1996 Congressional Hearings
Intelligence and Security

DEA Congressional Testimony

Statement by:
Thomas A. Constantine
Administrator
Drug Enforcement Administration
United States Department of Justice

Before the:
Senate Committee on Banking, Housing and Urban Affairs

Regarding:
Drug Trafficking in Mexico

Location:
Rayburn House Office Building
Washington, D.C.

Date:
March 28, 1996

Note: This document may not reflect changes made in actual delivery.

Mr. Chairman and Members of the Committee: It is a pleasure to appear before the Committee today to discuss the issue of drug control in Mexico. In my testimony today, I will limit my remarks to matters that pertain directly to the Drug Enforcement Administration, with particular emphasis on the drug trafficking situation in that country and our efforts to work cooperatively with our law enforcement counterparts in Mexico.

The role of the DEA as a law enforcement agency is primarily to identify the leading drug criminals, develop information to support criminal investigations, and ultimately to bring them to justice. In addition, we recognize the need for programs that ensure compliance with international obligations. This is especially true in an era when organized crime syndicates, such as the world's sophisticated international drug trafficking organizations, respect neither borders nor international agreements.

At the outset, I would like to express the DEA's full support for the President's certification decision. We know they are the product of careful deliberations that considered all aspects of our bilateral drug control relationships with foreign governments. While law enforcement cooperation is a critical component of the certification process, it is but one aspect considered when the President certifies a nation.

Before addressing specifics about Mexico, I would like to give the Committee my assessment of the seriousness of the international organized crime problem we face as a nation today, with particular emphasis on criminal organizations operating from Colombia and Mexico. Any in-depth discussion about Mexico must include an overview of the symbiotic relationship between traffickers in Colombia and Mexico.

Foreign Control of America's Drug Problem

A substantial amount of major drug trafficking in the United States is the result of criminal enterprises controlled and orchestrated by well-financed criminal organizations headquartered in foreign countries. The trouble starts in Colombia, where the Cali mafia manages all aspects of the cocaine trade from coca cultivation, to production in Andean Ridge countries, to transportation, and then to wholesale distribution in the United States.

The Cali mafia: Each year, the Cali drug mafia smuggles hundreds of tons of cocaine into the United States, and launders billions of dollars in drug proceeds. However, the future scope of Cali mafia operations is becoming increasingly uncertain due to the recent arrest of several top Cali mafia drug lords. With much of its leadership imprisoned or killed, the Cali mafia is now undergoing a period of managerial turbulence. This temporary incapacitation in Colombia has provided a "window of opportunity" for drug traffickers from Mexico to expand their role in the smuggling of cocaine to the United States.

An Overview of Activities of the Trafficking Groups from Mexico: The role of drug trafficking groups from Mexico in the production and smuggling of drugs into the United States is unique. They are positioned to become major suppliers of the primary drugs abused in the United States: cocaine, methamphetamine, heroin, and marijuana. Up to 70% of the cocaine available in the United States transits Mexico. Mexican trafficking organizations have replaced U.S.-based outlaw motorcycle gangs as the predominant methamphetamine traffickers in the United States. In addition, Mexico remains the number one foreign source for marijuana in this country, accounting for 50% of the marijuana supply in this country. And finally, Mexican heroin is the predominant form of heroin available in the western United States. Overall, Mexico accounts for 5% of the heroin sold in the United States.

There are a number of factors contributing to Mexico's pivotal role in the trafficking of illegal drugs into the United States. A primary component of this criminal activity is the 2,000-mile porous border. The drug organizations in Mexico have a long history, an established record of poly-drug smuggling for nearly thirty years, and the existence of cross-border familial ties.

Several years ago, the Mexican drug organizations became the transportation agents for the Colombian organizations and took over the responsibility for smuggling cocaine across the U.S. border. They used the knowledge and skills gained over previous years when they were involved in the marijuana and heroin trade to their advantage in their new business relationship with the Colombians. As they became the key transporters for the Colombians, they began to demand and receive a portion of the load (50%) for their services.

