A Mexican citizen living unlawfully in the United States was sentenced to 70 months in federal prison for money laundering and firearms offenses, according to an announcement from U.S. Attorney Kyle G. Bumgarner of the Western District of Kentucky and other federal officials.
On March 5, 2026, Jose Malagon Castro, 49, received a sentence that includes three years of supervised release, a $30,000 fine, and forfeiture of $516,800. He was convicted on twenty-four counts related to money laundering and one count of possession of a firearm by a prohibited person. Castro was not allowed to possess firearms due to his immigration status.
Two other individuals involved in the case were also sentenced. Kelin Hernandez Barahona, 31, a Honduran national, and Suri Rosmeri Hernandez Del Cid, 28, from Guatemala—both unlawfully present in the U.S.—received sentences of just over eleven months in prison with three years’ supervised release for their roles in assisting Castro.
From at least January 2020 through December 2024 in the Western District of Kentucky, Castro used his Money Service Business (MSB) at three grocery stores—El Rey I, II and III—to launder proceeds from drug trafficking. He and his employees transmitted cash to multiple recipients in Mexico. Forensic accounting by the IRS determined that more than $1.9 million was laundered to Mexico for a single drug trafficking organization. On December 4, 2024, law enforcement searched Castro’s businesses and residences and seized $516,800 as well as several firearms.
Two co-defendants—Vanessa Avila Galaviz of Mexico and another individual named Kelin Hernandez Barahona—remain fugitives after failing to appear following their indictment.
United States Attorney Kyle Bumgarner said: “Castro laundered over 1.9 million dollars in drug proceeds to Mexico on behalf of a drug trafficking organization. That 1.9 million dollars of laundered drug money represents a significant amount of poison that was sold in our community. Castro will now spend 70 months in prison before being expelled from the United States.”
There is no parole available under the federal system.
The investigation involved several agencies including IRS Criminal Investigation, ATF Louisville Field Division, DEA Louisville Field Division, Homeland Security Investigations Nashville, FBI Louisville Field Office, Louisville Metro Police Department (LMPD), and Jeffersontown Police Department.
Assistant U.S. Attorneys Mac Shannon and Joseph Ansari prosecuted the case.
This prosecution falls under the Homeland Security Task Force (HSTF) initiative—a partnership aimed at dismantling criminal cartels and transnational organizations that violate federal law or facilitate human smuggling and trafficking operations impacting U.S. security.
