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The Mexican activist who exposed housing corruption and ended up in prison

All is dark in the overcrowded cell, save for the dim light flickering from a three-tiered bunk bed.

Humbertus Perez writes every night, his flashlight wrapped in cardboard so as not to disturb the accused car thief and the mugger with whom he shares a thin mattress.

The young men snore and occasionally throw a foot in Perez’s face, but it’s better than sleeping on the floor. There, dozens of inmates — alleged murderers, rapists, career criminals — lie sprawled on cots and planks, a malodorous tangle of arms and legs.

Perez, a 54-year-old academic, was Mexico’s leading homeowner activist — a fiery orator who railed against the Mexican housing developers and foreign investors who reaped enormous profits at the expense of working-class people.

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To his supporters, he was an incorruptible one-man force. He saved thousands of homeowners from eviction. He led rowdy marches, battled Wall Street investment banks, called judges stubborn mules and publicly shamed governors and presidents — labeling the entire Mexican political system a criminal enterprise.

Scribbling legal briefs and letters every night while his fellow inmates sleep, Perez tries to keep his campaign alive from Chiconautla prison, 20 miles northeast of Mexico City.

Two years behind bars have taken a toll. Rashes cover his body. Chronic diarrhea has forced him into diapers. He goes days without sleep.

“This is a hard place to do time,” Perez said by phone from the mess hall, where fellow inmates guard him so he won’t get stabbed. “I thought long ago they would kill me, but God has been very kind.”

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Outside the prison walls, his homeowner movement, the Mexican Front in Defense of a Dignified Home — once thousands strong — is adrift without him.

Perez was arrested on Nov. 4, 2015, as he left a news conference where, in a characteristic burst of barbed oratory, he had accused top government officials of conspiring to destroy his movement. Authorities charged him with robbing two neighbors at gunpoint of a cellphone, a laptop and paint buckets because they owed membership dues to his Mexican Front.

Three sets of judges threw out the charges and ordered Perez’s immediate release, saying the witnesses’ testimony seemed scripted and contradictory. But the Mexico state attorney general’s office persuaded other judges to keep Perez behind bars without bail.

Supporters of Perez say the relentless prosecution of a professor in a country where 95% of homicides go unsolved smacks of brutish retaliation.

In Perez’s saga, many of the nation’s entrenched problems converge: brazen corruption, official impunity and a rigged justice system that crushes those who raise a voice against powerful interests.

Perez’s only crime, as his supporters see it: calling out the greed that betrayed the homeownership dreams of millions of Mexicans.

“It’s pure revenge of businessmen and politicians,” said Arturo Chavarria, president of the College of Architects and Urban Planners, a professional association based in Mexico state. “Perez exposed all the corruption in the affordable housing market and government housing policies over the past 20 years.”

***

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Perez’s spiral from first-time homeowner to prison inmate began when he turned on the kitchen faucet in his new home. Nothing came out.

Looking outside, he saw his neighbors in the Villa del Real development, in the Mexico City suburb of Tecamac, gathered around a burst water main.

Perez accused the developer, Urbi, of providing too few wells and pumping stations to serve the fast-growing community. It was one of thousands of developments built outside Mexico’s major cities from 2001 to 2012 in a government-funded effort to create affordable housing for millions of people.

The gaps in the Villa del Real’s water infrastructure overburdened the system, causing pipes to burst and pumping stations to malfunction.

Across Mexico, infrastructure problems were turning up in development after development, most of them far worse than Villa del Real.

No one appeared to be looking into the problems, so Perez decided to do it himself.

An economist and historian who lectured at the National Polytechnic Institute north of Mexico City, he knew his way around government archives.

“I was used to reviewing reports with thousands of pages. Imagine a mortgage contract. It only has 40,” said Perez, who spent years working on budgets as a legislative analyst for a Mexican senator.

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Perez said he found evidence of collusion between builders and the government officials who approved developments despite inadequate water supplies. Of million-dollar infrastructure bonds disappearing. Of government officials ignoring reports warning of large-scale mortgage fraud.

