Mexico cartel money laundering cases difficult but critical

McALLEN, Texas — (AP) — When it comes to arresting drug traffickers and dismantling organized crime, the investigation into a U.S. horse racing operation allegedly laundering money for one of Mexico’s most powerful cartels is rare — and difficult to prosecute.

Unlike most drug busts, the backbone of sophisticated money laundering cases is a complicated trail of paper — reams of bank, tax and property records — that usually take years to track. But hitting organized crime where it hurts the most — the money flow — is the most effective way to shut the crime networks down, investigators say.

“The money is much more valuable to the trafficker than the drugs are,” said John Kirby, a former federal prosecutor in San Diego, who worked on money laundering cases against the Arellano-Felix cartel, among others. “If you want to hurt these guys that’s how you do it, because that’s the end product. That’s what they really want. And if you can try to take that away, then you’re really having an impact.”

During his 10 years in the U.S. Attorney’s office, Kirby said he prosecuted hundreds of drug traffickers. “I had eight good money laundering cases. They’re just hard.”

Chasing organized crime’s money flow isn’t a new tactic. The same racketeering laws being used against Mexican cartels today are the ones that targeted the mafia in the 1970s. Money laundering was spelled out as a federal crime with a 20-year maximum sentence per count in 1986 as law enforcement officials increasingly recognized that just seizing the drugs wasn’t enough to bring down traffickers.

In this latest case, federal agents raided an Oklahoma ranch, a New Mexico quarter horse race track and sites in Texas on last Tuesday, alleging a brother of a leader in the Zetas drug cartel was using a horse-breeding operation to launder money. Millions of dollars went through the operation, which bought, trained, bred and raced quarter horses throughout the southwest United States, the indictment says.

Eight people were arrested, including Jose Trevino Morales and his wife in Oklahoma. Two of his brothers and four others remain at large.

“That case will be a model, a blueprint for a long time to come of how we need to take on these 21st-century criminal techniques,” said Douglas Leff, who was chief of the FBI’s Asset Forfeiture and Money Laundering Unit before recently returning to New York. He expects more cases because of a 2010 Mexican banking law that makes it difficult to deposit U.S. dol- lars into accounts across the border. That means cartels will do more money laundering in the United States, he says.

The government’s investigation into the horse operation began in January 2010 with a tip from an informant in Mexico that two Trevinos at the top of the Zetas organization were the real buyers behind two quarter horses that sold for more than $1.1 million at an auction in Oklahoma City, according to court records. The IRS had its own investigation of Jose Trevino, and the investigations merged in February 2011.

Usually the drug cash was smuggled back into Mexico and run through currency exchanges for an initial rinsing. Then the Trevino brothers recruited Mexican businessmen to wire payment or write checks for horses bought in the United States to make the transactions appear legitimate. They would reimburse them in cash. At other times, workers for the Zetas’ Dallas cocaine distributor passed drug cash directly to Jose Trevino — at least once at a Walmart outside Dallas — cutting out the return trip to Mexico, court records say.

One informant told investigators that he distributed $4 million in horse-related expenses in one year for the Zetas and all the money came from drug proceeds.