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Inside the North American Drug Trade: The 400-Year Road to the Cartels · Deadly Intentions

• 0:00
  The subject is much more nuanced than genesis of the drug trade
• 0:03
  in North America is over 200 years old.
• 0:06
  You've got migration from China, increasing demand, civil war
• 0:09
  increasing demand, boys down in Sinaloa bumping up production.
• 0:13
  The guy overseeing the operation in LA was a guy named Bugsy
• 0:15
  Siegel. At that point it was 5 if not 6
• 0:19
  cartel. In an earlier episode, we kind
• 0:23
  of got into the Mexican drug cartel world, but we kind of
• 0:27
  dabbled in it and kind of went all around it and what have you.
• 0:30
  And we've got a lot of people that have reached out and said,
• 0:32
  listen, give us, give us the start of the North American drug
• 0:36
  trade. Give us, give us the start.
• 0:38
  So Pete and his expert knowledge of this particular space is
• 0:42
  we're going to roll this thing back 200 plus years and we're
• 0:46
  going to take it from the North American drug trade from 200
• 0:49
  plus years ago when they came over on these wooden ships all
• 0:53
  the way to 1989. That's going to be Part 1.
• 0:57
  And the episode following this Part 2 will be 1990 to today's
• 1:02
  world within the North American drug trade.
• 1:04
  So without further ado, here's the expert at it.
• 1:08
  I'm just here for window dressing, and I'm not very damn
• 1:11
  good window dressing. Pete Rossini.
• 1:14
  How you doing Pete? Good morning.
• 1:15
  Good morning. Thank you for having me back.
• 1:16
  OK. No, not me having you back.
• 1:18
  You're a Co host of this deal. That's right.
• 1:19
  Thank you for coming back. All right.
• 1:21
  So listen, yes, as we indicated, we had an earlier discussion
• 1:26
  where we kind of jumped into the middle of the story and the
• 1:31
  perception here in the States with respect to the drug trade
• 1:36
  in Mexico is basically informed by shows like Narcos on Netflix.
• 1:40
  Well, earlier when we were preparing for this, Pete goes,
• 1:43
  the North American drug trade isn't Netflix's Narcos.
• 1:46
  So that's what what I think Pete want to say.
• 1:49
  Like you, everybody's so misinformed as to the true
• 1:53
  history of it. Certainly, look, the production
• 1:58
  on Netflix was actually more accurate than most depictions,
• 2:02
  but it's stripped of context. And if you don't have the proper
• 2:07
  context, you're not going to be able to evaluate one how we're
• 2:12
  here today. And particularly like for the
• 2:14
  law enforcement members of your community, how are you going to
• 2:16
  develop a strategy that's actually going to be effective?
• 2:20
  And I've had conversations of this nature with people that
• 2:22
  were former law enforcement. And look, the majority of people
• 2:27
  in law enforcement tend to be pretty decent guys.
• 2:29
  Oh yeah, there's a lot of there's, there's some scumbag.
• 2:31
  Some fringe, but. Lots of them are pretty decent
• 2:33
  and even the ones that are operating in good faith simply
• 2:37
  don't have access to the information necessary to be able
• 2:42
  to understand what you're dealing with today because you
• 2:45
  don't understand how it started. When when I get invited to give
• 2:49
  speaks just, you know, I had to give talks at universities for
• 2:52
  kids that are taking the advanced courses in like public
• 2:54
  policy. Well, they're interested in the
• 2:58
  genesis because they don't know what they haven't been told,
• 3:02
  which is essentially Chapo Guzman this, Miles Ambat of
• 3:06
  that. And that's all they know.
• 3:07
  That that's all they know. And, you know, maybe Pablo
• 3:09
  Escobar, throw in a little Pablo.
• 3:11
  Escobar Sure. But that's, you know, this is
• 3:13
  the the subject is much more nuanced.
• 3:16
  And so in order to properly put it in its context, you have to
• 3:20
  understand the genesis of the drug trade in North America is
• 3:23
  over 200 years old. And the core of this drug trade
• 3:31
  is centered around a relationship between China and
• 3:35
  Mexico. Now, today, of course, you get a
• 3:38
  lot of scrutiny because you have elements of Chinese organized
• 3:43
  crime working hand in hand with the Mexican cartels.
• 3:45
  With respect to the fenny trait, I'll try to avoid saying it
• 3:48
  because, you know, YouTube's a little sensitive about that
• 3:50
  word. We'll see at one time.
• 3:52
  It's fentanyl. Well, the genesis of that
• 3:55
  relationship, however, is well over 200 years old.
• 3:58
  Now, fentanyl obviously wasn't in play 200 years ago.
• 4:01
  What were the big players 200 years ago as far as substance?
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  Opium because starting at the beginning, in the mid 16th
• 4:13
  century, 1565 I believe, for the next 250 years, the Spanish
• 4:18
  Empire ran a trade route called the Manila Galleons.
• 4:23
  The Spanish Empire of course, was one of the largest empires
• 4:25
  on the planet. They had territory in the North
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  America, what they call New Spain, which includes all of
• 4:31
  Mexico today, plus California, New Mexico, Texas, Arizona,
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  Nevada, open to Colorado. So that was all part of their
• 4:37
  territory. All new Spain and North America.
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  Called that New Spain. Yes.
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  See a lot of us who just take the standard U.S. history
• 4:46
  gimmick doesn't. We don't know that.
• 4:48
  Sure. And so then in Asia they had the
• 4:51
  Spanish Philippines, now the Manila galleons.
• 4:56
  And here's a artist rendering of a Spanish galleon from that era.
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  And then here's here's the color photos.
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  So these are the type of vessels they would use to get over to
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  New Spain. Yes.
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  So the the trade route was between the Spanish Philippines
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  with their primary port in Manila and Spanish the New Spain
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  with their primary port in Acapulco.
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  Both of them have beautiful bays.
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  And this is the 1500s. Beginning in the mid 1560s
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  through the early 19th century, the Spanish galleons were
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  involved in trade with Chinese silk, Chinese porcelain, and
• 5:37
  Chinese tea. So the Spanish operating out of
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  the Philippines were engaging in commerce between China and
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  Mexico. On the Mexico side, On the New
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  Spain side, what they had was silver, and so you had the
• 5:53
  Spanish colonizers extracting silver from the colony, sending
• 5:59
  that to China in exchange for the Chinese goods and the mass.
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  The amount of trade was massive. Textiles.
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  Like I said, the the porcelains, the silk, the the deep.
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  But in return, Mexico is sending or New Spain, they're sending
• 6:12
  back silver. They're sending silver mined out
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  of Mexico. And so over the course of that
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  250 years, you started getting a little bit of migration.
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  This was It wasn't the first wave of large migration of
• 6:26
  Chinese to Mexico, but over the course of a 250 year period, the
• 6:30
  trickles started coming in. See a lot of people we don't
• 6:32
  have most people don't know this people.
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  I mean, we know we pick up with the Pilgrims, you know, and the
• 6:39
  Mayflower, the whatever that with the three, the three boats.
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  That's where we that's where we as Americans for the most part,
• 6:46
  pick it up. Sure.
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  And we don't have anything to do with, I mean, the 1500s as, as
• 6:51
  Americans. And when so you had the trickle
• 6:54
  of span of Chinese migration to Mexico in the form of sailors,
• 6:59
  seafarers. You have some businessmen that
• 7:02
  come over here to source stuff in North America for them.
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  So you had like a little bit of migration.
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  Also you had like skilled labor cause in New Spain you had what
• 7:12
  was essentially landed Gentry. Well, they needed tradesmen, so
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  blacksmiths, carpenters, fishermen, people that made the
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  Nets, people that worked with leather, old skilled trades of
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  Chinese individuals started coming over.
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  And so you had a Chinese community in Acapulco and a
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  Chinese community in Mexico City.
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  And we know this conclusively because there's some famous
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  artwork in Mexico from the mid 16th century where the Mexican
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  or at times Spanish artists were using Chinese calligraphy.
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  So now independent of what's going on with respect to the
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  Chinese and New Spain, you also had a separate empire now in the
• 7:56
  mid 18th century where you had the British Empire had taken
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  control of the opium trade. They, they had a monopoly over
• 8:07
  the production of opium in II, of course, was a former British
• 8:10
  colony. And so now the British were
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  taking the opium from India and selling it in China.
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  So the Chinese are paying for the British opium in silver that
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  they're getting from the Spanish coming out of Mexico.
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  Wow. The British had a one.
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  They had a large empire. They had to bankroll their
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  operation. They essentially bankrolled
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  their empire on the opium trade because they had huge trade
• 8:40
  deficits with China. Silk, porcelain, tea.
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  Well, to pay for these goods, they were taking the opium from
• 8:48
  India, selling it into China. Now, this had an indirect impact
• 8:53
  on what was going on in the States because King George the
• 8:55
  Third, when he was imposing his taxes, people here in the United
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  States were rebelling. Well, there was a famous
• 9:00
  incident that took place in Boston where a group of men
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  stormed one of the Piers and threw a bunch of tea overboard.
• 9:05
  Boston Tea Party. Well, that tea was Chinese tea,
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  paid for by the silver coming out of Mexico.
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  So we don't even know. We all think that that tea was
• 9:18
  Britain's tea, but that tea was actually Chinese.
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  Tea. Chinese tea.
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  Paid. For by.
• 9:23
  The Brits trafficking in opium. Trafficking.
• 9:27
  Wow. See people don't know that Pete.
• 9:30
  So now who or when did they first discover opium could be
• 9:38
  used to be as a narcotic? There are different accounts
• 9:42
  where it's been used for. There's some accounts indicating
• 9:47
  that they were used 3000 years ago in Egypt.
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  OK. I mean, like it's, it's been a
• 9:51
  long, long going thousands of years, but it's just unrecorded.
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  So you have essentially have like historical tales.
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  Like recreationally it wasn't a staple within their community,
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  but recreationally it was probably used medicinally.
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  Yeah, for all types of different.
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  Things like historical myth, but documented.
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  We know that it was used in Asia not only medicinally but also
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  recreationally. Right.
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  And the important part of the story is with the Brits pumping
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  opium into China. How, How would they consume it?
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  They were smoking it. OK, they were smoking.
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  And it becomes important they don't, because the Chinese
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  variant is smokeable, right? And so, and again, none of this
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  at the time was illegal, did they?
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  Even have laws back then, like you know, it's just like it was
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  probably if it's indigenous and it grows in the ground, you can
• 10:41
  consume it. Probably something.
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  Like that and so, but it became an issue because the Chinese
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  government pushed back because you had massive addiction rates
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  because particularly in southern China, it was consumption was
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  similar to how you know, a man in the United States drank in
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  the mid 50s. You got the two martini lunch,
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  no problem. Then after work, the happy hour,
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  no problem. You get home from work, drink
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  waiting for you at home, no problem.
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  Like continuous consumption of alcohol.
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  Well, that's how it was in their culture.
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  So opium became, you know, like that.
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  You wake up in the morning, take your morning puff.
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  Not a big deal. Go to work, take them in the
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  afternoon, break, puff, puff, the afternoon, puff, puff.
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  Go home with the wife, puff puff.
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  It's just continuous consumption.
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  On average, every Chinese individual adult did it was
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  consuming a gram a day. Much like the way we glorified
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  cigarettes in the Fifties, 60s and 70s where you know you'd see
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  Johnny Carson or, you know, or, or established news sources
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  smoking a cigarette. Right on news.
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  Right on TV. So that was much like probably
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  what the opiate I. Don't think it was smoked to
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  that level only because it would have more impact, but I mean
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  like throughout the course of the day, everyone's stopping to
• 12:00
  take their little, their morning puff, afternoon puff.
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  So the the amount of consumption was enormous and bankrolled the
• 12:07
  British Empire. Sure.
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  Chinese government pushes back. This is what triggers the Opium
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  Wars. So now Britain goes to war with
• 12:15
  China. They have two of these Opium
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  wars where they defeat the Chinese force the Chinese
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  government to legalize it. This is when Britain takes Hong
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  Kong and now they're supplying opium.
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  Most people have no idea how Britain took Hong Kong or why.
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  Because of the opium. Wow, that was all based on
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  opium, Yes, they wanted to not really make it.
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  They wanted it to be legal. They needed it to be legal to
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  support their ecosystem, so to speak.
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  And so why you have a lot of antipathy towards the West?
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  In China, they call it the century of humiliation.
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  And so with respect to now, the Chinese that are migrating late
• 12:57
  7th, 18th century into the early 19th century, this is still New
• 13:01
  Spain. You had the trickle of
• 13:03
  migration. Well, they smoked opium.
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  It had the cultural practice. These are Chinese coming.
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  To here. To North.
• 13:11
  America to to New new Spain to. New Spain right in 1821 Mexico
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  gets their independence from New Spain.
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  Now you start getting the Spanish galleon trade route is
• 13:25
  no longer in place that was empire based, but you still have
• 13:29
  commercial trade because the Chinese still want silver, North
• 13:32
  America still wants tea, silk, porcelain.
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  So you don't own us, but we're still going to do business.
• 13:38
  Sure. That's how it went down.
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  Now it became much more of a commercial type of relationship,
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  and the individuals in the newly freed Mexico had a problem.
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  First of all, their country was enormous.
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  If you go all the way to California and Texas and and and
• 13:54
  New Mexico and Arizona, and that was a huge territory.
• 13:58
  Yes, and so you didn't have a population that's necessary to
• 14:03
  create an economy like you could have.
• 14:06
  Let's say you know when you were one of the landed gentry's your
• 14:08
  dad's friends with the King of Spain and he'll give you a 15
• 14:11
  mile track like you can have all Santa Monica.
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  Can you imagine? Can you imagine what?
• 14:16
  Do you think Los Angeles and. That's how it works.
• 14:18
  It's how it works. Yeah.
• 14:19
  You now who originally, just to get off the beaten path a little
• 14:22
  bit, who originally owned the majority of Los Angeles.
• 14:26
  Well, just landed barons. Right.
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  I mean like but they would probably just give large swaths
• 14:30
  of land away. In in Europe, you had what was
• 14:33
  essentially landed Gentry and the first sons received the bulk
• 14:38
  of the inheritance. And so if you were a Spanish
• 14:41
  aristocrat like your second son, third son, fourth son, plus the
• 14:46
  sons with the mistresses, they would all get screwed prior to
• 14:51
  the New World because they're not going to be able to inherit
• 14:54
  property. Right, they can't get there.
• 14:56
  No, they were in a position to get large tracts of land.
• 15:00
  So the Spanish aristocracy sent the second, third, fourth sons,
• 15:05
  the mistress sons, to the New World where they were getting
• 15:07
  these large tracts of land. They need your workers.
• 15:11
  Right, because they're probably their industry was farming.
• 15:13
  Well, they had, they had Native Americans there, but they were
• 15:16
  fighting the native. This wasn't a right.
• 15:19
  They didn't show up and they they didn't, they didn't welcome
• 15:21
  them. Right.
• 15:22
  The Native Americans didn't say, oh, you're taking 15 acres, go
• 15:24
  ahead and take it. They brought their bow and.
• 15:27
  Arrows out and fought like hell. That's why the Spanish had to
• 15:29
  send her conquistadores to wipe out the native population.
• 15:32
  So before we were at war with the Native Americans, There's,
• 15:37
  there's. Parallel parallel same time.
• 15:39
  Same time. So as we're developing our
• 15:41
  country, moving eastward, we're probably already liberated from
• 15:44
  Britain. We're probably.
• 15:45
  No, no, at this point this is still Jamestown 1960.
• 15:47
  Oh, this is still sure this. Is still under we're under
• 15:49
  Britain rule. Because when the, when we came,
• 15:51
  we had to go through the, you know, the, the fiction of
• 15:54
  Thanksgiving and it was a everybody was cohabitating and
• 15:57
  it was all peaceful. No, we just needed more guys to
• 15:59
  show up. Once our population built up,
• 16:01
  start slaughtering the natives in Mexico.
• 16:04
  They just came in the front door slaughtering, right?
• 16:06
  They didn't, you know, they just sent the conquistadors.
• 16:08
  They had, you know, they had rifles.
• 16:09
  Yeah, and and and just wiped them.
• 16:12
  Out sort of massive wipeouts. Well, you couldn't 1 you had it
• 16:17
  took a couple 100 years to break.
• 16:19
  So if you were a if you were a Spanish aristocrat and your 4th
• 16:23
  generation son came over to New Spain, which is now Mexico, and
• 16:28
  he wanted, you know, 27 acres outside of Santa Monica.
• 16:31
  And it was. It was.
• 16:32
  Him. Yeah, the the the king just gave
• 16:33
  him the 27 mile track. You got all of Santa Monica, you
• 16:36
  got all of Marina del Rey, but you got all of Orange County.
• 16:39
  They had. To come out and wipe out the
• 16:40
  Native Americans. You got people living here.
• 16:42
  Because they're saying that's their land as well.
• 16:45
  Can they live there? You got to.
• 16:47
  You know, so they would literally have to wipe them out
• 16:49
  in order to be able to live on live farm and be on their land.
• 16:53
  Yes, we know. There was a famous saying by
• 16:55
  Karl Marx that between two rights forced the sides.
• 16:57
  So the Indians claimed it as their right, the new Spaniards
• 17:00
  claimed it as their right. Well, force had to decide and
• 17:03
  the natives got wiped out. Well, the natives, many of them
• 17:06
  were like enslaved or forced to work in the mines, but they
• 17:12
  weren't. They lived a very different
• 17:14
  lifestyle. They didn't, they weren't
• 17:15
  utilizing, you know, the lifestyle that was prevalent in
• 17:20
  Europe. You needed the blacksmiths, you
• 17:22
  needed the tanneries, you needed the, you know, so to bring in
• 17:25
  these type of people, you need skilled labor.
• 17:29
  Well, just landed Gentry aristocrats in New Spain and
• 17:33
  then subsequently in Mexico started bringing in Chinese.
• 17:38
  So you have Chinese migration prior to Mexican independence,
• 17:41
  over 250 year period subsequent to Mexican independence, you
• 17:44
  started getting more migration because Mexico, newly formed
• 17:49
  Mexico had an enormous track of land that they needed to
• 17:53
  populate and they were unsuccessful over the course of
• 17:56
  that first decade to recruit induced immigration from Europe
• 18:00
  to Mexico. First of all, Mexico being a
• 18:03
  former Spanish colony, they didn't want any Spaniards coming
• 18:06
  because you started to worry about them trying to have a
• 18:08
  counter revolution. So you got to get them bastards
• 18:10
  not allowed in. So then they go to northern
• 18:11
  Europe. Well, the northern European
• 18:13
  countries, they're not going to come.
• 18:14
  First of all, it's a Spanish speaking country that's
• 18:16
  Catholic. The northern Europeans were all
• 18:18
  Protestants, right? So they're not immigrating.
• 18:20
  You can't go to France because they're at war with Spain.
• 18:23
  Can't go to Portugal because they're at war with Spain.
• 18:26
  So you go to. So then the alternative was
• 18:29
  Chinese. So they start bringing in
• 18:33
  skilled labor. Now that population post 1820s,
• 18:38
  they're all opium smokers and they're primarily coming from
• 18:42
  the province of Mexico and China called Guangdong because they're
• 18:45
  it's devastated. This is what the Brits called
• 18:48
  Canton. Well, there was economic
• 18:54
  disruption because of the levels of opium addiction, and so you
• 19:00
  had migration beginning from southern China to Mexico because
• 19:05
  there's work. Not everybody's high on opium.
• 19:07
  Well, no, no, but but they still consumed opium.
• 19:12
  Right responsibly, if there was such a.
• 19:14
  Thing so the the people that came brought seeds with them.
• 19:21
  See, you couldn't count on regular transshipment.
• 19:24
  Ships were sinking all the damn time in the Pacific.
• 19:26
  Out of an abundance of caution, they started bringing their own
• 19:29
  seeds. Now you had, by the 1830s, small
• 19:34
  Chinese communities. Some of them were 200 people.
• 19:39
  But this is in Mexico. Mexico which which considered
• 19:43
  which included present day California.
• 19:45
  Right, right. And probably New Mexico.
• 19:48
  Arizona, Nevada, Texas. All of Texas, up in Colorado.
• 19:52
  Think about how. Think about how large of a
• 19:54
  territory that is. What is this way?
• 19:55
  When Mexico lost the Mexican American War and the US took
• 19:59
  everything north of what we call the Rio Grande that was larger
• 20:05
  than present day Mexico, they lost over half of their
• 20:08
  territory. Yeah, when we took what, what
• 20:11
  year was? That 1848, we're going to get
• 20:12
  there in a little bit. OK, So right now we're in the
• 20:14
  1820s, eighteen 30s. But we've gone quickly from the
• 20:18
  1500s now we're already in the 18.
• 20:20
  Hundreds. So now.
• 20:21
  You. I like that, Pete.
• 20:22
  You got the Chinese migration, opium consumers, you got Chinese
• 20:26
  communities stretching from Acapulco up to Mazatlán and
• 20:31
  Sonata, Los Angeles, Monterey, San Francisco, CA at the time
• 20:37
  was called Alta California. Everything South of the river is
• 20:40
  called Baja California. So I'm gonna call it Baja today.
• 20:42
  Right, which is currently late today.
• 20:43
  Sure, up in Alta, CA, San Francisco, Monterey, Los
• 20:47
  Angeles, Chinese communities were not successful in being
• 20:52
  able to cultivate poppy. Couldn't.
• 20:55
  Do it. The poppy that grew, well, you
• 20:57
  know, the climate wasn't suitable, the soil wasn't
• 20:59
  suitable. The poppy that grew was feeble
• 21:03
  and the gum being produced was brittle.
• 21:08
  Couldn't do it. Couldn't utilize it.
• 21:10
  And Ensenada in Baja, similar circumstance.
• 21:13
  Down in Acapulco, similar circumstance.
• 21:16
  So you had this stretch of Chinese communities trying up
• 21:20
  and down the Pacific Coast, trying to cultivate poppy for
• 21:23
  the purposes of producing opium so they can locally smoke.
• 21:27
  Well, there was one community where everything lined up
• 21:31
  perfectly. The soil was appropriate, the
• 21:36
  climate was suitable. Every they were able to
• 21:41
  cultivate the poppy, extract the gum and produce a Berry, from
• 21:48
  their perspective, suitable form of opium, which could be turned
• 21:52
  into the smoking form. That geographical area in Mexico
• 21:56
  is today what we call Sinaloa. Sinaloa.
• 21:59
  Now for those that don't don't know where Sinalona is, where is
• 22:02
  that in Mexico? Sinaloa is a Pacific state in
• 22:04
  northern Mexico. OK.
• 22:07
  And so it's a couple of states down from the border.
• 22:09
  So you got to go through Sonora to get to Sinaloa?
• 22:11
  Like how many miles would you say from the was it would be
• 22:14
  California, Arizona border? What is the way from Kulia Khan,
• 22:19
  which is the capital of Sinaloa, to Los Angeles versus Sinaloa
• 22:23
  Cartel's American base of operation is probably 900 miles?
• 22:28
  So that's, that's quite a, quite a waste.
• 22:30
  Well, it's quite a waste, particularly for that particular
• 22:32
  era, because remember, they didn't have roads or cars or
• 22:35
  it's it's. So think about this.
• 22:36
  So in a 900 mile difference, is the difference between this
• 22:42
  poppy seed growing or not growing?
• 22:44
  What people don't understand. Here's a photo for.
• 22:46
  Here's a image for the People think of Sinaloa and they're
• 22:51
  thinking Mazatlán. They don't know.
• 22:54
  They don't know how treacherous it really is.
• 22:56
  The the. Right through the heart of the
• 22:58
  state, you've got the Sierra Madre mountain range, and the
• 23:01
  Sierra Madres is a range with numerous valleys crisscrossed
• 23:07
  with rivers. The climate is perfect, The
• 23:11
  elevation is perfect. The soil is perfect and so you
• 23:16
  were able to cultivate the poppy up in the mountains.
• 23:20
  Right. In fact, probably not closer to
• 23:22
  sea level. No, no, no.
• 23:24
  Now the the community was in Mazatlán, sure, but the
• 23:28
  cultivation was in the higher elevation.
• 23:30
  And probably within that, not probably patchy as to where it
• 23:36
  might work right? Do they have entire entire
• 23:39
  field? It wasn't systemized at this
• 23:41
  point because the community was still like a few 100 people,
• 23:44
  right? So they're producing it for
• 23:46
  local consumption and then trading with other groups.
• 23:50
  A group down in Acapulco might need some.
• 23:52
  We'll trade that for whatever goods you have.
• 23:54
  People in Los Angeles might need.
• 23:55
  Some Los Angeles, then. People in San Francisco, Sure.
• 23:58
  What was San Diego part of that? What?
