The Border Fence, Brownsville 
Anatomy of a Drug Cartel
The trial of Juan García Abrego showed how Mexican kingpins smuggle Colombian cocaine to American cities—and how Texas banks wind up with some of the profits.
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Banking on Texas
Garcia Abrego had another method of laundering cash, which U.S. investigators finally succeeded in unraveling after years of painstaking legwork. In this scheme García Abrego used casas de cambios, or money-changing operations, to get money into Texas banks. Money exchange houses offered a cunning shield for the cartel, because they too dealt in cash of small denominations. Once the drug money was mixed in, there was no sure way to tell it apart from clean currency, except to watch for suspicious activity, such as a flurry of subsequent bank transfers. To serve as his main front man, García Abrego enlisted Ricardo Aguirre, the former manager of a PEMEX gas station in Matamoros, who was known by the nickname Kenny Rogers. “He was always wearing cowboy outfits,” testified Francisco Segura, one of the cartel’s employees. Aguirre was part-owner of Casa de Cambio Colón in Monterrey, and he also worked with Casa de Cambio Nuevo León. Beginning in 1989, several employees of the cambios started crossing the U.S. border in cars and private planes. Although they brought with them large amounts of U.S. currency, they acted as if the cash were legitimate—they followed all the required regulations, filling out forms stating how much money they were importing. On June 21, for example, a courier arrived with $3,720,000, according to Customs documents. On June 22 one flew in with $1,700,000.
Often the couriers deposited the money into accounts belonging to the casas de cambios at First City Bank in McAllen. So far, only the size and the frequency of the deposits looked peculiar—but then the money started to move around in odd ways. From First City, Aguirre wired millions to Banker’s Trust in New York, where a banker named Antonio Giraldi was working. In an elaborate shell game, Giraldi then moved the money into several Swiss bank accounts. One was opened in the name of a holding company called White Horse Investments and another in the name of Stallion Investments. (Later, detectives would remember García Abrego’s interest in horse racing.) Both companies were incorporated in the Cayman Islands.
Eventually detectives discovered that the legal owners of Stallion were Aguirre and two of his relatives. They were even more interested to learn that the owners of White Horse were Aguirre, a relative, and a woman named María del Carmen Olivella—García Abrego’s wife. After Giraldi went to work for American Express Bank International in 1990, the money followed him there, into an account he opened for a company called Green Mountain Holdings. Over time the total amount of money that made its way from First City Bank in McAllen through the maze of transfers and into the Green Mountain account was $25,026,764.76—a small fraction of the billions that the Gulf cartel earned but all that prosecutors were able to track down. Although that sum officially belonged to Aguirre and his relatives, the jury found that it really belonged to García Abrego. “In this situation, the true owner didn’t want his name on anything, and his name was not in fact on anything,” testified Vincent Iglio, a money-laundering expert who works for U.S. Customs. “They were sheltered. What I call a veil of secrecy was created by these offshore accounts so that, in this particular case, for individuals like myself, it was almost impossible to determine who the true owner was.”
Besides First City Bank in McAllen, at least two other Texas banks have accepted money that once passed through the Gulf cartel financial empire. Couriers for Mario Ruiz Massieu, a former deputy attorney general of Mexico, used to arrive at Texas Commerce Bank in Houston with suitcases full of cash in small denominations. Eventually Massieu collected $9 million in his account, attracting the attention of law enforcement. Last April a federal judge in Houston ruled that the money in Texas Commerce constituted the proceeds of a drug conspiracy stretching into the upper echelons of the Mexican government, involving several drug traffickers, including García Abrego. Additional sums wound up in the International Bank of Commerce in Laredo and the Harlingen National Bank, in accounts controlled by Luis Esteban García Villalón, an agent with the Federal Ministry, who was also in cahoots with García Abrego.
The Streets of Brownsville
Last summer i was driving up and down elizabeth street, the backbone of Brownsville, looking for Mercantile Bank, the oldest financial institution in town. As I scoured the street, I realized that it was full of banks. Practically every other building housed one. The same is true in towns all along the border, where banks are drawn to the profits they can make from sitting next to Mexico, a country with a weak currency and an unstable banking system. Sixty percent of the money deposited into Mercantile Bank, for example, comes from Mexican nationals. I wanted to know how much of the money flowing into border banks was coming from the drug trade, but I wasn’t getting any clear answers.
In recent years Jim Scott, the president of Mercantile Bank, has become a spokes-man for integrity in the Valley’s banking community. In an interview, Scott argued that bankers do a good job of policing money, although he acknowledged they face a staggering problem. “The first premise is, Know who you’re doing business with,” said Scott. “We have a lot of clients in Mexico, and we’ve been doing business with the majority of those individuals for fifteen, twenty, twenty-five years. We know them well. We know their families.” And the second premise is, Scrutinize everybody, whether you know them or not. Banks remain responsible for reporting all cash transactions of more than $10,000, and recent changes in the law now also require them to report any suspicious activity—although what constitutes suspicious activity is left up to the bank to determine. Mercantile now pays three full-time employees to do nothing but look for fishy transactions, sometimes using sophisticated computer software.
