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Inside the Sinaloa Cartel: The Network Bigger Than El Chapo · Deadly Intentions

• 0:00
  First of all, you have to understand the cartel no longer
• 0:02
  is this. It imploded in 2024 in a civil
• 0:04
  war. There were at least four guys
• 0:06
  bigger than Chapo in the Sinaloa network that we never heard
• 0:09
  about. That means there's 44 drug Lords
• 0:12
  within this network. There's 44 Chapos.
• 0:15
  We thought there's one. One of the main misconceptions
• 0:20
  you have. First of all, here in the US we
• 0:22
  often qualify it as a singular the cartel.
• 0:25
  In reality there's over 9 cartels.
• 0:28
  See, you and I were talking privately and that's, I think
• 0:32
  single handedly the biggest misconception that all regular
• 0:35
  Americans think that it's just one, it's the cartel.
• 0:39
  And then when you told me that there is actually 9 or more at
• 0:43
  times, I'm like, what? And you're like, yeah, when they
• 0:46
  take down one, there's 8-9 more right there that.
• 0:50
  Well, again, and so look, you've got, let's say 9 cartels of
• 0:54
  which of course Sinaloa is the most famous here in the United
• 0:56
  States. Jalisco is the second.
• 1:01
  It's now the most powerful in Mexico, but still in the US,
• 1:04
  people primarily think Sinaloa when you say the cartel.
• 1:07
  So we're just going to use that as the illustrative example.
• 1:09
  Look, I'm from Los Angeles and the in the Little Cartel since
• 1:15
  its inception has used LA, it's American base of operations.
• 1:18
  All of the cartels have adopted an American city to serve as
• 1:23
  their primary base of operations in the United States.
• 1:25
  So no matter how many there are and you said maybe up to 9, they
• 1:29
  have different. Cities.
• 1:30
  So, for instance, the Gulf Cartel operates out of Houston.
• 1:33
  OK. And Waters operates out of El
• 1:35
  Paso. The independent cartels in
• 1:37
  Sonora operates out of Phoenix. Now Los Angeles is home to
• 1:41
  three. The other cartels are simply
• 1:43
  regional actors, and so the Gulf operates out of Houston, but
• 1:49
  they don't operate out of Boston.
• 1:52
  Right. Or Chicago.
• 1:53
  Or. This is like, you know?
• 1:55
  And so they're, and, and to get it to Houston is not that big of
• 1:59
  an, you know, it's not that great of a distance, I should
• 2:01
  say. Certainly, no, no, it's just a
• 2:03
  few hours from the border. And again, when we're speaking,
• 2:06
  my experience and my knowledge is limited to West Coast
• 2:10
  operations. It's like I said, I'm from LA
• 2:12
  and so I'm knowledgeable about how Sinaloa and Jalisco operate.
• 2:16
  The Gulf, the Northeast, the Texas based, those are those
• 2:21
  groups operating South of Texas I have no familiarity with
• 2:24
  whatsoever. And so the other one of the
• 2:28
  other main misconceptions is when you're talking about the
• 2:32
  Sinaloa cartel, first of all, you have to understand that
• 2:34
  cartel no longer exists. It imploded in 2024 in a civil
• 2:37
  war. Now there are factions of the
• 2:41
  group which have disarticulated. So you still have different
• 2:48
  groups that the US government still refers to collectively as
• 2:50
  the Sinaloa cartel in dealing with the public.
• 2:52
  But in reality, they've already gone back, and they recognize
• 2:55
  the group LED up by the Zambadas as a separate faction from the
• 2:59
  Guzman group. So they kind of had a civil war
• 3:02
  and in 2024 and it was pretty much disband.
• 3:05
  Yes. So this is the cartel structure
• 3:07
  in 2024, so that. That is the current.
• 3:10
  That was 2024. That was prior to the implosion.
• 3:12
  Each color is a different cartel.
• 3:15
  See, people have no idea that. So each color is.
• 3:19
  Red is Sinaloa. Now another misconception people
• 3:22
  have is when you say the cartel. First of all, the term cartel is
• 3:26
  a misnomer. A cartel has a technical term.
