How the Cartels Work

By Guy Lawson
Rolling Stone

A revisit:

Mexican drug lords have transformed the narcotics trade in America — and the DEA appears powerless to stop them.

One of the strangest things about the drug war that is tearing Mexico apart is how little of the bloodshed has spilled over the border. On one side of the Rio Grande is Ciudad Juárez, one of the most violent cities on the planet, with 1,600 drug-related murders last year.

On the other side is El Paso, Texas, the third-safest city in America, with only 18 killings. The 100-to-1 disparity in murders underscores a little-understood reality in the War on Drugs: The current crop of Mexican drug lords is not a bunch of Scarface-style lunatics high on coke and hellbent on violence. Instead, they are highly sophisticated executives, pursuing profit by the cheapest and most efficient means possible.

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Torturing rivals and beheading victims serves a purpose in Mexico, where drug-related violence has killed 12,000 people in the past three years; narcotraficantes routinely use brutality to subdue competitors, eliminate witnesses and frighten off police recruits.

But north of the border, the drug lords are as corporate and hyperorganized as Walmart, replacing the top-down approach of their Colombian predecessors with a new business model — one that outsources the street-level grunt work to an army of illegal immigrants. With business booming — prices are steady and demand remains high — unleashing a Mexican-style rampage in this country would only risk riling up U.S. law enforcement. The Mexican cartels aren't fighting the War on Drugs in the United States for a very simple reason: They've already won.

As the violence in Mexico has escalated, federal officials have stepped up major busts against the cartels in the U.S. Earlier this year, in Operation Xcellerator, the Drug Enforcement Administration made 750 arrests from California to Maryland, seizing $59 million in cash and 23 tons of narcotics — including 12,000 kilos of coke, 1,200 pounds of meth and 1.3 million hits of Ecstasy.

The operations employ the same law-enforcement tactics used to disrupt the Mafia in the 1980s, busting low-level flunkies and turning them into informants. So far, though, the DEA's widely publicized campaign has been a total bust when it comes to nailing top narcos. The target of Operation Xcellerator — a drug lord from the Sinaloan cartels — remains a fugitive, as do four Mexican drug traffickers designated as "narcotics kingpins" in July.

According to the DEA, the men operate out of Mexico, overseeing a sophisticated organization in the U.S. that sets prices, tracks shipments, manages employment and handles payoffs. The group has divided the border into "plazas," each under the control of a specific manager. The name of the outfit, appropriately enough, is the Company.

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The failure of the DEA raids underscores the fundamental difference between Italian-American mobsters in Brooklyn and the much more brutal and ruthless Mexicans. The supposed Mafia "code of silence," called omertà, proved to be little more than a joke as hundreds of wiseguys flipped to save their own skins, generating a steady stream of convictions. But the Mexicans have more than a fictional code of conduct: They have hostages.

Every low-level narco busted in the U.S. has family and friends back in Mexico who, they know, will be killed by the cartels if they cooperate with the gringos. Senior DEA agents acknowledge privately that they have yet to flip a single significant snitch from the cartels. The matrix of punishments and incentives that destroyed the Mafia — racketeering laws, witness-protection programs, supermax prisons — have little relevance to the Mexican drug lords, who are essentially holding an entire nation at gunpoint.

"Mexicans don't flip," says an undercover DEA agent who participated in Operation Pocono Powder, a major case against the cartels in New York. "Part of the way the cartels retain control is through fear. Mexicans will cooperate to a certain level, but they won't talk about Sinaloa. They know their family back home will be killed."

The DEA insists that its high-profile busts are having an effect. "In Project Reckoning, we had 64 cities involved," says Carl Pike of the DEA's Special Operations Division, citing a bust against the Gulf cartels that resulted in 507 arrests by last year. "We were after their distribution capability. It was like taking out 64 Walmarts all at once. The Mexicans have to regroup from ground zero, and it's time-consuming and expensive to do that."

But the Walmart analogy offers a larger insight into how the Mexican cartels have transformed the drug business in America — and why the DEA has been unable to stop them. In the 1980s, the Colombians tried to directly control the distribution of their product through a network of low-level dealers — a group prone to stealing, fucking up, getting caught or trying to take over themselves.


