New York lawmakers worry that fast-growing marijuana store chains across the city could be a source of money for Middle Eastern terrorist groups — and they’re pushing for legislation to help weed out rogue financiers, the Post has learned.
Illegal tobacco store owners — who some city officials say now number in the thousands, compared to just 11 state-licensed stores in the Big Apple — have remained under the radar thanks to local laws that govern so-called LLC, or limited liability companies.
LLCs are legitimately used by businesses to receive tax benefits and provide liability protections. But they also face abuse from tax evaders, money launderers and other criminals — and supporters of terrorism could be among them, Sen. Brad Hoylman-Sigal told the Post.
“We know that LLCs are used to hide and funnel money to unsavory causes and could be used to fund terrorist activities,” said Hoylman-Sigal, who is the lead sponsor of the Corporate Transparency Act. LLC. “It wouldn’t surprise me if there were individuals or groups of individuals funding these stores in aggregate, but we won’t know until we get to the core of their ownership.”
Passed by the New York Legislature in June, the bill would require LLCs to report the true identities of their owners, including their names, addresses and year of birth, to a public database.
The bill requires Gov. Kathy Hochul’s signature by the end of the year to become law.
A spokeswoman for Hochul said she was reviewing the bill, but that it faced strong opposition from her deep-pocketed supporters, including business and real estate lobbyists.
Insiders say this is partly because secretive shell companies have been a massive force in propping up New York’s real estate market.
A study last month found that 37 percent of Manhattan properties are owned by LLCs.
“Russian oligarchs, narcotics traffickers, terrorists and money laundering dirtbags around the world are using New York LLC secrecy laws to hide their money,” said John Kaehny, executive director of the group monitoring company Reinvent Albany, which published the study.
Meanwhile, the explosion of illegal smoke shops across the city has become a political hot potato, with New York Mayor Eric Adams saying there are now 1,500 of them – and the City Council said in a statement press release in August that the number was closer to 8,000.
State Sen. Liz Krueger — who sponsored the bill that regulates and taxes marijuana after it is legalized for recreational use in 2021 — said the growth of illegal marijuana stores across the city has far outpaced anything what she expected. As a result, Krueger said she supports more disclosure laws about their property.
“I think there are people with a lot of money who are dealing with these illegal stores,” Kreuger told the Post. “I am absolutely concerned that limited liability companies are being used to finance terrorist groups. »
An illegal New York City pot shop can bring in tens of thousands of dollars a day — despite the city’s uneven efforts to fine business owners and landlords since the botched rollout.
Although information about ownership remains obscure and speculative, the weed that ends up in some illegal tobacco shops has been linked to Chinese criminal networks that are among the largest producers of cannabis in the United States, according to Chris Urben, an agent retired DEA who is the chief executive of global investigative firm Nardello & Co.
Dishonest Chinese financiers, in turn, have also done business with Lebanese money laundering networks, according to Urben. When the latter are involved, there is likely a link to the Iran-backed Hezbollah terrorist group, he adds.
Lebanon-based Hezbollah has been launching missiles at neighboring Israel since the Jewish state began bombing Gaza following the Hamas terror attack, which killed more than 1,400 Israelis.
“We’ve seen connections between Chinese money launderers and Lebanese money launderers. So we believe there is some sort of money laundering connection” with marijuana sold in some illegal stores, Urben said , who worked for the federal Drug Enforcement Administration for 20 years. 25 years.
In 2015, U.S. Attorney General Preet Bharara arrested 10 synthetic marijuana “K2” dealers across New York City who were using a network of bodegas to sell drugs manufactured in China. The synthetic weed was divided into 260,000 packets and sold for $5 apiece “where they sell milk and candy,” Bharara said at the time.
The defendants in the case — several of whom took conspiracy plea deals and served prison sentences ranging from four to 12 months — were mostly of Yemeni descent. No specific terrorism financing charges have ever been brought against these defendants.
Yemen in the mix
Nonetheless, in recent years, federal agents have gathered evidence that money from K2 drug sales across New York City helped fund Yemen-based Houthi fighters, according to Urban. There are 6,000 bodegas run by Yemenis in the Big Apple out of 13,000 in the city, according to the Yemeni Merchants Association.
“A significant portion of synthetic narcotics have been sold in New York gas stations and bodegas in recent years, and it is highly likely that significant amounts of money from these sales were sent to Houthi militias,” Urben said.
Last week, the Houthis made headlines when they fired several missiles into Israel following Hamas attacks on October 7. The missiles were shot down by a US Navy warship, the Pentagon said.
Hezbollah trained and armed the Houthis during their years-long war against Saudi Arabia in Yemen. The Houthi leader recently said his group was ready to coordinate with Hezbollah if the United States intervened in Gaza.
The Yemeni Merchants Association, which represents many of New York City’s smokehouses in addition to the 6,000 bodegas owners, did not respond to calls seeking comment.
The group said during city council hearings that its smoke shop owners wanted to obtain a license, according to public testimony.
“They want to avoid police raids,” said Paula Collins, a lawyer who represents most of the city’s pot shop owners. “People are tired of life.”
Collins denied that any of his Yemeni clients were behind a network involved in nefarious schemes.
“There are small groups with three or four stores,” Collins told the Post. “Most Yemenis I know work hard, are destitute and save money to get here. I just don’t see the connection.
Still, Collins admitted that owners are having a hard time finding a place to hide their cash because most banks won’t accept money from cannabis companies because it’s still illegal at the federal level.
Banks that manage cannabis funds charge thousands of dollars for basic services, including checking accounts, she said.
“Welcome to the world of cannabis,” Collins said.
With Carl Campanile
New York Post