He faced resistance at every turn. Officials ordered him out of their offices. Bureaucrats turned over documents only in response to formal transparency-law requests, which took time and money. Perez and fellow homeowners paid about $30,000 in copying fees alone.

Defenders of the housing program say any flaws were outweighed by the benefits of providing affordable shelter for middle-class workers and people who would otherwise be in shantytowns.

Perez pushed a darker version, of crony capitalism run amok: Mexico’s biggest builders constructed flimsy homes with faulty public infrastructure, then sold the homes at inflated prices. Government officials, instead of acting on the problems, approved even more projects.

Foreign investors and bondholders reaped enormous returns.

In 2009, Perez asked the federal attorney general’s office to conduct a criminal investigation.

He presented a document alleging widespread fraud, accusing housing industry figures and government agencies of building defect-riddled infrastructure and systematically overvaluing substandard homes.

A year later, a financial crimes prosecutor concluded that there was enough evidence of wrongdoing to refer the case to a federal corruption unit and the Mexico state attorney general’s office.

There the cases sat.

***

Homeowners at the Benevento development, 30 miles west of Mexico City, suffered from more than water shortages. The lights kept going out, sometimes for days. Frustrated residents brawled with electrical utility workers and invaded the offices of the builder, Homex.

In 2015, residents turned to Perez for help.

His evidence file had grown to more than 14,000 pages, but the criminal investigations remained stalled. Perez had expanded his Mexican Front movement to developments across the country. Residents held marches, blocked evictions and paid dues to defray legal costs.

At Benevento, he targeted Infonavit, Mexico’s home financing agency, which had been sharply criticized for steering borrowers to problem developments.

When the New York Times reported in 2015 that Alejandro Murat, then director of Infonavit, and his family owned several properties in the U.S., including an upscale Manhattan condominium, Perez lashed out at Murat.

“It couldn’t be possible that while millions of Mexican families are condemned to live in housing without minimum standards for urban infrastructure … you continue living the high life of government officials,” Perez wrote to Murat.

Within a month, Infonavit allowed dozens of Benevento residents to stop making their mortgage payments.

Such victories earned Perez intense loyalty from supporters. He saved many of them from foreclosure after they fell behind on high-cost loans.

Perez found that banks were charging fees for insurance policies they never provided to borrowers. Judge after judge declared the policies void, allowing overextended residents to avoid foreclosure.

In his biggest coup, he discovered that Mexico state had no law on the books allowing the foreclosure of homes.

Lenders seeking evictions had been citing a law typically used to repossess cars and furniture. Perez objected to the tactic, and judges sided with him.

Public interest attorneys say this probably saved thousands of homeowners from foreclosure.

“He revolutionized housing law defense in the state of Mexico,” said Jose Penaflor, a social justice attorney in Tijuana.

In protest marches and radio interviews, Perez portrayed the housing boom as little more than a criminal enterprise meant to enrich government and industry players at the expense of first-time homeowners.

He accused President Enrique Peña Nieto of mismanaging the building spree as governor of Mexico state from 2005 to 2011, when hundreds of thousands of homes were built. Pena Nieto’s office did not reply to a request for comment.

Perez called state judges “stubborn mules,” slammed U.S.-based mortgage lenders and likened the Mexican government to organized crime.

“The story of Mexico is the story of a criminal economy,” Perez said in a radio interview. “Because in Mexico, the rule of law was never established. What was established was a criminal economy that works only for whoever gets power.”

***

The years-long building boom sparked regular protests. Homeowners in tracts across Mexico would block roads, march on government buildings and invade developer offices. They were the desperate tactics of poor people who couldn’t afford legal representation.

Perez’s Mexican Front, by comparison, was a middle-class movement with the financial resources through membership dues to keep Perez investigating and traveling.

Over the years, signs emerged of its growing clout.

Industry and government officials on several occasions offered to cancel the mortgages of Perez’s leadership team — 18 in all — if he would disband the organization, Perez and several of his supporters said. One of his deputies was offered a home remodel and new furniture, Perez said.

In 2011, the unit of the Mexico state attorney general’s office that was supposed to investigate Perez’s complaint was enveloped in scandal.

