Ikon Midstream, a Houston-based petroleum trader whose offices were raided last month by US authorities, is under investigation in Mexico in connection with fuel smuggling, according to three Mexican security sources with direct knowledge of the matter and four Mexican government security documents viewed by Reuters.
The probe is part of ongoing investigations into maritime shipments of petroleum products that were brought to Mexico from the US and Canada in an alleged scheme to evade a hefty tax due on these imports, the documents and sources said.
Ikon Midstream is among the "central pieces" in a suspected scheme linked to one of Mexico's most powerful crime groups, the Jalisco New Generation Cartel (CJNG), and Mexico's attorney general's office has opened an investigation into the company, "based on testimonies, documents and surveillance," according to one of the documents.
Mexico's attorney general's office did not respond to requests for comment.
The Texas trader's export of diesel aboard the tanker Torm Agnes is being scrutinised for potential cartel links, as is Ikon Midstream's purported relationship with a suspected CJNG-related trucking company that helped offload the vessel's cargo in the ports of Ensenada and Guaymas, according to the security sources and the document.
Smuggled fuel and stolen crude oil have become the second-largest source of revenue for Mexico's cartels behind narcotics, according to the US government.
Two of the documents laid out the operations and players in the alleged racket. Among them, Ikon Midstream was allegedly a supplier of petroleum products that moved through a complex web of importers, transporters, distributors and facilitators in Mexico. The other two documents contained summaries of the probes. The four documents were created in March and April and their authenticity was confirmed by the security sources.
Asked to comment about the investigations, Ikon Midstream Executive Director Rhett Kenagy said in a May 12 email to Reuters that there was "not a single shred of documentation to back any of it up" and that the company was "not going to respond to accusations grounded in hearsay."
Homeland Security Investigations, the primary transnational investigative agency within the US Department of Homeland Security, executed a criminal search warrant at Ikon Midstream's Houston offices on April 14, a DHS spokesperson told Reuters in an April 17 statement. "This is related to an ongoing investigation into criminal activity," the statement said. DHS did not elaborate, and it did not comment on whether it was co-ordinating with Mexican authorities.
Ikon Midstream has repeatedly denied wrongdoing. In an April 24 statement to Reuters, the fuel trader said it, "has never knowingly provided, and does not knowingly provide, material support or resources to CJNG." Regarding the raid by Homeland Security Investigations, Ikon Midstream said in its statement that, "an investigative action by law enforcement is not itself a finding of wrongdoing."
Mexican authorities have announced the arrests of at least 16 people since September in connection with fuel smuggling. While officials have said they've uncovered a "criminal structure" behind the alleged illicit activity, they haven't publicly named the detainees or said anything about their possible connections to CJNG.
In an October report, Reuters chronicled how diesel exported by Ikon Midstream aboard the tanker Torm Agnes made its way into the hands of Intanza, a Mexican company that authorities there suspect is a front for CJNG. Intanza has no listed phone number, website, social media presence or physical location that Reuters could find.
That story detailed how Mexican cartels earn billions of dollars annually by smuggling fuel, mainly from the US to Mexico, in what boils down to a massive tax dodge: Diesel, gasoline and naphtha are claimed in trade paperwork to be lubricants to avoid a steep import duty that Mexico charges on these imported fuels.
Smuggled fuel and stolen crude oil have become the second-largest source of revenue for Mexico's cartels behind narcotics, according to the US government, which has ramped up efforts to crack down on the illicit trade. The Trump administration designated CJNG as a foreign terrorist organisation in February 2025.
Import-export paperwork for these transactions is often incomplete or faked by smugglers, who use front companies to facilitate these deals and enlist established oil industry players to help, some actively colluding, others acting unwittingly, trade experts, tax authorities and law enforcement officials told Reuters.
Ikon Midstream sued Reuters for defamation on November 14 in a district court in Texas, contending the news agency made "categorically false" statements about its business in the October article. Reuters stands by its reporting and is contesting the suit.
