James Jensen Charged in Cartel Oil Smuggling Operation

James Lael Jensen is a 68-year-old Utah businessman at the center of a federal cartel oil smuggling case in which prosecutors allege he and his son Maxwell ran a seven-year operation that moved stolen Mexican crude into Texas and sent millions of dollars to the Jalisco New Generation Cartel (CJNG). The case, filed in the Southern District of Texas, is one of the first to charge American citizens with providing material support to a Mexican cartel after the Trump administration designated the CJNG a foreign terrorist organization in February 2025.¹

What Jensen Is Charged With

A federal grand jury returned a superseding indictment on May 22, 2025, charging James Jensen and his 25-year-old son Maxwell Sterling Jensen with conspiracy to provide material support to a foreign terrorist organization, conspiracy to commit money laundering, and aiding and abetting the fraudulent entry of goods in violation of the Tariff Act. James Jensen faces an additional standalone money laundering count.²

The exposure is significant. The material support and money laundering conspiracy counts each carry up to 20 years in prison. The smuggling counts carry five to ten years, and the extra money laundering charge against James Jensen adds up to ten more. Prosecutors are also seeking a $300 million money judgment on conviction, along with forfeiture of the family’s business property, vehicles, barges, and real estate, including a $9.1 million Utah mansion.²³

Both James and Maxwell Jensen have pleaded not guilty. Maxwell was ordered detained without bond pending trial.⁴

How the Alleged Smuggling Operation Worked

According to prosecutors and investigative reporting by El País, the Jensen family’s operation ran from 2018 through early 2025. Over that period, the family allegedly imported more than 4,000 shipments of crude oil stolen from Petróleos Mexicanos (Pemex), generating an estimated $300 million. The superseding indictment focused on a narrower window, citing approximately 2,881 fraudulent shipments.⁵²

The CJNG stole crude from Pemex through pipeline tapping, terminal theft, and corruption of Pemex employees. The oil then crossed the border into Texas, roughly 85% by truck through Reynosa, 13% by rail through Matamoros and Nuevo Laredo, and the rest by sea. To get past U.S. customs, the Jensens allegedly declared the crude as “waste of lube oils,” “petroleum distillates,” “additives,” or “diesel.”⁵³

Once in the United States, the oil was routed to Arroyo Terminals, a storage and distribution facility the family operated in Rio Hondo, Texas. The company owned 30,000-barrel barges and large storage tanks near the Arroyo Colorado. According to NewsNation, the stolen crude was blended into the company’s own supply before being sold to commercial refineries.⁶ Investigators identified at least $47 million transferred from the Jensens’ U.S. business accounts to Mexican companies, several of which Mexican tax authorities had already flagged as fraudulent invoicing shells.³

The Cartel Connection

The feature that moves this case from smuggling to terrorism-related charges is the alleged direct link to CJNG leadership. Prosecutors’ evidence includes testimony from a DEA cooperating informant who began working with the agency in mid-2024 and admitted to collecting extortion payments for the cartel, bribing Mexican officials, and laundering money. Wire-recorded conversations and an April 2025 meeting in Dallas, where the informant discussed his relationship with CJNG leadership, are being used to establish the defendants’ awareness of the cartel tie.⁷

DEA intelligence reports name Iván Cazarín Molina, known as “El Tanque,” as a senior CJNG leader overseeing fuel theft operations. He was sanctioned by the U.S. Treasury in September 2024. César Morfín Morfín, alias “Primito,” controls the CJNG’s operations in Tamaulipas and oversees the smuggling of crude into Texas; he was sanctioned by Treasury in May 2025.⁸ Prosecutors allege the CJNG charged the Jensens a $2,000 extortion fee per shipment, with at least $8 million flowing to the cartel over the life of the operation.⁵

