Part II: A Journey Into the CJNG's Finances

"Redlogarythm" for Borderland Beat

For Part I, please click this hyperlink

US Department of the Treasury chart displaying the businesses owned by the Jalisco New Generation Cartel (CJNG) and its financial branch, Los Cuinis. Several of the entities and individuals pictured here are mentioned in this exclusive Borderland Beat report.

The Gonzalez Valencia clan started investing in South America at some point during the 2000s. They had already developed contacts in Colombia and Bolivia with cocaine traffickers who were their providers when they were known as the Milenio Cartel. Nevertheless, we do not know exactly at what moment they started channeling their assets to South America.

Taking into account that Colombian providers tend to use the Black Peso Market Exchange (BMPE) as payment mechanism and that this method requires developing contacts with local businessmen, we can infer that it occurred by 2003 (the year of the Gonzalez Valencia began working more directly with the Sinaloa Federation). By then they had businesses in Colombia, Bolivia and Peru. This is mere speculation.

The first time investigators spotted the Gonzalez Valencia clan were spotted in South America was in 2009. On March 10th that year, a Chevrolet Astra was involved in a minor car accident in the city of Buenos Aires, Argentina.

Inside the car were three Mexican citizens: Francisco Marzio Medina González, Pedro Merced Medina Lizarraga and Julio Cesar Alegre Ortega. When the local police arrived and asked the men to identify themselves, the three Mexicans started yelling and issuing threats to them:

"In my country you would be dead already", said one of them to the policemen.

After taking note of their license plates, the Mexicans left the scene. When arriving at the police station the cops discovered that the Chevrolet Astra used by the three foreigners was registered to an Argentinian citizen by the name of Oscar Gilberto Calvete, who lived in the town of Ituzaingo. This unnecessary encounter with law enforcement would turn out to be the beginning of a story implicating several local strawmen and Mexican money launders that were part of a giant criminal network.

There are reports that Gerardo Gonzalez Valencia, the second-in-command of Los Cuinis, was in Argentina by 2007. The following year, Gerardo's in-laws, Hector Amaral Padilla and his wife, arrived in Argentina and befriended a taxi driver they met on Galerias Pacifico Avenue in Buenos Aires. The taxi driver was Marcelo Alejandro Arias, who was hired as Amaral's personal driver in Buenos Aires and eventually was introduced to Gerardo.

Los Cuinis used Arias in their money laundering scheme, initially by working with the three Mexican nationals that were involved in the car collision. They were the ones who involved Arias in the money laundering scheme they were starting to develop in Buenos Aires.

After achieving enough trust the three Mexicans asked Arias to use his private domicile as the address of a company they were trying to fund in Argentina. This company's name was Circulo Internacional SA. It was founded on December 4. 2009 and immediately enrolled in the Inspeccion General de Justicia (Argentina's Commercial Register). The corporate purpose, according to the Register, was Servicios de Bares y Confiterias (Pub and Candy Shop Services).

Arias's cooperation with the Mexicans did not end there.

Francisco Marzio asked him for buying a Chevrolet Astra (the one involved later in the accident), a Ford Ecosport and a mobile phone. According to his statement he agreed because the Mexicans did not have the required legal documents to do such purchases.

The first step into the laundering project was already prepared: a company registered in a private domicile belonging to a poor Argentinian taxi driver who had several assets at his name and which would not be easily linked to any of the Mexicans.

At this point the Mexicans (by orders of Gerardo) started planning their next investment. They were looking for a laundering activity that could be done in a large city without being detected. Buenos Aires was known for its restaurants, bars, and cafes, so Los Cuinis saw an opening.

Instead of opening a single bar, restaurant or cafe, they built a shop that included a bar, a restaurant and a cafe. This is how they ended up developing their most valuable asset in Argentina: a pricey 24/7 convenience store. Its name was "Corner, mi lugar" (Corner, my place).

The store, "Corner, mi lugar", was located in Buenos Aires's most-exclusive district, Puerto Madero.