• 3:32
  A cartel is a collection of either organizations or
• 3:36
  countries in the with respect to like OPEC, the oil cartel that
• 3:40
  what the what they do is they're producers who operate monopolies
• 3:46
  and what a monopoly does is it artificially inflates price
• 3:51
  through restricting supply. Supply and demand.
• 3:55
  And so the cartel is an economic power.
• 4:01
  Well, none of the groups in Mexico have cartel pricing
• 4:03
  power, so the term is not being used correctly.
• 4:08
  They're not cartels. Because they don't necessarily
• 4:11
  control. They don't have pricing powers
• 4:13
  right now. The Colombians in the 80s were a
• 4:16
  cartel. Yeah, they were.
• 4:18
  They were two. Pablo Escobar.
• 4:19
  Yeah, but Mezzanine and down in Cali, but that's those were
• 4:22
  actual cartels. They control production, they
• 4:23
  control transportation, they control distribution.
• 4:26
  They controlled all three. They.
• 4:27
  Controlled. That's why Which.
• 4:28
  Controlled price which? That way they can restrict
• 4:31
  supply to artificially inflate price, which is why kilos were
• 4:35
  so much more expensive back in 1982 right than in 2020. 6 So
• 4:39
  like Pablo Escobar in the, in the, in the, in the cartel circa
• 4:43
  80s when they started getting too much product into Miami or
• 4:48
  whatever they were getting it into where they choke it down a
• 4:51
  little bit for supply and demand it.
• 4:53
  Was the other way around. Or they would ramp it up.
• 4:55
  No, they would. They didn't flood the market.
• 4:59
  See, when Reagan declared the modern war on drugs in 1982,
• 5:03
  according to the DEA, the Colombians were bringing into
• 5:07
  the United States anywhere from 40 to 48 tons a year.
• 5:11
  Let's, let's go. Let's go with the DEA's high
• 5:13
  rank, high number. Make the easy math easy. 48
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  tons, 48 tons. That's on average four a month.
• 5:17
  4 tons a month. OK, that's 19821997.
• 5:22
  I get transferred to the federal detention center, having been
• 5:25
  charged. I was prosecuted under.
• 5:27
  That was the federal drug kingpin prosecution in
• 5:30
  California. In what year was that?
• 5:32
  This was the indictment was returned in October 1997.
• 5:35
  Well, from 1982 to 1997 it's a 15 year time period.
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  It went from 4 tons a month to 80 tons a month.
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  So you had a 20 fold increase in a 15 year period despite the
• 5:51
  American government spending hundreds of billions of dollars
• 5:53
  to disrupt the drug flow? Despite Americans thinking that
• 5:57
  our government has got a war on drugs and they're doing some
• 6:01
  good and choking this down when really they've increased 20
• 6:04
  fold. Yes, well, it wasn't.
• 6:06
  The. The individuals that created the
• 6:10
  policies to disrupt the operations, but these these tend
• 6:16
  to be very highly intelligent, highly educated men.
• 6:19
  Harvard Kennedy School of Government, they go to Yale Law
• 6:21
  School. They they advanced degrees in
• 6:23
  public policy from Stanford. Very intelligent men.
• 6:27
  None of them have a liquor St. Sparks, and they don't
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  understand. Like we profess to be a
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  capitalist country, but very few of the people in charge
• 6:35
  understand how markets work. Correct.
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  And so when when Reagan initiated the war on drugs in
• 6:41
  19, the modern war on drugs in 1982, he would have been better
• 6:44
  off simply saying, look, I'm going to take $300 billion. 300
• 6:49
  billion. Burn it and disband the DEA and
• 6:52
  it'd have been a more effective counter narcotic strategy.
• 6:55
  Hold on, so you're telling me when Reagan in 1998, in 1982
• 7:00
  said I'm going to put 300 billion towards the war?
• 7:03
  On That's what they spent over the course of.
• 7:04
  The next right I'm going to put 300 billion towards the war on
• 7:07
  drugs, big war on road. Just say no big war on drugs.
• 7:11
  You're saying that he would have been more affected had he burned
• 7:14
  that 300,000,300 million, got rid of the DEA that would have
• 7:18
  did that, would have done more for the for stamping out drugs?
• 7:21
  Because it was that 4 tons when he announced it, right?
• 7:23
  It went to 80 tons 15 years later.
• 7:25
  Right, that's not a war on drugs.
