Monday, August 29, 2011

Just when you thought you knew something

Various media (including the Associated Press, link in title of post) have stories out about the Sinaloa cartel's apparent expansion into meth production. The reports – citing US law enforcement officials in Mexico (ie, DEA) – come on the heels of some massive meth busts. One was in Queretaro, where authorities seized nearly 500 tons of precursors (the chemicals used to make meth, which are banned in Mexico). Another seizure in Queretaro netted 3.4 tons of pure meth, worth about $100 million, according to the AP.

Mexican authorities also seized a 300-foot meth lab buried underground in Sinaloa. The authorities and the media have put two and two together, speculating that the Sinaloa cartel is increasing its interest in meth and trying to take over from the splintered La Familia as the major meth producer in Mexico.

There are several problems with this logic: While meth production in Mexico began in Michoacan (and Colima) under the Amezcua brothers in the 1980s, El Chapo Guzman and his Sinaloa crew moved into the business at least as early as 2003. They knew it was a golden opportunity.

Since then, massive meth labs have regularly been seized in Sinaloa, including one in 2009 which had the capacity to produce about 20 tons of meth – US street value, $700 million – in a month. Another meth compound in Durango was seized in the summer of the same year – it boasted top-of-the-range technology (internet, satellite tv, sat phones etc) and was nicknamed "El paraiso de cristal." Chapo was believed to have hidden out there, along with Nacho Coronel, who incidentally was nicknamed the "Ice King" because of his meth interests.

It should also be noted that La Familia has NEVER had the clout that the Sinaloa or Gulf cartel have had. When La Familia started rising up, it's believed that Chapo struck a deal with the Michoacan-based group – La Familia would produce the meth, the Sinaloa cartel would distribute it. After all, La Familia lacks a smuggling corridor into the United States, therefore must always rely on one of the bigger groups to allow it passage.

In the AP story, the US official is also quoted as saying the Sinaloa cartel has a better distribution network in the US than La Familia. This is absolutely right, as the Sinaloa cartel enjoys longer working relationships with US gang counterparts, probably has a better foothold of its own when it comes to distribution, while La Familia can only really rely on unestablished opportunists and fellow Michoacanos (hence a large suspected La Familia presence in Chicago, which is home to a very large community of Michoacan expats).

And yet: the DEA recently announced the results of Project Delirium, a 20-month series of US investigations targeting La Familia. 1,985 arrests were made, $62 million in U.S. currency was seized, as well as 2,773 pounds of methamphetamine, 2,722 kilograms of cocaine, 1,005 pounds of heroin, 14,818 pounds of marijuana and $3.8 million in other assets.

On Oct. 22, 2009, the DEA announced the results of Project Coronado, a 44-month series of investigations which resulted in the arrest of more than 1,186 alleged members of La Familia.

I have a few problems with these two operations: Heroin is not produced in large quantities in Michoacan. La Familia is from Michoacan. Are you telling me that La Familia, the cartel (as it's called by the DEA), is running heroin for another cartel? Sounds iffy to me. There have been cases of independent operators working in Michoacan, stockpiling poppy bought in Guerrero and then distributing it on up north, but to the best of my knowledge, these guys have not been members of La Familia, and my speculation (based on their last names and connections that have been made public) is that they were Sinaloans.

Second, Project Coronado was 44-months in the making. Forty-four months before Oct. 22, 2009, La Familia had yet to exist, or at least be known, outside of small towns in Michoacan. The group had yet to throw heads on a dance floor in Uruapan, for instance. I find it difficult to believe that the DEA had such great inside sources that they knew about La Familia's rise even before the Mexican authorities, who admitted quite bluntly in 2006 and even 2008 (the grenade attack in Morelia) that they really didn't have any idea of La Familia's growing clout.

Last point to a long-winded post: I believe we will see a global rise in meth production and distribution in the coming years, as the world works itself out of a recession. Meth is cheap to produce, cheap to sell, cheap to buy and as cheap a high as you're likely to find. Recession-proof, to say the least.

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