The paper trail that links a US fuel dealer to a Mexican cartel

According to Mexican sources who have direct knowledge of this matter, and four Mexican government documents, Ikon Midstream is being investigated in Mexico for fuel smuggling.

Documents and sources indicate that the probe is part and parcel of ongoing investigations on maritime shipments from the U.S. to Canada of petroleum products in an alleged scheme of evading a large tax due for these imports.

Ikon Midstream was allegedly one of the "central pieces," in a alleged scheme that involved one of Mexico's largest crime groups, Jalisco New Generation Cartel, or CJNG. According to a document, Mexico's Attorney General's Office?opened an investigation against the company based on "testimonies, documents, and surveillance."

The Attorney General's Office of Mexico did not respond to any requests for comments.

According to security sources and the document, the Texas trader’s export of Diesel aboard the tanker Torm Agnes, is being examined for possible cartel connections, as well as Ikon Midstream’s purported relationship with an alleged CJNG related trucking company who helped offload cargo from the vessel in the ports Ensenada, and Guaymas.

According to the U.S. Government, smuggled fuels and stolen crude oils are now the second largest source of revenue behind narcotics for Mexico's cartels.

Two documents described the alleged racket and its players. Ikon Midstream, for example, was accused of being a supplier in Mexico of petroleum products, which were allegedly moved through an intricate web of importers and distributors, as well as transporters and facilitators. The summaries for the other two documents were included. The security sources confirmed that the four documents were produced in March and April.

Rhett Knagy, Ikon Midstream's Executive Director, responded in an email on May 12 that "not one shred of evidence" could be found to support the allegations. The company would not respond to hearsay accusations.

Homeland Security Investigations (HSI), the U.S. Department of Homeland Security's primary transnational investigation agency, executed a criminal warrant at Ikon Midstream Houston offices on 14 April, a DHS spokeswoman said in a statement released April 17. The statement stated that the search warrant was part of an ongoing criminal investigation. DHS didn't elaborate and did not say if it was working with Mexican authorities.

Ikon Midstream repeatedly denies wrongdoing. Ikon Midstream, in a statement dated April 24, said that it has never provided and does not provide material support or resources for CJNG.

Mexican authorities announced that at least 16 arrests have been made since September, in relation to fuel smuggling. Officials have claimed to have uncovered "a criminal structure" behind alleged illicit activities, but have not publicly identified the detainees.

In an October report, detailed how diesel exported by Ikon Midstream on the tanker Torm Agnes found its way to Intanza, the Mexican company authorities suspect of being a front for CJNG. Intanza does not have a listed phone number, a website, a social media presence, or a physical address that authorities could locate.

This story detailed how Mexican cartels make billions each year by smuggling fuel - mainly from the U.S. - to Mexico. It's a huge tax dodge. Diesel, gasoline, and naphtha, are declared as lubricants in trade documents to avoid a high import duty charged by Mexico on these imported fuels.

According to the U.S. Government, smuggled fuels and stolen crude oils have become Mexico's cartels' second largest source of revenue behind narcotics. The government has intensified efforts to crackdown on this illicit trade. In February 2025, the Trump administration designated CJNG a terrorist organization.

Trade experts, tax officials and law enforcement officials have reported that the paperwork used for import-export transactions is often incomplete, or even faked, by smugglers. They use front companies and established players in the oil industry to help facilitate these deals, with some colluding and others unknowingly, while others are acting without their knowledge.

Ikon Midstream filed a defamation suit on November 14, in a Texas district court, claiming that the news agency had made "categorically untrue" statements in the article from October about its business. The news agency stands by its reporting, and it is fighting the lawsuit.

Ikon Midstream has said that it did not do business with Intanza. Ikon Midstream released internal documents after the publication of the 'October report. These showed that the Torm Agnes cargo, along with three other 2025 shipments containing diesel and naphtha on the tanker TormLouise?were sold by Ikon Midstream to a Mexican client named Azteca Cone.

Azteca Cone is also under investigation, along with Intanza, for suspected fuel smuggling, and possible links to CJNG. This is according to three Mexican security sources, and two government security documents.

Azteca Cone is a mystery in the fuel business. Azteca Cone, like Intanza has no phone number, web address or physical location.

Ikon Midstream's internal documents, which it shared with us, also showed that Ikon Midstream had incorrectly classified the cargo in at least four of its shipments to the United States last year. Ikon Midstream had some of its own documents that described the cargo as being lubricants. This contradicted statements made last year by both the Texas company's attorney and the commercial manager for the tankers who said the vessels were carrying diesel and naphtha. It is important to make this distinction because fuels imported from Mexico are taxed heavily.

According to law enforcement officials, smuggling can be difficult to detect when mislabeled records are matched with what is declared by the recipient country. For example, both parties declare cargo as lubricants, but the product in question is actually diesel.

