Zetas Cartel Money Laundering Trial Week 1 Recap

Chivis Martinez and Havana for Borderland Beat

Monday: Drama in the Opening of the Treviño by Chivis Martínez

There were 100 potential jurors comprising the jury pool, from which 15 jurors would be selected in the voir dire process of the José Treviño Morales  trial.

The defendant, dressed in a blue suit, stared at jurors during the process, breaking his stare to write notes. 

José is not wearing the translation headsets that his co-defendants are wearing, an indication that he completely understands the English language.

Tension filled the courtroom in the opening day of the   trial in Austin, Texas.  José is the brother of Miguel Treviño aka Z40, premier leader of the Zetas cartel.  José along with four other defendants is accused with using a race horse operation as a front for money laundering.

Jesús Maldonado Huitrón, Eusebio Maldonado Huitrón, José Treviño Morales, Francisco Colorado Cessa, and Fernando Solís García are the names of the defendants.

Security was evident  outside the courthouse.  Homeland security officers were stationed on the grounds surrounding the facility.

The trial began Monday in federal court with opening statements.  At the close of the trial day, assistant US attorney Douglas Garner notified judge Sam Sparks that a reporter had been spotted reviewing the FBI 302 documents connected to the case.

Alexandra Trevino wedding reception site Adolphus Hotel Dallas

FBI 302 forms are used to summarize interviews.  Garner accused defense attorneys of leaking the documents to the media.  In turn Sparks reprimanded the defense team and issued an order prevented them from speaking to the media.

As it turns out the documents were released to the public last month, in the end Gardner had to give a retraction of sorts as he issued a press release that the incident was a “misunderstanding”

There are some tidbits in response to the defendant’s motions in this 12 page document

This excerpt is a computer communication between Treviño’s daughter Alexandra (alexandratrvb) and her then fiancé , Luis, that was gleaned from the history of Treviño home computer.

She begins:
“Can I tell you something?”

He responds with the name; “The love of my life” click on image to enlarge and read.

The first day concluded jury selection and juror’s instructions.

 Note:  Zulema and Alexandra, the wife and daughter of  José Trevino, were charged in this case  but plead guilty in a plea bargain arrangement.  Zulema was charged in the indictment, with 'conspiracy to launder", Alexandra was charged with "fail to report".  Sources say Alexandra had recently joined the horse operation, working there for a few months before the bust.

 If convicted Zulema faced 20 years, Alexandra 3 years.  They have not been sentenced as of yet but are expected to spend no time incarcerated and will walk with only probation.

José cannot be deported, if he is found guilty and  serves a sentence. Though he was born in Mexico, José became a naturalized American citizen, as did Zulema.  Alexandra was born in the United States. 

 José, Miguel and Omar were brought to the United States as young children, spending their formative years in Dallas.  Either in part or whole the family then moved to the border town of Laredo Texas.  Miguel began his criminal career in Laredo first becoming a go-fer for the Texas gang in Laredo called "Las Tejas"

Tuesday: Opening Arguments and Testimony begins

In his opening argument, federal prosecutor Douglas Gardner, lead prosecutor of the four attorneys comprising the federal team, told jurors the horse racing and breeding operation was a front facilitating the laundering of funds generated by the Los Zetas cartel from criminal activities such as the trafficking of drugs.

Gardner told the jury that Jose was appointed in charge of the money laundering scheme by his brothers, Omar Treviño aka Z42 and Miguel Treviño aka Z40, leaders of Los Zetas.

Gardner described the Zetas as one of the largest, most versatile, and violent criminal organizations in the world.

He continued his argument with an overview of the cartel operation which included “crafted” bank deposits, front businesses that purchased horses and the fixing of horseraces using techniques such as the holding back of horses at the starting gate giving the edge to Zeta horses.

Gardner alleges Mexican businessman, Francisco Antonio Colorado Cessa, bought horses for the Zetas through his company, also alleged of being a front company for the Zetas.