Today, organized crime groups operating from Mexico smuggle large quantities of cocaine, methamphetamine, heroin, and marijuana into the United States on a daily basis. Collectively known as "The Federation," these polydrug trafficking groups operating in Mexico are no longer mere transporters for the Colombians. They have now gained an independent foothold in the lucrative cocaine wholesale business in the United States. They have become formidable adversaries. On many occasions, I have said that the Cali mafia and the Mexican Federation make previous organized crime syndicates that operated in the United States look like schoolchildren by comparison.

As I previously stated, up to 70 percent of the cocaine that enters the United States crosses through Mexico. DEA is closely tracking trafficking activities, as well as the size and power of Mexico-based drug organizations themselves. Some 820 to 855 metric tons of cocaine are produced worldwide, according to the 1994 National Narcotics Intelligence Consumers Committee (NNICC) report. Of this amount, a total of 303 metric tons were seized worldwide, leaving between 517 and 552 tons of cocaine. Although precise figures are impossible, DEA estimates that at least 300 tons of cocaine entered the United States in 1994. Of this, at least 200 tons entered through Mexico.

The inroads and smuggling corridors which have enabled Mexican-based organizations to move tons of cocaine, have also enabled them to dominate the U.S. methamphetamine trade, once controlled by outlaw motorcycle gangs. In addition to taking control of the methamphetamine trade, drug organizations in Mexico have also become major figures in the diversion of precursor chemicals that are used to manufacture methamphetamine. Methamphetamine has become the drug of choice in parts of California, and is on its way to becoming the drug of choice in many U.S. cities in the West and Southwest. DEA and its state and local counterparts have discovered that Mexico-based organizations now dominate methamphetamine trafficking in the United States.

Methamphetamine use and criminal ties to Mexican organizations are now evident in areas as diverse as Iowa, Florida and Georgia. We have seen dramatic increases in methamphetamine related deaths in cities such as Los Angeles and Phoenix. Methamphetamine deaths in Phoenix rose from 20 in 1992 to 122 in 1994. In Los Angeles they rose from 99 in 1992 to 219 in 1994.

We now face the problem of hundreds of clandestine labs frequently located in states bordering on Mexico that are often operated by individuals with direct ties to Mexican based organizations. These labs represent a danger to investigating officers as they frequently are rigged with explosives or booby traps. They are volatile locations that present a danger to anyone in or near them. We saw dramatic evidence of this danger last December when a suspect clan lab exploded in California, killing three children. They also represent serious environmental concerns as a result of the reckless discarding of the chemicals used to manufacture methamphetamine.

Because Mexico's methamphetamine trade has grown so rapidly, it is difficult to determine the amount of drug that enters the United States from Mexico. Methamphetamine seizures in Mexico have risen from a negligible amount in 1992 to 495 kilograms in 1995. Also, methamphetamine seizures along the U.S./Mexico border rose 6.5 kilograms in 1992 to 665 kilograms in 1995.

When reviewing the growing dominance of the Mexican-based organizations in the production and importation of methamphetamine to the United States, it is also important to note their role in the diversion of the precursors used to manufacture the drug, particularly ephedrine and pseudoephedrine.

We are aware of the enormous quantities of ephedrine being shipped to Mexico. From June 1993 through December 1994, we have documented that approximately 170 metric tons of ephedrine was diverted from the international commercial trade to Mexico. This equates to 119 metric tons of methamphetamine that could produce up to 24 billion dosage units (estimated at a 5 milligram dosage unit). Currently, the vast majority of the methamphetamine available in the United States originates in either Mexico or California.

The Federation: Mexico's Four Major Cartels

Organized criminal trafficking groups operating from Mexico operate within a fluid, flexible, and elastic system. Alliances shift or shake-ups in the hierarchy occur with the divergence of interests and eruptions of internecine violence. Four organizations have been identified as the most powerful:

The Tijuana Organization, headed by the Arellano-Felix brothers, Benjamin, Francisco and Ramon is based in Tijuana, Baja California Norte. The group controls smuggling across the border to California and is arguably the most violent of the Mexican organizations and has been connected by Mexican authorities to the killing of Cardinal Juan Jesus Posadas-Ocampo at the Guadalajara Airport in 1993 .

