A Houston-based petroleum trader raided last month by U.S. federal agents is under investigation in Mexico in connection with a suspected fuel smuggling scheme linked to the Jalisco New Generation Cartel (CJNG), according to a Reuters investigation published Wednesday.

Mexican authorities have opened a probe into Ikon Midstream, describing the company as among the “central pieces” in the alleged scheme, based on three Mexican security sources with direct knowledge of the matter and four Mexican government security documents reviewed by Reuters. Mexico’s attorney general’s office opened the investigation “based on testimonies, documents and surveillance,” according to the report.

A DHS spokesperson confirmed to the news agency that U.S. Homeland Security Investigations (HSI) executed a criminal search warrant at Ikon Midstream’s Houston offices on April 14. 

At the center of the investigation is a 2025 shipment of approximately 120,000 barrels of commercially-sourced diesel that was exported aboard the tanker Torm Agnes, which made its way to Intanza, a Mexican company authorities suspect is a CJNG front. Ikon Midstream subsequently told Reuters the cargo was sold not to Intanza but to a Mexican customer named Azteca Cone. 

Azteca Cone is likewise under investigation for fuel smuggling and suspected cartel links, according to the same security sources and documents. Like Intanza, Azteca Cone has no listed phone number, website, or verifiable physical address, Reuters found. Journalists traveled to an industrial address listed for Azteca Cone on Ikon Midstream invoices in Monterrey, finding only a metalworking company that said it had never heard of Azteca Cone.

The alleged scheme tracks with typical tariff fraud. The smuggled diesel, gasoline, or naphtha is falsely declared to be lubricants in customs paperwork, allowing CJNG to avoid a steep import duty and resell the fuel at market prices for a higher profit margin, according to the report. 

Ikon Midstream’s export filings used harmonized tariff codes for lubricants on at least four shipments, even as both the company and vessel managers described the cargoes as diesel and naphtha. U.S. Customs and Border Protection told Reuters the codes used were not appropriate for those products and that “repeated errors in HTS coding” could result in enforcement action including seizures and penalties.

Ikon Midstream acknowledged errors in its export filings in an April 24 statement, characterizing them as “clerical” mistakes with “no duty-avoidance motive,” the news outlet said. The company had previously asserted that its product codes had been correct.

Ten of the 13 other Mexican companies that had declared business with Ikon Midstream between 2019 and 2025 were subsequently suspended from Mexico’s importers registry, seven of them in 2025 alone. The Trump administration designated CJNG as a foreign terrorist organization in February 2025, a move that exposes any U.S. parties suspected of providing the cartel with material support to criminal liability. Smuggled fuel and stolen crude oil have become the second-largest revenue source for Mexican cartels behind narcotics, according to the U.S. government.