El Chapo to pay for wall? Not likely
WASHINGTON —With funding for President Donald Trump’s border wall languishing in Congress, Texas Republican Ted Cruz has gained widespread media attention with a brash proposal to let “El Chapo” pay for it.
Cruz, Trump’s former rival in the Republican presidential primaries, has said there would be “justice” in using the alleged Mexican drug lord’s illicit profits — estimated by prosecutors at $14 billion — to underwrite a physical barrier aimed at halting drug and human trafficking.
Best of all, it would fulfill Trump’s promise to make Mexico pay for it.
The plan, however, faces formidable legal and political obstacles that could tie up the money for years, even if the Mexican government and courts cooperated with the
Trump administration — which is far from certain.
There’s also the question of tracing cash and tangible assets linked to Joaquin Guzman Loera, aka “El Chapo,” whose fortunes are believed to have plunged significantly since 2011, when Forbes magazine last estimated his net worth roughly at $1 billion.
Gone underground after multiple international manhunts, near misses and escapes, he also dropped off Forbes’ billionaire rankings as his true net-worth and assets became too hazy to count.
That was until last May, five months after his recapture following a shootout with Mexican marines, when the Justice Department filed criminal forfeiture papers announcing their intent to seek some $14 billion in assets upon his conviction.
At the time, Guzman was still in Mexican custody, waiting to be extradited to the U.S., where he pleaded not guilty to charges of running a multi-billion dollar drug empire. He is currently awaiting trial in New York.
‘Absolutely ludicrous’
The government’s $14 billion figure — the largest ever connected to El Chapo — includes no public inventory of his assets. A Justice Department statement in January indicates that it is the sum of his Sinaloa Cartel’s narcotics sales in the U.S. and Canada between 1989 and 2014. Moreover, the government suggests, the “bulk” of the cash proceeds was smuggled back to Mexico.
“The $14 billion is a back-ofthe-envelope calculation of how much drugs were travelling to the U.S. over the past 30 years, and assigning a portion of that to El Chapo,” said Alejandro Hope, a security analyst in Mexico City. “To put it gently, it’s more of an art than a science.”
Hope said that major international drug forfeiture cases in the past have reached into the tens or hundreds of millions, not the billions. The government estimates also appear to be based on gross sales, without taking into account the drug cartel’s expenses for transport, security, bribes, storage and the like.
“The whole thing is absolutely ludicrous,” Hope said. “There’s no way El Chapo has $14 billion. This is political grandstanding.”
The government’s total asset forfeiture program has averaged less than $2.5 billion a year for the past decade, which includes recoveries from the massive Bernie Madoff investment fraud case. Seizures of the size needed to pay for a border wall, variously estimated at between $14 billion and $20 billion, would be unprecedented.
“I do not know how, in El Chapo’s case, these issues will be sorted out, but I’m confident that there will be nothing close to $14 billion to be found or recovered,” said Bruce Bagley, an expert on Mexico’s drug cartels at the University of Miami. “It has all been spent or hidden.”
For their part, El Chapo’s lawyers say any estimate of his wealth remains totally unproven. “The government is seeking forfeiture of $14 billion but has yet to demonstrate that Mr. Guzman has any assets at all,” his federal defender, Michelle Gelernt, said.
For the time being, Guzman is being held in isolation and represented by court-ordered federal defenders at public expense.
Cruz files funding bill
A spokesman for Cruz said Monday that he is relying on the figures provided by prosecutors.
Cruz, responding to the border wall stalemate, filed his border wall funding bill in the Senate last week, touting it on numerous television appearances and in election fundraising pitches to show that “we keep the promises made to the voters last November.”
Inventively named the Ensuring Lawful Collection of Hidden Assets to Provide Order (El CHAPO) Act, it would reserve any forfeited money from Guzman’s case for security measures along the border, including a wall.
National Border Patrol Council President Brandon Judd called it an “amazing idea.” Even wall funding skeptics like Texas U.S. Sen. John Cornyn have offered Cruz praise. “It’s creative, you’ve got to give him that,” Cornyn said.
But a number of security analysts say that whatever El Chapo’s fate in court, the bulk of his unknown assets, whatever they are, are likely to remain where they are: south of the border.
“In practice, the arresting country usually gets to keep 80-90 percent of the confiscated funds,” Bagley said.
Mexico, which played a major role in Guzman’s capture, is already at the front of the line. “In general, the United States has in place an asset sharing agreement with Mexico that allows each country to share forfeited assets with the other if the other country gives assistance relevant to the forfeiture,” said Peter Carr, a Justice Department spokesman.
Given the politics of the border wall, which Mexico opposes, negotiations over any split of forfeited assets could get tricky, with Mexico in the driver’s seat.
“In asset forfeiture sharing, ‘possession is nine-tenths of the law,’” said security consultant David Gaddis, a former chief of enforcement operations at the Drug Enforcement Administration. “If the government of Mexico is holding assets of Joaquin Guzman Loera’s organization, they can do with it what they want.”
Long line of creditors
The DEA and the U.S. Treasury Department have identified hundreds of businesses in Mexico that are suspected of laundering money or otherwise working with Guzman’s organization. They include gas stations, restaurants and even day care centers. Though the U.S. “Kingpin Act” bars American companies from doing business with them, actually tracing their drug connections and confiscating their assets would mean going through a tortuous legal process in Mexican courts that could take years, or even decades, to unwind.
The U.S. government also would have to get in line with legitimate private creditors, some with valid business claims.
“We’re taking about property that’s outside the United States,” said Steven Kessler, an asset forfeiture attorney in New York. “It requires the assistance of the country where the assets are located.
“You add to that the lovely relations the government has with Mexico, with the statements that ‘all this money is going to be used, in effect, to punish you’ and my guess is we’ll get the same treatment as we give,” Kessler said.