PENNINGTON THOUGHT OF EVERY INVESTIGATION HE WORKED AS A PUZZLE. After twenty-five years, he still relished putting together the pieces and unraveling the conspiracy. He’d devoted his entire career to uncovering what the human mind was capable of when it came to washing clean one’s financial sins: tax havens, anonymous trusts, shell companies, and bribery. His conclusion was that there was no depth a man would not sink to if there was a pile of cold hard cash at the bottom of the deep, dark well.
Miguel had been clever in using the Mexican companies to wire the money to the U.S. auction houses, because the businesses appeared to be legitimate. Colorado and his ADT Petroservicios had tens of millions in Pemex contracts. The commingling of the dirty money with the clean made it nearly impossible to separate the two, especially if the Mexican banks didn’t come through with the financial records they’d requested. So far, there’d been no answer, and Pennington knew better than to expect one.
Luckily, the cocaine corridor was about to yield their biggest breakthrough yet. During a routine traffic stop, a state trooper had found $462,000 in a hidden compartment inside a car. The courier was heading south toward the city of Eagle Pass. The trooper, thinking it might interest Pennington, called to tell him about the incident. What got Pennington’s attention immediately was that the courier was on his way to Eagle Pass, which shared a border with the city of Piedras Negras. This was Zeta territory and a stronghold of Miguel and Omar Treviño. That meant the courier worked for them.
Pennington immediately asked for the case file. Right away he noticed that the courier’s car had been recently purchased at a dealership on the north side of San Antonio. He decided to drive down and check it out himself. When he arrived at the dealership, once the car lot owner understood that the IRS wasn’t investigating his business, he was happy to pull the sales documents for the car. In a small notebook, Pennington wrote down the name of the man who had referred the courier to the sales lot. He asked the owner to check if he had any other recent sales that listed the same man as a referral. It turned out there were several.
When Pennington got back to Waco he entered the name into the deconfliction database and saw that the DEA in San Antonio had already begun an investigation into his suspect. The officer assigned to the case was a San Antonio cop on a DEA task force. Pennington picked up the phone and arranged for a meeting. When he got to the DEA’s office in San Antonio, Pennington gave the officer a summary of the money laundering case, the Treviños, and the racehorses. “I have a feeling this guy is tied into our case somehow,” he told him.
As soon as he mentioned racehorses, the officer’s eyes grew wide and he pushed back his chair from his desk. “I’ve got someone else you need to meet,” he said. He grabbed the phone and quickly dialed a number.
The officer’s reaction gave Pennington hope, and he was not disappointed when about an hour later a man arrived and introduced himself as Raul Guadalajara. He explained that until recently he’d worked as a drug smuggler and money courier for a man named Mario Alfonso Cuellar, known as Poncho, who was a major player in the Piedras Negras plaza. Cuellar worked for Miguel and Omar, and he was responsible for sending thousands of kilos of cocaine to Dallas every year. Occasionally, Guadalajara said, Cuellar had instructed him to deliver drug money to people in the United States to pay for racehorses. “You should talk to Poncho Cuellar,” he told Pennington.
“Yeah, well, that will be tough since he’s in Mexico,” Pennington said.
Guadalajara shook his head. “No he’s not. He’s here.”
“In Texas?” Pennington asked, feeling an edge of excitement.
Guadalajara explained that a few months earlier there had been trouble in Piedras Negras with Cuellar and his crew. Miguel and Omar wanted them dead. So Cuellar and his right-hand man, a guy named Hector Moreno, had fled to Texas along with their families. Guadalajara worked for Cuellar, so he’d also fled to San Antonio to save his own life. Pennington listened with growing interest. After the informant left, Pennington immediately phoned Lawson and Perez. “We just got a huge break,” he told them excitedly. “You need to get to San Antonio as soon as possible. I’ll stay here tonight and wait for you.”
Perez and Lawson drove up first thing in the morning. Pennington’s excitement fueled their expectations. They were not disappointed. The three agents met with Guadalajara once again at the DEA’s office, and he explained how he’d delivered money to José to pay for Miguel’s racehorses. Guadalajara told them that both Cuellar and Moreno were in Dallas. They had turned themselves in to the DEA and asked for protection in exchange for information on the Treviños.
Both Lawson and Perez realized that Cuellar was the crucial link they had been searching for between the drug money in Mexico and José’s burgeoning racing empire in the United States. It was better than a Title 3. Now they had witnesses who could testify on the stand that it was Miguel’s money behind Tremor Enterprises. But first they’d need to convince the DEA to give them access.