• 24:00
  What was that called? Los Angeles was the larger.
• 24:03
  Right. I understand that, but it was
• 24:05
  San Diego developed at that time.
• 24:07
  That I don't know. I'm from Lai, don't know the
• 24:09
  history of San Diego. Right.
• 24:12
  And so, but yes, and so Los Angeles certainly up in
• 24:15
  Monterey, up in San Francisco, but people don't understand is,
• 24:19
  you know, like California is the largest agricultural state in
• 24:21
  the United. States, I think, isn't it the
• 24:23
  fifth largest in the world? The economy is the 4th largest
• 24:26
  in the world, but in the United States, it's an enormous
• 24:29
  agricultural right. Well, that agricultural economy
• 24:35
  was developed by the Chinese. Now, so for the people in the
• 24:38
  Sinaloa, as a guy, do I say it right, Sinaloa about the where
• 24:42
  they grew the poppy, Sure that was was that their major crop or
• 24:47
  like the people in Los Angeles, what were the what were the
• 24:49
  Chinese growing in Los Angeles? They were doing fisheries,
• 24:53
  fisheries they were doing, they established the fisheries, the
• 24:56
  shrimping industry, lettuce, they did all death.
• 24:59
  They also did agriculture. They also did like for fruits
• 25:03
  and vegetables. Then they created the farmers
• 25:05
  markets and they created the fish markets.
• 25:08
  They were also very talented and they had skills in draining
• 25:12
  marshes to turn it into arable land.
• 25:14
  And think about it, Pete. They didn't have bulldozers.
• 25:16
  Or craters or. That had to all be done by.
• 25:19
  Hand everything. And so you needed the people
• 25:21
  that were the skilled tradesmen and the proto versions of like
• 25:25
  engineers sure. And so this migration of Chinese
• 25:31
  were the the opium consumers. And so you now had a little bit
• 25:34
  of a market. Now, independent of this, you
• 25:36
  had a significant event a few decades earlier where you had a
• 25:42
  chemist in Europe was able to isolate from opium A derivative
• 25:48
  that became morphine. Morphine revolutionized
• 25:52
  medicine, revolutionized war. Because you had the isolation of
• 25:57
  morphine in the early 19th century, a few decades later you
• 26:00
  had the creation of this hypodemic syringe.
• 26:03
  So now opium had not simply a recreational purpose and a
• 26:09
  medicinal purpose for a particular smaller community to
• 26:11
  Chinese, it now had commercial applications.
• 26:15
  The overwhelming majority of morphine was still being
• 26:18
  produced in Europe, near bringing here to the United
• 26:20
  States. But if you wanted to have your
• 26:22
  own production, but there's only one place in North America where
• 26:26
  they were growing opium or the poppy to produce opium, right,
• 26:29
  Sinaloa? And it's way easier to probably
• 26:32
  get it from there. Well, Sinaloa is the cradle of
• 26:34
  not only the drug trade in North America, it's also the cradle of
• 26:37
  the Pharmaceutical industry. Right.
• 26:40
  With respect to the 1860s, morphine changed warfare because
• 26:45
  if you had men that were taking, you know, a gut shot would take
• 26:47
  you 3 days to die, but they'd pump you full of morphine.
• 26:51
  And would you live or you still die?
• 26:53
  Still, but I mean, they had to have it for the men that were
• 26:56
  injured, hit them with morphine, Guys that had to get their legs
• 26:58
  amputated or broken bones, morphine.
• 27:02
  They were probably using Unbelievable.
• 27:03
  Quantities. You know how many people got
• 27:05
  injured in the Civil War, right? Massive.
• 27:07
  Tassel to point now, do you have the United States government,
• 27:10
  the Union and potentially the Confederates are now these huge
• 27:14
  customers of of of the pharmaceutical morphine?
• 27:18
  Well, morphine coming in from Europe, the unions are coming
• 27:20
  in. You know, the Confederates are
• 27:22
  having to run blockades because the Union guys had the, the
• 27:26
  bigger Navy. They were good to just, you
• 27:28
  know, blockade their ports. So you had the blockade runners
• 27:30
  coming in from, you know, the Gone With the Wind, your old
• 27:33
  Rhett Butler's character. Yeah, he's running blockades,
• 27:35
  bringing in opium, Terra and morphine.
• 27:37
  The the plantation Terra. Yeah, that's just who my
• 27:39
  sister's name after. Oh, really?
• 27:41
  OK, yeah, it's wonderful. And so then, but you also had
• 27:45
  opium being produced. In Sinaloa in.
• 27:48
  Sinaloa. So some of that starts making
• 27:49
  its way into the into the South, Come to Texas, part of the
• 27:53
  Confederacy. Sure.
• 27:54
  Now, before we get to the Civil War 1830s, you got this
• 27:58
  migration of Mexico and the establishment of the production
• 28:02
  of opium. You have the Mexican American
• 28:05
  War taking place between 1844 and 1848.
• 28:08
  Essentially, our ancestors saw this huge tract of land sparsely
• 28:16
  populated, and they said, you know, we want it.
• 28:18
  Right. Take it or take it.
• 28:20
  So they go to war with Mexico. The war takes four years.
• 28:24
  I didn't know it took that long. Yes, and at the end it was the
• 28:27
  Treaty of Guadalupe Hidalgo, I believe it was called.
• 28:30
  And at gunpoint, Mexico was forced to sell the land to the
• 28:36
  United States, the land north of the the Rio Grande.
• 28:39
  Which is basically all of Texas, all of California. 55% of new
• 28:44
  Spain's territory, Mexico's territory was taken and.
• 28:48
  Got wiped out. Yes, which is why today you'll
• 28:50
  see people ask why is Mexico so sensitive about American law
• 28:53
  enforcement presence under territory?
• 28:55
  It's because they perceive the US as having stolen their land.
• 28:59
  Right. Well, we did.
• 29:01
  We went to, I mean, we killed them for it.
• 29:03
  Now did we have to write them a check like, you know, under
• 29:05
  gunpoint? Sure.
• 29:06
  Yeah, you could. Was it like, yeah, yeah, yeah,
• 29:08
  $12.00. I mean, like thing was like $20
• 29:10
  million. 20 million. Which was a lot of money back in
• 29:12
  the 19th century, but it was a for sale, a shotgun sale
• 29:16
  essentially. And so now here it is, 1848.
• 29:20
  You've got the indigenous production of opium already in
• 29:23
  Sinaloa. Chinese migration, United States
• 29:27
  takes over everything north of the river, suddenly we've got a
• 29:31
  few Chinese communities. Right.
• 29:35
  So, and they didn't immigrate to come to the States.
• 29:38
  They can't. They immigrated to come to
• 29:39
  Mexico, but now they find themselves living here.
• 29:42
  Well, by separating Mexico from now what we consider the
• 29:47
  continental United States, you had the first transnational
• 29:51
  shipping network because you had the Chinese and the United
• 29:53
  States and needed to get their opium.
• 29:55
  So what happened to the Chinese nationalists or the Chinese that
• 30:00
  had migrated to what they, what was new Spain, which then was
• 30:04
  Mexico, you know, so they're say they're in California or Los
• 30:09
  Angeles, San Francisco, Colorado, Dallas, wherever
• 30:13
  they're, you know, wherever what became part of the United States
• 30:16
  because of the Mexican American War, whatever.
• 30:19
  Now what? Like they're like, Oh my God,
• 30:21
  now we're, we're no longer part of Mexico.
• 30:25
  We're now part of America. And did shit like change real
• 30:29
  fat? Like did it change?
• 30:30
  Like, did they have to change their way of life much?
• 30:32
  No, because, well, here's the thing.
• 30:34
  The communities were still small and they were very important to
• 30:39
  the the economy that was being developed.
• 30:44
  The next year, 1849, was a critical year in the history of
• 30:47
  California because that was the year that gold was discovered.
• 30:51
  The Big 49 or Gold Rush? And so. 8 That was 1849. 1849 in
• 30:55
  fact, even today. That's why they called the
• 30:58
  49ers. San Francisco 49ers is because
• 31:00
  of the gold Rush. And so San Francisco became a
• 31:03
  boom town. You had massive migration from
• 31:10
  all throughout the eastern coast of the United States.
• 31:11
  And keep in mind at that time you're talking wagon trails.
• 31:13
  It wasn't easy to get to California.
• 31:14
  Oh no, I mean it it, it was, and they were coming from all.
• 31:17
  Directions. All directions.
• 31:19
  And because now word had gotten back that there was golden in
• 31:22
  there. That's right.
• 31:23
  So you had mass migration to California for the purposes of
• 31:27
  going and mining gold, right? Moreover, throughout the
• 31:31
  American Southwest and in California in particular, like
• 31:33
  if you're a young guy and you're working as a ranch hand or
• 31:36
  you're working, you know, whatever job you're doing, you
• 31:39
  walked away from your job to go strike it rich.
• 31:41
  Now, wasn't there a a large percentage, Pete?
• 31:43
  I think we talked about it maybe once before that most of them
• 31:46
  didn't make it. Well, the majority of people
• 31:48
  don't win the lottery. Right, exactly right now, where
• 31:52
  there was a small percentage of people that made a.
• 31:54
  Lot certainly quite a bit and which is what fueled the Gold
• 31:59
  Rush mania. Well, as you had a depopulation
• 32:04
  essentially of the labor force in California, 10s of thousands
• 32:08
  of men left their jobs. Their fishery jobs, their the
• 32:12
  ranchers, the. Cowboys, the general store, the
• 32:15
  barbers. They left their jobs to go mine
• 32:18
  for gold. Now, now Pete, let me ask you a
• 32:20
  question was in the during the 49er eighteen 4940 Niner gold
• 32:25
  rush that big boom, was there particular an area that had more
• 32:30
  gold than others? It was in Northern California.
• 32:32
  Northern California, like Sacramento.
• 32:35
  That's why San Francisco became the boom town.
• 32:37
  OK. And so with this emptying out of
• 32:42
  the employment base, they need to start bringing in labor.
• 32:46
  When he started importing Chinese, between 1850 and 18
• 32:51
  eighty 300,000 Chinese immigrated to United States.
• 32:55
  These are the people that built San Francisco.
• 32:58
  Is that why? They built.
• 33:00
  San Francisco's got a huge Chinatown present because.
• 33:02
  Chinatown San Francisco has the first Chinatown.
• 33:05
  Right. Every Chicago, New York,
• 33:07
  everybody's got. It at this point, yeah, but the
• 33:09
  the original was in San Francisco.
• 33:11
  Right. And originally it was a ghetto.
• 33:14
  Now would the Chinese come here via Acapulco and that route?
• 33:19
  Of no, they're coming in because.
• 33:20
  Now they're coming from the West.
• 33:21
  Now they're coming from the West.
• 33:23
  None Acapulco's in Mexico. They're coming to the United
• 33:25
  States. Right.
• 33:26
  So they were probably coming into the Port of San Francisco.
• 33:29
  Come right into San Francisco. And so San Francisco became the
• 33:33
  key hub in the United States. San Francisco is the city that's
• 33:36
  most heavily influenced by Chinese culture.
• 33:37
  Yes. And so the Chinese essentially
• 33:39
  built San Francisco and much of the economy in California
• 33:45
  because the men went to go mine for gold.
• 33:48
  The locals, if you will. And so you had waves of
• 33:52
  migration where construction, fisheries, agriculture, barbers,
• 33:59
  laundry workers. Now, the thing about the Chinese
• 34:02
  is, although they were invited to come to serve as a labor
• 34:06
  force, they were discriminated against.
• 34:09
  Yeah, like what? You know, we immigration is a
• 34:11
  huge issue in today's world. What type of what type of
• 34:15
  immigration policies did we have back then?
• 34:17
  None. No, just get here.
• 34:18
  Just get here and so. But like I said, there was
• 34:21
  formalized discrimination. So like a Chinese individual
• 34:24
  couldn't testify in court against the white guy.
• 34:26
  Testimony wasn't allowed. Really.
• 34:28
  Sure. So for real?
• 34:30
  Yeah, of course. So a white guy could go kill
• 34:32
  this Chinese guy's wife and. That's all your witnesses.
• 34:35
  That guy, Donna, he doesn't. That's one.
• 34:36
  Didn't come. Wow, heavy discrimination.
• 34:39
  Heavy, heavy discrimination, banking discrimination, legal
• 34:42
  discrimination. So the Chinese formed what were
• 34:45
  essentially mutual aid, legal aid associations.
• 34:50
  They were called tongs. Later on, of course, tongs
• 34:55
  became associated with organized crime.
• 34:57
  But at the inception, like in my era, there was a, when I was
• 35:02
  active in drug trafficking a few decades ago, there was a, one of
• 35:06
  the triads out of Hong Kong came to California to hop toll for
• 35:10
  the purposes of unifying Asian organized crime.
• 35:13
  So San Francisco became their primary base of operation.
• 35:16
  And they partnered with one of the tongs, the Hopsin tongue,
• 35:20
  which was 100 years old, right? Well, this tongue was originally
• 35:27
  formed because it allowed for them to have banking services.
• 35:32
  See, the Chinese have a very different culture here in the
• 35:35
  US. We're very individualistic,
• 35:37
  whereas they came wave one, just worker bees, but they formed
• 35:43
  their association. Now they're able to start
• 35:45
  pulling together a little bit of money.
• 35:47
  They're very entrepreneurial. And they and they take care of
• 35:50
  each other. And they take care of each
• 35:52
  other. So what they've now they start
• 35:53
  pulling the money and now they say, OK, what are you going to
• 35:56
  open? I'm going to open up a fish
• 35:56
  market because my brother makes the Nets.
• 35:59
  Right. So I got one brother that runs
• 36:01
  the boats, one brother that makes the Nets.
• 36:02
  I'm going to set up the market. So they got fish markets, got
• 36:05
  Fisherman Wharf in San Francisco, you got the farmers
• 36:08
  market, you got the construction companies, you got the laundry
• 36:12
  services. So while you had many thousands
• 36:16
  of men, Americans, primarily Caucasians, come to California
• 36:19
  to go strike it rich in the mountains, the people who
• 36:23
  succeeded commercially were the Chinese, the people they sold
• 36:26
  the pick and shovels. Right.
• 36:28
  They sold the food. They sold the food they sold.
• 36:31
  The fish, the shoes, the. Legs The.
• 36:33
  Everything you needed essentially.
• 36:35
  It became a commercially very successful for the Chinese when
• 36:43
  mining shifted because after about the first decade the the
• 36:48
  easy gold had been retrieved right then it turned into
• 36:52
  commercial mining. Well, the Chinese were imported
• 36:56
  to go work these mines. Dig the tunnels and.
• 36:59
  Then they're brought in to bring to create the transcontinental
• 37:02
  railroad, right? I've seen a couple documentaries
• 37:06
  where they would show these sides of tunnels and they would
• 37:09
  actually get American or other workers that would refuse to do
• 37:13
  it. We're not doing it because of
• 37:15
  collapsing and dynamite, all that kind of stuff.
• 37:18
  And the only people they could get do it would be the and the
• 37:20
  Chinese would step right up and get it.
• 37:21
  Done. So you had hundreds of thousands
• 37:23
  of Chinese men, all opium smokers.
• 37:28
  That's the market. We got to get back to that now.
• 37:30
  Not the market. They want their daily puffs,
• 37:34
  right? So now of course the majority of
• 37:37
  opium is coming into the States from Asia.
• 37:41
  But because of the increase in demand, the guys down in Sinaloa
• 37:46
  had to bump up production a little.
• 37:49
  Bit to another side of a mountain.
• 37:50
  They they start increasing the production.
• 37:53
  Now who were the maybe that maybe you don't know, but like
• 37:56
  the very very full or fathers of who started the opiate trade
• 38:02
  down in Sinaloma? Well, they were called combinas.
• 38:05
  Combinas. And so these were simply they
• 38:09
  had their tongs. Right in Mexico they had a whole
• 38:12
  ecosystem in. Themselves.
• 38:13
  So what they were doing is they would pull their capital.
• 38:17
  They were able to negotiate the purchase of the gum in bulk.
• 38:20
  We're going to be able to lower the price by buying in volume
• 38:23
  and then they were going to be able to send it to Los Angeles.
• 38:26
  But isn't the harvesting of gum so labor intensive?
• 38:30
  That's I've been, I watched it where they, you know, they have,
• 38:33
  they use their hand, they slice like it into like a little test
• 38:35
  tube. It's like a little cutting
• 38:37
  knife. Yeah, yeah.
• 38:38
  And and they. Scarred a bulb.
• 38:40
  Yeah, but it's not a lot. I mean that each bulb present,
• 38:43
  you know, produces, you know, it's a labor cap, a cap full
• 38:47
  mate. Labor intensive, right?
• 38:49
  That's why later on when the US government says, well, you know,
• 38:52
  little cartel employs 10s of thousands of workers, there's
• 38:55
  10s of thousands of members. Now it's field guys scarring the
• 38:59
  bulbs. It's peasant labor.
• 39:02
  That's the only way to harvest it, isn't it?
• 39:04
  Yes, I mean you. There's no machine to this, to
• 39:07
  this day, right? To this very day.
• 39:09
  It's hand scarred, yeah. And so you had the production
• 39:12
  beginning. To ramp up.
• 39:14
  Ramp up with this massive migration from the 1850s to the
• 39:19
  1880s. Of people who are daily puffers.
• 39:22
  Puffers, 15 years into this migration period, a decade to 15
• 39:27
  years, you had the civil war, massive increase in the use of
• 39:31
  morphine, dramatic increase in the need of opium.
• 39:36
  So you've got migration from China, increasing demand, civil
• 39:40
  war increasing demand. Boys down in Sinaloa keep
• 39:44
  bumping up production. A lot at this point.
• 39:48
  I mean, you now have it morphed from recreational opium to
• 39:53
  pharmaceutical morphine and we're in the middle of a war and
• 39:57
  the only way to handle pain or any type of procedure per SE
• 40:02
  would be morphine, which so I mean, they in Sina Loma, they
• 40:05
  couldn't probably grow enough of it.
• 40:07
  And so for yeah, the the limited domestic production was
• 40:12
  utilizing the opium that's coming from there.
• 40:14
  Now the gold rush fever snaps in the 1870s.
• 40:20
  Eighteen, 3/18/73, we had a massive depression in the United
• 40:25
  States, massive economic disruption.
• 40:27
  And the reason why it's important is because once the
• 40:30
  gold fever snapped, all those men that came to California
• 40:35
  thinking they're going to get rich, well, they got to go back
• 40:36
  to working at the ranch or they got to go back get a job at the
• 40:38
  saloon, the general store. A significant portion of the
• 40:44
  economy is not controlled by the Chinese.
• 40:47
  They're not hiring outside of their own.
• 40:49
  No. You don't speak Cantonese,
• 40:54
  they're not hiring you. So you had political resentment?
• 41:00
  I was gonna say, as much as they've been discriminated
• 41:02
  against, now they're giving us a taste of our own medicine.
• 41:05
  Sure. By saying no, I mean I'll hire
• 41:08
  my cousin or my my uncle at the work here at the general store
• 41:11
  before I hire you white boy. Yeah.
• 41:13
  And so now because you. You've made it rough on me.
• 41:16
  Yes, and so do you. Had a large amount of animosity
• 41:21
  driven by economic circumstances and just, you know, it was a
• 41:25
  very different country. Racism was just over and so now
• 41:30
  the people that normally would have a privileged position in
• 41:32
  society. Can't get a job?
• 41:34
  Can't even get a job because they control everything, right.
• 41:37
  And so you started getting organized campaigns against the
• 41:42
  Chinese. And so in one of the things that
• 41:47
  they were able to focus on was their cultural practice of
• 41:52
  smoking opium, because in the aftermath of Civil War, you had
• 41:56
  100,000 combat veterans that were injured.
• 41:59
  Right. Well, their pain management
• 42:02
  protocol was morphine. And there was no PTSD diagnosis
• 42:05
  back then or anything like that. No.
• 42:07
  So you had massive quantities of most morphine consumption, along
• 42:13
  with morphine and opium being used for maternity purposes and
• 42:18
  medicinal purposes for people. And so you had literally
• 42:20
  millions of people using morphine, hundreds of thousands
• 42:24
  of addict. Right, that needed it.
• 42:27
  Well, the disgruntled and disaffected, predominantly
• 42:32
  Caucasian population in California started blaming the
• 42:35
  Chinese for all these like the But it's they're smoking the
• 42:40
  opium you're taking it. Right.
• 42:42
  But they didn't care about the fact.
• 42:44
  We're both consuming it. They smeared the Chinese.
• 42:48
  So in 1875, San Francisco passes the first law in the United
• 42:51
  States restricting the consumption of smokeable opium.
• 42:56
  They didn't ban the opium. They didn't ban the
• 42:59
  pharmaceutical grade. No, they didn't.
• 43:01
  What they did is they restricted the consumption, the smoking
• 43:05
  opium towards the Chinese because the other thing that
• 43:09
  they were able to complain about is not only to cultural
• 43:12
  practice, but they were saying white women are going into
• 43:16
  Chinatown to smoke opium. And nothing got Americans more
• 43:20
  wild up than the prospect of. Almost like the 1920s Reefer
• 43:24
  Madness. That's the model for Reefer
• 43:27
  Madness. Right was.
• 43:28
  Was originally conducted 50 years earlier with the Chinese.
• 43:31
  Saying your white daughter or wife or aunt is going to be
• 43:35
  going into Chinatown smoking opiate, smoking, smoking opiate
• 43:41
  with the Chinese. And so and.
• 43:43
  They they completely made the Chinese the boogeyman.
• 43:46
  Yes, and this is in 1875. 1875. And that on the heels of the law
• 43:52
  that we that we passed saying you can't smoke.
• 43:55
  Oh. This is 1875 was the legislation
• 43:57
  in San Francisco, right? And this movement was now picked
• 44:01
  up nationally by the newly nationwide media is coming into
• 44:09
  its own like the Hearst publications.
• 44:11
  Sure. And this is what was called the
• 44:13
  yellow pair. And so now because you had
• 44:16
  enormous numbers of Chinese that were came here for the purposes
• 44:19
  of transcontinental world, you had Chinese communities in
• 44:21
  Kansas, all across the Midwest. And so large scale
• 44:26
  discrimination directed towards them culminated in 1880 with the
• 44:31
  Chinese Exclusion Act. So for the first time, the US
• 44:34
  put the first legislation to control immigration was to
• 44:37
  prevent any additional Chinese from coming into the United
• 44:40
  States. So now the problem that arose
• 44:43
  from that, however, is you had just spent 3 decades importing
• 44:47
  hundreds of thousands of Chinese men.
• 44:48
  Now you come to the United States to work, save money, send
• 44:52
  the money home, bring your wife and kids.
• 44:54
  They want to reunify with their families.
• 44:55
  So when you need a tunnel dog so that you can run a railroad
• 44:58
  through it, that Chinese guy was OK, but now no more.
• 45:02
  No more so like, so you had Chinese guys on route, can't get
• 45:06
  into the country, People bringing their families can't
• 45:09
  get their families in. Meanwhile, down in Mexico, the
• 45:14
  Mexican government saw the economic success that California
• 45:20
  was becoming, right? Well, they're like, if you guys
• 45:23
  aren't going to take any more to Chinese, we'll take them.
• 45:28
  They invite the Chinese to come to Mexico, stay in the northern
• 45:32
  areas. Where was their port?
• 45:34
  Port of entry for that. Mazatlán.
• 45:36
  Oh. Sinaloa, they're now they're
• 45:39
  populating Sinaloa, they're populating Sonora, they're going
• 45:42
  up in the Baja. You had a community in Sonora in
• 45:44
  little port there also. So now the Chinese that were
• 45:47
  barred from coming into the US are now redirected.
• 45:52
  To Mexico. To Mexico.
• 45:54
  The Chinese living in the US, they wanted to bring their
• 45:56
  families over. And there's the maybe the dad
• 45:59
  stuck in San Fran, but the family had to go down over to
• 46:02
  Baja. The Baja So now.
• 46:04
  He's probably going down there. You had immigration from the
• 46:07
  United States to Mexico to live with them, to reunify the
• 46:11
  family, or the tongs in Mexico formed the first transnational
• 46:18
  smuggling operations. These are called snakeheads.
• 46:22
  So now Chinese immigrants were coming from China to Mexico and
• 46:26
  getting smuggled into the US, right?
• 46:29
  The Chinese were the first smugglers into the US for
• 46:32
  people. They were the first human
• 46:34
  traffickers, if you will. If you will.
• 46:36
  Because what they were, they identified the corridors right
• 46:40
  to bring people through and we. Didn't have a wall back then.
• 46:43
  We didn't have, we didn't have a, you know, like in Browns,
• 46:47
  Brownsburg or Brownsville, Brownsville, TX, a big
• 46:51
  immigrant, like they didn't have anything.
