Attacking a vast cocaine trafficking network that was allegedly camouflaged by U.S. and Mexican import-export companies, federal prosecutors charged the owners of a prominent Mexican foods business Thursday with conspiring to use a cross-border tunnel to smuggle drugs into California.
Discovered in Tijuana in 1993, the unfinished "narco-tunnel" was allegedly commissioned by Mexican drug lord Joaquin (Chapo) Guzman and the owners of a number of prosperous grocery companies in Southern California and northern Mexico, according to a sweeping indictment against 22 suspects filed Thursday.
Prosecutors charged brothers Jose, Antonio and Jesus Reynoso, executives of Reynoso Bros. in the City of Industry, with conspiracy to distribute cocaine and money laundering. Drug agents arrested Jose Reynoso, 63, Thursday morning at his Rowland Heights home, officials said. He pleaded not guilty Thursday in Los Angeles federal court, officials said. His attorney did not return a phone call seeking comment.
Antonio Reynoso, 51, and Jesus Reynoso, 58, live in Tijuana and Mexican authorities will be asked to arrest them and other suspects pending extradition requests, prosecutors said.
The indictment explains the lingering mystery of the tunnel, discovered in May, 1993, by Mexican federal police hunting the killers of the Roman Catholic cardinal of Guadalajara. The cardinal died in a shootout that authorities believe involved Guzman and Tijuana-based rivals. U.S. investigators had linked the now-imprisoned Guzman to the sophisticated, 1,416-foot tunnel near the Otay Mesa commercial border crossing, but said little until now about the intended destination--an unfinished cannery on the San Diego side allegedly financed by the Reynoso brothers.
The indictment paints a detailed picture of how the so-called Sinaloa cartel built a criminal partnership with the Los Angeles businessmen, who seemed to epitomize an immigrant success story and lent "an air of legitimacy to the Guzman organization's importation of cocaine," authorities said.
Traffickers allegedly used Lear jets, warehouses, machinery and cashier's checks linked to the Reynosos to move cocaine and money. The operation was part of a cross-border pipeline of food products and transportation companies in Mexico, California, Texas, Chicago and New Jersey that served as an elaborate front, according to the indictment.
"The amount of drugs is staggering, particularly when you look at all the different warehouses that were used," said Assistant U.S. Atty. Cindy Bashant, the San Diego-based prosecutor.
The charges suggest that the same kind of brazen business corruption exists north of the border as in Mexico, where drug mafia influence has infected that nation's economy as well as its politics and police. And the case appears to confirm the worst fears, expressed by opponents of the North American Free Trade Agreement, that legal U.S.-Mexico commerce will be used to mask the drug trade.
"The use of major business entities, and apparently legitimate ones, as fronts for the importation of narcotics into this country is obviously a matter of grave concern," said U.S. Atty. Alan Bersin of San Diego. "The corruption of cross-border commerce is a setback of significant proportions. This is one of the challenges faced by NAFTA. The potential benefits of NAFTA are so great that we can't be deterred by this kind of crime, but it underlines the need of Mexican and U.S. authorities to work together."
With a reported $30 million in earnings, Reynoso Bros. ranked 13th in a 1992 survey of minority-owned businesses in Los Angeles County. Before and after the seizure of the tunnel, Reynoso companies have been featured in news reports about Latino-oriented businesses. Reynoso family members recently appeared on a Los Angeles television program about family businesses to talk about their triumphs and tribulations.
Thursday's indictment also names Chapo Guzman and his brother, Arturo Guzman, who is suspected to be the acting head of a Sinaloa mob that was weakened by the arrest of fellow kingpin Hector (Guero) Palma this year.
"I think [the Sinaloan drug dealers] are pretty much scrambling right now," Bashant said. "It's not just this indictment, it's a series of things. They have taken big hits from Mexican law enforcement and big seizures. I think that has really pulled the organization apart."
The lengthy investigation found that companies from Guadalajara to Newark were recruited or set up to serve the multifaceted needs of a high-volume cocaine enterprise: smuggling, storage, sales and money laundering. One imprisoned suspect, a Mexican businessman and Guzman lieutenant named Enrique Avalos, bragged that he moved 50 tons of cocaine within a few months, according to authorities.