The four co-defendants are charged with laundering cartel funds through their personal accounts and purchasing horses for the cartel.

José Treviño defense attorney David Finn asserts that his client is a “genuine horseman” who was targeted by the government because of who his brothers are.  "This isn't some front," Finn said. "It's a legitimate, real business, built on the sweat of my client and his wife."

Mike DeGeurin, Cessa's attorney, said his client's company in Mexico, does not have ties to the Zetas. 

He contends Cessa legitimately invested money in purchasing and breeding horses.  In an appeal to the softhearted, DeGeurin stated that his client operated a horse ranch in Mexico used for therapy by autistic children.

The Attorneys for Solis and Eusevio Maldonado Huitron told jurors their clients were hard-working, honest horse trainers and that there is no evidence they had knowledge that the horse operation had ties to the Zetas..

The attorney of Jesus Maldonado Huitron's elected to exercise his right to make his opening statement subsequent to the prosecution presenting their case.

The first witness in the prosecutor’s case in chief was José Garza, a former Texas state trooper and intelligence analyst with the FBI, who educated jurors of the Zetas and how they operate.

José Vasquez Jr., another witness, testified that he assisted in the transfer of about $900,000 in cartel proceeds, which went towards payment of horses and other horse related expenses. 

He was based out of Dallas and worked for the cartel in the states of Texas, New Mexico and Oklahoma.  Vasquez is currently serving a prison sentence for drug trafficking.

Convicted Piedras Negras cocaine drug trafficker, Mario Alfonso Cuellar testified, he depicted José Treviño as a “good man”, with a genuine love for quarter horses. Cuellar is a government witness.

Cuellar said he learned about José Treviño, through his brother Oscar Omar Treviño.  Omar described his brother as “hardworking” and “humble”, which is how Cuellar says he found the man to be.  Cuellar was the liaison for the Zetas organization and horse racing; it was Cuellar that made Zeta introductions to key members and trainers in horse racing operations in Texas, California and New Mexico.

Cuellar said that José resisted becoming involved in the operation, but finally gave in to the urging of his brothers in 2009, he would later “purchase” 'Tempting Dash' in 2010. 

Looking closely into the ownership history of the horse, directly before the transfer of ownership to José Treviño, the original owner, José Ramiro Villareal, was found murdered in his torched vehicle outside Nuevo Laredo, Tamaulipas. 

Villareal was someone whose horse racing advice Miguel Treviño trusted.  When Miguel decided to begin the operation, it was Villareal that he turned to for purchasing advice.  Villareal is a bit of a horse racing legend, scraping together 10,000 dollars to purchase a racing horse at an auction.  

The horse proved to be a winner, and Villareal was on a successful roll, one that made his name synonymous with having an accurate instinct to spot winners, horses that he would purchase and give names to such as “El Sicario”.  Miguel trusted Villareal, but it was his brother José he wanted to become the in charge man of the operation.

The Villareal fate begins in 2010 ended with an execution ordered  by Miguel Trevino

Miguel genuinely liked Villareal, [at left] but more importantly he kept him close to the vest wanting his respected advice on purchasing.  Miguel called the rounded Villareal, “Gordo". They shared a warm friendship and when that friendship was tested, Miguel gave Gordo two lives.

In 2010 Gordo was stopped at a Texas airport by the DEA.  They grilled Gordo for hours, confiscated his cell phone and ordered him back for a meeting in a couple days.  At the second meeting Gordo’s world was shattered when the DEA told him to choose his fate, prison or become an informant.  He was positioned between a rock and a very hard spot.

Reluctantly he agreed to help the DEA, and what the DEA wanted was Miguel Ángel Treviño.

Gordo fed information that included a race in Nuevo Laredo that Miguel would be at.  The DEA had Mexican authorities to the race; they attended,  but only took photos of Miguel there was not a capture attempt.  That would become Gordo’s death sentence. 