• 46:52
  But they were. They were essentially bribing a
• 46:54
  lot through Mexicali, through Tijuana.
• 46:57
  And most of it was predicated upon corruption from border
• 47:00
  officials, sure, But nevertheless, that created this
• 47:04
  dynamic where there were groups in Mexico specialized in moving
• 47:09
  goods or people, because now they're smuggling the people in,
• 47:15
  and they're also sending over opium for the markets.
• 47:18
  So that's where it. Started the first narcos in
• 47:21
  Mexico were Chinese and the first human traffickers were
• 47:24
  Chinese. Wow, yes, so that that takes us
• 47:28
  to about what, maybe 1890? 1900, Yeah, the early 20th
• 47:33
  century. In the late 1890s, in the early
• 47:37
  20th century, you had a second derivative of opium produced
• 47:41
  because there was a lot of problems with morphine, because
• 47:43
  you had enormous abuse. This was started, it created a
• 47:47
  lot of social unrest. It started the prohibition
• 47:50
  movement was they called it like like soldiers disease because so
• 47:57
  many Civil War vets were addicted to morphine.
• 48:00
  So you had massive morphine consumption, and so morphine was
• 48:04
  10 times more powerful than opium.
• 48:06
  Well, a chemist in Germany identified another derivative
• 48:11
  that was supposed to not be abusive.
• 48:14
  It was called heroin. So heroin was a derivative of a
• 48:19
  supposedly lesser powerful. It's supposed to have been a
• 48:22
  lesser A lesser powerful form of morphine.
• 48:24
  Less addictive portion of morphine it.
• 48:26
  Turns out it's 10 times stronger.
• 48:28
  Oh yeah, I mean, like, right, that's the real boogeyman,
• 48:31
  right? Ends up being a big boogeyman.
• 48:34
  Now you have demand for opium for smoking, demand for opium
• 48:39
  for morphine, demand for opium for the new medicine, heroin.
• 48:43
  And they were dispensing heroin. Just, you know, there there was,
• 48:46
  there were analgesics that were produced for moms to put the
• 48:49
  heroin under newborn babies. Gums when they're teething.
• 48:52
  So now we're looking at probably early 19.
• 48:55
  Early 20th century, right, you know, had the commercialization
• 49:01
  of opium for the purposes of heroin, with heroin becoming a
• 49:08
  analgesic that initially was supposed to be less powerful
• 49:12
  than opium, than morphine, ultimately turns out to be an
• 49:14
  even bigger problem. But at this point, what we're
• 49:17
  talking about still commercially accepted.
• 49:20
  Acceptable, but if quickly becomes appreciated that this
• 49:24
  stuff is a disaster. Yeah, how many years do we go?
• 49:27
  Within a decade. Within 10 years we're like, OK,
• 49:30
  we we really missed the missed the mark here.
• 49:32
  This is actually more addicting, more powerful and a worse
• 49:36
  situation than our pharmaceutical grade morphine
• 49:40
  and the puff puff Willy, you know, so at that point.
• 49:44
  Well with this prohibitionist movement you had the first drug
• 49:49
  law passed at the federal level in 19 O 9 which was the Opium
• 49:53
  Smoking Exclusion Act or it targeted specifically the
• 49:58
  Chinese. So just do a lot of anti Chinese
• 50:01
  sentiment. And we were really mean to them.
• 50:05
  Yeah. And so the legislation was
• 50:07
  geared towards targeting what was considered the creation of
• 50:12
  opium dens, because in San Francisco with the legislation,
• 50:15
  they had to take it from the salons to the underground level.
• 50:20
  Like the speakeasies and you know, things like that, like
• 50:23
  much like, but when we had prohibition, here's a they had a
• 50:25
  Speakeasy. They that's where the is that
• 50:27
  where the term opiate den came from In San Francisco, They'd
• 50:30
  find these there's a. Couple of photos.
• 50:32
  These are photos taken in the late 19th century.
• 50:35
  You'll notice on the third one it depicts and at the notice at
• 50:40
  the bottom. White women in an opium den with
• 50:43
  the Chinese. So they're starting their Reefer
• 50:45
  Madness nonsense because what gets Americans more cheered up
• 50:49
  than white women doing bad things?
• 50:51
  And say they had Caucasian men and women are going into
• 50:55
  Chinatown, unaccompanied white women are going into Chinatown
• 51:01
  and American youth. Are going into.
• 51:04
  China of good parentage are going into Chinatown.
• 51:08
  So that was their whole spiel. Yeah, that's that's the the the
• 51:11
  formula that was crafted and utilized later was originally
• 51:15
  conceived of back in the early 20th century and it was geared
• 51:19
  towards the Chinese with the 19 O 9 opium exclusion.
• 51:22
  Now did they have any early big busts of?
• 51:26
  Well, here's the problem to make.
• 51:27
  Examples, you know. Yes, and there's a there's a
• 51:31
  photo of a large collection of opium that was collected in
• 51:36
  early 20th century where it was burned into the center of San
• 51:39
  Francisco. Oh wow, did they get high off?
• 51:42
  The SO now the the Chinese didn't help themselves very much
• 51:53
  because they created dens the tongs had morphed into.
• 52:00
  Essentially they remained legal, mutual agents, associations, but
• 52:04
  without any new immigration. Like they were the ones that
• 52:06
  would help the new guys arrive, get you an apartment, get you
• 52:09
  settled, get you a job. But without any immigration,
• 52:12
  they didn't have a purpose. So they converted over to vice
• 52:18
  because you had hundreds of thousands of men, no women, but
• 52:23
  they controlled the prostitution.
• 52:24
  So. They made a lot of money on
• 52:29
  providing escort services. They also ran the gambling, you
• 52:34
  know, very popular gambling Chinese culture, so they had the
• 52:38
  proto casinos. I don't know that the average
• 52:41
  person understands that China really was the beginning of the
• 52:48
  drug trade, so to speak. Sure.
• 52:50
  I mean it at at its purest. In in North America.
• 52:53
  In North America, yeah, yeah, yeah.
• 52:54
  Not talking about Europe. The Europeans impose that on
• 52:58
  them over there. But as far as here in North
• 53:00
  America, it all goes down to Ground Zero China.
• 53:03
  Yes. And now you had the large
• 53:05
  population centers in San Francisco, smaller in Los
• 53:09
  Angeles, but that was, you know, the the other side of the
• 53:14
  tracks, if you will. And so that was the association
• 53:19
  with the Chinese. And so the tongs started having
• 53:24
  disputes amongst each other in the Tong wars, which fed into
• 53:29
  the narrative because now they're just, you know, shooting
• 53:31
  it out in the streets or control of the rackets.
• 53:34
  Right. The gambling racket, The women
• 53:36
  which? Fed right into the narrative.
• 53:38
  Of their bad people. These are bad people.
• 53:40
  They're subversive. There's one of the newspaper
• 53:42
  articles that said all their women are whores.
• 53:46
  Now with the these hundreds of thousands of Chinese men that
• 53:50
  have, you know, are in San Francisco or whatever, what?
• 53:53
  There's not enough women going around for.
• 53:54
  There's not enough women so. They're all just smoking puffs
• 53:57
  into dens and visiting the a few hookers the hookers that are
• 53:59
  there and. Probably the women that they're
• 54:01
  able to hook up with are American women.
• 54:04
  No, there there was female immigration.
• 54:06
  It just was nowhere near on the skip because they're bringing
• 54:07
  over guys to build a railroad to work.
• 54:09
  They were in the mind. Right, so he might have left the
• 54:11
  old girl at home. Home, so they're trying to get
• 54:12
  their wives and kids over. Which goes back to the human
• 54:15
  trafficking. Back to the human trafficking
• 54:17
  Sonoma. Coming from Sonoda.
• 54:20
  Sonoda And then with the with the people also came the drugs.
• 54:25
  I mean, you, if you're going to, if you're going to take people,
• 54:28
  you might as well take a couple. Well, in the early 20s.
• 54:30
  Full of opium. That's what they called mules
• 54:33
  right after nineteen O 9 the anti the first legislation was
• 54:37
  directly targeting Chinese opium.
• 54:41
  So you couldn't bring Chinese opium in legally by boats
• 54:43
  anymore, so now you had to source it out of Mexico to.
• 54:49
  The ground. So you had to get the opium
• 54:52
  produced in Mexico in Sinaloa, extract the gum, refine the
• 54:56
  opium, send it to the United States.
• 55:00
  So you got the people smuggling groups.
• 55:02
  Now become the 1st. Drug smuggling.
• 55:04
  The drug smuggling groups. They're going to bring people.
• 55:06
  You might as well bring a couple barrels of opiate.
• 55:08
  Yes. So now what?
• 55:09
  They're using, however, and is what really got people riled up.
• 55:13
  They were using American women to do the smuggling.
• 55:17
  Now, Pete, let me ask you a question.
• 55:19
  This is, but I think this is before the advent of the
• 55:22
  vehicle, so at that point. They call them mules.
• 55:26
  So they would probably be literally mules and wagons.
• 55:29
  Women would take the material, put it in what's essentially an
• 55:36
  early form of a, you know, of a rubber type contraceptive.
• 55:42
  Take the material, lubricate it, insert it into their body.
• 55:46
  Oh, hold on. They were doing.
• 55:47
  They were doing that back then. Right across the border.
• 55:50
  That's why the Border Patrol, the early version of the Customs
• 55:53
  and Border Patrol, they had to start hiring female officers.
• 55:56
  To look vaginally. That's right.
• 55:58
  So they were taking like a prophylactic condom type deal.
• 56:01
  Fill it up. Fill it up.
• 56:02
  Insert come across the border. But how you couldn't get that?
• 56:06
  I mean, you wouldn't think. That's Yep, and they're not
• 56:10
  searching, so here's got a low interception rate.
• 56:12
  So yeah, one if you got 10 girls on a wagon.
• 56:14
  You got just women coming and going, coming.
• 56:16
  They were taking the hookers from LA wow, running this fleets
• 56:22
  of women boom boom. There was a one of the on the
• 56:24
  American side, there was a The coordinator who was responsible
• 56:28
  for putting this all together was a female who ran
• 56:31
  whorehouses. So when you bring in the hookers
• 56:34
  and you might as well bring a vagina full of opiates.
• 56:37
  Sure, of course. Wow.
• 56:40
  And so now, of course, the Chinese, they're using American
• 56:43
  white women to smuggle contraband.
• 56:45
  Right through their vaginas. And like, did the American
• 56:49
  public eventually find out about that?
• 56:51
  And did the government exploit that?
• 56:53
  Because in 1914, five years later, you got the Harrison
• 56:56
  Narcotics Act, which is the first law regulating controlled
• 57:03
  substances and the creation of the law enforcement apparatus to
• 57:06
  enforce that law. This is the early version of the
• 57:08
  DEA. That was in 1914. 1914 So now
• 57:12
  they had to require, you know, doctors had to keep records.
• 57:16
  It formalized the distribution of opium and its derivatives
• 57:21
  morphine and heroin, creating the first black market.
• 57:25
  Right. So now you have a black market
• 57:29
  where there's morphine consumption, heroin consumption
• 57:36
  and the Chinese opium puff puff. Yeah, 'cause you still have all
• 57:42
  those people that need some. Too.
• 57:44
  So now you're going into the early part of the 20th century,
• 57:48
  1914 was the Harrison Anti Narcotics Act.
• 57:50
  Independently of that, you had a major a second major event that
• 57:55
  occurred that year. World War 2.
• 57:57
  World War One. I'm sorry, I meant World War
• 57:58
  One. Sure, with war comes the need
• 58:01
  for morphine. That's right, and lots of it.
• 58:03
  On this scale, this is a way different scale than the scale
• 58:07
  of the North versus the South. Yes.
• 58:09
  And the problem for the Europeans of course is the
• 58:12
  majority of the pharmaceutical companies were in Germany.
• 58:16
  Well, they were a belligerent in the conflict.
• 58:19
  Right. They're not sending morphine to
• 58:21
  help the French, no. Or the British.
• 58:25
  And so when the United States began assisting our European
• 58:29
  allies, for the first few years we set material, weapons,
• 58:34
  ammunition, bombs, supplies, and morphe because the United States
• 58:42
  had access to opium. Right and the German
• 58:47
  pharmaceutical or tell in France and and Great Britain go packs
• 58:51
  and. Go packs and they were trying to
• 58:52
  work around it by working with people in Turkey, right?
• 58:55
  But the free flow pre war was restricted right?
• 59:00
  The US had its own indigenous production, not our own.
• 59:05
  But close enough. The guys didn't see a lot right
• 59:07
  Bump up production. So I mean, literally, do we have
• 59:09
  federal officials and federal, you know, cabinet?
• 59:12
  Members, at this point, it's still commercial.
• 59:14
  It wasn't governmental. Oh, so I'm oh, so the government
• 59:17
  didn't call Seema Loma and say, hey, we need to, we need to buy
• 59:21
  more. Yeah, they're buying from
• 59:22
  independent. I've got opium for sale.
• 59:25
  Right. It's good because they can.
• 59:26
  It's not. It's American commercial.
• 59:28
  It's regulated. Right, it's morphine.
• 59:30
  But it's opium not coming into smoke.
• 59:33
  No. It's raw opium for the purposes
• 59:36
  of pharmaceutical production of the morphine needed for our
• 59:39
  allies. Right, so we.
• 59:41
  Would So Uncle Sam is buying as much morphine as he can get his
• 59:43
  hands on and as much opium as he can get his hands on from
• 59:46
  American brokers. Right.
• 59:48
  The American brokers are dealing with the Chinese.
• 59:52
  In Sinaloa. In Sinaloa and of course in
• 59:55
  Tijuana and in Mexicali. But so there's Chinese, man,
• 59:59
  they're like, man, we're going to get you one way or the other,
• 1:00:03
  right? I mean, they're, I mean, they've
• 1:00:04
  been through this whole story, Pete.
• 1:00:06
  They've been the most brilliant, intuitive, hard working, getting
• 1:00:11
  screwed with, finding a way to figure it out portion of people
• 1:00:15
  that we've talked about. Yes.
• 1:00:16
  And so now you had a scale up of the opium production in Mexico
• 1:00:24
  when the war ends. Now we're talking 19719
• 1:00:28
  eighteen, 19201921. You had a second revolution in
• 1:00:33
  Mexico for the preceding decade. That's right.
• 1:00:38
  That's the infamous 1920 war that you speak of.
• 1:00:41
  A couple different times. The uprising of Mexico was
• 1:00:44
  where. Because you had.
• 1:00:45
  A party took over, right? Yes, because you had in Mexico
• 1:00:50
  the. Would this have been equivalent
• 1:00:52
  to their revolutionary civil war?
• 1:00:55
  This has been, I mean, would this have been equivalent to
• 1:00:57
  their civil? War.
• 1:00:57
  No, it's a it was a reorganizing of the government mainly, but
• 1:01:00
  what it was predicated upon was particularly in northern Mexico,
• 1:01:06
  you had the the local agrarian communities where they were
• 1:01:13
  producing the poppy, producing the opium.
• 1:01:16
  Combinas were buying it in bulk. They had controlled the
• 1:01:19
  distribution routes, the smuggling routes.
• 1:01:22
  Well, the local Mexican population, they saw a lot of
• 1:01:27
  wealthy Chinese guys. So when there was a just like
• 1:01:32
  you had in the 1880s, a lot of societal discrimination towards
• 1:01:37
  Chinese, you had a similar thing happening in.
• 1:01:40
  Mexico. So the the Mexicans are like
• 1:01:41
  man, just much like America and discriminating against the
• 1:01:45
  Chinese because they're doing well.
• 1:01:46
  Because after the exclusion act there was like 60,000 Chinese
• 1:01:50
  showed up in Mexico. Right.
• 1:01:52
  Same thing. They got the tongs, they pulled
• 1:01:54
  the money. They start the store, they start
• 1:01:55
  the fishery, they start doing Next thing you know, you know,
• 1:01:58
  3-4 decades later, you got a significant Chinese population
• 1:02:02
  and they're commercially successful and the greedy
• 1:02:06
  Mexicans are looking at them and saying we want to steal that.
• 1:02:10
  You got legitimate firm for pharmaceutical interest.
• 1:02:12
  They want to steal access to the opium.
• 1:02:15
  You got the gangsters, they want to steal access to the heroin.
• 1:02:19
  Right. So the above board guys are
• 1:02:22
  going with the morphine, the morphine and the black market
• 1:02:25
  guys are going with the heroin, Sure.
• 1:02:26
  And that's that's. Another you had.
• 1:02:28
  Vision in itself. Yes.
• 1:02:29
  And so you had an effort led by a former Mexican president and
• 1:02:33
  regional governors, which resulted in the expropriation
• 1:02:40
  from the Chinese. They took the land, they took
• 1:02:42
  their businesses, they took their farm.
• 1:02:44
  They took everything they raped. Brutal, brutal.
• 1:02:47
  That's in 1920. Between 1910, culminating
• 1:02:51
  between 19 Well, the revolution happened in 19, 2019, 21.
• 1:02:55
  The mass expulsion happened over the course of the next decade.
• 1:02:59
  So by 1930, the population of Chinese and Mexico had dropped
• 1:03:02
  down to like 5000. They were sending people back to
• 1:03:04
  China. They've never been to China in
• 1:03:06
  their lives. Right, they were born.
• 1:03:08
  There, born there. But get the hell out of here.
• 1:03:10
  There have been Chinese living in Mexico for 100 years, since
• 1:03:14
  the original Mexican Revolution and two 300 years.
• 1:03:17
  Before that. From the Spanish galleons.
• 1:03:19
  Right out Mexico was primarily populated with the Spanish
• 1:03:26
  galleons. At the turn of the 20th century,
• 1:03:28
  the largest population group in Mexico other than the local
• 1:03:32
  Indians, you had the European Spaniards descendants and then
• 1:03:36
  the Chinese mass expulsions of Chinese.
• 1:03:41
  So you said by 1930 there was less than 5000 in the entire
• 1:03:46
  country, the entire country. So they didn't give a fuck what
• 1:03:48
  you were doing. If you had a successful company
• 1:03:51
  or fishery or general store or whatever, get out.
• 1:03:55
  We're we're taking it and you're out of here and so.
• 1:03:58
  So now the Mexicans took control of the opium production.
• 1:04:03
  They took control of the heroin production.
• 1:04:07
  In the United States, you had a black market.
• 1:04:09
  A big one. And in Los Angeles, you had
• 1:04:15
  representatives from the Mafia. These are the Italians and the
• 1:04:19
  Jewish guys that were working together.
• 1:04:21
  The guy overseeing the operation in LA was a guy named Bugsy
• 1:04:24
  Siegel. Yeah, that's when Bugsy comes
• 1:04:26
  into play. Bugsy Siegel, working with his
• 1:04:30
  associates, were the ones that became the primary buyers.
• 1:04:36
  So now, Pete, we got kind of an era where the average American
• 1:04:40
  has heard of this guy, you know, prior to all this, you know, we
• 1:04:44
  don't we don't know the the people that hope that operated
• 1:04:47
  the opiate dens and and we don't know.
• 1:04:49
  The Chinese gangsters that operated the dead.
• 1:04:51
  Right. You know, we may have known some
• 1:04:53
  famous 49ers and through the trek that we've gone through,
• 1:04:56
  but then now we have the introduction of Bugsy Siegel and
• 1:05:00
  everybody pretty much has heard of that guy.
• 1:05:03
  He was a big mobster out of out of LA, but I think was the
• 1:05:07
  didn't he start Vegas? He was, yeah, he was the
• 1:05:10
  representative from the New York Commission.
• 1:05:13
  Right, that that that went over and they end up they end up
• 1:05:15
  knocking him off. They thought he was clipping or
• 1:05:17
  not managing correctly. So, buds, Bugsy Siegel got his
• 1:05:22
  start, so to speak. He was a very successful
• 1:05:26
  gangster in New York, working with Meyer Lansky and Lucky
• 1:05:30
  Luciano. These are the, you know, at the
• 1:05:32
  time there was a deep partnership between Italian and
• 1:05:35
  Jewish mobs. Right now, did they have the
• 1:05:38
  five families that early or no? They had, there was more than
• 1:05:41
  five families at that time. OK.
• 1:05:43
  This is where the Commission was originally coming together in
• 1:05:47
  New York, in New York. And of course this is the post
• 1:05:49
  bootleg era essentially because don't forget when you had
• 1:05:51
  prohibition. Is when mafia thrived the most.
• 1:05:55
  Yes, because she we were focusing primarily on the opium
• 1:05:58
  side of the equation. Well, there was also massive
• 1:06:03
  importation of alcohol from Mexico into the United States.
• 1:06:08
  And so this is where you started getting that free flow of people
• 1:06:11
  coming back and forth. If you wanted to have a weekend
• 1:06:14
  party, you just shoot down in New Mexico.
• 1:06:16
  Right, so you have an American. Neighborhood traffic back and
• 1:06:18
  forth of Americans going to Mexico.
• 1:06:21
  But you can consume alcohol down there, right?
• 1:06:23
  The women come back loaded up, loaded up.
• 1:06:26
  With the with the heroine in the prophylactic Willy.
• 1:06:29
  Yes. And so you had the creation of,
• 1:06:35
  they call them cultura bandistas.
• 1:06:37
  It's the smugglers of contraband.
• 1:06:41
  This is a long, storied tradition in Mexican culture.
• 1:06:45
  Kind of like we look back on our Cowboys, they look back on their
• 1:06:49
  smugglers. And so Bugsy got shipped from
• 1:06:53
  New York. Out to California because the
• 1:06:56
  mob, Bugsy Siegel, Mickey Cohen, Max Grossman, these guys were
• 1:07:00
  responsible Lucky's bank in New York, but these are the.
• 1:07:04
  Representatives, these are the LA pot that got Yeah.
• 1:07:06
  This is like the LA cell because they're the ones handling the
• 1:07:10
  alcohol coming in, right? So you got moonshine getting ran
• 1:07:13
  up into, you know, the liquor being ran into California for
• 1:07:17
  the purposes that are not being sent everywhere coming out of
• 1:07:19
  LA. So LA becomes a key Mafia center
• 1:07:22
  because of Bugsy Siegel's operation.
• 1:07:24
  And this is the third. Is this like the late?
• 1:07:26
  1920s yeah, For Prohibition. Prohibition ends at this point.
• 1:07:33
  The Mexicans have taken over the opium and heroin production.
• 1:07:37
  They just pivot right into heroin.
• 1:07:39
  The mob does. Yes, the mob does.
• 1:07:42
  And so we're going. To go from alcohol.
• 1:07:45
  Because you already have the smuggling network.
• 1:07:46
  Right, we got, we got the routes, we got the mules, we got
• 1:07:49
  the. This is when heroin started
• 1:07:52
  becoming chic, like the jazz era.
• 1:07:55
  Well, you had the production of that material coming in from
• 1:07:59
  Europe, which was, you know, available through the Eastern
• 1:08:03
  seaboard. But you also had the production
• 1:08:06
  of the material in Sinaloa. So the LA operation became a
• 1:08:11
  source or the opium derivative that they would then send to
• 1:08:15
  Chicago, they would then send to New York.
• 1:08:17
  So LA became a transshipment hub.
• 1:08:20
  So they needed their boys out there.
• 1:08:21
  So the money, you know, the Italians and the Jewish guys
• 1:08:23
  operating in LA, then you had the Chinese gangsters originally
• 1:08:30
  and then you had the Mexican gangsters who took over.
• 1:08:35
  So now they're dealing with the Italians and the Jewish guys,
• 1:08:38
  but they're also dealing with the Chinese because you still
• 1:08:40
  had the puff, puff market. Because we didn't do a mass
• 1:08:42
  deportation like Mexico did. We still had them.
• 1:08:45
  We still had them. They were American citizens.
• 1:08:47
  So now you got the Italian mob steps in.
• 1:08:49
  In LA. In LA, you got the production,
• 1:08:52
  in Mexico, Pudsey bankrolls the operation, scale up the
• 1:08:57
  production. This is what now they had to
• 1:09:01
  centralized it because you had all these little Chinese
• 1:09:04
  communities. You got some in Sonora, some in
• 1:09:06
  Sinaloa, and so they said, OK, you know what we're going to
• 1:09:09
  have? So they brought in chemists, put
• 1:09:12
  up the money, and they base it out of Guadalajara.
• 1:09:15
  Guadalajara, of course, is the capital of Jalisco.
• 1:09:17
  Later on it becomes much more important.
• 1:09:19
  But this is the genesis of the Guadalajara aspect, because you
• 1:09:22
  had the production of the opium taking place in Guadalajara and
• 1:09:27
  then sending it to Sinaloa for the refining into the
• 1:09:34
  derivatives, primarily heroin. And they were using what at the
• 1:09:39
  time was new technology, airplanes.