The connection between Avalos and the Reynosos was revealed in April, 1993, when Mexican federal police found seven tons of cocaine in a tractor-trailer shipment of La Comadre chili peppers in the Baja border town of Tecate, according to the Drug Enforcement Administration. The destination of the load was Distribuidora de Basicos, a Tecate warehouse owned by Avalos and "guaranteed" on ownership documents by Antonio Reynoso, authorities said. Reynoso companies import La Comadre-brand chili peppers, according to the indictment.
The plot thickened a month later with the shocking murder of Cardinal Juan Jesus Posadas Ocampo, who was gunned down during a May 24 shootout between forces of Guzman and the Arellano Felix brothers of Tijuana. Guzman and the Arellanos have fought a bitter war for control of Mexico's northwest smuggling corridor. Mexican investigators say the 64-year-old cleric was the victim of mistaken identity, arriving coincidentally at the Guadalajara airport terminal just as the rival gangsters crossed paths.
A massive hunt by Mexican and U.S. agents produced the arrest of Guzman and the spectacular discovery of the cross-border tunnel 65 feet below an industrial compound in Tijuana. The almost-complete tunnel ended 120 feet south of an Otay Mesa lot where workers were constructing a cannery and warehouse for a Reynoso company called Tia Anita, authorities said.
Agents believe that the cannery was the destination because the tunnel's length--1,416 feet--corresponds exactly to a county map that incorrectly shows that distance between the origin of the tunnel and the cannery. By relying on the map, the designers of the clandestine passageway allegedly came up short.
The meticulous workmanship--walls reinforced with concrete, subterranean lighting and ventilation systems--is "a carbon copy" of a Guzman smuggling tunnel found in Arizona in 1992, agents say. They suspect the same engineers supervised both projects.
Jose and Jesus Reynoso allegedly purchased the $1.1-million Otay Mesa lot, according to the indictment. They turned the property over to a "straw owner," fugitive sports impresario Jorge Ramirez Cordova of Tijuana, to commission construction of the cannery along with Salvador Reza, the Reynosos' El Monte broker, who was arrested Thursday, authorities said.
If the tunnel had functioned, the conspirators could have taken advantage of the semi-industrial area's heavy truck traffic to load and move tons of cocaine in shipments of canned goods, authorities said.
"It would have been very easy for them," a DEA agent said. "They have a very large truck fleet. They would have operated with impunity."
Citing telephone conversations among the suspects, the indictment additionally charges Antonio Reynoso with sending 390 kilos of cocaine to a Chicago warehouse in September, 1994. And Jose Reynoso allegedly registered two Lear jets, used by the Guzman mob for transporting drugs and profits, to Reynoso companies in 1991, according to the indictment.
Indicating the size and corruptive capacity of the conspiracy, prosecutors charged that a Guzman emissary paid $1 million in 1991 to an unnamed Mexican federal judicial police official to win the release of Arturo Guzman from custody in Mexico City. Intriguingly, a U.S. law enforcement source identified that police official as Guillermo Gonzalez Calderoni, a former anti-drug chief now living in Texas after a judge denied an extradition request by Mexican authorities who publicly accused Gonzalez of corruption.
Guzman henchmen also tried to bribe a U.S. immigration inspector to help smuggle cocaine through San Diego, according to the indictment.
The indictment does not explain how or when the alleged alliance between the Los Angeles executives and the Mexican traffickers began. But Bashant said the continued assault on the Sinaloa mob and the fugitive Arellano kingpins--coupled with the woes of the Cali mob of Colombia--have caused the price of cocaine in Los Angeles to rise.
And a turf realignment among Mexican drug lords may be evolving as Amado Carrillo Fuentes of Ciudad Juarez, considered the most powerful and discreet of the Mexican mafia bosses, moves in on the northwest smuggling corridor dominated by the Guzman and Arellano cartels, agents said.
Carrillo recently took the extraordinary step of traveling to Tijuana to meet with traffickers about expanding his operations there, according to U.S. and Mexican sources.