06/27/12 (by cmolzahn) - In what government officials are calling an operation without precedent, U.S. federal agents say they have dismantled a money-laundering scheme by the brother of the Zetas’ number two that funneled organized crime proceeds through a horse breeding operation. Authorities say that millions of dollars were invested in the business, which purchased, raised, trained, and raced horses throughout the southwestern United States. Eight arrests were made in the June 12 Justice Department operation, including that of bricklayer José Treviño Morales, brother of the Zetas’ second-in-command Miguel Ángel Treviño Morales “El 40,” along with his wife and five business associates. The arrests occurred in the states of California, New Mexico, and Texas. The Justice Department investigation began in 2010, and joined with an Internal Revenue Service investigation in 2011. U.S. officials consider operations against cartels’ financial operations to be much more effective in weakening the operations than intercepting drug shipments, and more attention has been paid in recent years to freezing assets believed to belong to organized criminal groups, and to discovering money-laundering operations on both sides of the border.
U.S. authorities–both former and current–allege that the Zetas’ El 40 used his brother’s legal residence status and the expertise of Mexican horse buyer Ramiro Villarreal, who helped the brothers acquire the winning quarter horse that won the 2010 All American Futurity in Ruidoso, New Mexico, along with the race’s $1 million prize, to set up the first known money-laundering operation of its kind. The alleged front business, Tremor Enterprises, owned a large ranch in Oklahoma and around 300 quarter horses, and over the course of three years won three of the industry’s biggest races netting a total of $2.5 million in prize money, which, as the New York Times reported, ultimately attracted the attention of U.S. law enforcement authorities, who questioned his ability to invest in the sprawling Oklahoma ranch and purchase valuable quarter horses while reporting less than $70,000 in earnings in 2008 and less than $60,000 in 2009. According to an affidavit filed by the FBI in a U.S. District Court, the Treviño brothers recruited Mexican businessmen to purchase horses–some valued at hundreds of thousands of dollars–for which they would later be reimbursed in cash, transferring ownership to Tremor. While the operation continued for several years, Villarreal was captured by the U.S. Drug Enforcement Agency in 2010 and began working as an informant. Months later, his charred remains were found in a torched car near Nuevo Laredo, Tamaulipas.
According to industry experts cited in the New York Times, which broke the story after agreeing with U.S. authorities to wait until after the June 12 operation, the Treviño brothers’ operation came within a larger context of Mexican horse racing operations moving to the United States in order to escape heightened drug violence. One expert attributed a recent growth in the quarter horse racing industry to a corresponding influx of breeders and buyers from Mexico, of which Villarreal was a part, before being recruited by Treviño in 2006. Another expert pointed to the notoriously shady dealings of the industry, often in cash, which combined with hefty price tags demanded at horse auctions make it an attractive refuge for money launderers.
José Treviño Morales was expected to be transferred to a detention center in Austin, Texas, where he is expected to face charges of conspiracy to launder money, according to Daryl Fields, spokesman for the U.S. Attorney’s Office for Southeast Texas. Charges were also filed against Miguel Ángel Treviño, other brother Óscar Omar Treviño “El Z-42,” and 12 others believed to be involved in the operation. Meanwhile, federal attorneys are seeking to seize properties from Treviño, including some of the more valuable horses housed at the Oklahoma ranch, including Mr. Piloto, which won the 2010 American Futurity race in New Mexico. In addition, Mexican Attorney General Marisela Morales said that there is an open investigation in Mexico into the alleged money-laundering ring, including property searches and asset seizure orders. She said that the investigation has been ongoing, and that Mexican investigators have been sharing information with their U.S. counterparts since April.