3 Ways Drug Cartels Launder Their Money, Right In Front Of You
Drug cartels make millions of dollars annually on the black market. Where do they put it? As Walter White learned on Breaking Bad, it would look suspicious if he just opened a bank account and the cash flowed in. Instead, he laundered it. The Mexican drug cartels are some of the best in the world at laundering money. This month, the Zetas, one of Mexico’s most dangerous and violent cartels, were busted by U.S. law enforcement officials for a large-scale money laundering scheme buying and selling quarter horses. After Zetas accomplices made millions of dollars, U.S officials filed a criminal complaint last year for their multiple money laundering offenses, and just recently designated four individuals and one company as “Zetas accomplices and family members.” Here’s how they get away with it:
1. They use their families
Drug cartels are intensely familial institutions. As criminal organizations where trust is essential and communication must be behind closed doors, they have no choice but to involve the family if they want to succeed.
In this most recent case, the Zetas family was caught laundering money through a cattle ranch in Mexico called “Ganadera 5 Manantiales,” named after the Manantiales area where the ranch is located.
The ranch was established by Omar Trevino Morales, brother of the recently arrested Miguel Trevino Morales, a Zetas kingpin. Omar began laundering money through his young 21-year-old wife, Carolina, and her father, who operated the ranch – along with the help of Carolina’s mother and her two uncles. Though neither uncle is related by blood to the Zetas leaders or the Trevino Morales family, the moment they begin the money laundering business, they are a “part of the family.” The pact and pressure of family is strong, and makes snitching near impossible. Using family members as accomplices is a lower risk for cartel leaders and a higher return – because the money stays in the family, after all.
2. They invest in inconspicuous institutions
Cattle ranching does not scream “drug trafficking.” It just doesn’t. In fact, the more straight-laced and benign the institutions seem, the longer they may fly under law enforcement’s radar. Many successful money laundering operations have gone through institutions that would shock patrons.
Some of the best examples include:
- Parque Acuático Los Cascabeles, a family-friendly water park used by the Sinaloa Cartel
- Barbaresco Restaurant, an Italian restaurant used by the Caro Quintero Cartel
- Crown Paradise Enterprises, a resort management company and marina, used by the Sinaloa Cartel
- Rica’s Pizza, a pizzeria used by Colombian FARC partners
3. They spread their activity over many institutions
Although the Zetas were busted this August for their laundering scheme with the cattle ranch, the money was not originating at the ranch. The ranch was used as a front for the purchase and sale of quarter horses, a sort of “straw” buyer and seller. For each transaction that the ranch made, some extra money was wired to the horse auction workers, horse trainers, and groundskeepers – all associates of the cartel.
Trevino Morales laundered money with each transaction, laundering an estimated $1 million each month from 2010 until 2012 when the entire operation was uncovered. In June 2012, Tremor Enterprises, the sprawling Oklahoma racehorse-turned-money-laundering-entity for the Zetas was raided and disbanded. However, because the larger operation was spread over many institutions, it did not abruptly halt.
Accomplices at the Ganadera cattle ranch, for example, had the opportunity to increase their money laundering activity. Although law enforcement officials had found Tremor Enterprises, they had not yet identified the ranch. In September 2012, after Tremor Enterprises was shut down, Carolina’s father (Trevino Morales’ father-in-law) bought four horses at an auction in Oklahoma, paying a total of $840,000 for them, wiring money with each transaction.
This last reason why cartels succeed may be the most important one. The Mexican cartels have grown so large not solely because of their high revenue or their violent actions, but because of their infiltration of hundreds, if not thousands, of institutions. They have sunk their teeth into so many types of organizations across Mexico, the U.S., Central America, and South America – that simply eliminating the leading institution will not stop their practices.
They were able to continue laundering money even after Tremor Enterprises, the nucleus of the operation, was raided. Why is this? Tremor Enterprises began creating smaller institutions, like Ganadera 5 Manantiales, almost as a form of insurance. If or when they were gone, at least one institution would be able to keep laundering their money and keep the business alive. There may even be some Zetas quarter horse buyers today, for another unknown ranch in Mexico.