Probably because of his affection for Gordo, he had him picked up and illustrated his possible fate in the wilderness surrounded by sicarios and Miguel Gordo saw a man executed, and thrown in a vat of acid.  Gordo fainted and woke to Miguel’s laughter and slapping of his face.  Miguel asked Gordo “you aren’t going to fuck me are you Gordo?” “No! Of course not papi" Gordo protested.

 It was a few months later that Gordo received the call for a meeting.  He had to have known this was "it".  Why he went is the guess of anyone, but his body was found a couple of days later, nearly completely incinerated requiring DNA testing for a positive identification.  "Tempting Dash" became José' horse.

José Treviño is described as shy and socially awkward, evidenced by his word stumbling in his  interviews with media connected to the horse racing world.  He at first would avoid interviews and reporters, but as he began winning races he became more comfortable with public speaking.

In speaking about Miguel Treviño, Cuellar disclosed that the Zetas leader was an active and interested party to the horse racing operation.  He further stated that Miguel had a list of horses, names and prices on his Blackberry.

Assistant U.S. Attorney Douglas Gardner said the Zetas, under the control of Miguel Angel Treviño Morales, have a transnational drug trafficking network stretching through Latin America to South American and north as far as Chicago.  The problem was always getting the large sums of cash back to Mexico. 

               Fernando Solís Garcia

Those profits would again be sent "back up north to be invested into legitimate businesses in the United States,” Garner said. The prosecution said we'll see money traced into the accounts of the defendants via transaction like wire transfers and the payments which are structured to be less than $10,000 each to avoid reporting requirements of the Internal Revenue Service, he said.

Prosecutors say Defendant Colorado used money from his company ADT Petrolservicios to buy quarter horses with solid champion bloodlines at auctions, while Defendant Eusevio “Chevo” Maldonado Huitron, who lives in East Austin and runs a horse training facility in Bastrop County, was paid to train them. The prosecution believes the Huitrons laundered money through their other companies

The first day was about paying for trainers, vets and the like. They hadn't been able to establish the first day that any of the defendants were aware of the money they were earning was anything other than legitimate money. 

"Chevo" Huitron it appears was uninterested in money. He was only interested in his horses, and certainly does not seem to know it was money laundering.

The defense depicts "Chevo" Huitron as illiterate with a sixth grade education, and Jesus had the sense to try to make him solvent with his home building company because Eustebio could only think of horses and  barely kept track of money. 

Little known fact: The hierarchies of Los Zetas all use Blackberries, because it has a privacy mode.  Common belief is they strictly used throw away phones.  Trial information revealed, when the phone is in privacy mode immediately “scrubs” itself clean.

One witness worked under Metro but reported directly to Miguel.  Miguel was trying to kill him in Piedras Negras, knowing this the witness crossed over and was arrested.  He is hoping for a lighter sentence for his cooperation.

Wednesday Witness Testimony Continues Horse Race Fixing

Gerardo Mata Morales Wednesday testified to jurors that at one time he was in charge of the transport of drug profits from San Antonio Texas to Eagle Pass Texas.  Additionally, the witness was in charge of the transporting of funds to New Mexico, where prosecutors allege the money was payment for the fixing of horseraces.

Eagle Pass is the city on the American side of the south border that divides the U.S. and Mexico.  The city of Piedras Negras is on Mexico’s side of the border.  Piedras Negras is a Zetas cartel stronghold.

Mata is an American from Eagle Pass, who admitted since 2004 he shipped the cars from San Antonio and Dallas to the border for Cuellar.

The .witness told the jury he smuggled to Mexico 3M to 4.5M USD per month.  In 2010 he received a new assignment from Cuellar, to travel to New Mexico and deliver 110k USD to a woman.  It says he had no problems making the delivery, and he never knew what the money was for.

Prosecutors contend the money was a payoff for Ruidoso Downs Race Track gatekeepers, to fix specific horse races. 