Ikon Midstream said it never did business with Intanza. Following publication of Reuters' October report, Ikon Midstream provided Reuters with internal company documents that showed the Torm Agnes cargo plus three other 2025 shipments of diesel and naphtha aboard the tanker Torm Louise were sold to a Mexican customer named Azteca Cone.
Azteca Cone, like Intanza, is part of the same alleged scheme and is likewise under investigation for fuel smuggling and suspected links to CJNG, according to the three Mexican security sources and two of the government security documents.
Azteca Cone cuts a mysterious figure in the fuel industry. Just like Intanza, Azteca Cone has no listed phone number, website or physical location that Reuters could find.
The internal documents that Ikon Midstream shared with Reuters also show that the Texas fuel trader incorrectly described the cargo of at least four shipments last year in filings with US customs.
Some of Ikon Midstream's own paperwork described the cargo as lubricants, contradicting statements made to Reuters last year by the Texas company's lawyer and the commercial manager of the tankers that the vessels carried diesel and naphtha. The distinction matters because lubricants are exempt from Mexico's steep tax on imported fuel.
When mislabelled export records match what's declared by the importer in the receiving country – such as both parties declaring cargo to be lubricants when the product is, in fact, diesel – smuggling is extremely hard to detect, according to law enforcement officials on both sides of the border.
Ikon Midstream in its April 24 statement to Reuters acknowledged that it had made errors in its export filings – a reversal of earlier assertions by the company that it had used the correct product codes in declarations to US customs. In the updated statement, the company characterised its repeated paperwork inaccuracies as "clerical" mistakes and said there was "no duty-avoidance motive."
Petroleum shipping giant Torm, manager of the tankers Torm Agnes and Torm Louise, did not provide comment for this story. Denmark-based Torm told Reuters last year that it had ended its business dealings with Ikon Midstream, "based on what has come to light." It did not elaborate.
Reuters previously reported that the diesel Ikon Midstream shipped to Mexico aboard Torm Agnes came from Imperial Oil, a Canadian oil company that is majority-owned by US oil major Exxon Mobil, according to four sources familiar with the deal.
Exxon is also named on inspection reports for the three Torm Louise shipments, documents shared with Reuters by Ikon Midstream showed, indicating that the oil giant supplied the fuel to Ikon Midstream. The parties listed on inspection certificates are typically the buyer, seller and terminal operator.
Exxon did not respond to multiple requests for comment. The company cut ties with Ikon Midstream in mid-2025, a person familiar with the matter said without elaborating.
The October Reuters report found that Ikon Midstream last year purchased about 120,000 barrels of diesel that was loaded in Canada aboard the tanker Torm Agnes and then transported to Mexico, where it was received by Intanza. Port records showed the cargo was twice declared to Mexican customs as a lubricant: first in the Port of Ensenada, where a portion was offloaded into fuel trucks, then later in the Port of Guaymas, where some of the remaining cargo was discharged the same way.
That misclassification allowed Intanza to avoid around $7 million in tax that would have been due on the diesel, Reuters calculated, based on the volume of diesel and the tax rate at the time.
Mexican security sources told Reuters that a trucking company named Mefra Fletes helped haul away the Torm Agnes diesel in both ports. The company has also been identified as one of the central pieces in the alleged fuel smuggling scheme, according to the four government security documents.
Mefra Fletes and Ikon Midstream have worked together extensively in recent years, including on tanker-to-truck transfers of petroleum products at multiple Mexican ports, according to the three Mexican security sources and two of the security documents. A Reuters reporter who stopped by Ikon Midstream's Houston offices in August was turned away by a man who said he was an Ikon Midstream employee and used to work for Mefra Fletes in Mexico. The man declined to give his full name.
A fifth undated Mexican government security document, a portion of which was viewed by Reuters, named five owners or representatives of Mefra Fletes that have alleged links to CJNG. Reuters could not ascertain whether any of those people have been charged, nor could it reach them or Mefra Fletes for comment. The company has no presence on social media and no listed phone number or address.