• 1:09:42
  Right. We had just got an airplane to
• 1:09:44
  fly it 30s. Yes, to fly it from Sinaloa to
• 1:09:49
  Los Angeles. And that was probably for the
• 1:09:51
  1st 10 years highly unregulated because how do you how do?
• 1:09:56
  You you just land the planes. I know that's what I'm saying.
• 1:09:58
  Like, you know, we don't, we didn't have, you know, the Air
• 1:10:01
  Force and people to the Interstate.
• 1:10:02
  So you like originally they were based in Bugley, of course lived
• 1:10:05
  in Beverly Hills and so and as the city of LA began developing,
• 1:10:09
  it just started moving to the landing places out.
• 1:10:11
  Pretty soon you got just all springs.
• 1:10:13
  Land them out in the middle of the desert right?
• 1:10:16
  Unload the load and then run it in LA.
• 1:10:20
  Yeah, my car. My car.
• 1:10:22
  You already had vehicles. Yeah.
• 1:10:24
  Well, in the 30s we actually had pretty we had V eights by the
• 1:10:27
  first year of V8 was 1/3 was 1932.
• 1:10:29
  And so now you had the development of the relationship
• 1:10:32
  between Mexican gangsters and American organized crime
• 1:10:38
  becoming cemented in the 1930s. Then you had the Mexican
• 1:10:42
  pharmaceutical supplier legitimate of opium to supply
• 1:10:46
  the American Pharmaceutical industry.
• 1:10:47
  Which was legit. Legit, right?
• 1:10:50
  And so now you. Had now, Pete, let me ask you a
• 1:10:51
  question, Let me interrupt you. But like back then in the 30s,
• 1:10:55
  these legitimate pharmaceutical companies, are they the common
• 1:10:58
  ones that we know now? The Johnson and Johnson, the the
• 1:11:01
  the, the Moderna, you know all these.
• 1:11:05
  I don't know what. I don't know what the what what
• 1:11:08
  the the relationship between them.
• 1:11:10
  I know what. They were like what?
• 1:11:11
  They were like, what the names? Like the the the biggest in the
• 1:11:13
  world were still like bare, like the guys in Germany were still
• 1:11:16
  the the massive ones, but here the indigenous production were.
• 1:11:21
  I just simply don't know the answer to that question.
• 1:11:23
  Right, right. But the point is is there was.
• 1:11:24
  Probably are derivatives of what they are today.
• 1:11:27
  Yeah, well, they had access to the opium because the combinas
• 1:11:30
  in Mexico had for had formalized this proto cartel structure
• 1:11:37
  where you buy in bulk, they're buying coffee in bulk, they're
• 1:11:40
  buying fruit in bulk, they're buying fish in bulk, they were
• 1:11:43
  buying opium in bulk. And if it was a for a
• 1:11:46
  pharmaceutical company, it's legal.
• 1:11:48
  Yes. Yes, I mean.
• 1:11:49
  Yes, they had to have. Sure, whatever document
• 1:11:52
  permission, yeah. But yes, they were able to do so
• 1:11:54
  also. Of course you also had
• 1:11:55
  immigration. You had importation coming in
• 1:11:57
  from Europe to Mexico, and then that was getting smuggled into
• 1:12:01
  the US. You've got the systematic
• 1:12:04
  production of opium for the first time in Mexico, now
• 1:12:06
  controlled by Mexican interest. Legitimate supply,
• 1:12:09
  pharmaceutical. Chinese are out.
• 1:12:11
  Gangsters supply to heroin. Heroin comes to the US.
• 1:12:14
  From Mexicans. From Mexico, they're hooking up
• 1:12:17
  the guys in Los Angeles, the mob guys, and they're hooking up the
• 1:12:21
  Chinese gangsters. Right.
• 1:12:23
  With the opium for the puff puffs.
• 1:12:25
  And so you now have the creation of two markets.
• 1:12:29
  Chinese market. The Chinese market and the
• 1:12:32
  Italian market now being taken over my head being supplied by
• 1:12:35
  the Mexicans who stole it from the Chinese.
• 1:12:37
  Right, right. Who stole it originally?
• 1:12:39
  They stole everything from the Chinese essentially.
• 1:12:42
  Next major event, and this is the perhaps the most significant
• 1:12:47
  in the entire narrative. I really like how we've gone.
• 1:12:49
  We've literally now everybody listeners, we've gone from the
• 1:12:51
  1500s and now I'm thinking we're probably in the 50s maybe.
• 1:12:55
  No, we're about to get Rio. Rio 1939. 1939.
• 1:13:01
  World War 2. Oh, and then with the with World
• 1:13:05
  War 2 means we need some more more.
• 1:13:07
  Yes, particularly because and lots.
• 1:13:08
  Because. Not in Germany is not supplying
• 1:13:12
  the Allies. And we don't come into the war,
• 1:13:16
  of course, until two and two and some years later after Pearl
• 1:13:20
  Harbor. 4142 December 41. Yeah, 41 December 7th.
• 1:13:23
  Yeah. And so you had.
• 1:13:25
  A couple years, much. Much like the template of World
• 1:13:28
  War. One, but this was now direct
• 1:13:30
  American government cut out the middle man Uncle Sam going scale
• 1:13:37
  up the production. Yeah, this isn't, you know, this
• 1:13:40
  isn't Bugsy Siegel. This isn't the mob, guys.
• 1:13:42
  Hey, we need. This is the United States of
• 1:13:44
  America. We need massive production.
• 1:13:49
  It goes from because remember the Seattle mountain range is a
• 1:13:53
  long range, so it goes from production in Sinaloa up to
• 1:13:58
  Sonora, over into Chihuahua, all the way down to Guedo.
• 1:14:03
  So we're talking about thousands of miles.
• 1:14:06
  No, I mean square, square. Miles of course, yes, it was
• 1:14:12
  just enormous production because you had a entire world at war.
• 1:14:16
  Now, now, Pete, where there's some people that just got
• 1:14:18
  insanely rich off of this, I mean.
• 1:14:22
  This is where the original once they stole everything from the
• 1:14:27
  Chinese. Which by the way, Pete, I'm I
• 1:14:29
  know I'm a Co host of this, but I am riveted because I've
• 1:14:32
  learned so much. I've learned and I know the
• 1:14:34
  average person watching are listening.
• 1:14:36
  I've we didn't know any of this and now I have a better
• 1:14:39
  understanding as to how it all went down.
• 1:14:41
  Because here the remember the people that were incentivized
• 1:14:45
  and this happened all over the country of Mexico, but the theft
• 1:14:49
  of the opium related activity happened in northern Mexico,
• 1:14:53
  which traditionally was the poorest sections.
• 1:14:58
  You know, all misconceptions aside, Sinaloa, dirt poor state,
• 1:15:05
  even up into the 1980s, nineteen 90s cartels built the hospital,
• 1:15:09
  they built the fucking roads, they built the, you know, the
• 1:15:11
  the little medical clinics. And so it's a very different
• 1:15:15
  perception down there of how they view the narcos and how we
• 1:15:20
  view them. And so throughout the early 20th
• 1:15:24
  century, very poor area of Mexico where the wealthy
• 1:15:29
  individuals in many respects were the people involved with
• 1:15:33
  the opium trade. Oh yeah, I would say that the
• 1:15:35
  wealthiest. And so when they had the
• 1:15:37
  expropriation of Chinese property, it formed the original
• 1:15:43
  version of what we're going to discuss later on called the
• 1:15:45
  Plaza La Plaza is a system of criminal governance that allows
• 1:15:51
  for the political class to extract wealth from the drug
• 1:15:56
  trade. And what they what they were
• 1:16:01
  able to do is the people that were powerful at that time were
• 1:16:04
  like the governor of Sinaloa, the governor of Sonora.
• 1:16:07
  This didn't really have the federal authorities involved in.
• 1:16:10
  And so you had a system that went for the next 50 years until
• 1:16:15
  the 1970s, where the drug trade developed in conjunction and
• 1:16:22
  with the support of local and state officials.
• 1:16:27
  They're all getting their cut. They're all getting paid.
• 1:16:29
  The governor, the mayor, the chief of police, the Little
• 1:16:34
  League baseball teams have as their sponsors different drug
• 1:16:40
  organizations, right? With badass uniforms.
• 1:16:43
  But yeah, the best equipment. One of the famous teams was
• 1:16:45
  called the Gummers because they were paid for by the guys that
• 1:16:48
  gummed. They built the baseball field,
• 1:16:50
  they built the soccer field. And so this is how deeply
• 1:16:55
  ingrained the cultivation of opiates and the production of
• 1:17:00
  controlled substances is in their culture.
• 1:17:03
  It's going back at least 200. Years.
• 1:17:04
  Oh, yeah. I mean, it might be the.
• 1:17:06
  It might be what? It might be the product that
• 1:17:08
  built the country. Built Mazelan, right Sinaloa was
• 1:17:12
  built in numerous respects on the wealth generated from opium.
• 1:17:18
  So we're at 1939. So 1939 you get World War 2
• 1:17:23
  massive increase in demand. And Germany's not their
• 1:17:28
  pharmaceutical morphine is not a not for consumption.
• 1:17:32
  For the Allies. For the people they used to
• 1:17:34
  sell. So now you had a massive
• 1:17:36
  increase in production to support Uncle Sam's war effort.
• 1:17:42
  So while you know, the Americans sent supplies and material and
• 1:17:45
  later on we sent manpower, Mexico's contribution Morphe to
• 1:17:52
  produce it massive industrial scale production of opium, which
• 1:17:57
  in turn results in tremendous amount of wealth being generated
• 1:18:01
  by the local political structure.
• 1:18:02
  Oh yeah, I mean a massive. Yes.
• 1:18:06
  So you've got the early networks working hand in hand with the
• 1:18:11
  political class. So now this goes on through
• 1:18:15
  World War 2, huge wealth coming into this poor area of the
• 1:18:19
  country. People in Mexico City and other
• 1:18:22
  parts of the country are noticing a lot of money over
• 1:18:25
  there. Like we'd just normally ignore
• 1:18:27
  them. Right, there's a bunch of dirt
• 1:18:29
  foot morons. But I mean but now.
• 1:18:30
  These guys are like wealthier than we are.
• 1:18:33
  They're making significant amount of money and we're not
• 1:18:35
  getting a cut. Right.
• 1:18:38
  So throughout the 1940s you have World War 2, then you had Korean
• 1:18:44
  War. Right, which a lot of people
• 1:18:46
  overlooked. So then it wasn't until you had,
• 1:18:51
  and don't forget you also had there's wars all over the place
• 1:18:56
  at this point because you had the what was became the Cold War
• 1:18:59
  between the Warsaw Pact and US, but the Soviet Union.
• 1:19:02
  Meanwhile, you got the Chinese in a civil war right, with the
• 1:19:05
  nationals getting beat, defeated by the Communists.
• 1:19:07
  So then they flee to Formosa. Today, we call it Taiwan.
• 1:19:12
  Right, which is the advent. Of those are the Chinese, that
• 1:19:14
  law that was their Confederates essentially, right?
• 1:19:17
  The losers went to Taiwan, right?
• 1:19:20
  They're still Chinese. They're not Taiwanese.
• 1:19:22
  They're Chinese living in, they just went to the part of the
• 1:19:25
  country. Yeah, that's the only thing they
• 1:19:26
  had left. That's the only thing that well,
• 1:19:28
  then a lot of them also fled. And this becomes important
• 1:19:31
  because the Nationals when they fled, they went to a significant
• 1:19:39
  went to Taiwan, but they also went to Singapore, Malaysia,
• 1:19:44
  Thailand, United States, Canada, Europe became they formatted,
• 1:19:52
  they formed themselves into what became known as triads.
• 1:19:56
  And so like today, the 14K triad was originally a pro nationalist
• 1:20:01
  guerrilla force. They had 18 divisions, right?
• 1:20:06
  All those 18 divisions became the 18 chapters at a 14K triad.
• 1:20:09
  So here in the United States, the 14K operation base of
• 1:20:12
  operations is in Los Angeles, down in Orange County.
• 1:20:15
  But it's originally derivative. From Hong Kong.
• 1:20:18
  From Hong Kong. Sure.
• 1:20:19
  Because Hong Kong was a British territory, the Chinese couldn't
• 1:20:23
  go get them. They can run to Hong Kong,
• 1:20:25
  right? They could run to Macau.
• 1:20:27
  That was Portuguese territory at the time.
• 1:20:30
  And so you had the development of the triads that became what
• 1:20:39
  is associated with Chinese organized crime.
• 1:20:41
  The triads themselves aren't criminal syndicates.
• 1:20:44
  Individual members of triads are criminals.
• 1:20:46
  You've got a lot of law enforcement that are members of
• 1:20:48
  triads. Mayors are members of triads.
• 1:20:51
  Kind of like the tongs. Not everybody was involved in
• 1:20:53
  vice, but there was plenty of it.
• 1:20:57
  Same thing with the triads. Now the triads become important
• 1:20:59
  later on in the late 20th century, but at this point you
• 1:21:04
  have massive skirmishes all over the planet.
• 1:21:08
  And we're talking about. 1940s Nineteen. 40s, early 50s, yes,
• 1:21:12
  right. There's all kinds of different
• 1:21:14
  conflicts from different things. Everybody seems to be fighting.
• 1:21:17
  Until the Soviets pop off a nuke.
• 1:21:20
  Right. And where do they pop off that
• 1:21:22
  at this? Was in the 1950s.
• 1:21:25
  Once they knocked off a nuke that changed everything.
• 1:21:30
  Who'd they nuke? They just demonstrated they have
• 1:21:32
  them. Oh, OK, so in the 50s.
• 1:21:36
  Because that up until that point there was actually plans for us
• 1:21:38
  to start bombing the Soviets. But they showed us the good
• 1:21:42
  news. They.
• 1:21:43
  Said they have it now you got a stalemate.
• 1:21:45
  Right, correct. And so now we settled into, you
• 1:21:48
  know, cold wars, which essentially became proxy wars.
• 1:21:52
  But up until the 50s, mid 50s, with the Korean War, you had a
• 1:21:55
  decade of American combat between World War 2, the Korean
• 1:21:59
  War. But then in the 1960's, the
• 1:22:03
  synthetic version was developed. The Fanny.
• 1:22:08
  It's been around that long. Fentanyl's been around that.
• 1:22:11
  Long I. Never knew that That's a.
• 1:22:14
  It's a synthetic derivative. It's a not a derivative at all.
• 1:22:16
  It's a synthetic they're able to synthesize.
• 1:22:19
  It's a. It's a.
• 1:22:21
  A synthetic form. A synthetic mock.
• 1:22:23
  Up. It's a synthetic opiate, right?
• 1:22:25
  And so whether it being derived from opium, which is morphine,
• 1:22:28
  or heroin, now it's just produced in the lab, so it
• 1:22:32
  obviates the need. It mimics heroin and and without
• 1:22:36
  having to be without having to be a more.
• 1:22:39
  Powerful than opium and heroin was 10 times more powerful than
• 1:22:42
  heroin than than morphine. Benny is much more powerful
• 1:22:46
  than. So each step of the way that's
• 1:22:48
  it's. Progressively more potent, and
• 1:22:52
  so now with the development of the synthetics, it obviated the
• 1:22:56
  need for the legitimate production of opium in Mexico.
• 1:23:02
  Well, they does. Does the market come crashing
• 1:23:04
  down? Well, the the amount of demand
• 1:23:07
  in the United States for the black market derivative isn't
• 1:23:12
  sufficient to support that enormous growing and cultivation
• 1:23:18
  operation in Mexico. Now, fortunately for the
• 1:23:23
  Mexicans, the 1960s you had a pivot in American Society,
• 1:23:32
  culminating in what became known as the hippies.
• 1:23:34
  Yeah, I was going to say. So that kind of plays into what
• 1:23:37
  they're doing. Because with the hippies, you
• 1:23:41
  know, the British Invasion, with The Beatles onward, you had
• 1:23:46
  recreational use of marijuana. I was just getting ready to say
• 1:23:52
  that's probably where weed gets introduced.
• 1:23:54
  Because now you had this enormous stretch of land
• 1:23:58
  dedicated in Mexico for the production of opium to produce
• 1:24:01
  the morphine. They said, well, we can't
• 1:24:04
  sustain the market in the United States, so we'll just flip over
• 1:24:07
  to a different cash crop. The cannabis.
• 1:24:10
  It flipped over to cannabis. And that was probably mid, mid
• 1:24:13
  1960s, yeah. So now you had mass production
• 1:24:18
  of weed, of cultivation of weed, running parallel with the opium
• 1:24:24
  for the purposes of the heroin, which is always a much smaller
• 1:24:27
  market. Now, the reason why this is
• 1:24:29
  important is because the states that are at the core of this
• 1:24:33
  production, Sinaloa is at the heart of the Golden Triangle,
• 1:24:39
  whether it's Durango, Chihuahua, Sinaloa, that's where you had
• 1:24:44
  the epicenter of the distribution.
• 1:24:50
  And so the quote UN quote, drug Lords at the time were very
• 1:24:55
  respected members of the community.
• 1:24:57
  These are the, the, the land, the large land owners.
• 1:25:00
  You need huge tracts of land to cultivate marijuana.
• 1:25:03
  This wasn't, you know, when you're paying the mayor, the
• 1:25:05
  chief of police, everybody's getting their cut.
• 1:25:07
  La Plaza system a governance It ran smoothly for decades.
• 1:25:14
  They had it figured out. They had it.
• 1:25:15
  Figured out they had a market in the United States.
• 1:25:17
  They sent up the weed. They sent up the H meanwhile.
• 1:25:22
  They paid off the mayor. They paid off everybody's chief,
• 1:25:24
  yes. So now by the mid 1960s
• 1:25:27
  everything stabilized on the production and distribution.
• 1:25:31
  Independent of all of this, you had a major event that took
• 1:25:35
  place in 1959, which was the revolution in Cuba.
• 1:25:43
  And so when they overthrew the American puppets that were then
• 1:25:47
  in control of Cuba, it was the first of what was perceived here
• 1:25:54
  in the United States as the Soviets.
• 1:25:58
  On the March is when you had the domino.
• 1:26:00
  Theory. And then we got the Bay of Pigs.
• 1:26:02
  And and so all that, yes and so, but the reason why Soviet is
• 1:26:05
  important. Soviet tension was more than it
• 1:26:07
  ever was. Yeah, enormous.
• 1:26:08
  It was extraordinary. And so like the US perceived the
• 1:26:13
  overthrow of the Cuban regime as an existential threat, this is
• 1:26:17
  where you had to blockade and of course, to be a pig because.
• 1:26:20
  It's so close to home. It's 90 miles from from from the
• 1:26:23
  Keys. Yeah, so once they discovered
• 1:26:24
  that the Soviets were putting missiles there and like they
• 1:26:26
  went into full freak out mode. Not unreasonably, of course.
• 1:26:31
  Well, the reason why it's important with respect to the
• 1:26:33
  drug trade is because the Cuban Revolution inspired leftist
• 1:26:41
  movements throughout Latin America, because throughout
• 1:26:44
  Latin America you had a tremendous amount of antipathy
• 1:26:47
  towards the United States because we had what was called
• 1:26:49
  the Moro Doctrine, and the United States was essentially
• 1:26:54
  engineering coups and local governments whenever they got a
• 1:26:59
  little too uppity. And so you stage a coup in
• 1:27:03
  Honduras, you stage a coup in Guatemala.
• 1:27:07
  Like you interfere with American commercial interests, you get
• 1:27:11
  knocked off. The reason why Brazil moved its
• 1:27:14
  capital and of Brazilian descent, they moved its capital
• 1:27:17
  from Rio to Brasilia, was to get out of range of the American
• 1:27:22
  battleships. Guns, really.
• 1:27:25
  It's called gunboat diplomacy. Well, you can't shell the city
• 1:27:28
  if you capital if you move it inland.
• 1:27:31
  Most people don't know. That so there's a tremendous
• 1:27:33
  amount of antipity not towards Americans, because I've
• 1:27:35
  travelled throughout South America many times.
• 1:27:37
  They love Americans, despise our government, and there's been a
• 1:27:42
  tremendous amount of anti democratic activity by our
• 1:27:45
  government overthrowing. And Cuba was the start of that.
• 1:27:49
  Cuba was the start of it with respect to the leftist movement,
• 1:27:53
  because this is the first time the commies had done so.
• 1:27:56
  So you had a series of events, you had us fighting to a draw.
• 1:28:01
  Do you have the Communists taking over China, the
• 1:28:04
  communists taking over the Warsaw Pact, US fighting to a
• 1:28:07
  draw in Korea, the communists popping off a nuke, Then they
• 1:28:13
  take Cuba. Meanwhile they're pushing up
• 1:28:16
  into Vietnam. They're going to have to go bail
• 1:28:19
  out the French in a few years. So the Commies are on the March.
• 1:28:22
  Big time with a bunch of WS. What the That's right.
• 1:28:27
  And so the Cuban Revolution inspired leftist sympathetic
• 1:28:32
  movements throughout Latin America.
• 1:28:35
  Later on the US coming headed overthrow the president in
• 1:28:39
  Chile, install Pinochet. As a child I was raised in
• 1:28:43
  Brazil. I was raised in a military
• 1:28:44
  dictatorship. The government got knocked off.
• 1:28:47
  The right wing puppets were put in place by the Americans.
• 1:28:50
  But prior to that. Well, yeah, they don't want
• 1:28:52
  that. And, you know, that's that's the
• 1:28:54
  genesis of the war with Iran is 1953 when we knocked off the
• 1:28:58
  democratically elected government president there and
• 1:29:01
  put in the Shah? Do we keep saying we're at war
• 1:29:04
  for 47 years? No.
• 1:29:05
  No, they're saying no. We've been at war since 53.
• 1:29:07
  Right, you put in the Shaw in 53.
• 1:29:09
  You put in the dictator. See, most people don't know that
• 1:29:12
  either, Pete. And so in the 1950s, we were
• 1:29:15
  doing a lot of interfering with democratic processes.
• 1:29:18
  The coup we had to. Rig the election in Italy to
• 1:29:20
  make sure the commies didn't win.
• 1:29:22
  We had to knock off people that we didn't want.
• 1:29:24
  This is the the genesis of the CI as like Black Ops type
• 1:29:28
  activities. Well, they flipped the script on
• 1:29:31
  us with Cuba. Then you started seeing
• 1:29:33
  movements in other Latin American countries.
• 1:29:37
  That were Cuba like. That were sympathetic to leftist
• 1:29:40
  causes, drawing inspiration from the Cuban Revolution, drawing
• 1:29:44
  inspiration and monetary support from the Soviets.
• 1:29:49
  And of course it was during this time period that the Soviets put
• 1:29:51
  the first satellite in space, put the first man in space.
• 1:29:57
  We're in full fucking panic mode in the West.
• 1:30:00
  Yeah, we're, we're not nearly that technical.
• 1:30:03
  And so particularly in Mexico, the pro leftist sympathetic
• 1:30:09
  movement was the largest out of all the Latin American
• 1:30:14
  countries. Now following the revolution in
• 1:30:18
  1920, you had a political party that goes by the acronym PRI,
• 1:30:23
  just say called PRE. Pre became the government in
• 1:30:28
  Mexico. Well, for the next, from now up
• 1:30:31
  into the 1960s, PRE remained to power in Mexico.
• 1:30:35
  From 1920 to 2000, it was a 70 year run, 7 decades of political
• 1:30:42
  hegemony controlled by one political party.
• 1:30:46
  Pre, Pre, they controlled everything at the federal level,
• 1:30:50
  state level, the military apparatus, the intelligence
• 1:30:54
  community, the law enforcement apparatus.
• 1:30:58
  Pre became very concerned when you started getting mass
• 1:31:03
  mobilization and support for the leftist sympathizers that were
• 1:31:09
  drawing their inspiration from the Cubans.
• 1:31:11
  The current president today, Miss Scheinbaum, the previous
• 1:31:14
  president, AMLO, they were college kids participating in
• 1:31:18
  these movements. Against pre.
• 1:31:19
  Against pre. With pre, of course.
• 1:31:21
  I've been in power for decades. Very corrupt.
• 1:31:23
  Who's in charge now? Started as a leftist movement.
• 1:31:26
  Sympathizers from kids that were in college at the time.
• 1:31:29
  Yeah, you had and you had. To the last two presidents were
• 1:31:32
  have been that. Yes, this is dirt to dirt.
• 1:31:35
  Since 2000. No, since 2016.
• 1:31:40
  Oh, so they've had a short run? Oh yeah.
• 1:31:41
  Yeah, it's just been Miss Sheinbaum and in the previous
• 1:31:43
  guy Amela. So he had a six year run and
• 1:31:46
  she's like 2 years like the. Last eight years right now.