When a criminal organization uses a company or legal entity as a money laundering front, most of the times it follows the same path: the business is not very big, its located in a quiet place, it is a single locale and it usually tries to attract the least possible attention.

If things go wrong the business can shut down quickly and move to other place in order to conduct new business activities. This pattern was completely the opposite of what Gonzalez Valencia implemented in Buenos Aires.

Here are some business initiatives Los Cuinis carried out to expand their convenience store:

• Corner's first shop initial investment reached US$2,500,000 (for just one shop)

• Corner´s portfolio comprised more than 2,000 products (national and international) including fine wines, beers, spirits, delicatessen, dairy, fine coffees, salads, bakery, ready meals, candy, newspapers/magazines, cigarettes, parfums and cleaning items

• The shop was located at Puerto Madero (one of the capital most expensive areas)

• Coffee machines offering Juan Valdez Coffee (the most famous Colombian one, Corner was the first shop to offer it in Argentina)

• Corner accepted foreign currency

• They hired Miller Zell, an Argentinian public relations company in order to develop a brand and create social awareness

• They created social media profiles for Facebook and Twitter and had even a slogan: "A kiosk is too small for eating. A supermarket is too big for daily shopping."

The first shop opened at Dam Nº 4, Pierina Dialesi Nº 260 (at the Buenos Aires port shore) on September the 8, 2009. Gerardo Gonzalez Valencia planned to expand by 2010 (in just one year) to four neighborhoods: Barrio Norte, Microcentro, Congreso and Palermo.

As a manager the designated Argentinian businessman Oscar Gilberto Calvete (the one who owned the Chevrolet Astra bought by Arias for the scheme's members). Calvete had known Gerardo Gonzalez Valencia in Mexico where he had a consulting firm. As we can appreciate from the images, Corner was specifically designed for expansion through the whole city of Buenos Aires. We will never know under which kind of business structure Los Cuinis wanted to develop their Argentinian structure (i.e., a franchise, a brand chain, etc.)

The system built by Los Cuinis in order to channel money through Corner was quite simple. Circulo Internacional SA had opened three different corporate accounts at Santander Rio Bank, a subsidiary of Banco Santander. This is a Spanish bank owned by the Botin dynasty, which has a huge presence in Latin America. These three corporate accounts received two kinds of deposits/entries: cash deposits and bank drafts.

There is hardly any public information on what happened inside the Circulo Internacional SA accounts at the Santander Rio bank. The cash deposits made into the accounts could represent the money channeled through the Corner shop. Since this shop was a cash intensive business which accepted even foreign currency (such as dollars, for example), the flow of cash between Corner and Circulo Internacional SA´s accounts could be justified as legitimate profit (the amount, nevertheless, should have been quite astonishing considering that Corner was only one shop and was a new business).

The issue relating bank drafts is far more interesting because it maybe have involved money coming from outer Argentina. We must not confuse a wire transfer and a bank draft. If one wants to make a wire transfer, one must do it by transferring funds from Account A to Account B, and thus the path of the money can be traced inversely, from Account B to Account A.

If one has access to Account A, that means that it is possible that their name or data appearson it as well. Nevertheless a bank draft does not require an Account A. It is possible to send money directly to Account B without the need of using a traceable first account.

For example, imagine there is a Cuinis operator in Guadalajara. That operator wants to send $US50,000 to Circulo Internacional in Argentina and wants to do it directly, without using any open or existing bank accounts in the Mexican financial institution because they want the money to be literally untraceable. All they need to do is to gather 25 people, give them US$2,000 each (since it was the maximum quantity Santander accepted for bank drafts), and tell them to go to several Santader offices around Guadalajara to make the drafts.

They would show their ID card and notify the identity of the receiver (Circulo Internacional SA). They are not required to have an account in the Santander bank (if they do, the draft does not suffer a commission). This process takes a few minutes.

Circulo Internacional would receive in less than 24 hours the US$50,000 (minus commission) and on the records it appears that 25 different Mexicans, which did not have any kind of contact with Santander´s Bank Mexican subsidiary, sent the money to three accounts of a client of Santander´s subsidiary in Argentina.

