Jun 26, 2025
In April 2025, the Jensen family faced serious legal troubles when James and Kelly Jensen, together with their sons Maxwell and Zachary, were charged with money laundering. The family stands accused of orchestrating a sophisticated $300 million fraud scheme involving the illegal transportation of crude oil from Mexico.
Jensen's company, Arroyo Terminals, served as an ideal conduit for the operation. According to CBS 4, the crude oil was transported via barges from the company's Rio Hondo facility to various buyers throughout Texas. Federal agents conducted a raid on Arroyo Terminals on April 23.
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However, CBS 4 now reports that charges against Kelly Anne and Zachary are being dismissed "in the interest of justice."
An evolving situation
The Jensen family has been accused of masterminding a $300 million crude oil smuggling operation that prosecutors called “Operation Liquid Death,” according to MySanAntonio.com.
In late April, U.S. Marshals apprehended James and Kelly at their sprawling 27,000-square-foot estate. The couple, along with their children Maxwell and Zachary, face indictments for money laundering and criminal charges stemming from activities beginning in May 2022.
According to court filings, the family facilitated approximately 2,900 shipments of crude oil into the United States while directing payments to enterprises connected to Mexican criminal organizations.
“They were entering into agreements with conspirators — unindicted conspirators — to bring mislabeled crude oil from Mexico into the United States,” Assistant U.S. Attorney Michael Hess said during an April 24 hearing.
Paperwork described the shipments as “waste oil,” Hess said, not crude oil.
“This is significant mainly because the government of Mexico, through its oil company, PEMEX, will not allow for crude oil to enter into the United States, except through very limited agreements with oil and gas companies,” Hess said.
This wasn't James' first encounter with legal trouble regarding petroleum products. In 2011, PEMEX filed a lawsuit against him, alleging theft of natural gas condensate. James maintained his innocence throughout the proceedings, and the case was ultimately dismissed in 2013 due to insufficient evidence.
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Maxwell, who co-owned Arroyo Terminals, was said to have had "significant ties to Mexico,” according to Assistant U.S. Attorney Laura Garcia.
The Jensen family unanimously entered pleas of not guilty to all allegations. Subsequently, prosecutors filed an amended indictment against James and Maxwell, charging them with providing support to the Cartel de Jalisco Nueva Generacion (CJNG), which has been designated as a foreign terrorist organization. A conviction on this terrorism charge could result in a 20-year federal prison sentence for both men.
Recently, the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury has imposed sanctions on five leaders of CJNG. This cartel is known for its extreme violence and controls a substantial portion of the fentanyl and other illegal drug trade entering the United States.
On May 27, authorities dropped all charges against Kelly and Zachary Jensen. When questioned about this development, a representative from the U.S. Attorney's Office declined to provide further details.
Prosecutors are pursuing a $300 million judgment against James and Maxwell Jensen. Their seizure targets include two bank accounts, three commercial trucks, four tank barges, and more than 80,000 barrels of crude oil.
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The government is also seeking to confiscate numerous Jensen family assets, including their mansion in Sandy, Utah, a home in Draper, Utah, a substantial property in Jackson, Wyoming, a luxury vehicle, and the Arroyo Terminals property.
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How oil scams affect you
The Transnational Alliance to Combat Illicit Trade reports that illegal crude oil trading generates between $5.2 billion and $11.9 billion annually, with criminals stealing approximately 99 to 227 million barrels of oil each year.
According to Windward AI, oil smuggling occurs in various forms: concealing oil in hidden ship compartments, conducting illegal ship-to-ship transfers, or using fraudulent documentation to transport oil—the latter method apparently employed by the Jensens.
Beyond its illegality, oil smuggling significantly disrupts supply chains. When border authorities investigate suspected smuggling, legitimate shipments face delays, increasing suppliers' costs that ultimately get passed on to consumers.
The Energy Information Administration notes that crude oil constitutes over 52% of gasoline pump prices. Smuggled oil can increase crude prices, making gasoline more expensive. Additionally, smuggled crude often fails to meet quality standards, resulting in potentially unsafe fuel.
Poor-quality gasoline can do more than just reduce your vehicle's performance—it can cause serious damage. Your car might stall in dangerous situations, such as highway driving, or experience other issues including failure to start, delayed gear shifts, and acceleration problems.
Extensive engine damage from contaminated fuel can lead to substantial repair costs. Consumer Affairs estimates engine replacement typically costs between $5,000 and $10,000, with final expenses varying based on whether your vehicle is new or used and your specific engine type.
Consequently, combating illegal crude oil smuggling isn't solely about preventing criminal profit — it's also about ensuring vehicle safety and protecting drivers from potentially devastating repair expenses that many cannot afford.
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Maurie Backman has been writing professionally for well over a decade. Since becoming a full-time writer, she's produced thousands of articles on topics ranging from Social Security to investing to real estate.