• 1:31:48
  Will it stay this way? No, because you have elections
• 1:31:50
  every six years. I know but like will pre come.
• 1:31:52
  Back. Well, Pre came back for a
• 1:31:54
  stretch in 20/12/2018 and then before that you had 12 years.
• 1:31:59
  A pun. It becomes part of our story
• 1:32:00
  later on with respect to the modern cartel era, but back then
• 1:32:04
  it was only Pre. That's all you dealt with and
• 1:32:07
  so. The power structure in Mexico
• 1:32:09
  became very concerned because you had large sympathetic
• 1:32:13
  leftist movements which resulted in the Mexican military reacting
• 1:32:20
  poorly and you had large scale massacres, just like wholesale
• 1:32:25
  shootings of kids, you know, 10s of thousands of they just
• 1:32:28
  started firing and then they're blaming guerrillas.
• 1:32:31
  But a lot of animosity started developing towards PRE one,
• 1:32:39
  because you had a segment of the population where the wealth
• 1:32:42
  disparity was enormous. There was no social mobility,
• 1:32:45
  like it was just poverty stricken.
• 1:32:47
  The only people making money in the north are the drug
• 1:32:49
  traffickers throughout the rest of the country.
• 1:32:52
  You know Pre was essentially extracting all of the wealth for
• 1:32:56
  themselves. In a very socialistic type way.
• 1:33:01
  In a very fascistic type way, right?
• 1:33:03
  Fascism being a political economy, not the Nazi version
• 1:33:07
  with the anti-Semitism is they just adopted the the Mussolini
• 1:33:10
  model essentially. And so they were extracting
• 1:33:12
  wealth and you had entire segments of the population who
• 1:33:16
  were sympathetic to the message that was coming out of the
• 1:33:20
  Soviet Union. And so you had a series of
• 1:33:24
  massacres throughout the 1960s. Going into the 1970's, the CIA
• 1:33:31
  started becoming deeply involved and if everybody's interested
• 1:33:35
  you can go online. It's called Operation Condor.
• 1:33:38
  An Operation Condor was a program derived devised by the
• 1:33:43
  CIA for the purposes of stopping these leftist movements in the
• 1:33:49
  Western Hemisphere. This is ultimately what knocked
• 1:33:51
  on and then to overthrow the government in Chile.
• 1:33:53
  Like I said, numerous governments got overthrown and
• 1:33:58
  the Operation Condor aspect in Mexico resulted in a
• 1:34:04
  collaboration between the intelligence services, which go
• 1:34:08
  by the Mexican acronym of DFS. So you got the DFS, which was
• 1:34:12
  their premier law enforcement and intelligence, like the
• 1:34:15
  FBICIA combo. They didn't differentiate.
• 1:34:18
  They partnered with the CIA. The DF.
• 1:34:21
  SDFS, the CIA provided the monetary support, the electronic
• 1:34:26
  equipment. Like what?
• 1:34:27
  What? What year are we talking here,
• 1:34:28
  17? 19 early 70s, early 60s, early
• 1:34:30
  70s OK. So we're in bed with the DFS.
• 1:34:33
  The DFS is in bed with the CIA for the purposes of targeting
• 1:34:37
  the communist sympathetic movements, which had two
• 1:34:44
  components, essentially college kids, young idealistic kids, and
• 1:34:49
  then the actual like poor people from the more agrarian states.
• 1:34:53
  So you had a lot of support in Sinaloa, a lot of support in
• 1:34:57
  Sonora, not the descendants of the landed Gentry.
• 1:35:01
  The majority of the population were essentially very receptive
• 1:35:06
  to this type of message. And you had it.
• 1:35:09
  What was the beginning of what were essentially guerrilla
• 1:35:11
  groups. And to bankroll their
• 1:35:14
  operations, they're bombing banks and stealing the money.
• 1:35:18
  All somewhat backed by our CIA. No, no.
• 1:35:21
  The communist groups to fund their operations.
• 1:35:24
  Yeah, OK. Right.
• 1:35:25
  So. Now the DFS is going to the CIA
• 1:35:27
  saying, hey, look, we got a problem.
• 1:35:28
  We've got these guys are. Bombing banks, They're.
• 1:35:30
  Mobilizing if if they had free and fair elections pre would
• 1:35:33
  have lost. They just kept rigging the
• 1:35:35
  elections. And it's like we may get toppled
• 1:35:39
  because you're having enormous gathering hundreds of thousands
• 1:35:43
  of people mobilizing it. They're they're marching kind of
• 1:35:45
  like their civil rights movement.
• 1:35:48
  And so you had this. Like our circa Martin Luther
• 1:35:51
  King 60. 7 Like oh ho, we got to stop that because if there's one
• 1:35:55
  thing the US government can't stand is democracy when it
• 1:35:58
  results in, you know, elections that happened that don't go our
• 1:36:01
  way. So to throttle that when they
• 1:36:04
  started working with the DFS to quell the legitimate leftist
• 1:36:10
  sympathetic movements. And make sure they don't win.
• 1:36:12
  Make sure they don't win, make sure they don't take hold.
• 1:36:15
  And to stop the guys that were legitimately gorillas because
• 1:36:18
  they're not attacking, you know, the financial structure, they're
• 1:36:21
  hitting businesses and banks. The DFS receiving this money,
• 1:36:27
  the financing and the Technical Support for operations in
• 1:36:33
  northern in northern Mexico formed arrangement with the
• 1:36:39
  federal government in Mexico. They're like, you know what?
• 1:36:41
  Under the guise of attacking these guerrilla groups and under
• 1:36:45
  the guise of thwarting these leftist sympathizers, why don't
• 1:36:49
  we consolidate the drug trade? See, this is later on.
• 1:36:54
  Like you hear now that, well, the CIA is responsible for
• 1:36:57
  creating the cartels. No, not at all.
• 1:37:00
  DFS The CIA was working with the DFS to stop the commies.
• 1:37:05
  But that was our mission. Our mission wasn't to organize
• 1:37:07
  the cartel. Playing both sides against the
• 1:37:08
  middle. We weren't necessarily trying to
• 1:37:12
  start the cartel, we were trying to stop the leftist commies from
• 1:37:16
  getting any. Stronger bankrolled in this
• 1:37:18
  operation on the side started eliminating traffickers In
• 1:37:26
  interim Sinaloa. They identified several men, one
• 1:37:30
  of whom was a former police officer was by the name of Feliz
• 1:37:32
  Gallardo, couple other of his guys.
• 1:37:37
  They were the ones ultimately selected because they were given
• 1:37:40
  an offer by the Mexican government.
• 1:37:44
  You guys are responsible for the drug trade.
• 1:37:47
  We're going to consolidate power in your 3 organizations.
• 1:37:51
  We're going to wipe out your adversaries.
• 1:37:54
  We got 50% off the top. Well, and those guys couldn't
• 1:37:57
  say yes fast because. If they didn't say yes, then the
• 1:38:00
  other guys, they're going to get knocked off and another guy's
• 1:38:01
  going to get the job. So you you say yes, play ball
• 1:38:05
  with them. You have no choice.
• 1:38:06
  But it probably is unbelievably profitable.
• 1:38:11
  This is where the Mexican government now, if they're
• 1:38:14
  getting 50%, they have to have a mechanism to audit.
• 1:38:17
  You're not going to trust the narco.
• 1:38:19
  And protect. In addition to protecting, more
• 1:38:22
  importantly, how do you keep track of?
• 1:38:24
  What? How do we forensically account
• 1:38:25
  this? Because if you know, let's say
• 1:38:27
  you're selling 500 kilos, let's say you sell 2000 kilos, you're
• 1:38:30
  going to tell them you sold 500. Well, you're also 15,000 a
• 1:38:33
  piece. So you make it 7.5 million they
• 1:38:34
  get. You're dealing with, you're
• 1:38:36
  dealing with criminals, with criminals.
• 1:38:38
  So they're not going to be necessarily well, legitimately,
• 1:38:41
  we sold this many. They're going to they're going
• 1:38:43
  to clip you. So what they're going?
• 1:38:44
  So what the Mexican government, the pre political party?
• 1:38:48
  See, last year Trump created a big brouhaha when he said there
• 1:38:53
  was an intolerable alliance between the Mexican government
• 1:38:55
  and the drug cartels. Yes, that's true, But that
• 1:38:59
  didn't start today. No, that's been around since
• 1:39:02
  the. There wouldn't be drug cartels
• 1:39:03
  if the Mexican government didn't form them.
• 1:39:05
  If the DFS didn't go, cut the deal pre.
• 1:39:07
  And the DFS, because Pre said how can we extract wealth from
• 1:39:12
  the drug trade without getting our hands dirty?
• 1:39:15
  Because at the time, Nixon's going crazy.
• 1:39:18
  War on drugs. War on drugs The first war on
• 1:39:20
  drugs. Yeah, before Ronnie, before
• 1:39:22
  rapping Ronnie started. In 1972.
• 1:39:24
  Right. He was the Nixon was the first
• 1:39:25
  one, right? So we want to extract wealth
• 1:39:28
  from the drug trade without getting our hands dirty so that
• 1:39:31
  we can go to the gringos and say, hey, we're helping you
• 1:39:33
  fight it. So give us money to fight the
• 1:39:34
  narcos while we're profiting from the narcos.
• 1:39:36
  Yeah. So give us money to fight them,
• 1:39:39
  but really we're in business with.
• 1:39:41
  Yeah, so the Mexican, they're they're double dipping.
• 1:39:43
  Did we ever figure that out? They knew from the beginning.
• 1:39:45
  Oh, so we're like. Because the CI as working with
• 1:39:47
  the DFS that's. You're right, I forgot about
• 1:39:50
  that They. Knew what they were doing, but
• 1:39:51
  we didn't care because we were more concerned with fighting
• 1:39:55
  communism. Well, the optics as well, like,
• 1:39:57
  you know, we're more worried about the optics of fighting.
• 1:39:59
  Communism. the US government has no qualms jumping into bed with
• 1:40:02
  drug traffickers as long as it's in their strategic interest to
• 1:40:04
  do so. We did so in Afghanistan with
• 1:40:06
  the Northern Alliance. We did so on numerous occasions
• 1:40:09
  throughout our history. We worked with the mafia in
• 1:40:11
  World War 2. Like they don't.
• 1:40:13
  The intelligence world is very. Different the Iran Contra.
• 1:40:17
  This becomes that's part, this came out of Operation Condor,
• 1:40:20
  right? But that's later still.
• 1:40:21
  This is back the 1970s version. And we're going to 89 on this,
• 1:40:24
  on this part, we're going to 89. Which is the demarcation point,
• 1:40:28
  right? So, so we're now we're about
• 1:40:30
  197778. 79 you've got the formation of what was the first
• 1:40:36
  network. Of which is better known as
• 1:40:39
  probably the first cartel so. To speak Yeah, the Americans
• 1:40:41
  called the the group called the Guadalajara Cartel.
• 1:40:45
  That's Cartel 1. Cartel.
• 1:40:47
  Now there was a parallel group because Cartel 1 handled the
• 1:40:51
  Pacific Coast. OK, you need Cartel 2 handled
• 1:40:54
  the Boston NY. No, no, the, the this is the
• 1:40:57
  Mexican. Oh, I'm sorry.
• 1:40:58
  The Pacific Coast of Mexico. Sinaloa, Sonora, Jalisco,
• 1:41:00
  Michoacan on the right side of the country.
• 1:41:03
  On the Gulf side, you've got the Mexican state of Tamaulipas with
• 1:41:06
  the primary city is Monterey. That's where you have the Gulf
• 1:41:09
  Cartel. Now are they working with DFS?
• 1:41:11
  Too, of course. All right, so same.
• 1:41:12
  Yeah, the Mexican model, 50% off the top.
• 1:41:14
  Same model. Yeah, of course.
• 1:41:15
  Then we call them Cartel 1 and 2.
• 1:41:17
  Yes, of course you got sure. What are the hotter cartel and
• 1:41:19
  the Gulf cartel? And that's all you got.
• 1:41:21
  That's all you. Of course it's controlled
• 1:41:23
  because PRI is a uniform entity. They're working with the DFS.
• 1:41:28
  The DFS has got two different cartels.
• 1:41:29
  The political class gets 50% off the top.
• 1:41:32
  So the primary beneficiaries of the drug trade since its
• 1:41:35
  inception have been the political, the ruling elite.
• 1:41:38
  In Mexico, we focus on the narcos.
• 1:41:43
  Well, you're missing the majority of the picture, which
• 1:41:47
  is the people that orchestrate and organized it were the
• 1:41:52
  Mexican government. If you don't understand this
• 1:41:53
  history, you don't understand why the structure that exists
• 1:41:55
  today are in place. And so when the Mexican
• 1:41:59
  government under the pre political party which was a
• 1:42:01
  hegemonic political power, worked with the DFS to create
• 1:42:05
  the cartels so that the government can audit the amount
• 1:42:07
  of product being sold to make sure they got their cut.
• 1:42:10
  All while trying to work with the United States about stopping
• 1:42:15
  out with the war on drugs. And working with we're getting,
• 1:42:17
  they're getting money from the CIA to help counter, then it's
• 1:42:20
  been working with the American government to stop the narcos.
• 1:42:23
  Meanwhile, the DFS are literally using their trucks to move the
• 1:42:26
  product to the border 'cause they're just getting waved
• 1:42:30
  through the border. They're coming into the DFS
• 1:42:32
  trucks because, you know, marijuana is a bulky product.
• 1:42:35
  It's not like the other. You can smuggle.
• 1:42:37
  Right. So you had industrial scale?
• 1:42:41
  And and and and large volumes, I mean industrial scale
• 1:42:45
  production. And transportation facilitated
• 1:42:48
  by the Mexican intelligence agencies.
• 1:42:50
  It wasn't narcos who put that together.
• 1:42:51
  DFS. It was their version of the CIA
• 1:42:56
  who got trained in the United States.
• 1:42:58
  Who was working with the CIA? Yeah, again, not involved in the
• 1:43:01
  drug trade, but these were trained intelligence operatives
• 1:43:06
  who were the progenitor of the drug trade.
• 1:43:10
  They formalized it and at the same time they formalized the
• 1:43:13
  drug trade in Guadalajara because you didn't want the guys
• 1:43:16
  in Sinaloa backward ass Countryville.
• 1:43:20
  So they said we're going to move you to Guadalajara, we can
• 1:43:22
  protect you there better. Well, first of all, it's a
• 1:43:24
  cosmopolitan city. At the time was the second
• 1:43:26
  largest city in Mexico. It's the heart of Mexican
• 1:43:29
  culture. But more importantly, if you put
• 1:43:31
  them all in one place, you're going to be able to audit the
• 1:43:34
  activity. Regulate them.
• 1:43:35
  Audit. Yeah, now we're going to.
• 1:43:37
  Be able to make sure that they get their cut off the top.
• 1:43:39
  And so 15 years later or a decade later, when George W
• 1:43:42
  George HW Bush was saying Felicia Gallardo generates a a
• 1:43:45
  billion dollars a year, No, he doesn't 500 million go to the
• 1:43:49
  political class out of the remaining 500 million they got
• 1:43:54
  to pay for the product. And the payouts?
• 1:43:56
  And the payouts to the local guys.
• 1:43:58
  So if Gallardo's making 100 million a month at the end, he's
• 1:44:02
  making 7. After you cut it all up.
• 1:44:04
  After you cut it all. Up and with the with the with
• 1:44:07
  the largest creditor being the government.
• 1:44:09
  The the federal authority pre, state and local officials pre at
• 1:44:13
  that point dominated by PRE. In fact, in the 1990, well,
• 1:44:17
  there was a major scandal when the political president and name
• 1:44:19
  was Salinas. His brother was discovered to
• 1:44:21
  have hundreds of millions of dollars in a Swiss bank account.
• 1:44:24
  That was the Mexican president's cut from the drug trade.
• 1:44:29
  It's always been this way. In Mexico, the primary
• 1:44:33
  beneficiary of the drug trade have been the political class.
• 1:44:36
  Is it still that way? Yes, of course, but it's taken a
• 1:44:39
  different color. And we're going to get into.
• 1:44:41
  That we're going to get that into second part, second part,
• 1:44:43
  but at this point. At this point, they're knee deep
• 1:44:46
  in it. They're.
• 1:44:47
  There is no. They're 50% partners.
• 1:44:49
  It's not, it's not, it's not the independent contractors all over
• 1:44:53
  Sonora and Sinaloa. It's like, no, we're going to
• 1:44:55
  consolidate for audit purposes. We're going to structure it.
• 1:44:59
  They also create the parallel money laundering operation.
• 1:45:02
  That money laundering operations in Guatemala has been in place
• 1:45:04
  for over 50 years. It's not there to launder the
• 1:45:08
  money for the narcos. It's to take the money from the
• 1:45:10
  narcos and launder it to the political class.
• 1:45:12
  For the government. That's they don't take duffel
• 1:45:15
  bags of cash, but that operation is still going today.
• 1:45:19
  Oh yeah, the money laundering, Money laundering, they got it,
• 1:45:21
  They got it. They got the government's got to
• 1:45:22
  clean. It this isn't poncho with the
• 1:45:24
  3rd grade education. These are guys are financial
• 1:45:26
  services professional in Guadalajara.
• 1:45:28
  I've known a number of these men right?
• 1:45:29
  You'd be you'd be surprised how many of them went to USCI.
• 1:45:33
  Was going to say probably coming from unbelievably prestigious
• 1:45:37
  universities and colleges on how to finance.
• 1:45:42
  It's not poncho with a third grade.
• 1:45:43
  Education, that's right. No, this is this is they adopted
• 1:45:45
  with essentially a private equity private credit model
• 1:45:49
  today. Back then, of course, it was
• 1:45:52
  just state sponsored criminal activity, like nobody could
• 1:45:56
  cross what we called the Guadalajara cartel because the
• 1:46:00
  DFS was their protection. What better?
• 1:46:03
  What better people to be in bed with?
• 1:46:05
  And so you had the development of the trade under the auspices
• 1:46:11
  of the Mexican government with pre extracting wealth from the
• 1:46:15
  for the political party individual pull apart.
• 1:46:19
  You know, political figures were corrupt.
• 1:46:22
  Local guys are getting paid off. And so it's.
• 1:46:24
  Police chiefs, Mayors. You know, when you hear the
• 1:46:27
  American authority say, you know the narcos are corrupting
• 1:46:30
  Mexican political officials. Now the Mexican political
• 1:46:33
  officials aren't taking bribes. They're extorting the narcos.
• 1:46:39
  They don't have a choice. You're going to give us this
• 1:46:41
  percentage or you get removed and the next guy takes the spot.
• 1:46:45
  Next guy slides in. And the guys in Guadalajara knew
• 1:46:47
  that because they were able to consolidate power because the
• 1:46:50
  DFS wiped out their competitors like they had no qualms while
• 1:46:53
  taking people and throwing them out of helicopters.
• 1:46:56
  Really. Sure, of course that's they
• 1:46:58
  were. They were vicious.
• 1:46:59
  They were doing it with the college kids, taking them in
• 1:47:01
  helicopters, put them out over the Pacific and throwing them
• 1:47:03
  up, all those terrible what they did with the kids.
• 1:47:06
  So now you've got the La Plaza system of criminal governance
• 1:47:09
  where the Mexican government created the first two cartels,
• 1:47:15
  the larger the two Guadalajara cartel, one had such expansive
• 1:47:19
  territory that they had to create regional outposts.
• 1:47:26
  So you had one in Tijuana, one in Sonora, one in Juarez went in
• 1:47:33
  Sinaloa. These were called plazas.
• 1:47:37
  A Plaza is a geographical territory where a specific narco
• 1:47:42
  is assigned responsibility for governing that territory.
• 1:47:47
  He handles relationships with all the other narcos in that
• 1:47:50
  territory. So the Mexican senator, he talks
• 1:47:52
  to one guy, he doesn't talk to 100.
• 1:47:55
  Talks to 1. The general talks to one guy,
• 1:47:58
  the political representative from the party.
• 1:48:00
  They deal with one person. That guy is deputized.
• 1:48:05
  So when the US government says this is the most powerful narco
• 1:48:08
  in this particular area, what they're saying is he's the guy
• 1:48:12
  that's authorized by the government to regulate the
• 1:48:15
  trade. And to talk to us.
• 1:48:17
  Because he collects the taxes. If you want permission to
• 1:48:21
  operate, you got to pay into the La Plaza system.
• 1:48:23
  If you don't pay into the system, you could target it.
• 1:48:26
  And so the entire drug trade was created by Dupree and DFS and
• 1:48:32
  structured and organized in such a way where they can tax the
• 1:48:37
  narcos without, you know, you can't legally tax cocaine or
• 1:48:44
  marijuana. They didn't want to pass the
• 1:48:46
  legislation, so they needed an informal tax collector.
• 1:48:50
  That's the cartel boss. Who kicks up to the financial
• 1:48:54
  guy? He's responsible for that area,
• 1:48:57
  so he collects everything. So when you say, well, Tropical
• 1:48:59
  Guzman was the head of the scene or no, he wasn't.
• 1:49:03
  He was the guy designated by Feliz Callardo.
• 1:49:05
  You handled this area. Yeah.
• 1:49:06
  Well, I was going to say is. He's just a coordinator.
• 1:49:09
  He was just a regional guy. He's just a regional guy that
• 1:49:12
  collected the taxi. He had no authority over them.
• 1:49:15
  See everybody? Thinks he's the largest scale
• 1:49:17
  of. All.
• 1:49:18
  He's a region. I mean by by your accounts a
• 1:49:20
  regional. He was a regional representative
• 1:49:22
  in the 19 in the 1980s for Feliz Callardo.
• 1:49:25
  And we made him Public Enemy number one.
• 1:49:28
  Was it just window dressing? The narrative was all window
• 1:49:30
  dressing. Sure.
• 1:49:31
  But what I'm saying is like, OK, if you're that's the average
• 1:49:34
  American, they'd be like, OK, Chapo.
• 1:49:36
  And Chapo, whatever. And so you're like, he's the
• 1:49:38
  biggest ever yet underground tunnels, whatever he as you
• 1:49:41
  describe it, he was just a regional guy.
• 1:49:43
  When he worked for Felice Cairo, he was the regional Lieutenant
• 1:49:47
  in Sinaloa, so that meant he had to work with all the other
• 1:49:51
  locals. Hey Mile, I need your cut.
• 1:49:54
  He's just, you know, the go between.
• 1:49:57
  He's a collector. He's just not the enforcer.
• 1:50:01
  He's just the designated person responsible for this territory.
• 1:50:04
  So the Guadalajara cartel is up and running.
• 1:50:07
  The money laundering network is up and running.
• 1:50:11
  Marijuana's coming into the US, Heroin's coming into the US Los
• 1:50:15
  Angeles serves as the primary distribution hub because
• 1:50:21
  Sinaloa, the the regional outposts are smuggling product.
• 1:50:27
  But Sinaloa was the cultivation area.
• 1:50:30
  So you had organizations from Sinaloa who had distributors in
• 1:50:34
  LA because the guys in Sinaloa are growing the poppy,
• 1:50:39
  extracting the gum, producing the heroin.
• 1:50:42
  Already been established. Cultivating the marijuana.
• 1:50:44
  So the Sinaloa Plaza had actual distributors on the American
• 1:50:50
  side in addition to smuggling. Because Sinaloa, unlike the
• 1:50:55
  other groups, is nowhere near the border.
• 1:51:00
  The all of the other nominal all the other plazas which later on
• 1:51:04
  became our cartels, are on the border.
• 1:51:07
  Border towns. Whereas there are states that
• 1:51:11
  are adjacent to the American border, Saint Louis got to go
• 1:51:14
  1000 miles. That's a very different dynamic.
• 1:51:19
  Well, more insulated. Well, not just that, but it's
• 1:51:22
  more importantly, it's requires a different organizational
• 1:51:25
  structure and we'll get into that in a little bit.
• 1:51:27
  But at the beginning it was the regional outpost for the
• 1:51:31
  Guadalajara network. But because Sinaloa had the
• 1:51:35
  production of the weed and heroin, they had to have a
• 1:51:39
  distribution element in LA. So you had Sinaloa traffickers,
• 1:51:44
  distributors who were selling product in LA for producers in
• 1:51:51
  actual Mexico. In Sinaloa itself in the late
• 1:51:54
  1970s, you had the prominence of cocaine, particularly in the
• 1:52:02
  late 1970's. The, you know, was it the
• 1:52:06
  Saturday Night Fever? Studio 50.
• 1:52:08
  Four. That era.
• 1:52:10
  Very, very glamorous. Very.
• 1:52:12
  Glamorous, very chic. And so going into the 1980s, you
• 1:52:19
  had the what were legitimately cartels in Colombia.