This kind of fractional payment system is called "smurfing". Although it is simple and slow, it is often the best way to send money abroad without gaining attention. Santander Bank had a subsidiary called Santander Envíos SA, which had developed a bank draft network system known as Santander Envíos. This was possibly the channel that Circulo Internacional SA used to receive drug-money from Los Cuinis network.

In the end the whole scheme would look like this:

Through this simple methods Los Cuinis laundered a quantity between US$1,500,000 and 2,000,000. Considering that the opening of the first Corner shop cost nearly US$2,500,000, it is obvious that they did not even recover the initial investment. That might be the reason for Gerardo's departure to Uruguay.

On July 9, 2012, he took his wife and children (who were attending one of the most expensive private schools of Buenos Aires) and moved to Uruguay, a country located between Argentina and Brazil. The next part of the story has been more difficult to trace for one reason. Although most official institutions are reluctant to label Uruguay as such, we must consider that this tiny Latin American country is in fact a tax heaven.

Since the 1990s it has placed itself as a paradise for money laundering for two reasons: first, it is a country located near Brazil, Paraguay and Argentina, three countries that are drug trafficking and corruption hubs in the need of constant infrastructure for sending black money away (for which they use corporate vehicles founded in Uruguay)

And second, Uruguay is adamant in its use of tax secrecy. Although the government says that the 2016 Tax Secrecy Law Uruguay has made the country's financial system more transparent, it is still virtually impossible to obtain information about Uruguayan companies, businesses or people associated to them.

That is why the only way to research about Uruguayan firms is to use foreign sources, in these case offshore leaks, such as the Panama Papers, a massive leak of 200,000 documents in 2015 from a private law firm containing information from several global clients, including Los Cuinis.

When they moved to Punta del Este (one of the most expensive cities in Uruguay), Gerardo Gonzalez Valencia and his wife Wendy Dalaithy Amaral Arevalo had already developed ties with a Uruguayan  notary called Gianella Guarino Anfossi. She was an important contact Los Cuinis in this tiny tax heaven.

Gianella Guarino Anfossi had constituted Asesores y Consultores del Sur Limitada (ASCONSUR) back in 2002. According to its foundation statements the initial capital for ASCONSUR was $30,000 (divided in 100 stocks of $300 each) and its corporate purpose was to provide professional advice on legal, tax, accountant, financial, administrative, judicial. The services included international private law, foreign commerce and re-domiciliation consultancy for national, foreign, or legal people (in the European corporate law system a legal person can be defined as a legally conformed business).

Even more importantly, ASCONSUR purpose was also the constitution and organization of commercial companies, outsourcing, viability and investment projects analysis and elaboration, development and commercialization of such services, intermediation in service providence, and legal representation and business negotiation services.

This corporate purpose was developed in such a vague way for a reason. Most accountancy, legal or advisory firms working in tax heavens or offshore jurisdictions offer their products in a menu way. When the client meets the lawyer/accountant and explains to him the problems he is facing in his home country, the professional will analyze the client´s problem and according to his particular situation, they will offer them a personalized and unique package of products.

Such schemes involve multiple legal entities: shell banks, shell companies, strawmen (which are legal in such jurisdictions as we will see), trusts, foundations, etc. This kind of infrastructure is what is reflected in ANCOSUR´s foundation documents. Its purpose was to help its clients benefit form Uruguay´s bank and tax secrecy law in order to avoid public scrutiny when managing their wealth.

On January 17, 2012 (before Gerardo Gonzalez Valencia and Wendy Dalaithy left Argentina), Veronica Corbo, an ASCONSUR´s employee, asked through an e-mail to Mossack Fonseca for a list of already pre-designed companies (including the transaction costs and related taxes). Mossack Fonseca was a Panamanian law firm which became internationally famous for its massive 2015 leak of 12 million documents related to the firm's activities since the 1970's.

