT WAS ONE OF THE KEY TURNING POINTS?

“In June 2015, customs officials in the port city of Guangzhou reportedly seized nearly 50 kilograms of fentanyl. Around the same time, officials seized another 70 kilograms hidden in a container on its way to Mexico. Six Chinese agents became ill after handling the drugs; one fell into a coma.”

DID THE CHINESE START TO ADMIT TO A FENTANYL PROBLEM?

“Publicly, Chinese officials remained reluctant to acknowledge that fentanyl was an issue. But privately, they were ready to talk. “We don’t have a fentanyl problem,” one American diplomat was told by a Chinese counterpart. “We have a ketamine problem — hint hint.”

WHAT DID THE NEW REGULATIONS CONTAIN?

“The new regulations contained another unexpected clause, which Schoeman referred to as the “golden nugget” of the measure. For the first time, Chinese officials could consider damage done in another country as a criterion for regulating a drug domestically.”

CHINESE WERE NOW EMPOWERED TO ACT 

“It was a seemingly minor change in wording, but the result was groundbreaking: If American investigators show definitively that a drug from China had killed an American, Chinese officials would be empowered to act.”

FINAL THOUGHTS

Recent cooperation between the U.S. and Chinese law enforcement that lead to the arrests of the nine (9) counterfeit fentanyl dealers is welcomed, but long overdue. It appears that if not for the pressure the U.S. has imposed on China regarding trade and intellectual property theft, China would not have made amendments to the fentanyl regulations mentioned above.

Therefore, what are we all waiting to see?

We’re waiting to see if China will continue to cooperate with the U.S. in the counterfeit fentanyl enforcement effort.

ADDITIONAL READING

Anti-Counterfeiting and Piracy–Roles and Responsibilities of Intermediaries

The Need for IP Cargo Transporters to Conduct Background Screening of Their Customers—“Know Your Customer”

Intermediary Freight Forwarder Not Liable In Counterfeit Case – Singapore Court Rules – Part I

Intermediary Freight Forwarder Not Liable In Counterfeit Case – Singapore Court Rules – Part II

The Trademark Counterfeiter’s Depot – Self-Storage Facilities: Another Third-Party Supply Chain Intermediary – Part I

The Trademark Counterfeiter’s Depot – Self-Storage Facilities: Another Third-Party Supply Chain Intermediary – Part II

Know Your Customer (KYC) and Other Anti-Counterfeiting “Best Practices”

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Ron Alvarez is an IP Investigations / Protection writer and licensed private investigator in New York City. He is a former NYPD lieutenant where he investigated robbery, narcotics, internal affairs, and fine art theft cases. Ron is a graduate of the FBI National Academy and earned a B.A. in Government and Public Administration from John Jay College of Criminal Justice in Manhattan. He has published a number of articles on various investigative topics for PI Magazine. Ron is certified by the Interpol-International IP Crime Investigators College (IIPCIC.) as a "Transnational and Organized Crime Intellectual Property (IP) Investigator."

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