The violent activities of this group and the resulting impact they have in the United States can be illustrated by a 1993 turf battle over methamphetamine in San Diego by this group and a rival drug gang. 26 individuals were murdered during one summer as a result of this drug-related violence. This is a classic example of how activities controlled at their source in Mexico by these violent organizations result in violent drug-related acts on the streets of the United States.

Benjamin ARELLANO-Felix was indicted on May 2, 1989 in San Diego California on charges of a continuing criminal enterprise which involved the importation and distribution of cocaine. Despite newspaper reports indicating that he has frequently been seen in public in Mexico, he has never been arrested on these charges.

His brother Francisco Rafael Arellano-Felix was indicted in 1980 in San Diego for possession and conspiracy to possess cocaine. He has never been brought to justice on these charges; he is currently in jail in Mexico on firearms charges. The prohibition against extraditing Mexican fugitives to the United States has precluded his extradition.

The Sonora Cartel, headed by Miguel Caro Quintero, operates from Hermosillo, Agua Prieta, Guadalajara, and Culiacan, as well as the Mexican states of San Luis Potosi, Sinaloa, and Sonora. Miguel's brother, Rafael, is currently imprisoned in Mexico for his complicity in the brutal torture and murder of DEA Special Agent Enrique Camarena. This group's smuggling routes extend into California, Arizona, Texas, and Nevada. They have direct connections to major Colombian organizations. Miguel Caro Quintero is the subject of indictments in Tucson (1988) on continuing criminal enterprises in relation to the shipment of 2 tons of cocaine from Mexico to Arizona. He has also been indicted twice in Colorado, the latest being in 1993 for racketeering and possession with intent to distribute cocaine. He remains a fugitive.

The Juarez cartel is headed by Amado Carrillo Fuentes, the most powerful figure in the Mexican drug trade. His group is directly associated with the Rodriguez-Orejuela drug mafia in Cali, Colombia, and through a cousin to the Ochoa Brothers of Medellin as well.

For years, the Carillo-Fuentes organization acted as transportation agents for the Colombia-based distribution organizations and his operation included the use of 727-type aircraft to fly drugs from Colombia to Mexico, and to move drugs from regional bases in Guadalajara, Hermosillo and Torreon.

The scope of Juarez based transport capabilities was illustrated by the 1989 seizure in Sylmar, California, of over 21 metric tons of cocaine and $12 million. The DEA seized ledgers accounting for the movement of 70 tons of cocaine. Reports reveal that this organization moved over 200 tons of cocaine by tractor trailer prior the Sylmar seizure.

Carrillo Fuentes is the subject of 26 separate DEA investigations in the United States and Mexico. He has been indicted in both Dallas, Texas (1993) on charges of possession and conspiracy to possess cocaine, and in Miami, Florida (1988) for conspiracy to distribute heroin and marijuana. He is currently a fugitive and has been one for 8 years.

The Gulf Group, headed by Juan Garcia Abrego and based in Matamoros, Tamualipas State, distributes cocaine in the United States as far north as Michigan, New Jersey, and New York. In 1993, DEA received information that this group had smuggled cocaine into the United States in excess of 30 metric tons with a street value of hundreds of millions of dollars.

In early October 1994, Mexican authorities arrested Juan's brother Humberto on money laundering charges. Several other prominent traffickers associated with the group were arrested as well. Juan Garcia Abrego was arrested on January 14, 1996, by Mexican authorities. He was expelled to the United States and arrested on a federal warrant from Texas charging him with conspiracy to import cocaine and the management of a continuing criminal enterprise.

Impediments to Progress

Drug trafficking organizations in Mexico have become so wealthy and so powerful over the years that they can rival legitimate governments for influence and control. They utilize their vast financial wealth to undermine government and commercial institutions. We have witnessed Colombia's struggle with this problem, and it not unexpected that the same problems could very well develop in Mexico.

