Patrick T. Fallon/AFP via Getty Images
A Texas-based fuel trader is under investigation in the United States and Mexico after documents allegedly showed a paper trail linking fuel shipments to a smuggling scheme tied to the Jalisco New Generation Cartel, one of Mexico’s most powerful drug cartels.
Reuters reported that Ikon Midstream shipped diesel and naphtha that were allegedly classified in customs paperwork as lubricants, a category that can avoid steep Mexican fuel import duties. Mexican security documents and government sources cited by the news agency allege the company played a key role in moving fuel into Mexico through obscure importers that lacked valid permits.
Ikon has denied knowingly supporting any cartel-linked operation. The company acknowledged documentation errors but said it followed due diligence protocols and did not know its customers were allegedly involved in illegal activity. Ikon is also suing Reuters for defamation over earlier reporting.
Ikon Midstream Executive Director Rhett Kenagy told the outlet that there was “not a single shred of documentation to back any of [the allegations] up” and that the company was “not going to respond to accusations grounded in hearsay.”
The report centers on shipments involving the tankers Torm Agnes and Torm Louise, which Mexican investigators linked to importers Intanza and Azteca Cone. Reuters said both companies are under investigation and lack valid import permits. Ten other Mexican companies connected to Ikon were also suspended from Mexico’s import registry, according to the report.
The case comes as the U.S. cracks down on cartel involvement in fuel theft and oil smuggling. In May 2025, the Treasury Department sanctioned three Mexican nationals and two Mexico-based entities, saying they were part of a drug trafficking and fuel theft network linked to CJNG.
Treasury said the network generated “hundreds of millions of dollars annually” for the cartel through fentanyl trafficking, fuel theft, and crude oil smuggling. Federal authorities have already taken action connected to Ikon.
Reuters reported in April that U.S. law enforcement raided the company’s Houston offices as part of fuel-smuggling investigations in Mexico. When asked for comment, Homeland Security Investigations, the agency that executed the warrant, told Reuters that the raid was “related to an ongoing investigation into criminal activity.”
The State Department designated CJNG and seven other groups as Foreign Terrorist Organizations and Specially Designated Global Terrorists in February 2025. The National Counterterrorism Center describes CJNG as one of Mexico’s most powerful and violent cartels and a major trafficker of fentanyl and other drugs.
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