Prosecutors allege the race fixing was but a part of the broad operation by Zetas leaders to launder money through their brother José Treviño Morales through his horse operations from 2008 to 2012 when he was arrested. 

José maintains his innocence although of the nearly 20 people indicted, most have pled guilty or have fled jurisdiction.

Cuellar testified to the jury on Tuesday about the horse race fixing.  He said Miguel Trevino was very anxious to fix the 2010 All American Futurity favorable to “Mr. Piloto”, a horse with odds at 22-1.  José Treviño owned Mr. Piloto.   Cuellar explained that by holding back a quarter horse by a millisecond, in a race that only lasts 20 seconds, it effects the entire race and gives a great advantage to the favored horse.

Cuellar stated that it was Miguel Treviño so intent on winning the race,  that he more than tripled the bribe the gatekeepers requested.

“They wanted $3,000, and Miguel said, 'No, you're not going to give them $3,000, you're going to give them $10,000,'” he said on the witness stand.

Mr. Piloto won the race and the $1 million purse, the richest prize in quarter-horse racing.

José’ co-defendants are; Francisco Colorado Cessa, a wealthy Mexican businessman whose company contracted for Mexico’s state-owned oil company,  Fernando Solis Garcia, a quarter horse expert, Jesus Maldonado Huitron, a Texas home builder; and his brother, Eusevio Maldonado Huitron, a prominent horse trainer. 

All five defendants say they are innocent of the charges.

Ms. Moore Crane took the stand, she is a book keeper.  Jose Treviño Morales contacted her to set up a LLC for Tremor Enterprises.  He told her he and his wife saved money and bought a horse Tempting Dash, for $25,000, the horse won a major race,  and he needed her to do his 2009 income taxes.

2011 she also set up LLC's for Jose Treviño Morales's Zule Farms and 66 Land.  Zulema (wife of Jose) or Jose would bring receipts and statements monthly to her office. 

When she started the Treviño Morales were making about $70,000 to $80,000 combined, but later they were declaring nearly a million.

Without being a CPA, the witness lacked the confidence and felt inadequate to deal with such large amount of money coming through the accounts.  She testified that she didn't notice any improprieties, it was just larger than she was used to being responsible for and she felt  the Treviños  needed the expertise of a CPA. So, she referred her clients to Alan Price CPA.

Ms Moore-Crane agreed on redirect that there was there was a lot of money going through the account, but they'd won money and were trying to expand the business.

When she saw on television about the Government raid of her client's horse ranch, she was surprised because when she was working with them there was only 9 horses and she heard about 400. She then consulted an attorney. She appeared very frighten on the witness stand.  Continues on next page

Thursday Testimony Continues:
Governor race

Jose Carlos Hinajosa was a law clerk at the Federal Attorney’s office in San Miguel Aleman, Tamaulipas, before becoming the account for Los Zetas.

         Franciso Colorado Cessa below

He testified Thursday that in 2004-2005, Francisco Colorado Cessa siphoned millions of dollars of drug money that was allocated for the horse racing operation and 12 million dollars to the PRI political party’s gubernatorial campaign in Veracruz.  Though not named, the governor was Fidel Herrera Beltrán.  He denies this to be fact, but the FBI suspected Francisco was giving money to Herrera.

Once the candidate won, the majority of contracts awarded for Pemex and Petróleos Mexicanos was given to ADT, Francisco’s company.  Francisco was the liaison between the governor and a former Zetas leader, probably Heriberto Lazcano who is now deceased.  The gubernatorial victory assured free passage for the Zetas trafficking drugs through Veracruz.

Hinijosa testified that in 2001, when the Zetas were the enforcer wing of the Gulf cartel [CDG], a founding member of the Zetas, Efraín Teodoro “Z-14” Torres, was sent to take  over the Miguel Alemán plaza. “Plaza” refers to a region.  Miguel Alemán is the border city across the Rio Grande from Roma. 