Since its very foundation in 1970, Mossack Fonseca had only one purpose: the constitution and storage of offshore corporate vehicles (known as shell companies). In the offshore world, corporate law is extremely opaque and permissive in its regulations. Most offshore jurisdictions allow and even promote the constitution of companies that do not render any kind of corporate tax. Thus, the capital (money, real estate property, yachts, planes, cars, etc.) introduced in these legal entities is virtually exempted from paying any kind of tax. These companies do not carry out any kind of economic activity; they just hold assets for preventing tax payments.

This system, although oversimplified for this report, is also stimulated by the fact that the data concerning the stakeholders, assets or location of the company are obscured by the tax/corporate secrecy legislation of tax heavens.

All Mossack Fonseca did was to create literally thousands of these companies, branding them with generic names, and added them to an inactive corporate list which was offered as like a "menu" to law and accountancy firms all over the globe. These were then selected by clients. Once a certain company was selected, the legal issues and tax payments were quickly arranged between Mossack Fonseca (who added a commission for them) and the accountancy/law firm (the intermediary), which then handed the corporate entities for their clients.

List of corporate entites owned by Los Cuinis

This is the official relation of ASCONSUR purchases to Mossack Fonseca. Between its foundation in 2002 and the year of the leak, ASCONSUR purchased at least 27 offshore companies from Mossack Fonseca. The places were the entities were located were three tax haves known for their lax restrictions: Panama, BVI (British Virgin Islands) and Wyoming (the US has at least three States acting as virtual tax heavens: Wyoming, Nevada and Delaware).

Interestingly enough, the only company located in Wyoming bought by ASCONSUR, Lotrade International, was owned by Paola Martina Guarino Anfossi, one of Gianella's (ASCONSUR´s owner) sisters. The only reference about Paola Martina Borderland Beat was able obtain for this report was a reference to her job a few years ago. According to data found publicly online, she imported vehicles from Mexico.

Here is a node diagram representing the offshore companies bought by ASCONSUR to Mossack Fonseca

On January 17, 2021, between a list containing 10 names, ASCONSUR chose Montella Global SA. On January 26, Gianella Guarino Anfossi sent an email to Mossack Fonseca encouraging them to speed the constitution process because Montella Global SA was going to be used for the purchase of real estate property in Punta del Este (Uruguay) and their client (Los Cuinis) needed to arrange several legal documents to the Uruguayan Consulate by February 10.

Mossack Fonseca did not reply to Guarino's email and on February the 6 she sent a follow-up message. The next day, Gerardo Gonzalez Valencia obtained in Mexico a fake passport under which he would justify his ownerships of Panamanian offshore companies, which would own assets in Uruguay. This assets turned out to be a luxury villa in the city of Punta del Este where his family lived. The place was called Quincho Grande.

In December, Gerardo Gonzalez Valencia and Wendy Dalaithy started doing plans for expanding to Panama. We must recall that they owned a Panamanian shell company which owned the big real estate property where they were living in Uruguay, but they didn not own any kind of asset in Panama directly. They asked their Uruguayan legal counselor Guarino Anfossi if Montella Global SA was enabled for the acquisition of assets in Panama.

On July 3, 2013, Mossack Fonseca sent to ANCOSUR a list of seven possible names for their clients' new company: Seaside Company, Vani Business, Amanecer Enterprises, Tarima Holding, Delirio Business, Clarisse Company and Deltodo Enterprises. On November 10, 2013 Valeria Martino, officer in chief for Foreign Services of ANCOSUR, sent Mossack Fonseca this email:

"We'll proceed with the purchase of Deltodo Enterprises SA, under Panamanian jurisdiction, through the following procedure: apostilled agreement, directory hired by Mossack Fonseca and granting of power to Wendy Dalaithy Amaral Arevalo and Gerardo Gonzalez Valencia. This needs to be apostilled."

