Los Angeles ( CNN ) -- Los Angeles is known as the nation 's capital of many things . Entertainment . Gangs . Even the creative capital of the world . Add this : The City of Angels is now the nation 's `` epicenter '' for money laundering by international drug cartels . Federal officials made such an announcement this week after they raided downtown businesses and seized an estimated $ 100 million in cash and from bank accounts around the world that were part of forfeiture actions in the ongoing probe . Some of the laundered money included ransom payments to the Sinaloa drug cartel that allegedly kidnapped and tortured a U.S. citizen at a ranch in Mexico . `` Los Angeles has become the epicenter of narco-dollar money laundering with couriers regularly bringing duffel bags and suitcases full of cash to many businesses , '' Assistant U.S. Attorney Robert E. Dugdale said . California Attorney General Kamala Harris also was blunt . `` California is the gateway to the rest of the United States , '' Harris said . `` California is and always will be an attractive target for these kinds of activities because we have the largest population of any state in the United States . The seventh-largest economy in the world . '' Use of peso brokers . The cartels used a scheme known as `` trade-based money laundering '' or `` black market peso exchange , '' federal officials said . On Wednesday , 1,000 law officers swept through a section of downtown Los Angeles known as the `` fashion district , '' which is known more for its dense bazaar-like maze of shops than for any catwalks or haute couture . Authorities initially seized $ 65 million , but the figure grew Thursday to more than $ 100 million , said Thom Mrozek , a spokesman for federal prosecutors . In the `` Operation Fashion Police '' raids , nine people were arrested in the investigation into laundering drug proceeds for cartels , authorities said . Three of the arrests were among seven individuals facing federal indictments for alleged conspiracy to launder money and other charges ; the other three defendants are from a business in the Mexican state of Sinaloa and are being sought , authorities said . The defendants ' attorneys could n't be reached for comment . `` We have targeted money-laundering activities in the fashion district based on a wealth of information that numerous businesses there are engaged in black market peso exchange schemes , '' Dugdale said . Kent Smith , executive director of the LA Fashion District , told the Los Angeles Times that 4,000 businesses generate billions in economic activity each year . `` It 's unfair to paint the rest of the legitimate businesses ... with what a small number of businesses may be doing in terms of illegal activity , '' Smith told the Times . An $ 18 billion sector of downtown . Authorities also say the `` vast majority '' of L.A. 's $ 18 billion garment district is legitimate and operates lawfully . But the federal crackdown clearly `` portend ( s ) a profoundly troubling trend , '' said Claude Arnold , special agent in charge of U.S. Immigration and Customs Enforcement 's Homeland Security Investigations unit in Los Angeles . `` The scope of this current case and its potential long-term impact are truly unprecedented , '' Arnold said . A major tipoff to the illegal activity came when the Sinaloa drug cartel used a fashion district firm as a conduit to launder and accept ransom for the release of a U.S. drug dealer who was kidnapped and tortured by narco thugs . `` The victim was held captive at a ranch in Sinaloa , where he was beaten , shot , electrocuted and water-boarded . The hostage was released after relatives paid $ 140,000 in ransom '' through the fashion district business , authorities said in a statement . The raids capped a two-year investigation , and Attorney General Harris called `` transnational gangs '' like those behind money laundering `` the number one threat to California 's public safety . '' How it worked . Under the scheme , a peso broker would work with a U.S.-based drug dealer or another conspirator who needs to send dollars to Mexico or another country , authorities said . To do so , the broker would find businesses in Mexico that buy goods from U.S.-based firms such as those in the Los Angeles ' fashion district . The Mexican merchants would send dollars to the Los Angeles fashion district stores , authorities said . In return , the fashion shops sent goods to the Mexico businesses , which then sold the products and gave the proceeds in pesos to the broker and eventually the cartels , authorities said . Cartels allegedly use the scheme to avoid `` the risk of smuggling bulk amounts of U.S. currency across the Mexican border and without having to convert and wire the U.S. currency through established financial institutions , which not only carries transaction fees , but also a threat their illegal activity will be detected , '' prosecutors said in a statement . `` It also gives them a presence in the United States they otherwise would n't have , indeed a presence in our business industry , '' Dugdale said . Also , in June 2010 , Mexico announced anti-money laundering regulations `` that restrict the amount of physical cash denominated in U.S. dollars that Mexican banks may receive , '' a grand jury indictment said . U.S. declares victory over Cali cartel . Notorious Mexican cartel leader Nazario Moreno dead -- again .
Authorities conducted more than $ 1 million in raids of downtown Los Angeles shops . The business are located in the city 's Chinatown - like fashion district . International drug cartels allegedly use a ` ` drug - based money transfer '' scheme . Couriers brought ` ` " bags and suitcases full of cash to many businesses , '' feds say .