Like any good manager, however, the Mexicans learned from the mistakes of their predecessors. Instead of maintaining their own labor force of dealers — a risky and costly proposition at best — the drug lords came up with the same solution as Walmart and countless other multinational corporations: outsourcing.

To sell their product in America, the Mexicans contract with existing criminal operations, relying mainly on Hispanic gangs like MS-13 and the Mexican Mafia. But they also sell to Crips, Bloods, Hells Angels, Puerto Ricans or Dominicans — whoever can move weight reliably.

This keeps their overhead low and reduces potentially risky connections to top management. It also makes all of the headaches of running the business — wages, benefits, overseeing an untrained and unruly workforce — someone else's problem. "American gangs are not integrated into the Mexican drug-trafficking organizations," says Tom Diaz, a senior policy analyst at the Violence Policy Center and the author of No Boundaries: Transnational Latino Gangs and American Law Enforcement.

"The gangs are wild cards; their behavior is unpredictable. There's no advantage to the Mexican cartels to bring them into their structure. The Mexicans are happy to sell them drugs, but they keep them at arm's length. They use them sometimes as muscle or disciplinarians, but only on a contract basis."

Street-level dealers, mostly drawn from the pool of millions of Mexican immigrants stuck in menial jobs in the U.S., effectively become what Amway calls "IBOs," or Independent Business Owners. They sell all the crank and crack they can, hoping to boost their sales status from an Amway-like Silver to Gold to Platinum, providing them with ever-larger supplies of product to move.

"The low-level guys are working menial jobs as they establish themselves as a drug dealer," says Greg Borland, the DEA assistant special agent in charge of Alabama. "They are the ones who are like Tony Montana in Scarface. They start small and try to make something of themselves."

Higher-level dealers are required to keep a low profile and live modestly, as if they were regional managers for a chain of fast-food restaurants. If one gets busted, there's rarely a link that can be traced back to the cartels — and even if there is, the dealer knows that his family back in Mexico is certain to be executed if he talks to the feds. "The structure is designed to minimize the risk by minimizing the number of sales or 'touches' that have to be made," says Borland. "The guys at the highest corporate level — the cartel guys — only make one sale. It's very low-risk."

Stripped to its essence, what the Mexican cartels sell is not drugs so much as access to the world's biggest and most lucrative market for drugs. And thanks to U.S. policy, the Mexicans enjoy a virtual monopoly on the American market. In the 1980s, Ronald Reagan largely closed off the Caribbean as a passage for narcotics, forcing the Colombians to turn to the Mexicans for an overland route. In the mid-1990s, after NAFTA made it easier to ship goods of all kinds across the border, Mexicans became the go-to distributors for Afghans, South Asians, Middle Easterners and anyone else looking to sell illegal substances to Americans.

The result has been the creation of one of the most successful criminal enterprises in human history. In Sinaloa, money brought back from U.S. drug deals was long known as "dirt," because of the smell it got from being hidden in suitcases underground. But today, the cartels launder Yankee dollars through a network of global banks, using the same secure electronic transfers as any self-respecting international business. According to the government's own estimates, the Mexican cartels generate as much as $38 billion in gross proceeds at the wholesale level every year — a sum that surpasses Dupont and Coca-Cola.

Alabama offers an especially illuminating microcosm of the way the drug cartels operate in America. The state has been cut up into territories, with no sign of the violent turf wars over markets that plague Mexico. Distribution in the north of the state is handled largely by established black drug dealers; the rural areas are increasingly handled by Mexican migrant workers looking to supplement their income from day labor.

Even if the feds manage to bust a dealer, it's almost impossible to connect such a low-level flunky to a drug kingpin in Mexico. "The problem is how smart they are," says Borland. "The dealers are illegals, so they're not documented. There's no credit cards, no driver's licenses. They're ghosts. All the dealer is, is a face and a name — which is probably not his real name. One false move and he disappears into thin air."