Corruption problems are a concern for law enforcement agencies everywhere. We have not escaped this problem in the United States. It is not an issue or problem that is restricted to South or Central America. In the United States, we rely on strict internal inspection and integrity controls and generally well-paid and professional police structure to blunt the potential of corruption. We reinforce this with specific laws, a grand jury and prosecutorial system that reinforces the desire and need for rooting out corruption in the law enforcement services. The Mexican Government has recognized that they must make similar provisions for their domestic law enforcement agencies which have had past problems of corruption involving the major drug organizations.

Mexican police are generally low-paid and do not have the sufficient training and resources they need to go after the major drug organizations. They have become tempting targets for the cash-rich narcotraffickers. Some examples of the problem Mexico has been dealing with are:

- In November 1995, a large cargo airplane was discovered near Todo Los Santos, Baja California Sur. This airplane had reportedly transported up to 17 tons of cocaine from Colombia and was off loaded with the assistance of local Mexican Federal and State Police. The national government authorities launched an investigation of the incident, which resulted in the issuing of 20 arrest warrants against Federal and State police officials.

- Another example where cooperative efforts were thwarted by corruption took place in March 1995, when 16 INCD officers were arrested in Puerto Vallarta for accepting cocaine and cash to allow a 1.2 metric ton shipment to pass onto Sonora.

- In June 1995, Hector Luis Palma Salazar, a major figure in the Mexican drug trade, was involved in a plane crash in Mexico. He survived the crash and was subsequently located by Mexican military authorities at a location where he was under the protection of the Mexican Federal Judicial Police. Salazar was arrested as were 34 members of the MFJP who were accused of providing protection to him.

Legal Limitations: Mexico lacks the sophisticated law enforcement structure necessary to counter the Federation, second only to the Cali mafia in terms of power, wealth and influence. The problem begins with lack of basic law enforcement tools in Mexico. Just consider that, in Mexico:

-wiretaps are currently illegal;
-conspiracy laws do not exist;
-police cannot use confidential informants;
-no witness protection program; and
-money laundering is not a criminal offense.

By contrast, U.S. law enforcement agencies have needed and used all of these instruments to great success in combating organized crime within our borders. We have seen how important electronic surveillance, the use of informants, the witness protection program and comprehensive conspiracy laws have been to American law enforcement. It is very important that the Mexican government expeditiously enact similar legislation to afford their law enforcement agencies adequate laws and legal authority to successfully investigate and prosecute major drug traffickers.

There has been a limited sharing of intelligence information between U.S. and Mexican law enforcement agencies due to the lack of an appropriate infrastructure. The DEA often cannot receive tactical intelligence from these law enforcement counterparts due to their inability to collect such information. We have identified some of the prohibitions placed on these efforts: prohibition against the use of confidential informants, prohibition on communication intercepts, etc. Conversely, the need to professionalize and improve narcotics enforcement units in Mexico is necessary to facilitate a more comprehensive exchange of intelligence information with U.S. agencies.

Money Laundering: Mexico is increasingly serving as a funnel for South American drug traffickers sending southward those proceeds generated in the United States and Canada. Mexico's lack of anti-money laundering legislation, to include a Currency Transaction Reporting (CTR) requirement, is a major source of concern. The absence of a CTR requirement makes difficult all attempts to follow drug money as it moves from the streets into the financial system.

Moving drug proceeds from the United States into Mexico can be accomplished through relatively simple and direct means. Currently, bulk shipment of U.S. currency is one of the most popular methods. U.S. dollars are concealed and transported by courier or cargo, either over land or by air, often in the same vehicles used to transport the drugs into the United States. Once in Mexico, the financial sector easily and conveniently absorbs the cash. Currently banks are required to file suspicious transaction reports, although there are no penalties for failure to do so. Once placed into the banking system, the money can be transferred virtually anywhere in the world. Money laundering also occurs on a large scale in the many casas de cambio along the border. Mexican bank drafts and other monetary instruments, as well as gambling establishments, are also widely used to justify the movement of drug proceeds from Mexico back into the United States.