The directory of an offshore company is not like the one of a normal business. In non-offshore jurisdictions, the board of directors, administrators and the rest of legal personnel of a company must be involved in the company's operations. In offshore jurisdictions, the directories are purely procedural. In fact, firms such as Mossack Fonseca have a list of several hundreds of people worldwide (i.e., housewives, retired people, and even their own employees) used as nominal directors of the companies they create.

On December 16, 2014, Cecilia Bonino, from ASCONSUR, communicated to Mossack Fonseca their clients' decision to dissolve Deltodo Enterprises SA. On December 18, Gerardo Gonzalez Valencia and his wife changed their minds and conditioned the existence of Deltodo Enterprises to the fact that it could be the legal owner of a tequila international brand that would be registered and sold in the US, Russia and China.

What tequila brand could be related to CJNG/Los Cuinis as a long-term investment? The answer: Onze Black Tequila.

Back in 2013 El Mencho's daughter, Jessica Johanna Oseguera, founded Onze Black tequila as a brand specifically aimed to export. During its first year, Onze Black could be bought only in Mexico and through specialized retailers (mainly for parties or palenques). Through this product they tried to create a new line of money laundering operation that would use a fully developed asset as a front. They even created Facebook and Twitter profiles for Onze Black Tequila.

The tequila brand Once Black was owned by the CJNG.

The business life of Onze Black was short-lived. On September 2015, the US Department of the Treasury blacklisted the company along with other four entities used by Los Cunis network for laundering CJNG's profits: Las Flores Cabanas (a vacation cabin rental business), Mizu Sushi Lounge (a sushi restaurant in Puerto Vallarta), J&P Advertising (an advertising business), and JJGON S.P.R. de R.L de Capital Variable (an agricultural business).

Immediately after being designated, the official distributors of Onze Black ceased to offer it through their retail channels and the once-flamboyant CJNG's asset appeared to everyone as it truly was: a product used by a criminal organization to launder its ill-gotten gains.

We infer that Deltodo Enterprises was created specifically with the aim of owning the legal and commercial rights for the products Los Cuinis created for laundering CJNG's profits. Onze Black was not a company itself. It only was a product/brand that was owned by a certain company as one of its assets. This company, we infer, would have been Deltodo Enterprises if the US government had not disrupted the plan by indicting Onze Black.

Just one month before designating Onze Black, on August 2015, the US government listed 15 companies linked to Los Cuinis's network in Jalisco and Sinaloa. Among them were four related businesses: Hotelito Desconocido, W&G Arquitectos, Arenas de Loreto, and HD Collection. All of them had been founded or acquired at some point by Wendy Dalaithy Amaral Arevalo or by one of her strawmen.

The effect of a Kingpin Act designation has a terrible effect on the person/business designated. The designated individual/business is immediately incorporated to the Office Foreign Asset Control (OFAC) list, which is consulted by financial and legal institution each time a client makes a money transfer or wants to become involved in certain transactions. This designation means total financial isolation of the designated individual in most foreign markets. In addition, their US-based assets are frozen, and US individuals and entities are prohibited from engaging in business activities with them.

After being designated on August 2015, Wendy Dalaithy could not appear as the legal owner of any company that wanted to perform any kind of business. The ownership of Gerardo's and Wendy's assets were forced to change. Otherwise, their corporate vehicles would end permanently be put to a stop.

At this point we must introduce a third person in the story: Hector Amaral Padilla, Wendy Dalaithy´s father and Gerardo´s father-in-law. Hector had already been used by Los Cunis in the foundation of W&G Arquitectos (the legal owner of Hotelito Desconocido). When Wendy Dalaithy was designated by the US government, her husband and her turned to ACONSUR and had them transfer their stocks/participations in Deltodo Enterprises and Montella Global SA to Hector Amaral.

When ASCONSUR bought the two companies to Mossack Fonseca, they asked for the stocks of these companies to be designed as bearer shares. What does this mean? A stock represents the ownership of a certain part of a company. Every single stock must be owned by somebody and there are two ways of determining the ownership of a stock. One of these methods ensures complete anonymity.