Alabama is crisscrossed with interstate highways, making it an excellent site for transshipment. Police routinely set up roadblocks to catch narcotics on the highways, but the drug couriers have developed highly sophisticated evasion techniques. A three-car structure is used. First comes a sweeper car going 80 or 90 miles per hour, to flush out any law enforcement with a speeding violation.

Next comes a station wagon laden with coke or cash, often driven by an unthreatening-looking elderly couple. Behind is a chase car, charged with crashing into the police if a pursuit begins. Even if the cops do manage to stop the car with the drugs, the courier's higher-ups know instantly that the shipment has gone off track: The drugs are embedded with GPS tracking devices.

In a recent bust called Operation Rico Suave, the DEA set up on a drug cell that was dealing coke in the affluent area of Huntsville, Alabama. According to agents, the regional manager of the operation was a Mexican named Galdino Zamora, who oversaw a trucking operation that was secretly shipping 50 kilos of high-quality cocaine into Alabama each month from Brownsville, Texas.

Unlike Mafia wiseguys, Zamora didn't even bother to erect a legitimate front operation to fool law enforcement. Instead, he just hid in plain sight, living inconspicuously in a modest home and spending his days taking care of his lawn. From the cartel's perspective, there was no reason for Zamora to hide: He had contact with only one dealer, a local coke slinger named Reco Willingham. The DEA made 33 arrests in the case — but the bust didn't make a dent in the flow of drugs. "Only three of those guys mattered to us," says Borland. "The big guys in Brownsville fled back to Mexico. They get one glimpse of us, and they're gone. We never see them again. By now there will be a new Galdino Zamora in Huntsville. We just don't know who he is. He'll have a different cover. He'll work in a taco stand."

Perhaps the biggest tool the cartels rely on is the ignorance of their opponents. In places like Alabama, few cops or federal agents speak Spanish — let alone know the code words and secret signals used by couriers. DEA agents recount horror stories of local sheriffs who stumble onto a cache of drugs and then try to run their own case, ordering the courier to get on the phone and call his contact. "Mexicans are calm, educated, trained," says Borland.

"They don't shit the bed like a high school kid when they're arrested. They will agree to cooperate and give names and addresses to appear like they're furthering the investigation. But when they make a phone call, they will use code words — like 'I'm sick' — to signal that they've been busted. The contact walks away from the deal instantly. If it's 10 kilos of coke, it's nothing to them."

Borland recalls asking one sheriff how he knew that a courier had said what he was ordered to say when he was forced to call his boss and set up a meeting to trade the drugs. "That's what I told him to say," replied the sheriff, who spoke no Spanish. Borland shakes his head in amazement. "I pointed out to him the fact that the courier is a criminal, and he might be lying."

The cluelessness of local law enforcement was on conspicuous display last August, when deputies in Shelby County discovered five bodies splayed on the floor of an apartment outside Birmingham. To the local cops, it looked like a classic slaying by the Mexican cartels.

The five dead men had all been systematically tortured before they were killed. Jumper cables, modified to fit a household outlet, had been attached to their ears to administer electric shocks. There were traces of duct tape on their mouths and noses, bruises on their arms and wrists, and burn marks on their ears and necks. Even death hadn't been the end of their ordeal: The necks of the victims had been slashed postmortem — a signature common to narco murders in Mexico.

The press went into overdrive: "Cartels Unleash Violence in Region," reported The Birmingham News. "Drug Cartel Violence Spills Over from Mexico," trumpeted The New York Times. The murders in Birmingham, asserted Newsweek, were "believed to be a hit ordered by Mexican narcotraffickers."

But the official line was dead wrong. Through an anonymous tip, police eventually arrested a local drug dealer named Juan Castaneda who had apparently been carjacked a few weeks earlier carrying nearly $500,000 in cash he owed his suppliers in Mexico. Castaneda had to get the money back before it was spent, or he would become the equivalent of a narco sharecropper, forced to work off the debt by selling drugs for free until the half million was repaid. (The cartels rarely kill members of their sales force, preferring to keep them working.)

