STEVE PENNINGTON HAD SPENT THE LAST THREE WEEKS SITTING IN A chair at the prosecutor’s table waiting to be called to the witness stand. He’d never been someone who was good at staying still. Like Lawson, he preferred to be out on the street working, not sitting behind a desk. So it was a relief to him when Doug Gardner finally called his name to testify. The jurors and the courtroom had gotten a three-week seminar in drug cartels and horse racing. It was a lot to digest, and now the prosecutors wanted to make sure that Lawson and Pennington wrapped up their case and put a bow on it, to erase any doubt in the jurors’ minds that José and the other defendants might be less than guilty beyond a reasonable doubt.
Pennington had been on the witness stand too many times to count over his long career. Still, as he took a seat on the raised dais, it never failed to get his blood pumping and make him break out in a sweat once all eyes were upon him.
“Could you explain the concept of commingling to the jury?” Gardner asked. Commingling was an important part of the prosecution’s argument that they wanted the jurors to fully grasp. A key complaint against the Huitron brothers and Francisco Colorado was that they had mixed the “dirty” cocaine proceeds from Miguel and Omar with the “clean” legitimate money in their businesses. Earlier in the trial, Gardner had likened it to “spiking the punch bowl.”
“Yes.” Pennington nodded. “Anytime that you have funds, say, from an illegal source and you put those with an ongoing business or funds that are from a clean source, once you mix those funds together, then you have commingled the funds, and you can’t distinguish between clean and dirty.”
What Gardner also wanted to do was convince the jury that the defendants knew exactly where the dirty money had come from, which would make them active participants rather than passive, unknowing players in the conspiracy.
“. . . Special Agent, I want to turn your attention to some of the horse sales . . . Could we first start with the September 2010 Ruidoso sale? . . . For the jury’s recollection, how many horses were purchased?”
“Twenty-three horses,” said Pennington.
“And what was the purchase price?”
“Little over $2.2 million.”
“And who filled out the check for that?”
“It was signed by Francisco Colorado Cessa.”
“And based on the records obtained from Southwest Stallion Station and Paul Jones, were you able to trace those horses as they left the auction house?”
“. . . Yes. We reviewed the documents . . . and found out that twenty of the twenty-three were boarded and were trained at Paul Jones and Southwest Stallion under the account of Carlos Nayen.”
Gardner took Pennington back to the horse First Fly Down and the $400,000 check he and Lawson had found in Lexington made out from José’s Tremor Enterprises to Francisco Colorado. Pennington described to the jury how the check had never been cashed by Colorado, and that the horse was being trained by Paul Jones at Los Alamitos for Tremor Enterprises. The horse had died suddenly, explained Pennington, and afterward José had collected on a $400,000 insurance policy taken out on the racehorse.
Another six of the twenty-three horses that Colorado had bought in Ruidoso were at José’s Lexington ranch. Pennington and his task force had found that the horses were listed under various owners’ names, including Victor Lopez, who had been dead for several months. Two more of the horses were found in Ruidoso by Pennington’s task force. One was listed under Tremor Enterprises and the other under Desiree Princess Ranch, an LLC started by Fernando Garcia. Six others were transferred to other members of the organization and another six remained in Colorado’s name but their whereabouts were unknown, explained Pennington.
Gardner pivoted to another big auction, this time in Oklahoma at Heritage Place in November 2011. “. . . In addition to selling four horses, did the organization purchase a number of horses?”
“Yeah, including the four that were, quote, ‘sold,’ twelve total were purchased with funds from Francisco Colorado through Arian Jaff.”
“Is that the Quick Loans?” Gardner asked, citing the name of Jaff’s company.
“Yes, sir. Quick Loans, Arian Jaff.”
Now Gardner wanted Pennington to explain how he was different from the normal IRS employee that probably every one of the jurors was familiar with—the tax auditor sitting in a gray office whom everyone dreaded.
“. . . What does an IRS auditor do?”
“An IRS auditor is going to look at the first level of receipts to determine whether or not what you have on your tax return you have a receipt for.”
“So what does an IRS criminal investigator do in contrast to that?”
“We’re going to look below that level of receipts to try to determine where the source of the funds came from, and whether or not the expenses you’ve reported are legitimate.”
What Pennington and his task force had found, he testified, were mostly structured deposits and bank wires from Mexico going into various U.S. bank accounts and auction houses. José, Nayen, and the others moved the horses from one LLC to another and the money from one bank account to another in an elaborate shell game to hide the true mastermind behind the scheme, Miguel Treviño.
“Now, part of the government’s indictment alleges the international movement of funds . . . Could you explain to the jury what international movement of funds were discovered in this case . . . ?” asked Gardner.
“Yes, sir. We had bulk currency from the sale of narcotics being physically shipped from the United States in bulk-cash smuggling into Mexico. And then we have a number of wire transfers going back in from various different banks in Mexico such as Banco Monex, Banco Regional de Monterrey, Basic Enterprises, ADT Petroservicios. We had some from Grupo Aduanero from Sabanco. Those wires originated in Mexico and the money is wired into banks in the United States for the purchase of quarter horses.”