The witness explained; at that time the government controlled the drug trafficking in the state of Tamaulipas, Torres was sent in to gain control.  

The cartel “took over all the plazas in the state of Tamaulipas to control all the drug movement to the United States and to handle all bribery,” he said.  Eventually Torres was sent to Veracruz to capture that state as well.

 Zetas take control

In his testimony Cuellar had testified that by 2007 CDG and the Zetas had taken over Tamaulipas and Veracruz, then proceeded into Coahuila, a state that borders the Big Bend region of Texas.  Cuellar was hiding from US authorities in   Piedras Negras, across the border from Eagle Pass, when he was kidnapped by Omar “El 42” Treviño Morales,  and Jesús Enrique “El Mamito” Rejón Aguilar .

“The Zetas showed up in Piedras Negras and started picking everyone up and started making us work for them,” he testified. “Some were murdered, and they started lining us up so we would work for them.

Objections from defense attorneys were ongoing during Hinajosa’s testimony, they protested the irrelevancy of the testimony.  However, Judge Sam Sparks allowed the testimony in as he instructed the jury to weigh the credibility of the witness and decide for themselves.

The first witness was Hernando Guerra Gonzales, a cattle breeder advisor.  He also bought and sold horses. He wired money for bills for services for horses that Ramirez Villareal put in his name, all the while thinking he was helping his friend of over 25 years who "just had so many clients."  It was never established if he was paid for his time and aggravation.

Hernando Guerra Gonzalez had AQHA certificates of registration signed by Bill Price for Snowy Cartel, Fly Corona.  He opened a bank account at Lone Star Bank in McAllen, Texas with a check from Texas Racing Commission to pay expenses for Ramirez Villareal. Hernando Guerra Gonzalez.

The witness said Ramirez Villareal had every intention of straightening out what he termed “a mistake" but unfortunately, he hadn't a chance to fix the mess,  because  the man died. 

He met Miguel twice for about 30 minutes with Ramirez at a Monterrey stable to discuss blood lines and one other time briefly in 2008.  He had never met Jose.  The witness did not seem to know anything except his very abundant knowledge on quarter horses and cattle.

Hernando Guerra knew some of the other defendants as they are also experts in that field that buy and sell cattle just as he does. He went to the authorities.

High Tech Breeding

Witness Shelyn Bliss [photo above], a DMV, specializing in equine reproduction, has degrees from University of Oklahoma and A&M which has a renowned program specializing in equine embryo transfer. She worked with Jose Treviño Morales and daughter Alejandra very closely on their breeding program. 

Her only criticism was the business was growing too fast with mares used for breeding. They demanded more space because you were never certain what kind of shape they'd arrive. Close quarters make horses prone to fighting, stampeding  and transmitting disease. There was a neighbor William Jessie Pilgrim from Lexington Oklahoma.  He ended up selling his farm to Jose.  Jose needed to expand.  Money was given for a down payment  through Bank of America.  The government halted the final sale.

The DMV met Jose in 2011.  He consulted with her mentor Dr. Barnar at A&M about Tempting Dash's blood born disease and fertility complications. Trevino Morales was ascertaining the possibilities of breeding his prize horse without potentially spreading disease. Bliss an Oklahoma native was referred to Jose Treviño Morales to head up their breeding program.

Alexandra, José and Zulema

The farm in Lexington, Oklahoma wasn't up and ready in the beginning of the DMV's  tenure.  Extensive remodeling was necessary in order to facilitate a top-notch equine breeding program. Alexandra whom she worked closely with was the breeding manager. Zulema worked in the office. Dr. Bliss worked from Jan. 2012 preparing for the breeding season. 

Many recipient mares are necessary for equine embryo transfer. For the mares you need adequate space. She helped design the paddock to specifically mimic those where she previously worked before because they were professional and good.

Bliss noticed that Jose didn't have owners' names on horse medical files   She asked Alexandra to do that.  Alexandra did it for a while but stopped because Jose asked her not to do it.