Two prosecutors were fired, in part for failing to pursue the case, the Mexican newspaper La Jornada reported.

The head of the unit allegedly received $100,000 a month to make public corruption cases go away, La Jornada reported. The newspaper didn’t say who paid the bribes.

Surrounded by hundreds of supporters, Perez led noisy protests outside government buildings. He shouted the names of dozens of suspect officials, lenders and banks, some of them U.S.-based.

He made public a government report showing evidence of mortgage fraud dating to 2008. Mexico’s National Commission on Human Rights, prodded by Perez, also urged prosecutors to investigate.

Perez became such an industry scold that, even as he sat in prison, his movement was considered a major barrier to foreclosure actions. A leading mortgage servicing company gave a PowerPoint presentation this year to a Mexican congressional committee labeling Perez’s movement a “latent risk” to the enforcement of defaulted loans across the country.

In 2013, a federal judge handed the Mexican Front a major victory. Judge Carlos Martinez Hernandez ordered that the fraud case be resolved.

“It’s impermissible that the respective authority postpones indefinitely the integration and resolution under the law,” Martinez said in his ruling.

On a spring day in 2014, five years after Perez first presented evidence of criminal conduct to prosecutors, two investigators showed up at Villa del Real.

Perez and hundreds of his fellow homeowners greeted them. Perez wore a red cap over his black-rimmed glasses and unrolled a tract map of the development for the officials.

As far as anyone knew, government investigators had never shown up at one of the developments looking for criminal wrongdoing by the builder.

With homeowners recording him on video, lead investigator Mauricio Loeza visited the pump station and climbed atop a storage shed. He saw ruptured pipes and listened as a local water district official confirmed that the builder had never turned over the infrastructure to the agency.

Loeza likened the system’s defects to an embolism in a human body, which causes blood pressure to build. In the development of 6,000 homes, the failure to finish the water flow network was putting too much stress on the existing system, causing the pipes to burst and pumps to break down.

In his report, Loeza confirmed what Perez had said all along: Urbi had failed to complete a well, pipes and a water treatment system, yet city officials gave $2 million of the construction bond back to the developer.

Prosecutors returned a 320-page indictment charging two Urbi executives with a type of fraud specific to developers who sell houses that fail to meet the terms of the contract. On Aug. 15, 2015, one of the men, Rene Jaime Mungarro, was detained by U.S. customs agents as he tried to cross the border into Texas. He was handed over to Mexican authorities.

“This is important news for thousands of families that were defrauded by Urbi,” Perez told his fellow homeowners. “Today I can tell you that we can see light after so many years of legal battles.”

Seven days later, Mungarro was released. Perez said his release was part of a settlement agreement requiring Urbi to complete the water system at Villa del Real.

But in a recent interview, Mungarro said he hadn’t worked at Urbi since 2003 and that his arrest was a terrible injustice.

Mungarro denied that the settlement included a promise to repair the development. He referred further questions to Urbi. Representatives for the developer agreed to an interview, then canceled. The company declined to comment.

The other Urbi executive named in the indictment was never arrested.

::

“This home has been seized under a protective order related to a housing development crime.”

The signs started appearing in September 2015, nailed to abandoned homes and posted in empty lots in Villa del Real.

Perez was taking the fight to his own development, armed with a judge’s order declaring parts of it a crime scene.

Under the judge’s order affecting 6,200 homes, no properties could be bought, sold or taken over by squatters.

When local authorities failed to enforce the order, Perez again took matters into his own hands.

Escorted by dozens of Mexican Front members, Perez posted signs, nailed doors of abandoned homes shut and gave notices to people believed to have illegally inhabited more than 300 homes. Perez, citing the court order, told them they would have to leave.

Perez said the tactic was aimed at forcing Urbi to either compensate homeowners or complete the infrastructure. At the time, Urbi was seeking bankruptcy protection in a Baja California court. Perez traveled there in a bid to block the proceedings.