Family Members Arrested and Charges Dropped

All four Jensen family members were arrested on April 23, 2025 in a multi-agency operation dubbed “Operation Liquid Death.” James and his wife, Kelly Anne Jensen, were taken into custody at their Utah home; Maxwell and another son, Zachary Golden Jensen, were arrested in Texas.³

Kelly Anne and Zachary were initially charged with conspiracy to launder money. On May 27, 2025, federal prosecutors moved to dismiss those indictments “in the interest of justice,” and a judge granted the dismissals without prejudice the same day. The U.S. Attorney’s Office offered no public explanation, and it remains unclear whether either has become a cooperating witness.⁹¹⁰

At the time of the arrests, authorities seized four tank barges containing crude oil, three commercial tanker trucks, an Arroyo Terminal pickup truck, a personal vehicle, and crude oil stored in the company’s tanks.²

Where the Case Stands

The case, United States v. Jensen (1:25-cr-00257), is being heard in the Southern District of Texas before Judge Jose Rolando Olvera Jr. According to El País reporting from February 2026, trial proceedings were underway, and the defense appears to be arguing the family did not know they were dealing with the CJNG, an approach aimed at defeating the terrorism-related charges that carry the heaviest penalties.⁴⁵ The docket showed continued activity as of June 2026, with no verdict or plea agreement reported.

The case has also taken on an international dimension. On February 19, 2026, Mexican President Claudia Sheinbaum confirmed that her government had formally requested extradition of the Jensen family to face charges in Mexico related to the stolen Pemex fuel. As of early 2026, the U.S. government had not acted on the request. Sheinbaum characterized the American response as “inaction,” telling reporters in January 2026, “We keep insisting, because it still hasn’t happened.”¹¹

Why This Prosecution Is Different

Cartel fuel theft is not a new problem, but the legal theory being used against the Jensens is. On May 1, 2025, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a formal alert warning financial institutions about oil smuggling schemes along the U.S. southwest border tied to Mexican cartels. The alert identified fuel theft as the “most significant non-drug illicit revenue source” for organizations including the CJNG, the Sinaloa Cartel, and the Gulf Cartel. According to FinCEN, cartels sell stolen Pemex crude through complicit Mexican brokers to small U.S.-based oil and gas companies near the border, which then resell it at a discount and wire the profits back.¹²

What makes the Jensen prosecution unusual is that federal authorities are using the February 2025 foreign terrorist organization designation to bring material support charges against U.S. citizens who allegedly purchased cartel-sourced oil. DEA Acting Special Agent in Charge William Kimbell said what began as a drug trafficking investigation “evolved into a multifaceted case involving an alleged complex criminal operation generating millions of dollars from crude oil,” which he described as “the largest funding source for Mexican drug cartels.”¹ If the government secures a conviction on the material support count, the case will set a template for prosecuting American buyers on the demand side of cross-border cartel theft.

1
DEA. Father and Son Indicted for Providing Material Support to Mexican Cartel Engaged in Terrorism
2
U.S. Department of Justice. Father and Son Indicted for Providing Material Support to Mexican Cartel Engaged in Terrorism
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El País. The Jensens: The US Family That Smuggled 2,900 Shipments of Crude Oil From Mexico to Texas
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CourtListener. United States v. Jensen
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El País. The Jensen Case Reveals How Proceeds From Stolen Crude Moved From the US to a Mexican Cartel
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NewsNation. Utah Couple, Sons Charged in Smuggling $300 Million in Oil
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El País. Washington Links the Jensen Family to the CJNG Leadership in Charge of Fuel Theft
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U.S. Department of the Treasury. Treasury Targets CJNG Fuel Theft Network
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ValleyCentral. Prosecutors Drop Charges Against 2 People Arrested in Arroyo Terminals Case
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MySanAntonio. South Texas Oil Smuggling Mexican Cartel
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InSight Crime. Will the US Send Alleged Fuel Smugglers to Mexico
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FinCEN. FinCEN Issues Alert on Oil Smuggling Schemes on the US Southwest Border Associated With Mexico-Based Cartels