• 1:52:25
  They controlled the production, they would had the
• 1:52:29
  transportation, they had the distribution.
• 1:52:32
  Now what people don't appreciate is the fact that coke going into
• 1:52:38
  the 1980s was a rich man's drug. The in in 1982 when Reagan
• 1:52:46
  declared the modern war on drugs, the price of a gram in
• 1:52:52
  2026 dollars would have been $600.00.
• 1:52:55
  Today you go in LA, 20 bucks, but that's how exclusive.
• 1:53:03
  And that was part of the problem because it really took hold
• 1:53:07
  within the culture, whether it was in LA partying in Beverly
• 1:53:12
  Hills, partying on Wall Street, partying, you know, the Miracle
• 1:53:15
  Mile in Chicago, the exclusive upper class showed there.
• 1:53:21
  It was like popping bottles of Cristal later.
• 1:53:24
  And so you have. It was like a status.
• 1:53:26
  It was a very status thing and so it became very glamorous and
• 1:53:34
  the Colombians of course, dominated that market.
• 1:53:37
  They were producing it in Colombia, taking it to the
• 1:53:41
  Caribbean and then taking it from the Caribbean into South
• 1:53:45
  Florida. And so it was a movie with Tom
• 1:53:49
  Cruise. They were flying the little
• 1:53:50
  planes in there. OK.
• 1:53:51
  That was essentially the operation.
• 1:53:53
  You had American pilots taking at that last leg from the
• 1:53:57
  Bahamas, from these little islands, these chains, the
• 1:54:01
  little Caribbean islands. And they're flying that last leg
• 1:54:04
  into S floor little sleepy airports outside of Miami.
• 1:54:07
  Miami was essentially the cocaine hub for the 1980s.
• 1:54:14
  It was where the importation occurred and the distribution
• 1:54:18
  locally in Miami and going up to, you know, New York, Chicago,
• 1:54:25
  like there was a wealthy man's. Product of much like the movie
• 1:54:28
  Scarface I mean, you know, I know that that was probably
• 1:54:31
  Hollywood at its finest with Al Pacino, but you know, he was a
• 1:54:36
  was a Cuban immigrant who basically became a large.
• 1:54:41
  A large scale that was the cocaine cowboy era for for Miami
• 1:54:46
  and. And a lot of people made a lot
• 1:54:48
  of money, didn't they? Enormous amounts of money,
• 1:54:50
  particularly because remember the time the profits on a kilo
• 1:54:54
  in 1980 dollars was $25,000 per profit.
• 1:55:00
  Per unit profit, yes. Wow.
• 1:55:04
  And so in 1980 dollars to today you're talking, you know 100
• 1:55:07
  hundred grand profit per key per key and what's essentially of
• 1:55:11
  you know it's an agricultural product.
• 1:55:13
  So let me ask. You a question, Pete.
• 1:55:14
  Like it because you know, I know, you know, so like in the
• 1:55:17
  1980s, if you're looking at 25,000 profit, eight 1980s
• 1:55:22
  dollars, which could be potentially 100,000 today.
• 1:55:25
  What were some of the really like we talked about it in the
• 1:55:30
  other episode. You call them level 1
• 1:55:31
  wholesalers. What what would what would the
• 1:55:33
  volume like a level 1? In in 1982, when Reagan declared
• 1:55:38
  the modern war on drugs, there was on average 4 tons a month
• 1:55:42
  coming to the United States, nearly all of it coming in
• 1:55:46
  through Miami. Four times.
• 1:55:48
  Four times, Like when we were growing up, Miami Vice was the
• 1:55:51
  number one TV show. Absolutely.
• 1:55:52
  Yeah. That you know, again, Scarface
• 1:55:54
  in the early 80s. All based off of that.
• 1:55:55
  All based off of that particular.
• 1:55:57
  And that era, at that era, they were doing about four tons a
• 1:56:00
  month. 4 tons a month and so and it was being then disseminated
• 1:56:04
  to 1st tier wholesale level customers.
• 1:56:07
  So you had the wholesaler in Colombia, the Colombian
• 1:56:11
  wholesaler in Miami, and he's dealing with the Cuban or he's
• 1:56:14
  dealing with whomever in Los Angeles.
• 1:56:17
  You had a separate, like the guys in Miami were primarily the
• 1:56:22
  guys out of Medellin. Now you had a second cartel out
• 1:56:26
  of Colombia, which was the Cali cartel.
• 1:56:29
  They become important later on because they're the ones that
• 1:56:31
  start operating out of LA. But initially in the 80s it was
• 1:56:35
  Miami and you had the route going from Colombia to the
• 1:56:40
  Caribbean into Miami and then distribution to 1st your host
• 1:56:44
  level customers. Now independent of the drug
• 1:56:49
  trade, you had the anti commie effort still going on Operation
• 1:56:53
  Condor. That's right.
• 1:56:55
  That's right. And so you had the revolution in
• 1:56:58
  Cuba in 59, but then you had American government toppling
• 1:57:02
  regimes. Berlin Wall.
• 1:57:05
  No, no, this is way before that. Chile in 1973.
• 1:57:08
  Brazil. Guatemala.
• 1:57:10
  Honduras. In 1979 the second Latin
• 1:57:15
  American country fell to the commies.
• 1:57:18
  Nicaragua. Oriega.
• 1:57:21
  This no, no, he was in Panama, He was.
• 1:57:22
  In Panama. OK, this is you're way better
• 1:57:25
  history than me, Pete. Yes, and this was in the
• 1:57:26
  Sandinistas took over. That was and see, people don't
• 1:57:30
  realize the significance of that.
• 1:57:32
  That was realistically the second Tommy regime to be taken,
• 1:57:36
  which scares the hell out of us, right?
• 1:57:38
  Well, not just really close to. Home.
• 1:57:39
  Yeah, Not just that, but don't forget we had lost the civil,
• 1:57:42
  the Vietnam War. Right.
• 1:57:44
  So we lose to the commies well. First of all, you go back to 59
• 1:57:47
  and they take on Cuba. They.
• 1:57:48
  Take on Cuba, then they've all these movements are getting.
• 1:57:52
  The CIA is going around putting out all these fires.
• 1:57:54
  Right. With the right wing American
• 1:57:58
  puppet regimes engaging in massacres up and down the Latin
• 1:58:01
  American landmass to try to quell these movements.
• 1:58:07
  I'm not suggesting the CIA participating in the massacres.
• 1:58:09
  They partnered with the local intelligence and law enforcement
• 1:58:12
  groups that themselves were doing the massacres.
• 1:58:15
  And so the old plausible deniability concept.
• 1:58:19
  And so you had Vietnam fall. Which was a disaster.
• 1:58:24
  Disaster. Afghanistan get invaded by the
• 1:58:28
  Commies 79. Iran gets knocked off.
• 1:58:33
  We lose our puppet. The Shah flees.
• 1:58:36
  We have our Iran hostage. The whole Iran hostage situation
• 1:58:39
  4. 144 days. Nicaragua, So the Commies are
• 1:58:44
  still on the March. Big time.
• 1:58:48
  And now the United States government going into the
• 1:58:50
  1980's, the Reagan administration, very
• 1:58:54
  conservative, very anti commie. They wanted to overthrow the
• 1:59:00
  Sandinista regime in Nicaragua. The problem, however, was that
• 1:59:06
  the country didn't have any appetite for any more foreign
• 1:59:13
  civil wars. Like, let them just do whatever
• 1:59:16
  the hell they're going to do. You know, we had a very rough
• 1:59:19
  decade in the 70s because you had not only the Vietnam issue,
• 1:59:22
  you also had Watergate, which was a tremendous loss of
• 1:59:24
  confidence in the American government.
• 1:59:25
  More importantly, you had coming off of the gold, coming off of
• 1:59:29
  the gold standard resulted in the creation of the Petro
• 1:59:32
  dollar, which resulted in massive inflation.
• 1:59:38
  And then you had the OPEC collection of countries embargo
• 1:59:44
  the US for oil over the Israel circumstances.
• 1:59:49
  So now you had the price of oil skyrocketing, you know, went
• 1:59:52
  from $3 a barrel to $12.00 a barrel.
• 1:59:55
  Then we had the mortgage crisis. Remember that you got home.
• 1:59:58
  Home mortgages back in 7879 were like 19 and. 20% because of the
• 2:00:02
  interest, because inflation was so high, they had to bring in
• 2:00:05
  the ability to crush the inflation.
• 2:00:07
  You had to increase the interest rates.
• 2:00:08
  So it was just a very bad challenge. 70s were tough.
• 2:00:12
  And that's where the term cartel takes on its connotation because
• 2:00:18
  you had the 2 oil embargoes by OPEC, which was the, you know,
• 2:00:22
  oil, oil cartel, oil cartel. That's where the term enters
• 2:00:25
  into the American Lang vocabulary zeitgeist,
• 2:00:28
  essentially with a negative connotation because prior to the
• 2:00:32
  1970s, no one ever called drug groups cartels.
• 2:00:36
  They were syndicates. You didn't really hear that
• 2:00:38
  word. The mafia was called a
• 2:00:39
  syndicate. The organization.
• 2:00:42
  If it's a collection of organizations, it's a syndicate.
• 2:00:44
  Or a racket or something like that, you know?
• 2:00:46
  Well, the rackets, the nature of the activity, the native, the
• 2:00:49
  highly defined. People.
• 2:00:51
  Syndicates well after the 1970s people associated cartel with
• 2:00:58
  Arabs. Bad, bad, bad, bad.
• 2:01:01
  So Reagan, very cleverly in 1982, takes that term and
• 2:01:07
  marries it to the narcos. Because he went bad.
• 2:01:10
  Both in Colombia and in. So Pablo and his boys.
• 2:01:15
  But the American government wasn't.
• 2:01:18
  And this is the misconception people have.
• 2:01:20
  They weren't targeting the narcos.
• 2:01:23
  We had just lost the second country in Latin America.
• 2:01:26
  Reagan had a hostile Congress. He couldn't get his legislation
• 2:01:31
  through to get the financing, the bankroll, the freedom
• 2:01:36
  fighters contras. Well, with an inability to not
• 2:01:43
  only get the legislation, Congress then passes a law
• 2:01:45
  called the Boland Amendment. You're forbidden from spending
• 2:01:48
  any money. No appropriation and no American
• 2:01:53
  money can be spent helping the quote UN quote freedom fighters,
• 2:01:58
  the guys that were trying to topple the democratically
• 2:02:00
  elected government. So what happens then?
• 2:02:03
  Iran Contra. Oh yeah, but before you get to
• 2:02:07
  Iran. Contra that, that.
• 2:02:09
  Hold on, Pete, you just tied it. Hold on.
• 2:02:11
  You just tied it all together for me.
• 2:02:12
  Yes, you just tied it. I mean, I didn't know how we got
• 2:02:16
  to the Iran Contra out of just thin air.
• 2:02:19
  I didn't really know. Iran Contra becomes very
• 2:02:21
  important to this story. But before Iran Contra, Reagan
• 2:02:26
  was trying to persuade Congress saying, hey, we need the money
• 2:02:29
  to go and topple this regime. Not doing it well, they needed a
• 2:02:34
  pretext to be able to create military bases in Latin America
• 2:02:42
  to make sure the other countries don't fall.
• 2:02:45
  You just had a Honduras fall. You just had Nicaragua fall.
• 2:02:48
  You had hot spots in Honduras, Guatemala.
• 2:02:51
  Mexico was popping off left and right.
• 2:02:54
  And so instead of being able to persuade a hostile Congress to
• 2:02:58
  give the money for the purposes of stopping the commies, they
• 2:03:02
  said, what we're going to do is we're going to declare a war on
• 2:03:05
  drugs, wink, wink, And we're going to assist our partners in
• 2:03:11
  the region take on these bad narcos.
• 2:03:16
  Well, the military base in Guatemala today that's used by
• 2:03:19
  the 7th Special Forces Group created in 1982, it wasn't put
• 2:03:25
  there to stop narcos. It was there to make sure that
• 2:03:27
  our puppets in Guatemala didn't get toppled.
• 2:03:30
  The drug war provides the cover to move military assets into
• 2:03:35
  Latin American countries without looking like we're there to
• 2:03:39
  support. The dictators without looking
• 2:03:41
  like we're there to. Support up the government,
• 2:03:43
  right? This is what we put in Noriega.
• 2:03:45
  He's our boy in Panama. Well we had American puppets in
• 2:03:49
  all these countries that we needed to support militarily
• 2:03:53
  without saying we're getting involved in anti commies in
• 2:03:56
  government. We're doing there to stop the
• 2:03:58
  narco. So as we are really entrenched
• 2:04:01
  into their government, we are under the guise of we're there
• 2:04:05
  to start to partner. With them to take on the bad
• 2:04:07
  Columbia. To stop.
• 2:04:08
  To stop the drugs. Why the effort was never geared
• 2:04:11
  towards stopping the drugs. It was to stop the government
• 2:04:15
  from toppling to lift the leftist sympathizers.
• 2:04:18
  So now we had a basis to create basis now where there was a a
• 2:04:22
  good faith basis to say we're going to send helicopters, we're
• 2:04:25
  going to send equipment, we're going to send material, we're
• 2:04:28
  going to train. You got people from the special
• 2:04:31
  forces from each of these Latin American countries come up every
• 2:04:33
  year to the United States. They train at Fort Bragg.
• 2:04:36
  You've got, like I said, seven special forces group in
• 2:04:39
  Guatemala. They train these guys,
• 2:04:41
  Americans. Americans.
• 2:04:42
  Yeah, a lot of those guys later on go to work for the cartels.
• 2:04:45
  That's the gunman. Oh, really?
• 2:04:47
  We haven't gotten there yet. And so, but at the beginning,
• 2:04:50
  you had a pretext. That's why, when you say, well,
• 2:04:54
  when Reagan declares the modern war on drugs in January 1982, he
• 2:04:57
  gives a speech in Washington, DC.
• 2:04:59
  State of the Union, address it. Wasn't just a.
• 2:05:01
  It was a one off. One off.
• 2:05:03
  There's 4 tons a month coming into the US on average,
• 2:05:07
  according to the DA, there's 42 to 48 tons coming in a year.
• 2:05:10
  So let's just take the high number that makes it easy for
• 2:05:13
  the math. It's 4 tons a month coming into
• 2:05:14
  the country. By the time I get charged, I'm
• 2:05:16
  my prosecution, the drug kingpin prosecution initiated in 1997.
• 2:05:21
  In that 15 year period, it went from 4 tons a month to 80 tons a
• 2:05:24
  month, a 20 fold increase. That's not really much a war on
• 2:05:27
  drugs, is it? And it was never a war on drugs.
• 2:05:30
  Right. Correct.
• 2:05:31
  Because had it been you? Wouldn't they wouldn't take up
• 2:05:33
  the you wouldn't. Nixon did.
• 2:05:35
  You would have said. When Nixon declared his war on
• 2:05:36
  drugs, the first one in 7280% of the money, 75 to 80% of the
• 2:05:40
  money went to curbing demand. It wasn't law enforcement.
• 2:05:46
  There are there are no markets without demand.
• 2:05:50
  Nixon had a legitimate war on drugs.
• 2:05:53
  By allocating the resources to curb demand with a little bit of
• 2:05:57
  resources dedicated to law enforcement, Reagan flipped the
• 2:06:00
  script. He says we're going to stop
• 2:06:01
  supply not because they were trying to supply.
• 2:06:04
  They had to put bases in Latin America.
• 2:06:06
  To watchdog the government. The watchdog to make sure that
• 2:06:09
  the commies don't knock them off because we lost Cuba, we lost
• 2:06:13
  Nicaragua. Honduras was a hot spot.
• 2:06:16
  They're all hot spots, just Guatemala, El Salvador, Panama,
• 2:06:19
  they're all bad. Mexico bad.
• 2:06:22
  And we can assure that that doesn't happen when we got boots
• 2:06:25
  on the ground. We have boots on the ground and
• 2:06:27
  Congress appropriated the money as counter narcotics operations.
• 2:06:31
  Or on drugs. Which has been the template used
• 2:06:35
  by the US government now for decades.
• 2:06:37
  So now back in the late 70s, early 80s, you had the creation
• 2:06:42
  of the DEA and the unleashing of the DEA for the purposes of
• 2:06:48
  stopping the quote, UN quote drug flow on the military side.
• 2:06:53
  It allowed for the militarization of Latin American
• 2:06:55
  countries without having to appropriate it for the purposes
• 2:06:59
  of fighting commies because we were sick and tired of spending
• 2:07:01
  money down that rat hole like we did in Vietnam.
• 2:07:05
  So they just pivoted, just retitled.
• 2:07:08
  Yes. Now, on the American side, when
• 2:07:11
  Reagan declared the modern war on drugs, they created what was
• 2:07:14
  known as the South Florida Task Force.
• 2:07:18
  And So what? And this was if you're going to
• 2:07:23
  do what they did, this is the most logical thing to do.
• 2:07:27
  It was foolish if you thought it was going to actually work, but
• 2:07:31
  they weren't trying to stop the drug flow.
• 2:07:36
  So when they create the South Florida Task Force, they want to
• 2:07:38
  disrupt the importation of the product.
• 2:07:41
  This is the typical type of thinking that guys from the
• 2:07:43
  Harvard Kennedy School of Government come up with these
• 2:07:45
  harebrained ideas. And so they take 1000 agents
• 2:07:52
  from all over the country, put them in Miami.
• 2:07:54
  This is the Miami Vice days. 1000 agents. 1000 agents not In
• 2:07:58
  addition to customs officers, they brought in the Coast Guard.
• 2:08:02
  They have a full all hands on deck to disrupt the drug flow
• 2:08:05
  and they start succeeding. Modern war on drugs gets
• 2:08:11
  declared in January of 82. June of 84.
• 2:08:14
  You have Reagan official administration, high-ranking
• 2:08:18
  people making statements on background to the Washington
• 2:08:22
  Post indicating that we had, quote, UN, quote, broken the
• 2:08:25
  backs of the Colombian cartels. That's an 84.
• 2:08:29
  When you hear guys that went to Harvard and Stanford and Yale
• 2:08:32
  talk about outsmarting the guy with the 3rd grade education,
• 2:08:35
  you know you're about to get fucked.
• 2:08:38
  Because they don't appreciate the adversary.
• 2:08:42
  Because to them, they can't even contemplate the possibility that
• 2:08:48
  the illiterate Colombian or the illiterate Mexican.
• 2:08:52
  Found a new way. Or the illiterate goat herder in
• 2:08:55
  Afghanistan could possibly outsmart them.
• 2:09:01
  And so the Colombians, as they started suffering losses because
• 2:09:05
  the American interdiction efforts worked for the first
• 2:09:07
  couple years, they go from losing 10% of the loads, like
• 2:09:12
  50% of the loads, 60% of the loads loss, loss.
• 2:09:16
  Yeah, the interdiction efforts started scaling up.
• 2:09:18
  Very impressive. Well, if you show me an
• 2:09:22
  incentive structure, I'll show you the operation and the
• 2:09:27
  effect. Once the Colombians started
• 2:09:31
  suffering these losses, what did they have to do to make up the
• 2:09:35
  difference? Increase production.
• 2:09:38
  So they went from 4 tons a month to 8 tons a month, 10 tons a
• 2:09:42
  month, 12 tons a month. You're incentivizing the
• 2:09:46
  adversary to do the very thing you don't want them to do.
• 2:09:49
  Scale up. Right, right.
• 2:09:52
  So now, so long as they're intercepting 5060% of the loads,
• 2:09:54
  the scale up maintains the equilibrium and game theoretic
• 2:09:58
  terms is the the Nash equilibrium.
• 2:10:01
  Well, that equilibrium breaks because the Colombians are like,
• 2:10:07
  you know what we're through dealing with South Florida.
• 2:10:10
  The gringos are getting too effective.
• 2:10:13
  They reach out to Feliz Callardo.
• 2:10:16
  Comes the Mexicans. Like, hey, you guys already have
• 2:10:18
  a pre-existing operation smuggling in tons of weed, the
• 2:10:22
  smuggling in large quantities of heroin.
• 2:10:24
  That dates back way before we were.
• 2:10:26
  Doing it, Yeah, you guys have. This network has been
• 2:10:28
  operational on its own for 10 years and you're protected by
• 2:10:31
  the Mexican government. Pre with pre with the DFS kicker
• 2:10:37
  with the CIA backing. So now they come to them and
• 2:10:40
  say, hey, we'll pay you to haul our lows.
• 2:10:44
  We'll bring them from Colombia to Mexico.
• 2:10:47
  You guys transport it into the country and just drop it off the
• 2:10:50
  Colombian opera operatives on the US side.
• 2:10:52
  That's it. Well, your girl's like, yeah,
• 2:10:56
  sure, OK, home where you get to pay US thousand a key.
• 2:10:59
  Great. So now the Colombians begin to
• 2:11:04
  pivot from South Florida where before you had 95% of the
• 2:11:07
  product coming in through a choke point.
• 2:11:13
  Like instead of disrupting the inflow, had they wanted to
• 2:11:16
  actually disrupt, you could have targeted the first tier
• 2:11:18
  wholesale level customer, not the cartel distributor in Miami,
• 2:11:22
  target the American customers. Because the Colombians, so long
• 2:11:27
  as they controlled the production, transportation and
• 2:11:30
  distribution were a monopoly. And no monopoly in the history
• 2:11:35
  of capitalism has ever flooded the market.
• 2:11:39
  They always restrict supply in order to artificially inflate
• 2:11:42
  their profit margins. And so if you're a government
• 2:11:46
  trying to disrupt the drug flow, why would you attack the
• 2:11:49
  individuals who have a financial incentive to minimize the amount
• 2:11:53
  of product coming to the states? It's only 4 tons a month.
• 2:11:55
  That was a lot by 82 standards. By 97, it's 80 tons.
• 2:12:01
  Why? Because you disrupted the
• 2:12:03
  incentive structure, we should have just left the Colombians in
• 2:12:06
  place. Because it would have stayed
• 2:12:07
  potentially a little bit more maybe, maybe a.
• 2:12:09
  Little bit more to increase the interruption.
• 2:12:11
  OK, we increased a little bit of production, but so long as they
• 2:12:15
  were able to keep their fat profit margins, they're never
• 2:12:17
  going to flood the market again. Government bureaucrats who
• 2:12:22
  profess to be capitalist, who don't know how markets work.
• 2:12:27
  And so you incentivized your adversary to scale up
• 2:12:30
  production, then you incentivize the adversary to pivot a course,
• 2:12:35
  correct. If the Miami operation is going
• 2:12:38
  to get curtailed, fine, we'll go to Mexico.
• 2:12:40
  Approximately what year did they make that pit?
• 2:12:42
  Right around 80. 484. 83 they started feeling out 84 just when
• 2:12:47
  I'm in high school. And was there ever a time, Pete,
• 2:12:49
  where there were like DEA agents in Miami, like the Maytag sales,
• 2:12:54
  the Maytag repair guy that just they didn't have any.
• 2:12:57
  They didn't have stuff. They didn't have nearly the
• 2:12:59
  volume coming in, which means they don't not going to have
• 2:13:02
  near the volume of busts. They start looking at their
• 2:13:05
  numbers and be like man, something's.
• 2:13:06
  Happened by the mid 90s. It it it.
• 2:13:08
  Los Angeles has been the drug trafficking capital in the
• 2:13:13
  United States since at least 2000.
• 2:13:15
  And before that, you had other cities we're going to get to.
• 2:13:17
  That's Part 2. That's Part 2.
• 2:13:18
  But at the beginning you got the 80. 4.
• 2:13:22
  The Pivot 8384, you got the guys in Guadalajara collaborating
• 2:13:26
  with the Colombians to now facilitate the smuggling of
• 2:13:30
  their product into the US They're not distributing in the
• 2:13:33
  US. And they're still and the
• 2:13:34
  Mexicans are still doing the weed.
• 2:13:36
  They're still doing that, if any.
• 2:13:37
  No, no. And opium derivative heroin,
• 2:13:39
  right. But at this point, but.
• 2:13:41
  They're like, we'll take on a new product, they're just taking
• 2:13:44
  on a new. Product, they're just hauling.
• 2:13:46
  They're simply transportation. That's why later on it becomes
• 2:13:49
  important. In the United States, they are
• 2:13:51
  primarily A logistical company. They bring the product across
• 2:13:57
  the border, deliver it to a hub. That's it.
• 2:14:00
  They're done. The number of operatives that
• 2:14:02
  are required for transportation, it's very small.
• 2:14:06
  You got a six or seven man cell. That's the entire fucking
• 2:14:08
  transportation team in LA. It's not hundreds, it's not
• 2:14:12
  thousands, It's a half a dozen fucking guys.