“. . . Now, the government has also alleged the interstate movement of funds.”
Pennington nodded. “You had currency deposited into various banks in Laredo, Texas, and then you had the money from those accounts in California, Arizona, and other states.”
“And what banks were they using?”
“IBC Bank, Wells Fargo, we have UBS and Bank of America.”
“. . . And what was the total amount expended on horses in this investigation?”
“Over $25 million.”
Now Gardner asked Pennington how many horses José Treviño had bought with his own money for Tremor Enterprises, or his companies 66 Land or Zule Farms.
“One,” Pennington said. In nearly three years José had only paid for one horse out of his accounts at Bank of America.
Gardner looked down at his notes on the lectern, letting this sink in with the jury for a moment. “And what was the amount of that horse?”
“Five thousand five hundred dollars, I believe.”
“. . . How many horses total did Colorado Cessa purchase?”
“I believe that was 121.”
Of those, Gardner now asked, how many were still in Colorado’s name at the time of the raid?
“He had—I believe it was still forty-one listed under his name . . .”
“And when you break down the forty-one,” said Gardner, “what did you discover with respect to the location of those horses?”
“A number of those horses were cared for at places like Southwest Stallion Station, Paul Jones under the Carlos Nayen account. And some of those horses were seized by IRS either at Lexington, Oklahoma, or California, or New Mexico.”
“And the horses you discovered being stabled under various places, how were those expenses paid for?”
“They were paid for by currency through Carlos Nayen, Victor Lopez, and by the funds from Alfonso del Rayo Mora.”
Pennington had been on the witness stand for more than an hour. The judge called the court to recess for a fifteen-minute afternoon break. When the trial reconvened it was time for the defense to have a go at Pennington. The defense attorneys took turns questioning the IRS agent, trying to mitigate their clients’ involvement in the conspiracy and build doubt in the minds of the jurors.
Pennington had testified that Eusevio “Chevo” Huitron and his brother Jesse had received more than $500,000 into their Wells Fargo account for horse expenses, much of it structured deposits from Victor Lopez and others in Laredo. Jesse Huitron’s lawyer, Brent Mayr, argued that his client had no idea that the funds had been structured because Chevo’s daughter Jessica kept the accounts. Nor did he make any of the structured deposits himself or have any idea of the illicit nature of the money he was receiving.
Of all the defendants, Jesse’s case for being indicted was the weakest, and his lawyer knew it. Jesse hadn’t been included in the original indictment, not until he’d inadvertently testified under oath to his involvement in his brother’s racing business, unwittingly making his own case for being indicted. Now Pennington watched Mayr work to grow a seed of doubt in the jurors’ minds about his client’s guilt. After nearly an hour and a half of peppering Pennington with minutiae over each structured deposit that was made, Mayr was starting to wear not just on him but on the judge and jury as well. It was nearly 5 p.m. and Pennington had been on the witness stand for most of the day.
“If I may, I’m only going to cover three more of the transactions. Then I will be done,” said Mayr, rifling through his notes.
“Have it all you want,” said Judge Sparks, who was losing patience. “You’re just burying everyone in the concrete. Your entire last hour and five minutes could have been done in three questions . . . If you would be watching the jury as I am, you would see you’re not doing any good. Three questions would have cleared it.”
“Okay,” said Mayr, making an apologetic face.
“I don’t know what they’re going to do, but they’re sure not happy,” Judge Sparks said, frowning. After a short recess, Mayr finished his questioning. He had been quiet for much of the trial, and this was his chance to drive home the innocence of his client, Jesse Huitron, which he had done with perhaps too much zeal. Only the jury’s verdict would tell. Pennington was finally excused and Judge Sparks adjourned the courtroom for the day.
THE NEXT MORNING AS they assembled in the courtroom, Lawson could feel himself starting to sweat. Gardner and Fernald had called fifty-nine witnesses so far in the trial and Lawson would be the very last one. He’d been sitting in the courtroom for nearly three weeks, silently watching and waiting for his turn. Now Doug Gardner called him to the stand to be sworn in for his testimony. Lawson quickly made eye contact with Perez, who was sitting toward the front of the gallery, and she smiled and nodded.
Earlier in the morning she’d had an awkward run-in in the bathroom with one of José’s sisters, who had tried to make small talk with her as she stood at the sink washing her hands. Perez had smiled politely then quickly walked out, not saying a word. Some of the reporters had tried to approach José’s mother and sisters for interviews in the hallway during the break, but the family had refused all requests. Perez wasn’t going to give José’s sister anything to write down in her little notebook either.
It would be Lawson’s job to reinforce all of Pennington’s testimony with more evidence—all of the surveillance photos, the recorded phone conversations, and documents that he, Perez, and the rest of the team had collected throughout the nearly three-year investigation. Lawson spoke of Tyler Graham and the information he provided as being key to unraveling the conspiracy.
“In the two years you were working with Mr. Graham, did any piece of information that he gave you prove to be untrue?” asked Gardner.