Urbi, once Mexico’s third-largest builder, was awaiting a judge’s decision on a plan that would put the company under the control of its foreign creditors and bondholders. Those included the World Bank, Newport-Beach based Pacific Investment Management Co. and employee pension funds of Coca-Cola and Northrop Grumman.

By October 2015, Villa del Real had turned into a battleground of warring neighbors. Mexican Front supporters confronted squatters they said were being allowed to live in vacant units by local officials beholden to Urbi.

One video showed a man raging at Front supporters through a car window. Another showed Perez screaming at a squatter and calling him a criminal. Packs of barking security dogs roamed legally disputed vacant lots.

Front leaders said groups of men in unmarked cars started following them. Perez and his family moved out.

At a news conference in Toluca in November 2015, Perez accused the mayor and police chief of Tecamac of having links to violent criminal groups.

On his way out, Perez was arrested.

::

Chiconautla prison lies at the end of a long dirt road, next to a garbage dump and the shanty-lined hill that gave the prison its name.

Its yellowed walls, built to house 900 inmates, hold about 3,000.

Perez shares his tiny cell with dozens of other inmates, along with bedbugs and cockroaches. Illnesses spread quickly.

One inmate recently had his leg amputated due to a bacterial infection, Perez said in a telephone interview. Another was beaten to death. Inmates urinate into soda bottles because sleeping bodies block access to the bathroom, where inmates rest atop overturned paint buckets or sprawl in the shower.

“Because we live near a garbage dump, they consider us garbage, but we’re not garbage,” Perez told a judge in a prison courtroom, where he sat inside a glass-walled cell.

Perez, unlike most of his cellmates, could afford bail.

But prosecutors argued against it, saying he was dangerous.

They claim that Perez, while making the rounds in Villa del Real with his supporters, broke into three homes to take several items from residents. He allegedly hurled threats and pointed a gun at a woman’s chest.

Several judges who reviewed the case expressed serious doubts. They questioned witness statements that seemed suspiciously similar, the lack of evidence that Perez had a gun, with one judge suggesting the claim was fabricated, and why, if Perez was such a threat, did it take almost a month for some witnesses to be questioned by police.

At a court hearing in April 2016, Perez exploded at judges and prosecutors. Aware that the proceedings were being video-recorded under Mexico’s judicial transparency laws, he went on for two minutes, a rare public airing of disgust with the country’s criminal justice system.

“You’re corrupt, that’s what you are,” Perez told the panel of three magistrate judges. “Amateurs, who come here to defend a network of criminals.”

Perez turned to the prosecutor, Fernando Ulises Cardenas, and threatened to detail a pattern of trumped-up charges and widespread brutality against him and other inmates.

“You have no shame at how you torture people and fabricate crimes,” Perez said. “You’re a coward.”

A few days later, a video was leaked to the Mexican media. It showed Cardenas appearing to tell fellow prosecutors at a staff meeting that innocent people are often jailed on trumped-up charges.

“Who says crimes aren’t made up?” Cardenas said. “That happens all the time.”

The attorney general’s office for Mexico state did not respond to requests for comment.

The leaked video boosted Perez’s image as a victim of prosecutorial abuse. A representative of the U.N. High Commissioner for Human Rights visited Perez last year, expressing concern that Perez was being persecuted for his defense of human rights.

But the attorney general’s office has continued filing appeals, even after another federal judge in January ordered his immediate release. Cardenas, despite calls for his resignation, remains the attorney general’s top litigator.

Developments across Mexico, meanwhile, continue deteriorating, even while their builders launch new projects. At Villa del Real, Urbi never dug additional wells, and burst pipes still flood the street, residents say.

Perez isn’t giving up. “Everything we’ve said has been proven true, and that bothers builders like Urbi,” he said.

His supporters send him money, some of which goes to pay $1 per week for the privilege of sleeping on a bunk instead of the floor.

Windy days, he said, bring him inspiration. When it’s blowing hard, he can hear the chants of his supporters carried over the prison walls. Dozens have gathered in rowdy protests demanding his release.

“We are all Humbertus,” they yell.

Times researcher Cecilia Sanchez in Mexico City contributed to this report.


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