• 2:14:16
  Now, they work with American truck drivers, but the truck
• 2:14:18
  drivers aren't cartel guys. They're Americans.
• 2:14:22
  The guys that unload the trucks and load the trucks, they're not
• 2:14:24
  cartel guys. They're worker bee.
• 2:14:25
  They get them from Home Depot. And so you have a half a dozen
• 2:14:30
  cartel men that oversee the transportation office.
• 2:14:35
  And it's been this way since its inception because primarily it
• 2:14:38
  was transportation. So now Feliz Gallardo gets the
• 2:14:42
  contract with Pablo Escobar. OK, Pablo, we'll smuggle your
• 2:14:46
  product into the United States. And he assigns each of the
• 2:14:50
  regional outposts. So now instead of the American
• 2:14:52
  government having to contend with a choke point in Miami, now
• 2:14:56
  they got to deal with a 2000 mile border.
• 2:14:59
  Now they're shooting in from San Diego.
• 2:15:00
  Babo Sonata Babo Waters Babo the Gulf Babo.
• 2:15:05
  Boom. Just boom, boom.
• 2:15:06
  You've made the. You have far more tentacles than
• 2:15:10
  the choke point in Miami the. Ability to interdict has
• 2:15:13
  decreased dramatically because the amount of opportunities for
• 2:15:16
  them to get across the border is now enormous.
• 2:15:19
  Like you said, there was a choke point.
• 2:15:21
  Now you have the Wild West. It's wide open, for lack of a
• 2:15:24
  better term. Yes, that's right.
• 2:15:25
  So now you've got the the sprawl of a 2000 mile border of which I
• 2:15:34
  think like 1500 of it is the the Guadalajara they ran from, put
• 2:15:38
  it away from Tijuana all the way to El Paso, the San Diego to El
• 2:15:42
  Paso, Tijuana to Juarez and then from El Paso to Reynosa down by
• 2:15:47
  Bronzeville was the Gulf Cartel. And so you had the two groups
• 2:15:52
  are now smuggling product for the Colombians under the
• 2:15:55
  protection of DFS and Dupree. So half the money.
• 2:16:00
  Can't forget the government. The government gets their 50%
• 2:16:02
  off the top. Doesn't matter what product
• 2:16:04
  you're putting in there. We get 50%, whether it's coke,
• 2:16:09
  heroin, weed, we don't. We don't discriminate against
• 2:16:13
  where this money is coming, do we?
• 2:16:14
  Yes. No, not at all.
• 2:16:15
  Which which adds another layer of of fuckery for the
• 2:16:19
  government's effort to try to thwart this.
• 2:16:22
  On our end, yes. And that's why you got the
• 2:16:24
  professional nature of the structures.
• 2:16:27
  Right. Because again, I'm not
• 2:16:30
  suggesting that the guy from the mountains with the 3rd grade
• 2:16:32
  education is an intelligent They're very smart, very clever,
• 2:16:37
  but they didn't put together the money laundering operations and
• 2:16:41
  they didn't create the transnational trucking logistic
• 2:16:45
  operations. The.
• 2:16:47
  Protection logistics. Well, that the DFS guys handled
• 2:16:50
  these shows like they're right. They came up working with
• 2:16:52
  intelligent operatives in the Mexican government, trained by
• 2:16:55
  the American government. Not for the purposes of drug
• 2:16:59
  trafficking, of course. Oh.
• 2:17:00
  So we don't have any pop up commies.
• 2:17:02
  So pop up commies so now. I've learned that.
• 2:17:05
  Yeah. So now by 84, you got this
• 2:17:07
  collaboration going on with the Mexicans and the Colombians.
• 2:17:10
  Meanwhile, the guys in Washington, Reagan people, they
• 2:17:13
  think they crack the Colombians back.
• 2:17:16
  Oh, yeah, They, they think that. Oh my God, our DEA agent son of
• 2:17:20
  Miami says. There's virtually none of this
• 2:17:22
  shit coming through here anymore.
• 2:17:23
  A year later you got the crack epidemic, massive explosion
• 2:17:27
  because you had remember they went from 4 tons a month to 12
• 2:17:31
  tons a month. Well, so long as the
• 2:17:34
  interdiction rate remained high, he has somewhat balance.
• 2:17:38
  But once they pivoted to the Mexican route.
• 2:17:40
  And the interdiction now. They're back up the 90 plus
• 2:17:43
  percent. All of a sudden you doubled and
• 2:17:44
  tripled the amount of product coming to the American market.
• 2:17:46
  Now you got to find a developing new customer base.
• 2:17:50
  That's where we get into the crack.
• 2:17:51
  And that's where the crack now becomes an issue because so long
• 2:17:55
  as it was pre 8483. It was a designer it.
• 2:18:00
  Was the a rich drug partied in Beverly Hills?
• 2:18:04
  Manhattan? Miracle Mile in Chicago.
• 2:18:06
  The elite. But you make so much sense when
• 2:18:08
  you say, OK, when you're getting 4 tons in a month out of Miami,
• 2:18:12
  you got the designer element, the chic element.
• 2:18:14
  But when you pivot. And when you triple the amount
• 2:18:16
  of product. When you got you got increase.
• 2:18:18
  30. Tons. 30 tons coming in.
• 2:18:20
  Because 12/13/14 tons. And you don't have a 60%
• 2:18:24
  interdiction rate, you got a 10%.
• 2:18:27
  Now we got all this surplus of product.
• 2:18:29
  Products markets flooded. We got to get a new customer.
• 2:18:32
  You got to get a new customer, You got to you got to increase
• 2:18:34
  the customer base. And here in the United States,
• 2:18:37
  the distribution of wealth is of course, in the form of a pyramid
• 2:18:40
  with, you know, the very the, the coke using segment was the
• 2:18:43
  very tip of the pyramid. The upper echelon.
• 2:18:46
  And then you have what's essentially like the middle
• 2:18:48
  class. Which was your weed?
• 2:18:50
  Which were which were aspiring to get to the Coke guys.
• 2:18:53
  Right, but they're weed. But they're they're Budweiser
• 2:18:56
  and. Miller Lite and.
• 2:18:57
  Weed and weed, yeah, yeah. And then of course you've got
• 2:19:00
  the lower part of the pyramid, which is the base, which is the
• 2:19:03
  largest, but the lower middle class working class and the
• 2:19:06
  lowest port, which today this is the largest segment.
• 2:19:09
  Back then it wasn't the largest segment would.
• 2:19:11
  That be the crack. These are the.
• 2:19:12
  Poverty people, right? Would that be the?
• 2:19:14
  Well, these are the people who there's more of them, they just
• 2:19:18
  don't have any money. So you had to figure out a way
• 2:19:21
  how can you market a high value item to a segment of the
• 2:19:26
  population that's broke? And that's the $10 crack rock.
• 2:19:29
  That's the $10 crack rock. And So what they did is they
• 2:19:31
  figured out, OK, so we're going to take the the coke, dilute it.
• 2:19:38
  And so the purity level of what's called crack is a
• 2:19:41
  fraction of what's going on in Beverly Hills.
• 2:19:43
  You get 100 times the penalty, of course, because the US
• 2:19:46
  government never changed its racist policies.
• 2:19:48
  No, no, very racist. And so here you had a deliberate
• 2:19:52
  inflation of the penalties associated with the poor man's
• 2:19:56
  drug, even though the purity level was a fraction of what?
• 2:20:00
  The standard key ones. The guy that's driving a
• 2:20:02
  Mercedes and and and popping bottles, he that has a kilo of
• 2:20:07
  Coke. Gets a slap on the wrist.
• 2:20:08
  Yeah. Meanwhile, Leroy.
• 2:20:10
  Leroy. With 100 with 100 grams gets the
• 2:20:12
  30 years. Exactly.
• 2:20:15
  That kind of puts us at to where we're now.
• 2:20:16
  Does that kind of put us? It's changed in.
• 2:20:19
  No, I mean when. We're getting ready to go to
• 2:20:20
  Part 2 here. Oh, yeah, yeah, there's, there's
• 2:20:22
  by the by the second Bush, the George W Bush administration
• 2:20:26
  took the first steps, then the Obama administration, they've
• 2:20:28
  been in an effort to ameliorate and then Congress got involved.
• 2:20:32
  But at the at the inception, it was mass panic because they
• 2:20:36
  thought in 84 that they broke the Colombians back a year
• 2:20:39
  later, massive epidemic. Like it just blindsided.
• 2:20:43
  Them. They had no idea.
• 2:20:44
  None, they quickly figured out. Well, and well, here's the
• 2:20:48
  thing. And this is where LA starts
• 2:20:50
  becoming important because you had what we referred to as the
• 2:20:55
  Guadalajara Cartel in Mexico was actually the Pacific Network
• 2:20:59
  because it's on the Pacific Ocean.
• 2:21:01
  And so you had the group in Tijuana coming into San Diego.
• 2:21:05
  You had the group in Sinaloa coming into Los Angeles and the
• 2:21:11
  group in Sinaloa was responsible was headed up by Chapo Guzman,
• 2:21:15
  who was a Lieutenant. His organization had nothing to
• 2:21:18
  do with distribution, strictly smuggling.
• 2:21:22
  And so he partnered with another guy named what Obama.
• 2:21:27
  What? To the extent there was a leader
• 2:21:28
  at a Sinaloa cartel and there wasn't a The nominal leader was
• 2:21:32
  What Obama? Chapo Guzman was in his 30s.
• 2:21:36
  Men in their 40s and 50s aren't taking orders from a 33 year
• 2:21:38
  old, but he had the contract because he was competent, the
• 2:21:44
  police girl said. You handle getting the loads
• 2:21:46
  across the border. To Guzman.
• 2:21:49
  Guzman so Guzman's organization would take him from Mexico and
• 2:21:53
  he had the port of entry in Tecate, which is a bullshit.
• 2:21:55
  You know, Sinaloa always got the short end of the stick.
• 2:21:57
  He got the bullshit out little port of entries in Tecate.
• 2:22:00
  Megali they got another one in Arizona by the New Mexico
• 2:22:02
  border. They had to come in through
• 2:22:03
  Douglas, AZ all the way back to LA.
• 2:22:05
  That's where you got the first tunnels in Douglas, AZ.
• 2:22:09
  And so working with the smaller, less valuable ports of entry and
• 2:22:18
  the smaller contract, because Guzman got the Cali cartel
• 2:22:21
  operation, they didn't get the Pablo with Medellin.
• 2:22:26
  Well, Cali had their operation based in Los Angeles, and their
• 2:22:30
  leader was a guy named Mario Villabona.
• 2:22:32
  Mario's. I know Mario from prison and
• 2:22:34
  Mario's uncle was one of the primary drug Lords within the
• 2:22:38
  Cali network and he sent his his nephew out to LA who handled the
• 2:22:44
  distribution activity. And so the Cali cartel cell in
• 2:22:47
  Los Angeles received the loads coming in from Chapo Guzman, who
• 2:22:53
  was the transport operation for Felice Gallardo out of
• 2:22:55
  Guadalajara. This goes on for a few years
• 2:23:00
  now. Independent of this, you still
• 2:23:01
  got the weed and the heroin. And this is I.
• 2:23:05
  I haven't seen Narcos Mexico but I understand this is what the
• 2:23:08
  narrative story is centered around.
• 2:23:10
  Was the unaliving of ADEA agent. Yeah, I think that's the start
• 2:23:14
  of it. OK, It was a gentleman named
• 2:23:16
  Camarena, and Camarena was working in an undercover
• 2:23:19
  capacity targeting the cultivation operation of a
• 2:23:26
  massive operation in Mexico headed up by Caro Quintero.
• 2:23:31
  In fact, Caro Quintero this last year was extradited to the
• 2:23:34
  United States, A big win for the current administration.
• 2:23:37
  They finally got their hands on this guy.
• 2:23:40
  But in 1985, Caro Quintero was infuriated because Kamarina's
• 2:23:47
  operation took down one of his grow operations.
• 2:23:50
  Like 10,000 acres. Massive multibillion dollar
• 2:23:55
  bust. Kamarina's the case agent.
• 2:23:58
  Kamarina's the guy operating undercover.
• 2:24:01
  He's the US DEA agent. The DEA agent in charge of this
• 2:24:04
  operation, he's the the point man.
• 2:24:07
  Well, he infuriates Caro Quintero, but more importantly,
• 2:24:11
  who's he infuriate? DFS.
• 2:24:15
  Who we're supposed to be working with?
• 2:24:17
  And so Caro Quintero, working with the DFS snatch up.
• 2:24:22
  One of their big earners. Marina, the DEA agent take him
• 2:24:26
  to a ranch. Hold on.
• 2:24:27
  So DFS snatched up our. DEA yes now OK, narcos get the
• 2:24:33
  blame. But the DFS is the one that got
• 2:24:35
  of course snatch him up. The one that they're making the
• 2:24:39
  narcos. Don't leave me hanging.
• 2:24:40
  Don't leave me hanging. Snatch him up.
• 2:24:42
  Snatch him up, take him to a ranch owned by a doctor named
• 2:24:45
  Zuno. RC Old man Zuno was at the same
• 2:24:48
  prison that I was at. And so they take him there and,
• 2:24:53
  you know, they, they own a live and it was gruesome.
• 2:24:56
  To send a message. Well, not that they wanted to
• 2:24:58
  extract the information. And so like they had the DFS
• 2:25:01
  guys had a surgeon come and while they were beating him,
• 2:25:04
  they were pumping him full of like he'd pass out from the
• 2:25:07
  injuries and then they'd pump him with a solution and bring
• 2:25:09
  him back up too. And he'd torture him some more,
• 2:25:11
  get more information. Like it was an intelligent,
• 2:25:14
  terrible, terrible. What happened to accommodate his
• 2:25:15
  horrific horrific and it was a enormously impactful for what
• 2:25:21
  happens later on because the Camarena homicide is the most
• 2:25:26
  significant killing in the history of the Mexican drug
• 2:25:29
  trade. Really sure, of course, because
• 2:25:32
  is. It is it Is it their biggest
• 2:25:34
  regret, you think? Yes, because had they not done
• 2:25:37
  that, they wouldn't have near the.
• 2:25:38
  End as we get to the 19, the reason why 1989 is the cut off
• 2:25:43
  is the year Guadalajara collapses because in the
• 2:25:47
  aftermath of unaliving Camarena. So now you've got Mass product
• 2:25:54
  coming into the country, coke volumes increase, problems with
• 2:25:58
  the weed. You know, the the the war on
• 2:26:00
  drug rhetoric coming out of the Reagan administration, plus the
• 2:26:04
  unaliving of an agent. Right.
• 2:26:06
  And keep in mind, down in Colombia, Pablo's blowing planes
• 2:26:09
  out of the sky. He's taking over the Supreme
• 2:26:11
  Court. He's running for Congress.
• 2:26:13
  He he went actually did two years in prison that he bought.
• 2:26:15
  He built his own prison. Yeah, yeah.
• 2:26:16
  So like the the the Colombians are running wild.
• 2:26:18
  Like the guys in Cali are the quiet guys letting Pablo take
• 2:26:21
  all the heat. Well, the guys in managing were
• 2:26:23
  just nuts. They're going crazy.
• 2:26:25
  And so the American government's got this, this target that was
• 2:26:30
  useful. Pablo.
• 2:26:33
  Because he created the pretext to allow them to say, hey, we
• 2:26:37
  got this problem, we're going to put bases in all these
• 2:26:40
  countries. And a lot of it was window
• 2:26:41
  dressing and optics, Pablo. Yes.
• 2:26:44
  And now the same similar thing happened with respect to,
• 2:26:47
  because remember prior to the combinator thing, you had the
• 2:26:49
  Iran Contra thing begin. And so the derivative of
• 2:26:55
  Operation Condor essentially. And so they needed to raise the
• 2:26:59
  money to supply the Contras, the freedom fighters.
• 2:27:04
  And so this convoluted operation comes involved where they're
• 2:27:09
  essentially selling weapons. Was that Oliver North and G
• 2:27:13
  Gordon Liddy? Oliver North, G Gordon.
• 2:27:15
  No, No, not G Gordon. G Gordon Liddy is Watergate.
• 2:27:17
  That's right, Oliver North. Oliver North and the Bill Casey
• 2:27:23
  and the head of the CIA at the time working in conjunction with
• 2:27:27
  the Reagan Bush administration, where Reagan later on said why
• 2:27:31
  made a finding or where's the paperwork a mental finding.
• 2:27:34
  Yeah. And so he was, you know,
• 2:27:39
  believed to be knee deep. You can draw a reasonable
• 2:27:41
  inference that they were all knee deep.
• 2:27:43
  This is where Epstein comes into the story, in fact.
• 2:27:46
  Really. Because he was the financier
• 2:27:50
  associate of a man named Khashoggi.
• 2:27:53
  Khashoggi was a core player in the Iran Contra story.
• 2:27:58
  For for real. Yeah, wow.
• 2:28:02
  In fact, the Khashoggi that was recently unalived during the
• 2:28:05
  first Trump administration, the reporter that was.
• 2:28:08
  Oh, the Turkish and. The Turkish unalive, that was
• 2:28:11
  that Khashoggi son. Oh, I did not know.
• 2:28:15
  That Khashoggi was the probably the largest arms trafficker in
• 2:28:18
  the world. So you got Khashoggi working
• 2:28:20
  with Epstein, you got Oliver North working with Bill Casey,
• 2:28:26
  you've got the Nicaraguan freedom fighters, you've got the
• 2:28:31
  Israeli selling weapons to the Iranians, where we're taking the
• 2:28:34
  proceeds from that, bringing it over here.
• 2:28:38
  And our freedom fighter associates, again, not the CIA,
• 2:28:42
  and I'm not trying to cover for them.
• 2:28:44
  Believe me, they do a lot of squirrelly stuff, but the people
• 2:28:47
  that they partnered with, we're taking those proceeds on their
• 2:28:52
  own combina that are sourcing Coke, bring it to LA And so the
• 2:28:58
  people distributing Coke weren't Mexicans at that time in LA,
• 2:29:03
  they were Colombians, Mario Cell, and then Nicaraguans.
• 2:29:08
  Now I got to know one of the main Nicaraguans very well,
• 2:29:10
  imprisoned my my friend Rafael Cornell.
• 2:29:13
  And right in the middle of all this.
• 2:29:16
  Now, when you would roll up on a guy like Raphael and you are as
• 2:29:20
  knowledgeable about this as you are, would it they not be blown
• 2:29:24
  away by your Intel? And in this, I mean with, I mean
• 2:29:27
  like, like damn kid, I mean, you know, for real, you, you got
• 2:29:31
  this figured out. Is I'm I'm neat, I'm knee deep
• 2:29:35
  in it, executing the format if you will, and you know every
• 2:29:38
  aspect of it. Well, I wasn't.
• 2:29:40
  I understood the the trafficking aspect, the political aspects
• 2:29:44
  took years of of reading and reinteracting with the guy.
• 2:29:47
  He's a lot. Of I understand.
• 2:29:48
  You know, because when you talk to Raphael.
• 2:29:49
  He's like, so you, you. You get to know Raphael, you get
• 2:29:51
  to know Mario. See like Mario's problem?
• 2:29:54
  Well, on the American side there was an issue, but on the
• 2:29:56
  Mexican. Mario was the big swinging Dick
• 2:29:58
  in LA. In LA, well, the problem you had
• 2:30:00
  for them is that there was a. He was the largest first level
• 2:30:04
  wholesaler in LA. Wasn't he the cartel
• 2:30:06
  distributor? Right, Mario, we talked about
• 2:30:08
  him in the other episode. He's.
• 2:30:09
  Massive. He was the biggest drug
• 2:30:10
  trafficker in the. West Coast and you say 300
• 2:30:14
  kilos? Oh, no, no.
• 2:30:15
  I mean, he was multiple tons. So for that era, it was big.
• 2:30:18
  Yeah. So, you know, Guzman's
• 2:30:19
  organization would drop off 6 tons, 8 tons.
• 2:30:22
  I mean, it was enormous for 1980 level air and trafficking.
• 2:30:25
  Now the problem that the where the Colombians got into, their
• 2:30:29
  issue was and they fell right into the trap because there was
• 2:30:34
  a, the middleman between the Colombians and the Mexicans was
• 2:30:38
  a Honduran named Ramon Mata. And Mata had large ranches with,
• 2:30:46
  what do you call it, landing strips.
• 2:30:50
  And so the Colombians would take off from Colombia, they got to
• 2:30:52
  go. So they'd stop off, refill with
• 2:30:54
  gas and then shoot over to, you know, whatever island they're
• 2:30:57
  going to get you to hook up with the American pilots.
• 2:30:59
  Well, the American government wanted to use Ramon Mata's
• 2:31:02
  airstrips to land the weapons that are going to the Contras.
• 2:31:07
  Right, They're not even trying to fight the drugs.
• 2:31:09
  They're going to the narco. Hey, let us use your airstrips,
• 2:31:10
  guys, and refill our planes for us while you're in between the
• 2:31:13
  loads. In between taking Pablo's shit,
• 2:31:17
  let us refill our stuff because we're going to fight the
• 2:31:19
  Contras. He foolishly said no, no, of
• 2:31:24
  course you're you're on the team.
• 2:31:26
  Yeah, you're team Uncle Sam. But you got it, and you got them
• 2:31:29
  both ways. You got them both ways and so,
• 2:31:30
  but instead this knucklehead says no independently of this,
• 2:31:34
  like he wasn't the only landing strips that they were using.
• 2:31:37
  You got the Colombians that were using other landing strips.
• 2:31:41
  Well, some of those landing strips were controlled by the
• 2:31:45
  Sandinistas, others were controlled in territories of the
• 2:31:48
  surrounding countries or the guerrilla groups controlled.
• 2:31:53
  Well, using their landing strip meant you had to pay them a fee
• 2:31:56
  you. Had to do business with them.
• 2:31:58
  So now the American government was able to say, hey, the
• 2:32:00
  Colombians are bankrolling the guerrilla groups.
• 2:32:05
  No, they're not bankrolling them for political.
• 2:32:07
  Purposes. They're not paying them, they're
• 2:32:08
  paying the land on the ground. Land on the ground, refill our
• 2:32:11
  air bladder so we can go like you're just pit stopping.
• 2:32:14
  But it was a revenue stream. For the gorillas.
• 2:32:18
  For the gorillas and it was a propaganda windfall.
• 2:32:22
  For the United States, the. Arabian administration to.
• 2:32:24
  Be able to say. To be able to say, aha, they're
• 2:32:27
  financing. The Colombians are financing the
• 2:32:29
  guerrillas. Now we can go.
• 2:32:31
  Now we can go. That's part of the basing
• 2:32:34
  arrangement that they were able to come up with.
• 2:32:36
  Now as the situation starts to fall apart, things, I think it
• 2:32:42
  was 1986, either 86 or 87, where the plane gets taken down.
• 2:32:51
  It's an American pilot full of guns.
• 2:32:53
  Remember that that was part of the Tom Cruise deal.
• 2:32:55
  OK, yes. And so, yeah, I never saw that.
• 2:32:57
  I only heard about the movie. And so all of a sudden, like,
• 2:33:00
  they're marching because the American government's saying
• 2:33:02
  we've got nothing to do with this.
• 2:33:04
  We're not helping them. It's against the law for us to
• 2:33:05
  help them. All of a sudden, OK, we're like,
• 2:33:07
  here, here's the CIA pilot with one of your planes filled with
• 2:33:09
  guns, full of guns. They marched them out on the
• 2:33:11
  television. Yep, Yep, they they, they
• 2:33:13
  actually did the bust on the runway and full of guns.
• 2:33:17
  So now, of course, the cat's out of the bag.
• 2:33:19
  So back in 85, you had to accommodate an issue that
• 2:33:24
  prompted the American government to respond in a way that they
• 2:33:29
  had never previously done so before.
• 2:33:32
  Like, they shut down the border, no more commerce.
• 2:33:36
  And they literally started sending like bounty hunters in
• 2:33:40
  New Mexico because the Mexican government was refusing to
• 2:33:43
  arrest. And Reagan's full hot at this.
• 2:33:46
  Time at this point, yeah, you're not going to unalive a DEA like
• 2:33:48
  they were playing ball up until you did that.
• 2:33:51
  Until you killed our DEA guy. Now we.
• 2:33:53
  Have so now the DFS of course needed four guys because they're
• 2:33:56
  not turning themselves in they blame the narcos.
• 2:33:59
  I'm not suggesting the narcos weren't weren't doing.
• 2:34:02
  Illicit stuff, but. But this was a Mexican
• 2:34:04
  intelligence operation that resulted in the unaliving of
• 2:34:08
  the. DEA and we start going
• 2:34:10
  absolutely nuts in 85 we. Start going.