Friday Testimony

Friday was a half court day. 

U.S. Immigration and Customs Enforcement agent Edward O'Dwyer testified that, in July 2011, he began investigating a group of women suspected of cash structuring, a term that includes importing or depositing money in small batches to avoid a law that requires declaring amounts of $10,000 or more.

O'Dwyer testified said the investigation led him to Victor Manuel Lopez, who is among the almost 20 people charged along with the Treviño brothers. Miguel Treviño and Lopez are fugitives.

O'Dwyer continued that  he received a tip from airline in February 2012 that Victor Lopez would be flying from Laredo to Oklahoma City and returning the same day. He asked agents there to be on the lookout for Lopez.

              Jesus Maldonado Huitron

Agent Joshua Schenk testified that when Lopez arrived in Oklahoma City, he walked to a parking garage and spent about four minutes in a truck with José Treviño before returning to the airport to catch his flight back to Laredo.

Oklahoma Police Depart pulled over José Treviño for crossing the center divider. Matt Martin, Oklahoma Police Detective, testified that José Treviño consented to a search of the vehicle and was courteous as he patiently waited in the back of a police car and while being questioned by officers.

No one could find anything out of the ordinary, including the drug-sniffing dog.  Treviño Morales had 5000 dollars cash on his person supposedly to purchase supplies for his horse ranch. 

He later pleaded guilty to the traffic violation, which defense attorney Christie Williams characterized as a "pretext stop."

Police Detective denied under oath of not knowing the term which means stopping a suspect on the pretense of a minor offense with the real objective being to search the vehicle and the occupants.

Witness Jane Eckert an accountant with over 20 years of experience testified in federal court in Austin in the money laundering trial of Los Zetas on Friday.

She worked at Heritage Place,  the famed quarter horse auction house "where champions are sold" from 2008- 2012 and all of 2006. She was office controller and auction manager Jane Eckert met Ramiro Villareal in 2006, she considered him a buyer/ agent, who bought higher priced horses. She was also familiar with both Carlos Nyan  and Fernando Garcia from the purchasing of quarter horses at many Heritage Place auctions. She thought Carlos Nyan to be Fernando Garcia's boss.

Horses linked to Jose Treviño Morales were paid for from primarily five different companies:

LA Horses-Groupo Aduanero-FF Stables-ADT Petroservicos-Basic Enterprises

The prosecution provided a financial overview of the monetary intricacies of horse auctions as they watched a paper trail from Defendant Fernando Garcia payments for horses bought at auction and paid for by ADT Petroservicios. 

Eckert acknowledged on the stand that it was the co-owner of Heritage Place, Dr. Charles Graham  [at left], also a horse breeding veterinarian, who mentored Jose Treviño Morales in horse breeding. Dr. Graham   A& M graduate A&M University’s College of Agriculture and Life Sciences. is an Elgin, Texas ranch owner/resident who is a known to be a heavy donor to Texas political campaigns.

"The indictments suggest that the Zetas cartel paid the Grahams a small fortune in recent years. In all, Tyler Graham bought more than $1 million worth of horses that ended up in the hands of the Zetas cartel, which made at least $550,000 in payments to the Grahams’ stable, according to trade publications and the indictment."

Tyler Graham, Dr. Charles Graham's, grandson,  a 30 year old agent/ manager at Heritage Place is on their Board of Directors.

The jury watched evidence from the last days of Feb. 2012 and early March of Graham signing off on a series of payments/deposits of $9,900 to Heritage Place’s commercial Bank of  America for horses brought. 

These transactions were followed up with an email with receipts from Fernando saying money was sent from ADT petroservicios. A series of  cash payments under the $10,000 is a red flag for the government as they see it as an indication of structuring. Eckert said she knew this to be the case and Tyler Graham oversaw that. 

The prosecution asked if Eckert knew Tyler Graham was a confidential informant and she said not at the time but she did find out later

Testimony continues tomorrow April 22, 2013