In the first option, the owner can appear with its name and surname in each of the stocks he/she owns. This kind of stocks are called nominal stocks since the owner is designated nominally. In the second option, the owner can be the one who literally owns the stock, but there does not need to be any reference of them in the stock. This is ideal for people looking for anonymity.

Here are the node-diagrams of Montella Global SA and Deltodo Enterprises

In the case of Montella Global SA until 2015, the shareholders were to anonymous bearers (Gerardo Gonzalez Valencia and Wendy Dalaithy). These two unknown bearer shareholders transferred their ownership to Hector Amaral Padilla on October 30, 2015. From this day onwards the legal owner of Montella Global SA was only Hector Amaral.

The case of Deltodo Enterprises is a bit more complicated and we will need some basic corporate legal system knowledge to analyze it. On July 10, 2013, the company's shareholders were nominated as bearers. Nevertheless, at some point in time in 2013, Wendy Dalaithy and Gerardo were nominated as beneficiaries. This is a very common practice in offshore jurisdictions/tax heavens.

The legal owners of a company appear to be to anonymous bearer shareholders. They are the legal owners of the company, but the profits or the assets held by the company must render their profits to one or more beneficiaries which are fully designated. In the end the beneficiaries (the ones who enjoy the profits/assets of the company) turn out to be the bearer shareholders, but by protecting their identity behind bearer shares they are protected in the case of lawsuit against the company alleging they were not the owners but just the people enjoying the profits of the company.

This was the situation until October 30, 2015. On that day, the two mysterious and anonymous bearer shareholders handed over their shares to Hector Amaral, who on the same day became the owner of two offshore companies in Panama: Deltodo Enterprises SA and Montella Global SA.

According to the Panama Papers, the couple had asked ASCONSUR on October 26 for the transfer of ownership to Wendy Dalaithy´s father. During their stay in Uruguay, Wendy Dalaithy and Gerardo founded two more companies. This time they were purely Uruguayan and we could not establish if ASCONSUR was the intermediator in its constitution. But based on previous business activities, we can infer that they were involved in it.

The two companies were called Tossa del Mar SA and Dalaithy SA (created on July 29, 2011). In Tossa del Mar SA, Wendy Dalaithy was featured as apoderada (attorney) and she was the director of Dalaithy SA. These two companies were used for buying Uruguayan assets.

As far as we know they were:

• 1 Audi Q7 TFSI ($130,000)
• 1 Audi A4 
• 1 Volkswagen Saveiro pickup
• 1 Land Rover pickup
• 3 lots in Punta Ballenas for $550,000 through Tossa Del Mar SA

The vehicles were sold to Dalaithy SA by a Uruguayan couple that was later arrested for money laundering. During these years Wendy Dalaithy and Gerardo became friends with an Uruguayan businessman identified only as P.G., who acted as a mediator between the Mexicans and several potential buyers for the assets that the couple owned through their Uruguayan companies.

The Mexicans working for Los Cuinis used this Uruguayan national as the strawman for changing dollars for pesos and vice versa in the well-known casa de cambio (money exchange business) in Piriapolis city. The so called P.G. would meet with Gerardo in Montevideo. Gerardo would hand him a bag filled with dollars and instructed him to go to money exchange business, change the dollars for pesos and then hand them over Hector Amaral, who at the time was also living with the couple in the Quincho Grande estate.

Using a local for exchanging dirty cash in money exchange businses is a common practice by Latin American criminal organizations.

The Mexicans' scheme ended up gaining enough attention by law enforcement. The Uruguayan police started following P.G. and recorded the money exchanges and the handing of the pesos to Hector Amaral. Uruguayan judge Adriana de los Santos ordered a raid on Gerardo's property. On April 2016 the police captured 11 members of the network (including Gerardo Gonzalez Valencia, Wendy Dalaithy and Hector Amaral). Gerardo was imprisoned in Uruguay for several years and was extradited to the US in 2020, as reported by Borderland Beat.

In the end the hole Panama-Uruguay network could have worked in this way: