The owners of downtown textile company Pacific Eurotex Corp. plead guilty to federal money laundering and tax charges Friday.

Morad Neman, 57, chief executive and his brother, Hersel Neman, 58, and chief financial officer of the company, plead guilty to federal charges that accused them of using their business to receive bulk cash that they knew or believed to be the proceeds of narcotics trafficking, according to a press release by the U.S. Immigration and Customs Enforcement’s (ICE), which was involved in the investigation.

The company was part of a raid three years ago. On Sept. 10, 2014, around 1,000 federal and state agents conducted raids on 75 textile companies in the Los Angeles Fashion District in an attempt to crack down on money-laundering schemes believed to be tied to drug cartels in Mexico. At the time, the total amount of cash and property seized totaled $140 million, according to media reports. The Nemans were among the 10 arrested from a handful of companies.

Money laundering is the process of making illicit money appear legal. In this case, it took the form of large sums of money dropped off at companies such as Pacific Eurotex, which took the money, paid for garments and shipped them to Mexico where the products were sold in stores for pesos, with the currency eventually finding its way back to cartels, according to ICE.

Prosecutors on Friday said Pacific Eurotex was used to launder $370,000. It accepted bulk cash payments that were deposited in amounts less than $10,000 to avoid bank reporting laws. The money was, in fact, provided by an undercover government agent posing as a money courier for drug interests.

Two other defendants in this case are scheduled to go on trial March 6. Mehran Khalili, brother-in-law of Hersel Neman, is charged with conspiring to structure cash transactions and Alma Villalobos, the accountant for Pacific Eurotex, faces several charges including conspiracy to launder money, the ICE press release said.

The Nemans agreed to forfeit $3.18 million to the government. The brothers face more than 20 years in prison and are scheduled to be sentenced on June 14.

Manufacturing and trade reporter Shwanika Narayan can be reached at snarayan@labusinessjournal.com or 323-556-8351. Follow her on Twitter @shwanika.