The Mexican Government has recognized this inadequacy in their laws and has stated that they are in the process of enacting legislation to effectively prevent their financial systems and institutions from being utilized from the drug organizations to launder illegal proceeds. Until this legislation is passed, this issue will continue to be a source of concern.

Chemical Diversion: The lack of chemical control laws in Mexico promotes chemical diversion and, in turn, the drug trade. Mexico should adopt chemical control legislation to effectively curb the ability of traffickers to divert the precursor chemicals that are used to manufacture illegal drugs.

This is particularly important in view of the escalating methamphetamine trade.

Some Achievements

I would like to recognize some of the achievements that the Government of Mexico has made in drug enforcement over the last year. Most recently and perhaps most significant is that law enforcement officials in Mexico apprehended Gulf Cartel leader Juan Garcia-Abrego early this year, and quickly expelled him to the United States to face drug charges. Garcia Abrego will be tried soon in Houston.

The PGR and its elements continue to seize increasing amounts of cocaine in various national and multinational drug operations. Mexico has taken steps to move in a leadership position and coordinate narcotics enforcement actions in concert with their Central American neighbors. Hopefully these actions will have a positive effect on reducing the flow of drugs though that region and into the United States.

However, until such time as Mexican law enforcement agencies have sufficient personnel and resources to conduct the complex investigations needed to penetrate the organized crime empires of the major drug trafficking organizations and secure the arrest and conviction of drug leaders, such as the Arellano-Felix brothers and Amado Carillo-Fuentes, these drug organizations will remain a serious threat to Mexico and the United States.

Conclusion

Mr. Chairman, Mexico's role in international drug production and trafficking is very significant. For close to 30 years, trafficking organizations from Mexico have been adaptable, persistent, and savvy in the ways they met the changing drug market dynamics, first providing heroin, then marijuana, then cocaine, and now methamphetamine.

While the drug situation in Mexico has not yet reached the proportions of Colombia's drug crisis, Mexican traffickers have the potential to become every bit as powerful and insidious as their Colombian counterparts. It is essential for the Government of Mexico to be vigilant about this potential and increase the law enforcement pressures against major trafficking organizations within their nation. Unless tough law enforcement measures which enable Mexican authorities to target and arrest major traffickers, seize their enormous profits, halt money laundering, and facilitate the extradition of traffickers to the United States to stand trial for their drug crimes are instituted, Mexico will face the continued threats posed by international drug organizations.

The U.S. Government is not standing by while major traffickers consolidate their power in Mexico. Through our Southwest Border initiative, a historic interagency effort to coordinate law enforcement activities along our nation's Southwest Border, the DEA has joined with the FBI, the Department of Justice's Criminal Division, U.S. Attorneys, and state and local law enforcement agencies to target the activities of major drug traffickers operating along the border. Moreover, we have increased the number of Special Agents serving in offices located along the Southwest Border, and all agencies involved have brought significant resources to that part of our nation. This commitment of attention and resources will be the DEA's top priority for the next 5 years, as we work to dismantle the trafficking organizations responsible for so such of the crime and violence plaguing our nation today.

In the DEA's Fiscal Year 1997 budget, which has recently been sent to the hill, we requested additional funding for this Southwest Border initiative. This funding will enable us to enhance our investigations, upgrade communications capabilities, and increase our ability to conduct chemical investigations along the border.

I will be happy to provide Members of the Committee with additional details on our budget proposal.

Mr. Chairman, as you know, no amount of funding on the part of the U.S. Government will solve the drug problem unless major traffickers in countries such as Mexico and Colombia are investigated and brought to justice. As long as the Arellano-Felix brothers, the Caro-Quintero organization, the Amado Carillo-Fuentes organization, and the remnants of the Juan Garcia-Abrego organization flourish, our chances for success are diminished. Major traffickers in both Mexico and Colombia need to be arrested, jailed in a secure prison, and prohibited from conducting drug business from their jail cells.

I thank the Committee for inviting me to appear before you today, and I look forward to answering any questions you might have.