Ikon Midstream did not answer Reuters' questions about its purported relationship with Mefra Fletes.
In its lawsuit against Reuters, Ikon Midstream described itself as an exporter of petroleum products and said the importer alone bears responsibility for what gets declared at Mexican customs.
Still, US exporters are expected to know their customers and make reasonable attempts to check that they aren't sanctioned or connected to a sanctioned party, according to eight legal experts consulted by Reuters.
Such vigilance is critical after CJNG and five other Mexican cartels landed on the US list of designated foreign terrorist organisations in February 2025, according to Ephraim Wernick, a partner at Vinson Elkins and a former US Department of Justice prosecutor who specialised in foreign corruption and money laundering cases. That's because US prosecutors now have more leeway to go after any parties suspected of providing cartels with material support, he said.
"You're not allowed to stick your head in the sand," said Wernick, who noted he isn't familiar with Ikon Midstream or its transactions in Mexico.
In its April 24 statement, Ikon Midstream said it vets customers using a "risk-based due diligence programme." It said it had never done business with an entity that appeared on a US sanctions list and that none of its counterparties had shown "behaviour inconsistent with a legitimate wholesale fuel purchaser."
Reuters, however, could not ascertain even the most basic information about Azteca Cone, including its physical address.
Using an address for Azteca Cone listed on four 2025 invoices provided by Ikon Midstream, two Reuters journalists in November travelled to an industrial zone on the outskirts of Monterrey in northern Mexico. That location was home to a metalworking company called C.W. Tech. An employee said they had never heard of Azteca Cone and that C.W. Tech had been at that address for the past three years.
C.W. Tech did not respond to requests for comment. There is no indication that the company was involved in the alleged fuel smuggling scheme.
In addition, Reuters could find no records showing that Azteca Cone or Intanza had ever held permits required by Mexico's Energy Ministry to import diesel or naphtha into Mexico, according to a Reuters review of such permits since the companies were founded in 2021 and 2022 respectively. Importers lacking these permits can face hefty fines or even jail time, two Mexican attorneys specialising in energy and tax matters said.
The Energy Ministry did not respond to requests for comment.
Ikon Midstream said it wasn't responsible for verifying the physical operating presence of Azteca Cone, nor was it obligated under US or Mexican law to verify whether its Mexican customer held such permits, according to its April 1 statement.
Both Azteca Cone and Intanza have likewise had a crucial government approval revoked. Every company seeking to import goods of any sort into Mexico must have a separate valid registration with SAT, as the nation's tax authority is known. On March 31, 2025, both Intanza and Azteca Cone were suspended from the agency's importers registry, according to SAT's official list of suspended companies. Those suspensions came less than a month after Torm Agnes arrived in the Mexican Port of Ensenada on March 8, 2025.
The suspensions list said that Intanza and Azteca Cone had lost their import authorisations because each had a connection to another party that had been suspended from importing. The document did not name the third party or explain why it had been suspended.
Mexico's tax authority did not respond to requests for comment.
Ikon Midstream in its April 1 statement said that it "cannot be held responsible for regulatory actions taken against a customer after the fact."
In addition to Azteca Cone and Intanza, 13 other companies in Mexico declared they had done business with Ikon Midstream between October 11, 2019, and May 4, 2025, importing products that included lubricants and fuel trucks but not diesel, gasoline or naphtha in more than 300 transactions, according to Mexican trade data provided by trade analytics company Altana.
Ten of these companies, too, were suspended from the import registry by Mexico's tax authority – seven of them in 2025 alone, according to the agency's suspensions list.
The list cited a variety of reasons for those suspensions: Some of the companies could not be located by the tax authority. Others didn't file tax returns. Others didn't have the documents required to explain their foreign transactions. The suspensions list did not elaborate on these cases; details are not made public by the tax authority.
SAT did not respond to requests for comment about its suspensions of Azteca Cone, Intanza or the 10 other companies. A public document issued by the tax authority on January 23, 2026, said SAT suspects one of those firms – Komercialis – of being a phantom company that issued fake invoices for transactions that never took place.