Ikon Midstream, in its statement of April 24, acknowledged that it made mistakes in its export filings. This was a reversal from earlier statements by the company claiming that it used the correct product code in its declarations to U.S. Customs. The company's updated statement characterized the repeated inaccuracies of its paperwork as "clerical mistakes" and stated that there was "no intention to avoid duty."

The story was not commented on by the oil shipping giant Torm. It is responsible for managing the tankers Torm Agnes, and Torm Louise. Torm, a Danish company, said last year it ended its business with Ikon Midstream based on "what has been revealed." However, the company did not provide any further details.

Four sources familiar with this deal have confirmed that Imperial Oil is the Canadian oil company which owns the majority of Exxon Mobil.

Documents shared by Ikon Midstream show that Exxon was also listed on the inspection reports for three Torm Louise shipments. This indicates that the oil giant provided the fuel to Ikon Midstream. On inspection certificates, the parties listed are usually the buyer and seller as well as terminal operators.

Exxon has not responded to numerous requests for comments. A person with knowledge of the matter stated that Exxon cut ties with Ikon Midstream by mid-2025.

Ikon Midstream purchased 120,000 barrels last year, which were loaded on the Torm Agnes tanker in Canada and transported to Mexico. Intanza received it. Port records show that the cargo was declared twice to Mexican customs, first at the Port of Ensenada where a portion of it was loaded into fuel trucks and then in the Port of Guaymas where the remainder was discharged in the same manner.

This misclassification enabled Intanza avoid paying around $7 million of tax on diesel. The tax was calculated based on volume and tax rate.

Mexican security sources said that Mefra Fletes, a trucking firm in Mexico, helped remove the Torm Agnes Diesel from both ports. According to four documents from the government, the company was also identified as a central piece in the alleged fuel-smuggling plot.

According to two security documents and three Mexican sources of security, Mefra Fletes has worked closely with Ikon Midstream in the past, transferring petroleum products from tanker to truck at several Mexican ports. In August, a reporter stopped at the Houston offices of Ikon Midstream and was turned away by an employee who claimed to be from Ikon Midstream. He had previously worked for Mefra Fletes. The man refused to reveal his full name.

Five owners or representatives of Mefra Fletes were named in a fifth, undated, Mexican government security document. The document was partially viewed. It also alleged that the five had ties to CJNG. It was not possible to determine if any of these people had been charged or to reach Mefra FLetes. The company does not have a presence on social media, nor a listed phone number or an address.

Ikon Midstream has not answered any questions regarding its purported relationship to Mefra Flates.

The FUEL TRADER'S VANISHING Clients

Ikon Midstream, in its lawsuit against a Mexican company, claimed to be an exporter and that it is solely responsible for the declarations made at Mexican customs.

Eight legal experts were consulted to determine what U.S. exporters should do to ensure that their customers are not sanctioned and are not connected to sanctioned parties. Ephraim Wernick is a Vinson & Elkins partner and former U.S. Department of Justice prosecution who specializes in foreign corruption and anti-money laundering cases. He says that such vigilance will be critical once CJNG, five other Mexican cartels, and the United States list of designated terrorist organizations are updated in February 2025. He said that U.S. prosecutors have greater leeway in pursuing parties suspected of giving cartels material support.

Wernick said, "You can't bury your head in the ground." He noted that he was unfamiliar with Ikon Midstream and its transactions in Mexico.

Ikon Midstream, in a statement dated April 24, said that it screens customers with a "risk based due diligence program." The company said that it has never transacted with an entity on the U.S. sanction list and that no counterparty had displayed "payment behaviour inconsistent with that of a legitimate wholesale purchaser."

Azteca Cone's physical address and even the most basic of information was not available.

Two journalists visited an industrial area on the outskirts Monterrey, in northern Mexico, in November using an Azteca Cone address listed on four invoices for 2025 provided by Ikon. This location was the home of a metalworking firm called C.W. Tech. C.W. Tech has been located at this address for three years.

C.W. Tech has not responded to any requests for comments. No indications exist that the company is involved in this alleged fuel smuggling scam.

According to an analysis of permits issued since 2021 or 2022, Azteca Cone and Intanza have never held the permits required by Mexico’s Energy Ministry for the importation of diesel or naphtha to Mexico. Two Mexican attorneys who specialize in energy and tax issues said that importers without these permits could face heavy fines or even prison time.

The Energy Ministry has not responded to any requests for comments.

Ikon Midstream stated that it was not responsible for verifying Azteca Cone's physical presence, nor did it have any obligation under U.S. law or Mexican law, to verify if its Mexican client held these permits. This statement, dated April 1, said.

Azteca Cone, as well as Intanza, have also had an important government approval revoked. In order to import any goods into Mexico, each company must be registered with the SAT (the nation's tax authority). According to the official list of suspended firms, Intanza as well as Azteca Cone, were both suspended from SAT's importers' registry on March 31, 2025. These suspensions were made less than one month after Torm AGNES arrived at the Mexican port of Ensenada in March 2025.