So Castaneda had hired a local hoodlum known as CJ to find the stickup crew responsible for the carjacking. Police say CJ and another thug named Train lured four of the victims to a meeting; the other dead man just happened to be in the wrong place at the wrong time. The jumper cables were the ones CJ used to kill his pit bulls when they became too old to fight. What made national news as evidence of the reach of the Mexican drug cartels was, it appears, a dope-dealer rip-off gone haywire.

To anyone who knows how the narcos operate, the murders looked pretty half-assed by Mexican standards. "The Mexicans don't leave scars," says Borland. "Some of those neck wounds didn't even lacerate the esophagus. Down in Mexico they decapitate people and line the heads up like they're bowling balls. If old CJ wanted to convince us that it was the Mexicans, he would have to bear down a lot harder."

But the lack of any evidence linking Mexican drug lords to the homicides did nothing to dissuade Robert Owens, the district attorney in Shelby County, from treating the murders as part of a broader conflict between rival cartels. Owens freely admits that his office is unprepared to make sense of such killings. "Our problem with dealing with cartel-level offenses is that none of us have the training, background or experience to accurately know what is going on," Owens says. "I don't know anything about drug cartels."

Chris Curry, the sheriff for Shelby County, is equally blunt. "I'm in the same situation as police chiefs in little towns all across the country," says Curry, who has only two Spanish-speakers on his entire force. "We don't have the operational intelligence to know what is going on right in front of our eyes."

For now, violence stemming directly from the cartels has been largely confined to U.S. towns along the Mexican border. In Phoenix, where the number of kidnappings has tripled since 2000, police have created a special unit to deal with the wave of abductions. Most of the victims are low-level couriers who are held for ransom when drug deals go bad: In Georgia, one of the newest distribution routes for Mexican drugs, a dealer was kidnapped last year in a dispute over a $300,000 drug debt and held hostage for a week.

Federal officials, however, continue to insist that the drug lords are personally ordering assaults within the United States. According to the National Drug Intelligence Center, Mexican cartels now operate in 230 cities across the country. "Their violence is not contained at the border," declared Michele Leonhart, acting chief of the DEA. "It has reached as far as Chicago and Detroit, and even into small-town America." In March, according to the agency, the drug lord known as El Chapo traveled to the Mexican town of Sonoyta, a few miles south of the Arizona border.

There, he reportedly ordered his men to "use their weapons to defend their loads at all costs" — even if it meant killing American cops. On August 20th, the Justice Department indicted El Chapo and nine other top drug lords on charges of criminal conspiracy. Leonhart accused the Mexicans of "calling the shots" in "street operations in U.S. communities like Chicago and New York."

So far, though, there's little evidence that El Chapo or his rivals want to wage war in the U.S. To do so would endanger their business — and business is good. As they say in the Sierra Madres, where El Chapo is based, No mates la gallina de los huevos de oro. "Don't kill the goose that lays the golden eggs." But if El Chapo should step up the violence, U.S. agencies are ill-prepared for the fight.

In Operation Pocono Powder, for example, the DEA wasn't able to bust anyone close to the cartels. "The main guy running the deal was from Sinaloa," says the undercover agent who handled contact with the man. "He knew how to play the game. We never got a wire on him. Once the load got taken, he disappeared. The last we heard, an informant saw him back in Mexico working out at a gym with two security guys guarding him. All we got was the local guys doing the monkey work."

Although DEA officials still present the bust as an example of a "great case," it actually underscores how the cartels run rings around the agency, even on its home turf. The bust began with an informant in federal prison, who told the DEA that El Chapo was importing 1,000 kilos of coke a year into New York through a trucking company in California.

The source enabled undercover agents to make contact with El Chapo's connection in California and to offer to buy 100 kilos. But the entire investigation was based on a ruse. The prison "informant," it turned out, had stolen 150 kilos from the cartels — he was simply using the DEA to take out his U.S. suppliers so he could explain the missing coke to his bosses back in Mexico.

"The guy was full of shit," says the undercover DEA agent. "He orchestrated it all. He actually fooled the Mexicans." Not to mention America's top enforcement agency in the War on Drugs.