A Chinese company accused of supplying drug traffickers with the illicit precursor chemicals used to make fentanyl has come forward to defend itself in court in the United States, claiming everything is just a big misunderstanding—and possibly the work of Big Soda.
The Yuancheng Group, led by 68-year-old Chuen Fat Yip, is allegedly a wholesale manufacturer of banned anabolic steroids and the key ingredients that enable clandestine chemists to cook fentanyl, the powerful synthetic opioid fueling a surge in U.S. overdose deaths.
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Federal prosecutors in Texas unsealed a five-count indictment against Yip in March 2021, but despite U.S. authorities offering a $5 million reward for his capture he remains a fugitive and is suspected to reside in the Chinese city of Wuhan, where his company is headquartered.
Yip and Yuancheng are not household names like El Chapo and the Sinaloa Cartel, but they allegedly help keep Mexican traffickers in business as a vital link in the black market supply chain. Prosecutors say Yip’s company agreed to ship a restricted precursor into Mexico knowing it would be turned into fentanyl and smuggled across the border to the U.S., where synthetic opioids were responsible for about two-thirds of last year’s record 108,000 fatal overdoses.
Yuancheng had not responded publicly to the allegations until last month, when the company filed an unusual 22-page declaration with the federal court in Texas, proclaiming innocence and counter-alleging a wild conspiracy that involves a “secret agent” journalist, the makers of Coke and Pepsi, and a purportedly stolen cola ingredient.
The declaration was filed in both English and Mandarin Chinese, and the English version appears to suffer from questionable translation. It blames author (and onetime VICE contributor) Ben Westhoff for Yuancheng’s problems with the U.S. government, which span the Trump and Biden eras, saying he has “repeatedly smeared and slandered our company in the press.”
“His reports were made with ulterior motives,” the declaration says. “He exploited two presidents with political methods to obtain his own benefits.”
Westhoff’s 2019 book, Fentanyl, Inc., explored Yuancheng’s role in the synthetic drug trade. He has described secretly recording conversations with the company’s staff of young, English-speaking salespeople, who offered to mail shipments of fentanyl precursors to the U.S. in packaging disguised as food additives. Westhoff also traveled to Wuhan and went undercover, posing as an interested buyer to score a tour of the Yuancheng offices and a handshake with Yip himself, who said they had 30 branch offices across China.
Yuancheng says in its filing that Westhoff’s meeting with Yip “lasted less than five minutes” and ended because they suspected “he might be a drug dealer.” The meeting occurred in 2018, not long after the Chinese government restricted production of fentanyl precursors, which had previously been unregulated. Despite the new rules, Westhoff said, Yuancheng sales reps still offered to cut him a deal on fentanyl ingredients. The company maintains it is a “legit enterprise” and has “never sold banned chemical products.”
In a subsequent phone conversation, Westhoff reported, Yip insisted that he only dealt chemicals legal under Chinese law: “Anything that the country schedules, we don’t sell,” he said. “As long as it’s scheduled, we won’t sell it. If it’s not scheduled, we can sell it.”
Yuancheng says in its declaration that U.S. efforts to restrict fentanyl precursors are “too confusing” and infringe on free trade. A company that sells “chemical raw materials” as they do, the declaration argues, shouldn’t be held responsible for how buyers use the products.
“If these chemicals were all banned,” Yuancheng wrote, “there would be no chemical industry in the world.”
Beyond disputing the international rules most other chemical companies manage to follow, Yuancheng alleges there’s something more nefarious afoot. They claim to have developed a “tasteless and odorless” preservative called potassium cinnamate in the early 2000s on behalf of “two big US cola companies,” only to have their production techniques “stolen.”
Asked about the allegations, a spokesperson for PepsiCo sent a statement to VICE News that said: “We have never had a business relationship with Yuancheng Group. We do not currently use potassium cinnamate in any of our products and, to the best of our knowledge, we never have.”
The Coca-Cola Company did not respond to requests for comment.
All the talk about fentanyl, Yuancheng alleges, was Westhoff doing the bidding of the cola companies and the U.S. government “to suppress Chinese enterprises.”
In perhaps the most mangled English translation, the declaration says of Westhoff, “he will enter in any hole, and if it finds none it will make none.” (A fluent Mandarin Chinese speaker said the passage would be more accurately rendered as, “He is trumping up a charge against us.”)
Westhoff responded publicly on July 16, poking fun at the suggestion he has secretly been working for Big Soda while practicing investigative journalism.
“For the record,” he wrote, “I prefer Coke, fountain style, over ice.”
Beyond Yuancheng, Westhoff says, Yip—also known as Ye Chuan Fa—has “long operated scores of shell companies, specializing not just in fentanyl precursors but also anabolic steroids.” He provided VICE News with a list of nine companies associated with Yip suspected of still being active in China.
Yuancheng did not respond to a request for comment from VICE News.
The U.S. Treasury Department has sanctioned Yip, saying he is “considered one of, if not the largest, producer of anabolic steroids in the world,” who has increasingly turned to bitcoin to conduct business. Last November, prosecutors said they had obtained a warrant to seize more than 49 Bitcoins—then worth approximately $2.3 million–from a digital wallet traced back to Yip.
At least one factory used by Yuancheng in Wuhan has been out of commission since at least October 2019, when VICE News saw it firsthand while producing a podcast series about illicit fentanyl. A large facility with the company’s “YC” logo on the exterior had been badly damaged by a fire and stank of singed chemicals. Chinese authorities reported at the time that the cause of the blaze was under investigation, and our attempts to interview neighbors at the factory were cut short when men hanging out nearby warned them not to speak with us.
Westhoff says “the local investigation did not rule out arson” at the Yuancheng factory.
Erin Dooley, a spokesperson for the U.S. Attorney’s Office in Northern Texas declined to comment, citing the ongoing prosecution, but asked the public to contact the DEA with tips about Yip’s whereabouts.
It’s unclear whether Yip is wanted by Chinese authorities, but according to Westhoff his company has received support from the government and cultivated links with the ruling Communist Party. Beijing has declined to arrest other accused fentanyl traffickers wanted by the U.S., with a top Chinese anti-narcotics official saying in years past that cooperation on such cases has been “extremely limited”
There is no extradition treaty between the U.S. and China, so it’s unlikely Yip will ever set foot in a Texas courtroom. Meanwhile, fentanyl seizures are skyrocketing along the Mexican border and across the United States, with India emerging as a new source of precursors for cartels.
Jeremy Douglas, the Southeast Asia chief for the United Nations Office on Drugs and Crime, told VICE News that traffickers in the region have already adapted to new regulations intended to thwart shipments of chemical precursors—not just for fentanyl, but also methamphetamine, ketamine, and other synthetic substances.
“Organized crime syndicates and their business partners in Asia are pretty ruthless, and they’re masters at evading controls and skirting regulations,” Douglas said. “They’re innovators.”
As for Westhoff, he told VICE News that while Yuangcheng is attacking him in court, he’s not worried about his safety.
“I don’t have any specific indications that I should be fearful, like suspicious vans following me in traffic, but the State Department has advised me not to travel to China again,” Westhoff said. “All of this makes me a bit concerned, but I’ve been sleeping pretty well. It makes me feel good to take on a company that has caused so much harm.”