According to the list of suspensions, Intanza? and Azteca Cone lost their import authorizations due to their connection with another party who had been banned from importing. The document didn't name the third-party or explain why they were suspended.

The Mexican tax authority has not responded to any requests for comments.

Ikon Midstream stated in a statement dated April 1, that "it cannot be held responsible for any regulatory actions taken after the fact against a client."

Altana, a trade analytics firm in Mexico, reported that in addition to Azteca Cone, Intanza and other Mexican companies, thirteen others declared doing business with Ikon Midstream from October 11, 2019 to May 4, 2025. They imported products such as lubricants, fuel trucks, but no diesel, gasoline, or naphtha. Mexico's tax agency also suspended ten of these companies from the import registry - seven in 2025, according to its list of suspensions.

This list gave a number of reasons why these suspensions occurred: some of the companies were not able to be located by tax authorities. Others didn't file tax returns. Some didn't have all the documentation required to justify their foreign transactions. These cases were not detailed in the suspension list; tax authorities do not make details public.

SAT has not responded to any requests for comments about the suspension of Azteca Cone or Intanza, nor did it respond to questions regarding its suspensions. In a public document published by the tax authority in 2026, SAT said that it suspects that one of these firms - Komercialis – is a phantom firm that issued fake bills for transactions that did not take place.

No one responded to the requests for comments. The majority of companies did not have a listed phone number, or an internet presence. Many questions sent via courier were not delivered because the listed addresses of most companies could not be located.

Ikon Midstream stated that all of its counterparties had a business address at the time they transacted with it, in a statement dated April 24, 2004.

"IF NOTHING, THIS IS SUSPICIOUS"

The World Customs Organization developed product codes to standardize the way countries identify and track goods that enter or leave their borders. These codes are called Harmonized Tariff Scheduling (HTS) in the U.S.

The system is easy for smugglers to abuse, despite its precision. Customs officials cannot inspect each shipment to verify that the codes on the trade paperwork match the goods. Trade experts and authorities say that smugglers who want to avoid Mexican import duties for fuel often code their cargo as lubricants, or another type of petroleum product which is exempt from levy.

Ikon Midstream reported that it used Torm tankers for at least five shipments to Mexico of petroleum products. Both companies said that the cargoes they delivered were naphtha and diesel. The export documentation that the fuel trader provided for four of these shipments revealed that Ikon Midstream had used HTS codes to identify lubricants.

Two bills of lading were issued, one on January 7, 2025 and the other on January 24, 2025 for shipments departing Texas aboard the vessel Torm Louise. Both bills of lading had the HTS code for both cargoes, 2710.19.3020. According to the description of this code in the online database of HTS Codes by the U.S. Government, the number represents lubricating oil used in marine, automotive or diesel engines. Written descriptions on the bills of lading also described the cargo as being lubricating oil.

Ikon Midstream provided U.S. Export Documents for two additional shipments - a cargo containing diesel and naphtha that was sent aboard the Torm Louise in February and March of last year and diesel aboard the Torm Agnes. Both shipments used HTS codes as lubricants.

Ikon Midstream lawyer stated in an email dated October 29, that it was appropriate to use 2710.19.3020 because "it is a general product category and not a specific cargo listing."

The U.S. Government disagreed with this interpretation. U.S. Customs and Border Protection declined to comment on specific companies, investigations or reports. However, it did say that 2710.19.3020 was not the correct code for naphtha or diesel.

It is possible to make occasional mistakes on documents relating to international trade due clerical error, misunderstandings or a language barrier. CBP spokesperson stated that repeated inaccuracies could be considered as a violation of the foreign trade regulations.

CBP takes repeated errors in HTS code seriously, both for imports and exports. CBP may take enforcement and compliance actions including seizures, penalties, and increased scrutiny.

James Swanson is a former director of cargo security and controls for CBP. He said that Ikon Midstream repeatedly used incorrect HTS codes in U.S. Export paperwork. This was especially alarming to him because the Mexican importer had made the same error on their customs filings. He said it was hard to believe that this was an accident. This is at least suspicious.

Ikon Midstream, when presented with CBP's position regarding the product codes, admitted that it made mistakes in its export filings. It described the errors as minor and unintentional and stated in its statement on April 24 to the news agency that it was "committed" to accurately classifying products going forward.

Speaking generally about fuel smuggling and the use of false tariff codes, a former investigator for Mexico's tax authorities said that smugglers are now coordinating both ends of the transaction, using the same fake tariff codes in Mexico and the U.S. to make it harder for law enforcement officials to detect their deception.

Former investigators said that such subterfuge was "the most sophisticated and complex we've ever seen." It requires both importers and exporters to work together, as well as a good deal of technical expertise and a solid strategic plan.

Ikon Midstream stated in its statement of April 1, "There was no coordination between Ikon Midstream, Azteca Cone and tariff codes"

(source: Reuters)