The owner of a small chain of Mexican grocery stores in Louisville has been sentenced to nearly six years in prison after pleading guilty to laundering drug money.
José Malagon Castro was sentenced on March 5 by U.S. District Judge Claria Boom to 70 months in prison, along with three years of supervised release.
Prosecutors said Castro owned and operated El Rey Market I, II, and III at 7600 National Turnpike, 8655 Preston Highway, and 8203 Dixie Highway. Authorities said he ran a small money-laundering operation through the stores.
According to prosecutors, cash from drug sales was brought into the stores, where cashiers employed by Castro, or Castro himself, wired the money to people in Mexico. A 15-page indictment states that $34.7 million was wired between 2020 and 2024. The transfers were split into smaller amounts over time to avoid compliance programs and reporting requirements. Prosecutors also said the recipients’ names, addresses, and phone numbers were often false.
Court testimony described Castro as having grown up “dirt poor,” completing only third grade before coming to the United States from Mexico nearly 26 years ago in search of a better life. He eventually settled in Louisville, where he worked hard and started the grocery stores. An employee of Saint Rita Catholic Church on Preston Highway, where Castro and his family attend, described him in a letter to Judge Boom as hardworking, honest, and peaceful.
“He always helps people in need with money, service, or with good advice and volunteers,” the employee wrote.
However, Judge Boom said Castro eventually gave in to greed. Before announcing the sentence, she noted that Castro has no criminal record and maintains strong ties to the community, as reflected in the letters submitted on his behalf.
Still, Boom said she could not overlook the seriousness of the crime, noting that drug sales continue the “poisoning” of communities.
“You harmed our community in a really extreme way by undertaking the laundering of drug proceeds. Unfortunately, today is the day your greed and attempt to take shortcuts come to roost,” Boom said. She was nominated to the federal bench by President Donald Trump in 2017 and confirmed by the U.S. Senate a year later.
Federal prosecutors said Castro has been living unlawfully in the United States and is likely to be deported after serving his prison sentence. His attorney, Scott C. Cox, said an immigration detainer has already been filed.
Boom said she would recommend that the Federal Bureau of Prisons place Castro in a facility in Kentucky so he can remain closer to family and friends.
Castro has been in federal custody since April 2025, when he and six others were indicted by authorities. Court records show that two of the four cashiers he employed have reached plea agreements with prosecutors, along with one of the individuals accused of bringing drug sale proceeds to the grocery stores.
As part of his plea agreement, Castro also agreed to forfeit $516,800 seized by authorities, along with six firearms he was not allowed to possess as someone living in the country without legal authorization.
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