By all appearances, Oklahoma farm owner Jose Trevino Morales bought American quarter horses to train, breed, and race.
But Trevino, the brother of two leaders of the violent and powerful Mexican drug cartel Los Zetas, was not just in the horse business: He was using the farm as a front to launder millions of dollars of the cartel’s illicit profits.
A three-year FBI-led investigation resulted in convictions recently in federal court against Trevino and three others for conspiracy to commit money laundering.
The case was significant because it revealed the reach and influence of Los Zetas in the US — and also revealed the effectiveness of American investigators in targeting the cartel’s leaders.
“Core family members of the cartel and key business partners were impacted by this case,” said Special Agent David Villarreal, who supervised the investigation from the FBI’s Laredo, Texas agency.
“The FBI is targeting the highest echelons of the cartel’s leadership, and that sends a strong message not only to the cartel but to the people who are laundering their money on the American side of the border.”
The probe, conducted through the Department of Justice-run Organized Crime Drug Enforcement Task Force program, showed that, since 2008, Trevino and his associates bought and sold racehorses with Los Zetas drug money using shell companies and front men.
Testimony during the trial revealed that, during a 30-month period, the defendants spent $US16 million in New Mexico, Oklahoma, California, and Texas on the horse farm operation.
US Attorney Robert Pitman, who prosecuted the case, said after the trial: “The government was able to show how the corrupting influence of drug cartels has extended into the United States with cartel bosses using an otherwise legitimate domestic industry to launder proceeds from drug trafficking and other crimes.”
Investigators traced upwards of $US22 million that was laundered and shipped back to Mexico, Villarreal said. “And that was just a piece of the operation that we used as a snapshot to prove our case in court.”
Villarreal believes that dismantling the horse farm operation will hamper the cartel’s ability to launder money, and that, in turn, will help restrict its US operations.
As part of the case, the government seized 455 horses and will seek a judgment in an upcoming civil trial that will include forfeitures of cash, US real estate, and three jets that could total more than $US70 million.
In Laredo, on the South Texas border, “the Zetas are the main criminal threat, responsible for most of the violence, kidnappings, human and drug smuggling, and related crime”, Villarreal says.
“Across the border in Mexico, they have bombed police stations and assassinated numerous public officials.”
The cartel, he said, “has committed countless atrocities, and they are responsible for destabilizing the border.”
He added that everyone on the task force — including the Internal Revenue Service, the US Attorney’s Office for the Western District of Texas, the Drug Enforcement Agency, and other federal, state, and local law enforcement agency partners — worked hard to make the case against Trevino and his associates.
“Personally,” said Villarreal, who grew up in the region, “it is very rewarding to be able to bring justice to these ruthless people and to help stop their US operations.”
Prosecutors got their convictions against the four early in May, in the case in which they outlined how cash from the sale of drugs was laundered to buy, train, breed, and race American quarter horses.
Authorities described it as a complex conspiracy.
Jurors convicted 46–year-old Trevino, of Balch Springs, Texas, who is the brother of purported Los Zetas leaders Miguel Trevino Morales (also known as “40”) and Oscar Omar Trevino Morales (also known as “42”). The jury also convicted 52-year-old Mexican businessman Francisco Colorado Cessa, 30-year-old horse trainer and purchasing agent Fernando Solis Garcia, and 49-year-old horse trainer Eusevio Maldonado Huitron of one count of conspiracy to commit money laundering.
Jurors acquitted horse trainer and home builder Jesus Maldonado Huitron, of Austin, of the money-laundering conspiracy charge.
United States Attorney Robert Pitman said the trial documented the violence, brutality, and corruption generated by Mexican drug cartels.
He continued: “The Department of Justice, the Treasury Department and all our federal, state, and local law enforcement partners are committed to drawing a line in the sand to prevent the Mexican cartels from importing their brand of violent crime, corruption, and ruthlessness into the United States.”
Evidence presented during the 12-day trial revealed that Los Zetas were a powerful drug cartel based in Mexico that generated multi-million-dollar revenues from drug trafficking.
Since 2008, Miguel and Oscar Trevino Morales would direct portions of the bulk cash generated from the sale of illegal narcotics to Jose Trevino and his wife, Zulema Trevino, for purchasing, training, breeding, and racing American quarter horses in the US.
Testimony also revealed a shell game by the defendants involving straw purchasers and transactions worth millions of dollars in New Mexico, Oklahoma, California, and Texas to disguise the source drug money and make the proceeds from the sale of quarter horses or their race winnings appear legitimate.
The defendants also implemented a scheme to structure cash deposits in amounts under $US10,000 in order to circumvent mandatory bank reporting requirements.
“[The] verdict affirms the hard work and dedication of the FBI and our law enforcement partners in combating drug cartels and their attempts to influence and control legitimate enterprises. The FBI will continue to combat the efforts of organized criminal enterprises, including the Zetas, who would seek to endanger our communities,” said FBI Special Agent in Charge Armando Fernandez.
Some of the more than 400 quarter horses seized by federal authorities in June as part of the swoop have been sold for about $US9 million.
Most of the horses were sold at Heritage Place Auction Facility in Oklahoma City, Oklahoma, in the past year, including A Dash of Sweet Heat, who sold for $US1 million.
About 100 broodmares were sold before auction for $US35,000.
The federal government still retains possession of five quarter horses, including Tempting Dash, winner of the Dash for Cash at Lone Star Park race track in Grand Prairie, Texas, on October 24, 2009; Mr. Piloto, $US1 million All American Futurity winner at Ruidoso Downs on Labor Day, 2010; Dashin Follies; Separate Fire; and Y516, a yearling seized on Zule Farms in Lexington, Oklahoma.
The proceeds from the sale of the quarter horses are being held in trust pending the resolution of a forfeiture action.
The government is also seeking forfeiture of farm and ranch equipment; horse racing equipment; property in Lexington, Oklahoma, and in Bastrop County, Texas; and funds contained in three bank accounts allegedly used in the defendants’ scheme.
The government also seeks a monetary judgment in the amount of $60 million, representing the amount of money derived from the conspiracy.
Authorities continue to seek the apprehension of seven co-defendants in this case: Miguel Trevino Morales and Oscar Trevino Morales, as well as 32–year-old Victor Manuel Lopez, Sergio Guerrero Rincon, 41-year-old Luis Gerardo Aguirre, Erick Jovan Lozano Diaz, and Gerardo Garza Quintero.
Several others who pleaded guilty to related offences are awaiting sentence.