None of the companies responded to requests for comment. Most had no listed phone number or internet presence. Questions sent by courier went largely undelivered because the companies could not be found at their listed addresses.
Ikon Midstream said all its counterparties had identifiable business addresses at the time of its transactions with them, according to its April 24 statement.
International trade revolves around product codes – strings of numbers developed by the World Customs Organisation to bring uniformity to how countries identify goods coming and going from their shores. In the US, these are known as Harmonised Tariff Schedule (HTS) codes.
But for all its specificity, the system is easy to exploit because customs officials can't inspect every shipment to ensure the product codes placed on trade paperwork match the merchandise. Smugglers looking to avoid Mexican import duties on fuel typically code the cargo as lubricants or some other type of petroleum product that's exempt from the levy, trade experts and authorities said.
Ikon Midstream used Torm tankers to deliver at least five shipments of petroleum products to Mexico, Reuters reported in October. Both companies told Reuters that those cargoes were diesel and naphtha. But export paperwork the fuel trader shared with Reuters for four of those shipments showed that Ikon Midstream used HTS codes for lubricants.
One example involves two bills of lading, one dated January 7, 2025, the other January 24, 2025, for shipments leaving Texas aboard the vessel Torm Louise. The bills of lading identified both cargoes with the HTS code 2710.19.3020. That number stands for lubricating oils used in automotive, marine or diesel engines, according to the US government's description of the code on its online database of HTS codes. The written description on those bills of lading likewise described the cargo as lubricating oils.
US export documents provided by Ikon Midstream for two additional shipments to Mexico – a cargo of diesel and naphtha sent on the Torm Louise between February and March last year, and the diesel aboard Torm Agnes – likewise used HTS codes for lubricants.
Ikon Midstream's lawyer said in an October 29 email to Reuters that the use of 2710.19.3020 was proper because it's, "a general product category, and not the specific cargo listing."
The US government disagreed with that interpretation. US Customs and Border Protection (CBP) declined to comment on specific companies or investigations, but it told Reuters that 2710.19.3020 is not the appropriate code for diesel or naphtha.
Occasional mistakes on international trade documents can occur due to clerical errors, misunderstandings or language barriers. But recurring inaccuracies may be considered a violation of foreign trade regulations, a CBP spokesperson said.
"CBP views repeated errors in HTS coding seriously for both imports and exports. CBP can take compliance and enforcement actions, inclusive of seizures, penalties and increased scrutiny," the agency said in a November 26 email to Reuters.
James Swanson, a former director for cargo security and controls at CBP, said Ikon Midstream's repeated use of incorrect HTS codes on US export paperwork was a red flag for him, particularly since the Mexican importer made the same mistake on customs filings there. "It's hard to believe this was just an oversight," he said. "If nothing else, this is suspicious."
Presented with the CBP's position on the product codes by Reuters, Ikon Midstream acknowledged it had made errors in its export filings, characterised the misreporting as minor and unintentional, and said it was "committed to accurate classification going forward" in its April 24 statement to the news agency.
A former investigator with Mexico's tax authority, speaking generally about fuel smuggling, told Reuters that smugglers have taken to coordinating on both ends of transactions, using the same false tariff codes in the US and Mexico to make their deceit harder for law enforcement to spot.
Such subterfuge is "the most complex and most sophisticated we've seen so far," the former investigator said. "It requires (collaboration between) both the importer and exporter, a lot of technical knowledge and a solid strategy."
Ikon Midstream in its April 1 statement said, "there was no co-ordination between Ikon Midstream and Azteca Cone," with regard to tariff codes.
(Reporting by Stefanie Eschenbacher and Stephen Eisenhammer in Mexico City and Shariq Khan in New York; Additional reporting by Laura Gottesdiener in Monterrey and Pola Grzanka, Adriana Barrera and Maria Laguna in Mexico City; Editing by Marla Dickerson)