For the most part, law enforcement agents also defend the integrity of bankers, and there has been little evidence of cooperation between bankers and drug dealers. Even though First City Bank in McAllen served as one of the points of entry for García Abrego’s drug money into the U.S. financial system, nobody who worked there was charged with wrongdoing. Nobody who worked at Texas Commerce, where Massieu stashed his payola, was charged with any crime either. So far, Giraldi and an assistant of his are the only bank officials in this country to be serving time for working with the Gulf cartel. Attorney General Dan Morales estimates that statewide less than one percent of the bankers involved actually know they are laundering money.
But whether bankers do enough to guard against accepting drug money is a matter of debate. Alonzo Peña, the head of the U.S. Customs office in Brownsville, told me that some bankers are purposefully blind to suspicious activity. “I don’t want to offend all banks, but banks are in business to make money,” said Peña. “Large deposits help them make money. And that’s a problem. The banking business is a very competitive business.”
The court cases uncovering the presence of drug money in Texas banks have caused significant consternation among lawmakers. Last year Congressman Henry B. Gonzalez, from San Antonio, suggested that an influx of drug money was the reason behind an inexplicable cash surplus of $3.2 billion at the San Antonio branch of the Federal Reserve bank. (The San Antonio branch routinely experiences a surplus, but in 1996 the surplus was $1 billion more than 1995.) “Since we know that many millions of dollars are being trucked into Mexico, deposited into banks, and then repatriated to ‘clean’ U.S. accounts, we can safely conclude that money laundering is a significant activity in the region,” Gonzalez wrote in a letter to the chairman of the House Banking Committee. However, the IRS conducted an investigation and found that the sources of the surplus couldn’t be clearly identified. Meanwhile, Morales has estimated that $30 billion a year in drug profits enters Texas banks.
In a way, it’s fitting that dirty money should come back to haunt us. On this side of the Rio Grande, revelations of widespread collusion with drug traffickers by Mexican officials have for the most part elicited the equivalent of a puzzled shrug—oh, inscrutable Mexico, forever unredeemed. This reaction ignores the substantial role the United States plays in the whole matter. We buy the drugs, for one thing. Our money is the currency of the drug business; the bills used to bribe Mexican officials bear the likenesses of American heroes such as Alexander Hamilton. Juan García Abrego amassed a fortune by following age-old capitalist advice: find a need and fill it. It’s not so surprising that a well-organized, lucrative business would want to put its millions in a safe place. And maybe it’s not so surprising that some American bankers, like the ranch hands in Soto la Marina, would go about their business as if they had never heard the whispers about what was really going on.
Citizen Abrego
On January 14, 1996, a group of Mexican police in riot gear hid in the shrubbery surrounding an attractive adobe-and-red-tile house in a rural area just outside Monterrey. For the previous several years, García Abrego had been leading a fugitive’s life, shuffling from house to house and ranch to ranch. His career began to unravel when Javier Coello Trejo of the Mexican attorney general’s office discovered he had been cheated out of some hush money. Coello Trejo turned on García Abrego, forcing the drug trafficker to go underground. Unfortunately for García Abrego, embarrassing revelations of corruption at the highest levels of the Mexican government had created a get-tough-on-crime climate for Mexican law enforcement. The police—who for years had not been able to track García Abrego down—suddenly knew where to look for him. After the cartel leader pulled into the driveway, he was ambushed, held overnight in Mexico City, injected full of Valium, and thrown on a plane for Houston.
In Matamoros, family members, including his uncle Juan N. Guerra, watched footage of the deportation on the television hanging from the ceiling of the Piedras Negras, while everyone else in the restaurant watched them to see how they would react to the news. García Abrego’s expulsion was highly controversial. Mexican law forbids the extradition of Mexican nationals (except in rare cases), but García Abrego was deported as an American citizen whose presence was “undesirable.” When he was 21, he made the mistake of acquiring a United States birth certificate, and even though the validity of that document has been questioned, U.S. authorities used it to bring him to trial in Houston. In October 1996 García Abrego was found guilty of smuggling cocaine into the U.S. and laundering money; last January he was sentenced to eleven life terms in federal prison and assessed fines and criminal forfeitures totalling $478 million.
Outside the Houston courthouse, little changed. Cocaine keeps flowing north and money keeps flowing south. The Gulf cartel remains open—some people say Oscar Malherbe has succeeded García Abrego and is running the operation from a Mexico City prison, while others maintain that García Abrego’s brother Humberto is now in charge. Either way, business is booming.
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