“No.”
“And how did you confirm the information that Mr. Graham gave you?”
“His information was confirmed by a variety of means: subpoenaed bank documents, surveillance conducted after information he gave us, debriefs of other witnesses, and debriefs with other law enforcement officers.”
Gardner clicked through the photos that Lawson and Raul Perdomo had taken at the auction and afterward at the All American Futurity. A giant image of Carlos Nayen at the auction in his pink shirt was projected on the screen behind the defense table. Gardner stopped at a photo of Nayen texting on his BlackBerry.
“Do you know who he was texting?”
“Through other informants, it was Miguel Treviño,” Lawson said.
One of José’s lawyers, Christie Williams, leapt to her feet. “Objection, Your Honor. Hearsay.”
Gardner rephrased his question. “Do you know personally who he was texting with?”
“No.”
Gardner took Lawson through several more surveillances he had conducted along with Perez and other agents. There was the money drop with Victor Lopez in front of La Posada Hotel in downtown Laredo and photos of Lopez leaving the duffel bag in the truck belonging to their undercover agent. The jurors seemed to welcome the visuals after the financial minutiae they’d been asked to digest during Pennington’s testimony. Finally, Gardner came to the day of the raid at José’s farm and the BlackBerry Lawson had uncovered hidden in a drawer in José’s room. It had been their ticket to capturing Miguel—the Holy Grail of their investigation—but it hadn’t played out the way he’d planned.
“Did you power up that phone?” Gardner asked.
“I did.”
“And do you recall the specific contacts that you saw?”
“There were no contacts on the phone, but it had a Mexican phone number.”
“Just one in the address book?
“Yeah.” Lawson nodded.
Gardner pivoted away from the line of questioning. They weren’t going to get into what happened afterward. It wasn’t going to help their case. He had passed that Mexican number along and done his part, but Miguel and Omar were still running free committing mass murder and smuggling tractor-trailers full of cocaine across the Rio Grande. But Lawson couldn’t dwell on that now.
AFTER LAWSON TOOK HIS seat again at the prosecution table, the government rested its case. The courtroom now belonged to the defense. Each of the attorneys, including Christie Williams on behalf of José Treviño, made a motion that the court enter a judgment of acquittal. The government hadn’t shown sufficient evidence or proved that any of their clients were knowingly participating in a conspiracy to launder dirty money through the American quarter horse industry. One by one they made the same argument. It was a last-ditch move in their arsenal, and it didn’t hurt to deploy it even if they knew there would be little chance of it being successful.
“The motions are overruled,” said Judge Sparks after a few minutes of debate. “Bring in the jury.”
The attorneys at the defense table passed on calling any witnesses to the stand, with the exception of Richard Esper, who represented Chevo Huitron. When Esper called Shae Cox, one of Chevo’s former employees, it explained why. Esper was opening up uncharted territory for the prosecution to explore, which had the potential to harm his client. After Esper was done throwing softball questions at their sole witness, Gardner eagerly approached the lectern for the cross-exam. “Now, you also stated that Chevo Huitron . . . is an excellent trainer?”
“Yes.” Cox nodded.
“And you also stated that he was extremely honest?” asked Gardner.
“Yes.”
“Do you also recall your response to the question, did you ever see him do things that were illegal or underhanded?” Gardner asked, setting up the witness for what was about to come.
“Do I recall the question? Yes,” she said.
“Do you recall that?” Gardner asked again.
“Yes, I do.”
“Were you aware that on August twenty-sixth of 2011, Chevo Huitron was suspended and fined—”
“Objection, Your Honor.” Esper leapt to his feet. “Objection under 404(b), Your Honor.”
“The objection is overruled,” said Judge Sparks. “You placed all of this in evidence on your direct examination.” In other words, Esper had opened the door by calling Cox up to the witness stand, and now Gardner was going to tear the door off its hinges.
“On August twenty-sixth of 2011, were you aware that Chevo Huitron was fined and suspended for doping, drugging two horses with clenbuterol at Retama Park?”
“Yes. I’m aware of those problems,” she said, now looking nervous.
“On June seventeenth, 2011, were you aware that Chevo Huitron was fined for doping a horse with polyethylene glycol?”
“I didn’t know what the penalty was,” she said.
“Were you aware on July twenty-sixth of 2010 that Chevo Huitron was fined and suspended for obtaining fraudulent workouts through the bribery of track personnel?”
Gardner rattled off several more fines and suspensions filed against Chevo for doping horses. “Were you aware that he applied batteries in a fixed horse race to Tempting Dash?”
“No.” She shook her head.
“You weren’t aware of that?” asked Gardner. “So again, being aware of all that, would that change your opinion as to whether he’s an extremely honest person?”
“I still believe he’s honest,” she said tentatively. “Yes.”
“Pass the witness, Your Honor.” Gardner turned his back to the witness, and the judge excused Cox. The gallery was buzzing after the grilling that the witness had just endured. Bringing Cox to the stand had done Chevo Huitron more harm than good.