EIGHT MONTHS AFTER THE death of Ramiro Villarreal, DEA special agent Rene Amarillas and the Houston office were still trying to reassemble the pieces of their investigation. But now they had Poncho Cuellar and Hector Moreno in Dallas. Their defection was a coup for the DEA. Cuellar and Moreno were key money men in Miguel and Omar Treviño’s empire. Moreno was in charge of logistics and smuggling operations for the Piedras Negras plaza where they sent across up to a ton of cocaine every month to wholesale dealers in Dallas. Cuellar was in charge of the money, making sure the hundreds of millions in U.S. drug proceeds got to the right people: corrupt law enforcement and military, the Colombian suppliers of the cocaine, and Miguel and Omar. They also knew all the key players within the cartel. They were highly valuable sources, and the DEA was in no mood to share, especially with the FBI.
In Dallas, IRS special agent Billy Williams tried to gain access to Cuellar and Moreno through a DEA agent he often worked with but was unsuccessful. Next, Lawson and Perez asked their boss, Villarreal, if he could appeal to the head of the Dallas DEA, but he didn’t get anywhere either. The team was running out of ideas. Lawson had tried to employ the patience that Perez always preached, but he felt the old frustration and doubt of his early days in Laredo. The various agencies tasked to fight the war on drugs were now fighting among themselves.
WHILE PEOPLE ABOVE THEIR pay grade argued over access to the key informants in Dallas, Pennington and his task force sifted through the growing number of financial records they had collected.
To the untrained eye, everything that José was doing would appear legal at first glance. Pennington had to give them credit. It was a fairly sophisticated operation. Obviously, Miguel and Omar had their own team of financial experts advising them.
But the task force had diagnosed a couple of weaknesses that would help them make their case. Ironically, the biggest was José. While the now forty-four-year-old bricklayer had a clean criminal record, he also had a financial history in the United States that they could access. When Williams subpoenaed the records for José’s personal account at Bank of America, they could see that the family’s annual household income had never topped more than $50,000. But in less than a year, they’d become millionaires.
In December 2009, José had formed his racing company Tremor Enterprises LLC and opened a business account with Bank of America, where he deposited the $445,000 Tempting Dash had won in Grand Prairie. There was also the $968,440 deposited after Mr. Piloto won the All American Futurity race in 2010.
In October 2011, José registered two more companies, Zule Farms LLC and 66 Land LLC, for his new breeding business in Oklahoma, and he opened two more business accounts at Bank of America. Through the diligent work of Kim Williams and Brian Schutt, who were combing through thousands of pages of horse documents, they found that at least a dozen of the mares that had been transferred to José’s farm in Lexington had been paid for through money wires from Basic Enterprises in Monterrey at a cost totaling nearly $1 million.
But the curious thing was, there were no checks going out from José’s accounts to pay for any of these horses. His crew appeared to be generating new LLCs as fast as they bought horses, then passing the horses from one LLC to the next in an intricate shell game, so it looked like José only owned a few of the horses on his Lexington ranch. Ownership of the mares was listed under various names, including Carlos Nayen, who had started an LLC called Carmina, and Fernando Garcia, who had Poker Ranch.
Working with Tyler Graham, Lawson had diagnosed the brothers’ other weakness. They were sitting on piles of cash in Mexico, but it was no use to them until they could launder it through U.S. banks. They treated the businessmen, Alfonso del Rayo, Francisco Colorado, and Alejandro Barradas, like ATMs, and they were useful for wiring large amounts of cash.
What they hadn’t taken into account were the rapidly mounting expenses for everything from vets to blacksmiths for their growing number of horses. Graham would wait for months before he got paid. The money often had to be smuggled across the border by Victor Lopez. Several of the top breeding and training facilities in the United States, including Lazy E in Oklahoma and trainer Paul Jones, were also becoming increasingly frustrated with their slow payments.
In August 2011, Lawson and Perez had done another surveillance of Victor Lopez—this time in the parking lot of the Mall del Norte in Laredo. Lopez handed another undercover agent $56,000 in a plastic K-Mart shopping bag.
Through the calls between Graham and the various members of José’s network that were being recorded, Lawson could see that the conspiracy was growing so large it was becoming complicated for them to manage. Through their conversations with Graham, it seemed Nayen and Garcia were starting to have difficulties tracking the enormous number of horses they had purchased. With the help of Pennington’s task force, the agents had been able to estimate that Miguel now had as many as four hundred horses boarded at racetracks and training facilities throughout Oklahoma, the Southwest, and California.