• 2:34:12
  So you had a tremendous amount of pressure get put on the
• 2:34:14
  Mexican government. The Mexican government abolishes
• 2:34:18
  the DEF or DFS. They just did what basically
• 2:34:24
  headset did. They just relabel IT department
• 2:34:27
  of Defense to Department of War. It's the same operation.
• 2:34:30
  But that way they they have this fiction.
• 2:34:32
  Oh no, no, that era is over with.
• 2:34:33
  We abolished the DFS. They just all went into the new
• 2:34:35
  agency. It never stopped.
• 2:34:38
  Just relabel. They just relabeled the thing.
• 2:34:40
  But this is where the Mexicans get on the radar.
• 2:34:45
  And so ultimately, the Mexican government arrested Caddo
• 2:34:48
  Quintetto, but they refused to extra at him.
• 2:34:51
  They can't send him over. He'll just say this guy did it,
• 2:34:53
  this guy did it, this guy did it, this guy did it.
• 2:34:56
  They're not working with us. They're.
• 2:34:57
  Not working with us at all. They hold Caddo Quintetto.
• 2:35:00
  They took the other individual, Don Netto.
• 2:35:04
  I think that was his name. I forgot to like his last name.
• 2:35:06
  So you got these two individuals get captured.
• 2:35:08
  They don't take police Gallardo. Police, Gallardo's the guy who's
• 2:35:11
  paying the president. He's a point contact.
• 2:35:15
  He deals with the senators, he deals with the Secretary of
• 2:35:17
  Defense. They're not taking him.
• 2:35:18
  They're not taking him, no. And so now the American.
• 2:35:22
  They take the underlings, They take the. 2 They take the other
• 2:35:24
  two prominent drug Lords. Prop them up to probably be more
• 2:35:28
  than they really are. But they don't send them over.
• 2:35:30
  Right. But they don't.
• 2:35:31
  They don't send Felice. They don't send them over.
• 2:35:33
  Yeah, that's right. And so now you've got a
• 2:35:35
  combination of events going on where you've got the fallout
• 2:35:37
  from the combinator matter, the fallout from Iran Contra, and
• 2:35:42
  then you had the fallout from the BCCI banking scandal.
• 2:35:45
  BCCI was the bank that was facilitating all design rank
• 2:35:47
  Contra stuff plus a lot of the laundering.
• 2:35:51
  From the Mexicans the the pre cut, the pre cut of their cut.
• 2:35:57
  In fact, the BCCI branch in Tampa was the point man.
• 2:36:00
  Really. Yeah, BCCI bank in Tampa was the
• 2:36:05
  operational headquarters for that laundering operation,
• 2:36:07
  taking the money to Panama, taking the money for Khashoggi.
• 2:36:11
  They. Got it.
• 2:36:13
  No, I got indicted. And then my prosecutor, the one
• 2:36:15
  who had to quit his job, Robert Mueller, oversaw that opera
• 2:36:19
  investigation. And then he was The district
• 2:36:22
  attorneys in New York accused Mueller of sabotaging the
• 2:36:26
  operation, the investigation. Mueller resigned.
• 2:36:30
  And then he came back later on and took over my case.
• 2:36:32
  But at that point, he was just. By the way, Pete met with
• 2:36:36
  Mueller 3 times, Yeah. And so.
• 2:36:38
  And then he lied about it, didn't he?
• 2:36:40
  No, he didn't lie about the meetings.
• 2:36:41
  He just lied about the substance.
• 2:36:42
  That's what I'm talking about. Yeah.
• 2:36:43
  And so with respect to you had these all three things coming
• 2:36:47
  together. Contras.
• 2:36:49
  Iran Contra. The unaliving of the DEA.
• 2:36:51
  Unaliving of the DEA agent with the massive pressure from the
• 2:36:53
  American government and the Mexican government's cover up at
• 2:36:58
  this point. The money laundering.
• 2:36:59
  They got no they got to insulate the political class.
• 2:37:01
  Well, that's right. They, I think they got to prop
• 2:37:02
  the two people. So like, of course they look
• 2:37:05
  Caro Quintano I'm sure was a monster.
• 2:37:09
  I don't think he wasn't scapegoated though.
• 2:37:11
  I'm not saying he wasn't complicit, but he was
• 2:37:13
  scapegoated. And so you needed that fall guy
• 2:37:17
  individual. Like he's currently being
• 2:37:19
  prosecuted right now and. Here or there here.
• 2:37:24
  He was expelled last year, like when they sent him over.
• 2:37:27
  He's a man in his 70s. He's he's out.
• 2:37:30
  It's window dressing. Yeah, they're just to give him
• 2:37:32
  to him. He's going to say whatever
• 2:37:33
  you're going to say because he's going to implicate people from
• 2:37:35
  the 1970s, nineteen 80s. That are dead now, yeah.
• 2:37:37
  Or not with us. Or he's going to implicate the
• 2:37:40
  DFS guys. Right, which is their
• 2:37:42
  government. Yeah, so like I'm sure like at
• 2:37:44
  some point if they haven't already done so, the American
• 2:37:47
  government's going to leave that case out because if he goes
• 2:37:51
  through with the capital prosecution, he'll be able to
• 2:37:53
  bring in say, hey, hold on a second, I was working with you
• 2:37:55
  guys to help fund the anti commie stuff.
• 2:37:59
  So now here you've got by 1987, the wheels are starting to fall
• 2:38:03
  off. Yeah, you got all these events
• 2:38:06
  happening. You have all these events
• 2:38:07
  happening. So Feliz Gallardo convenes a
• 2:38:10
  meeting. All the regional lieutenants.
• 2:38:15
  Amen. We made a huge mistake kicking
• 2:38:18
  the bear. The DEA agent.
• 2:38:20
  By unaliving the DEA agent, the response from the American
• 2:38:23
  government has been extraordinary.
• 2:38:26
  This is where the first rule comes in from this point
• 2:38:29
  forward. You're no.
• 2:38:30
  Longer allowed to target American law enforcement.
• 2:38:33
  Period. Oh.
• 2:38:37
  They don't unalive federal officers, federal judges,
• 2:38:42
  federal prosecutors. Period.
• 2:38:45
  That would probably be an unaliving from somebody that
• 2:38:48
  didn't do that A. Summary Unaliving for you and
• 2:38:50
  your entire family. Yeah.
• 2:38:52
  If you harm an American federal officer, Done.
• 2:38:55
  Yeah, intentionally. Like if you get into a car crash
• 2:38:58
  or something, that's. Different, right?
• 2:38:59
  I understand. Yeah, you know what I mean.
• 2:39:00
  But if you target that is completely unsanctioned.
• 2:39:04
  You get because of the shitstorm that they were involved involved
• 2:39:07
  in from the that's why. What's the guy's name?
• 2:39:08
  Camarena. Camalea.
• 2:39:10
  That's the most, that's the most significant homicide in the
• 2:39:12
  history of the drug trade because it results in what
• 2:39:14
  became the disarticulation of Guadalajara police, Gyro said.
• 2:39:18
  Look, we have to devolve our infrastructure.
• 2:39:22
  You guys operate independently because if you have essentially
• 2:39:27
  A mosaic defense, much like the Iranians are employing today,
• 2:39:30
  you can't decapitate. Because there was a tremendous
• 2:39:34
  amount of pressure hand us Gallardo and so, but the Mexican
• 2:39:37
  government was, of course, refusing to hand over Gallardo,
• 2:39:40
  but the handwriting was on the wall.
• 2:39:43
  And so he devolves power. So now the plazas are
• 2:39:47
  essentially independent franchises now.
• 2:39:50
  They're still all cutting. They're all having to kick in
• 2:39:52
  still. Kick in to the to the to the
• 2:39:54
  pre. To fleece Gallardo, who's the
• 2:39:56
  point man for PRE? The DFS has been relabeled, but
• 2:40:00
  they're still in the mix. They're still there.
• 2:40:03
  So Feliz Gallardo's protected because they're not giving him
• 2:40:06
  over because he's the guy that's handing the president and all
• 2:40:08
  these guys. And the guy, the money man.
• 2:40:11
  Yeah. And so now, well, and he's
• 2:40:14
  responsible for coordinating with the financial sector also.
• 2:40:17
  So he knows everything. To this day, he's never been
• 2:40:20
  extradited. He's still in Mexico.
• 2:40:23
  Still doing what he does. 80 year old, late 80s, living in a
• 2:40:27
  wheelchair. He still gets interviewed on TV.
• 2:40:30
  Thinks still very, very wealthy. I have no doubt he was always
• 2:40:34
  very well. I mean, prison is very different
• 2:40:36
  in Mexico than the United States.
• 2:40:37
  Those guys got a very sweet. Especially when you're doing,
• 2:40:41
  when you're 1 of the government's you do.
• 2:40:43
  Yeah, you got women coming and staying with you.
• 2:40:45
  Yeah, quick catered meals. You know, I can tell you stories
• 2:40:48
  about some of my friends who had extraordinary experience in
• 2:40:52
  Mexican prisons. They live better than 80% of the
• 2:40:55
  men in the United States. Right.
• 2:40:57
  And so going into now 88, like right when I was graduating from
• 2:41:03
  high school, you had the breakup, not the formal
• 2:41:09
  disarticulation, but the independent operation now of the
• 2:41:13
  various plazas, independent of that the American government.
• 2:41:18
  Now, shortly before this conference, Elise Gallardo still
• 2:41:23
  hauling the loads for Colombia, the Mexicans got smart and said,
• 2:41:26
  you know what, why are we just doing transportation services?
• 2:41:30
  We're getting paid 1000 a key. We're moving, you know, 8000,
• 2:41:33
  you know, 8000 kilos at a time, 8 metric tons, 10,000 kilos, 10
• 2:41:38
  metric tons, we're getting 1000 a key.
• 2:41:40
  Like you guys are making all the, all the money.
• 2:41:44
  And so, you know, the American government throughout the 80s,
• 2:41:48
  they disrupt the importation operation in South Florida.
• 2:41:51
  Then they start attacking the distribution cells.
• 2:41:53
  Well, in Los Angeles they took down a cell like 85.
• 2:41:58
  Then right when I was graduating like 8788, they were taking out,
• 2:42:04
  they took out Mario cell. Right before that.
• 2:42:08
  The Mexicans entered into agreement with the Colombians
• 2:42:10
  saying, look, we're going to continue smuggling your product,
• 2:42:13
  but we are no longer going to charge you $1000.
• 2:42:15
  We want to get paid in product. We can't touch them now.
• 2:42:19
  They wanted a payment in kind fee structure.
• 2:42:22
  We're taking a third. So if you need 8 tons in LA,
• 2:42:26
  send us 12 tons. Because we're taking our cut.
• 2:42:28
  We're taking our cut. So now police, Callardo tells
• 2:42:32
  all the regional plazas. Hey, establish your own
• 2:42:35
  independent distribution capability because when you get
• 2:42:39
  the four tons out of the 12 ton load for you to cash out, you
• 2:42:42
  got to sell it. Well, what was the group that
• 2:42:46
  already had distributors operating in a loan because
• 2:42:50
  they're selling the weed and they're selling the heroin
• 2:42:52
  because they cultivated in those states.
• 2:42:55
  So they already had a distribution operation
• 2:42:57
  domestically in the United States.
• 2:42:59
  They already had a way to get rid of it.
• 2:43:01
  They already. Yes.
• 2:43:01
  And so now Guzman, who's responsible for the smuggling,
• 2:43:04
  him and what Obama, they're like, man, we got to figure out
• 2:43:07
  a way how to get rid of our, you know, 1/3 of our loads.
• 2:43:11
  Well, let's talk to the other guys.
• 2:43:11
  I've seen the law. Hey, Mile, you got people in LA.
• 2:43:15
  You set up a network to get rid of the coke.
• 2:43:17
  Yeah, I got you. Chapo, Amato, Carido.
• 2:43:19
  Yeah. Yeah, I got you, Arturo.
• 2:43:21
  I got you the spot of Goza. Got you.
• 2:43:26
  Well, Sinaloa had the advantage is because they were involved in
• 2:43:29
  the distribution of the weed and the heroin.
• 2:43:31
  They already had a distribution operation in Los Angeles.
• 2:43:34
  They. Already had that business
• 2:43:35
  template. These weren't cartel guys.
• 2:43:37
  These are just independent Mexican drug traffickers who
• 2:43:39
  happen to be from Sinaloa. But Guzman gets the product from
• 2:43:44
  Gallardo. He takes it to LA, drops off 2/3
• 2:43:48
  of the load, the Mario the remaining third.
• 2:43:51
  They just divvies up amongst the guys from Sinaloa who already
• 2:43:53
  had their people there. Who were already there, already
• 2:43:55
  there, selling the Fanny. They hadn't selling not the
• 2:43:58
  Fanny. Selling the weed.
• 2:43:59
  Selling the weed and the heroin. And yeah, I mean, I'm a but.
• 2:44:01
  They didn't, but again, they didn't work for Guzman.
• 2:44:05
  They're just independent traffickers.
• 2:44:07
  They were, but they were what's? Called Would they be considered
• 2:44:10
  first level wholesale traffickers?
• 2:44:12
  They were first tier, first tier, wholesale level
• 2:44:13
  distributors. Distributors, right, Yes.
• 2:44:16
  You know, Gallardo entrusted Guzman, Guzman entrusted them
• 2:44:21
  because they're what's referred to as paises.
• 2:44:24
  Paises, the term like in Italian, we have paisan.
• 2:44:27
  Well, in Mexico for Spanish they use the term paisa and it's.
• 2:44:30
  Like a comrade, like a like a countryman, right?
• 2:44:33
  It's like a like your boy kind of your guy.
• 2:44:35
  Yeah, but no more than that. It's a.
• 2:44:38
  It's more of a. Social and cultural connection,
• 2:44:41
  because Mexico is essentially 3 or 4 countries cobbled together.
• 2:44:46
  And so the people from that area, whether it's Sinaloa,
• 2:44:49
  Jalisco, Michoacan, Durango, Sonora, Baja, Kalima, Nayadi,
• 2:44:54
  those are essentially Pisces from that area.
• 2:44:58
  Like they don't do business with guys from Tamaulipas that might
• 2:45:01
  be a different country. And so the because they were
• 2:45:07
  already in Sinaloa, Guman knew these guys who were already
• 2:45:13
  paying the 50% for the Plaza system.
• 2:45:18
  So since you guys are already cutting in paying.
• 2:45:20
  Since you're. Already paying the government to
• 2:45:23
  operate, you know, And Guzman collected the tax.
• 2:45:26
  We just got a new product. How about if I give you guys
• 2:45:28
  this product and you guys sell it for these guys and, you know,
• 2:45:31
  come to a regional arrangement? So they said sure, no problem.
• 2:45:35
  So now Guzman becomes the bridge between Gallardo and the
• 2:45:38
  Guadalajara network and the independent Sinaloa traffickers
• 2:45:42
  who just happened to have operatives in LA to facilitate
• 2:45:44
  the distribution. Perfect.
• 2:45:47
  So now Guzman smuggles it to LA, drops off 2/3 of the load to
• 2:45:50
  Mario, drops off the remaining 3rd to the independent Sinaloa
• 2:45:54
  guys, Guzman establishes a hub to receive the loads.
• 2:46:00
  It's purely logistics on Guzman's operation.
• 2:46:02
  Yeah. Now in 8788, Mario gets knocked
• 2:46:06
  off. Well, when he gets knocked off,
• 2:46:11
  the only people left in LA at this point who could handle
• 2:46:15
  distribution at a large scale, or the Mexicans, they're already
• 2:46:20
  2 years, maybe 3, but definitely two years into establishing
• 2:46:26
  their parallel distribution operation.
• 2:46:29
  The American government, DEA had taken out the guys in 85.
• 2:46:32
  They just took out the guys in 88.
• 2:46:33
  There was like one last cell of Colombians and they got taken
• 2:46:38
  down. It was like 9394.
• 2:46:40
  Now we got to go to the Mexicans.
• 2:46:41
  But now it's the Mexicans who are essentially the last men
• 2:46:47
  standing. They inherit the market.
• 2:46:50
  They inherit the the whole the whole shooting match second.
• 2:46:54
  Rule gets put into place. So now you're in 88 where the
• 2:46:59
  Colombians get removed, the big sell Marios, the Mexicans take
• 2:47:04
  over. Well, the Mexicans implement
• 2:47:05
  rule too. Not only are you not allowed to
• 2:47:07
  touch American law enforcement, but don't make the mistake that
• 2:47:11
  Mario made, because Mario dealt directly with Americans.
• 2:47:16
  He's the one who was dealing with the African Americans whom
• 2:47:19
  the, you know, several of the big ones, he dealt with
• 2:47:23
  Waterhead Bow, he dealt with Harry.
• 2:47:26
  O like these are men I know from prison.
• 2:47:28
  And so, not that the Americans were intentionally trying to get
• 2:47:36
  Mario in trouble, but the authorities had Waterhead Bow
• 2:47:39
  under surveillance. And you know, Bo Bennett
• 2:47:43
  essentially LED. Them to Mario.
• 2:47:46
  To Mario was. So they rule #2 rule #2 only
• 2:47:51
  Mexican Mexican. Nationals.
• 2:47:53
  So if you're. A yeah, I've learned, I've
• 2:47:54
  learned, Pete, if. You're a Mexican distributor.
• 2:47:57
  You have to talk to a Mexican. You have to deal with the
• 2:47:58
  Mexican national. Why?
• 2:47:59
  Because Mexican nationals cannot be law enforcement.
• 2:48:02
  Right. And and if they know where their
• 2:48:05
  family is. And they know where your family
• 2:48:06
  is back in Mexico. That insulates the distributor.
• 2:48:09
  So when people think Sinaloa cartel, what you're thinking
• 2:48:12
  about is Sinaloa in 2006, 2007, 2008.
• 2:48:15
  Pre Mario bust no. No, this is 20 years that way.
• 2:48:18
  But The thing is, the American population, their imagination
• 2:48:23
  with respect to Sinaloa is always that era which was
• 2:48:25
  enormous at that point, the largest network in the history
• 2:48:29
  of the world, the most sophisticated drug trafficking
• 2:48:31
  syndicate in of all time. Essentially that was a network
• 2:48:37
  of over 65 organizations. That massive operation had 15
• 2:48:42
  guys in LA to handle 80% of all the coke, 15 dudes, 15 guys for
• 2:48:46
  that. The largest, the largest
• 2:48:48
  certificate ever, ever 15 guys in LA. 15 That's it.
• 2:48:51
  You had three guys in Chicago, two or three guys in New York
• 2:48:53
  and two or three guys in Atlanta. 15 out of.
• 2:48:56
  LA 15 guys handle 80% of the cocaine for the Sinaloa Cartel.
• 2:48:58
  And that's rule 2. Well, no.
• 2:49:00
  That's the derivative of Rule 2, which happened back in 89,
• 2:49:05
  because when the Colombians get knocked off, it was because of
• 2:49:10
  their direct involvement with American citizens.
• 2:49:12
  That's where they imposed the rule.
• 2:49:13
  So now when you say, well, you know this cartel distributors
• 2:49:17
  dealing with this American bullshit, not on American soil.
• 2:49:20
  They don't talk to American on American soil unless it's a
• 2:49:23
  Mexican American with kinship ties.
• 2:49:27
  Like the guy from Chicago that got busted, he did it.
• 2:49:29
  He was in Guadalajara. Well, no, for you to be an
• 2:49:32
  American, you can buy a deal with them in Mexico, correct?
• 2:49:35
  Like there's two operational. That was one of their episodes,
• 2:49:37
  the guy the biggest. The biggest level guy ever in
• 2:49:40
  Chicago. The biggest guy in history in
• 2:49:41
  the United. States didn't make any deals on
• 2:49:43
  American soil. On American soil, they were on
• 2:49:45
  Guadalajara, the largest. I think that was Guadalajara
• 2:49:47
  wedding. Yes, the largest drug trafficker
• 2:49:48
  ever. I'm learning, I'm learning.
• 2:49:50
  Not a single transaction, several billion dollars.
• 2:49:52
  And so that's where that's how you understand the rules later
• 2:49:55
  on because of what happened in the 80s.
• 2:49:58
  Tomorrow. Yes.
• 2:49:58
  And so the Mexicans learn to say, you know, OK what?
• 2:50:01
  Don't deal with Americans on American soil.
• 2:50:04
  We're going to deal with Mexican national.
• 2:50:05
  Mexican national with kinship from a particular area who meet
• 2:50:08
  the minimum threshold purchase requirement.
• 2:50:10
  You're going to come to the table with several $1,000,000.
• 2:50:12
  They don't deal with broke jokers.
• 2:50:14
  And then independent of that, Mexican Americans with kinship
• 2:50:17
  ties, you want to buy product, you got to go to Mexico because
• 2:50:20
  they're not going to talk to you here.
• 2:50:21
  Or find a guy here, the kind of guy here that's a Mexican.
• 2:50:24
  National deal with the customer all day, but you're not dealing
• 2:50:26
  with the cartel, you're dealing with the customer.
• 2:50:28
  Correct, correct. I'm doing.
• 2:50:29
  I'm dealing with the first. Your deal is at first a first
• 2:50:32
  year host level. I'm probably 3rd or 4th.
• 2:50:34
  Yes, most of the time it's the the first year host level
• 2:50:37
  customers are Mexican nationals, 90% of them they don't speak
• 2:50:40
  English, the distributors don't speak English.
• 2:50:45
  There are four nationals on American soil.
• 2:50:47
  And so the conception here in the United States is
• 2:50:51
  fundamentally flawed. Now, with respect to 1989, that
• 2:50:55
  spring, the Bush administration was in the process, the first
• 2:50:59
  one, George HW Bush, they were in the process of negotiating
• 2:51:02
  what became known as NAFTA. And this was a treaty that would
• 2:51:07
  result in essentially the integration of the American and
• 2:51:10
  Mexican markets. And this is where the middle
• 2:51:14
  class really got shafted and the working class really got shafted
• 2:51:19
  to an enormous benefit of Mexico.
• 2:51:20
  This is where you had the thousands of Mexican factories,
• 2:51:24
  American factories migrate to Mexico.
• 2:51:27
  Whoa. Part of the part of that
• 2:51:29
  negotiation was the Americans want to fleece Gallardo.
• 2:51:33
  Oh. The Mexican government said, OK,
• 2:51:35
  we'll go arrest him, but we're going to try him.
• 2:51:40
  So they prosecute Gallardo and put him in a Mexican prison.
• 2:51:43
  They never extradite him. They keep them.
• 2:51:46
  They keep them. But they supposedly.
• 2:51:48
  Now he's in jail. Now his nephews are the guys
• 2:51:52
  that have the crown jewel. His family controlled the crown
• 2:51:54
  jewel, which is the port of entry going from Tijuana into
• 2:51:56
  San Diego. Later on, they become known as
• 2:52:00
  the Tijuana Cartel in Sonora, Caro Condado's family, Sonora
• 2:52:06
  cartel in the Gulf. Remember the Cartel 2?
• 2:52:12
  That's the standalone unit now. One and two.
• 2:52:14
  That's the Gulf Cartel. Juarez becomes a Juarez cartel,
• 2:52:18
  Sinaloa becomes Sinaloa cartel, and you still got the remnants
• 2:52:22
  of the groups operating in Guadalajara.
• 2:52:24
  So you have got at least five, if not 6.
• 2:52:26
  Spin offs. Spin offs.
• 2:52:28
  The analogy we used earlier was the breakup of AT&T.
• 2:52:33
  Yeah, Mama Bell. Yeah, when the big bell broke up
• 2:52:35
  with little baby bells, right? This gave birth to the modern
• 2:52:39
  cartel era. This gave.
• 2:52:42
  Away from Cartel One and two turn into Cartel 14 and 15.
• 2:52:46
  At that point it was 5 if not 6 cartels.
• 2:52:49
  And of course. And in today's world, where's it
• 2:52:52
  at? That's well, today they're up
• 2:52:54
  over 13. But at that time, you had the
• 2:52:57
  regional plazas of the predecessor Guadalajara Group
• 2:53:00
  become the cartels that you and I knew from the 1990s into the
• 2:53:07
  2000s. What we knew of, yeah.
• 2:53:10
  And it's a little bit different today, but throughout that era,
• 2:53:14
  the birth of the cartel era, there's why we're ending in 1989
• 2:53:18
  was the disillusion of the Guadalajara network.
• 2:53:21
  It's disarticulation, giving rise to the Baby Bells.
• 2:53:26
  Now you've got five groups, six groups as opposed to
• 2:53:33
  centralized. And in our second episode of
• 2:53:37
  this, we'll discuss the economic implications and how the
• 2:53:41
  incentive structure changed because this is where we really
• 2:53:45
  harmed ourselves. Meaning we as a country.
• 2:53:48
  We as a country, certainly. We'll leave it with that.
• 2:53:51
  Appreciate you.