• 7:27
  No, no, it's a war on drugs. It's just it's where the law of
• 7:31
  unintended consequences comes in.
• 7:33
  And it's individuals who don't understand either the adversary
• 7:38
  or the market forces that drive the narco economy.
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  And so, had Reagan done nothing, it would have stayed at four
• 7:46
  times a month. Right, because that's what that
• 7:47
  was what it's. Because no monopolist in the
• 7:50
  history of capitalism has ever flooded the market.
• 7:55
  Annapolis don't flood the market.
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  They artificially restrict supply to keep prices high.
• 8:00
  That's how you protect your fat juicy profit margins.
• 8:03
  So the Colombians would have never flooded the market.
• 8:04
  They had no incentive to flood the market.
• 8:06
  So when the Colombians found out that the US had just declared a
• 8:09
  war on drugs, the Colombians weren't afraid.
• 8:13
  They they pushed the gas. No, that OK, Well, here one day
• 8:17
  I'm. Just trying to understand.
• 8:18
  This so when Reagan declares that he creates what's called
• 8:20
  the South Florida Task Force and at the time 90% of the product
• 8:23
  coming from Colombia entered the United States through South
• 8:25
  Florida. People may have seen the movie
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  blows. You got the product going from
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  Colombia to the Dominican Republic or you know, Puerto
• 8:31
  Rico, any of the Caribbean islands.
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  Then they fly it in to South Florida little sleepy airports
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  outside of Miami, right. This is when Miami was the the
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  capital for that particular world.
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  Miami Vice days when we were younger.
• 8:40
  Absolutely. OK, that was disrupted with the
• 8:45
  creation of the South Florida Task Force, where over the
• 8:48
  course of the next two years, the Reagan administration
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  initiated A2 pronged attack. They wanted to disrupt the
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  importation and so that's where they had, you know, the Navy
• 8:59
  involved Coast Guard, you know, a helicopter gunships, a massive
• 9:05
  interception program targeting the flights.
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  So now over the course of the next two year period does Reagan
• 9:10
  declares it in January of 82. By June of 84, you've got Reagan
• 9:16
  level of Reagan administration officials making statements to
• 9:19
  the Washington Post on background stating that we had
• 9:21
  broken the backs of the Colombian cartels and they may.
• 9:26
  Whenever you hear somebody who went to Harvard say that they
• 9:29
  have just outsmarted the guy with the 3rd grade education,
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  you know you're about to take it in the ass.
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  Never listen to the guy from Harvard when he's going up.
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  A guy with the 3rd grade education, right?
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  Who's on the street? And so the American government
• 9:43
  that developed a competency, A proficiency, where they started
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  intercepting 30% of the loads, 40% of the loads, 50% of the
• 9:49
  loads, 60% of the loads. They were getting that much.
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  So there's a massive disruption on the importation side of the
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  operation. So what does that incentivize
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  the Colombians to do? They got to double up
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  production, triple up production the more loads you you
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  intercept. You've taken down.
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  The more you're incentivizing them to scale up the production.
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  They weren't going to scale up the production prior to you
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  intercepting it. They had to compensate for all
• 10:13
  the losses. Like you said, they could have
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  stayed at 44 tons. 4 tons? You've been abolished.
• 10:18
  The DEA just stayed at 4 tons. We'd still be at 4 tons a day.
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  You'd be paying $600 a gram today instead of $20.
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  Right, right. So.
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  So now, with the interceptions of the loads that incentivized
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  the Colombians to scale up production after two years of
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  already taking these losses, what did the Colombians do?
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  They pivoted and partnered with the Mexicans.
• 10:41
  Right. They they changed their
• 10:42
  distribution. Did they course correct?
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  So they went from, they went from 90% of the product through
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  South Florida to pivot because you had the Mexicans who were
• 10:54
  themselves already involved in trafficking marijuana, all the
• 10:57
  degrees of heroin, but for the most part they were marijuana
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  based operations for Mexico, for Mexico.
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  So then the Colombians partnered with the Mexicans and the group
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  and power at the time was a, a network that the US government
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  characterized as the Guadalajara cartel.
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  It was a collection of organizations.
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  It was a network actually created by the Mexican
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  government. And so one of the factions that
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  you had two what nominally 2 cartels during that time period,
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  1 based out of Guadalajara on the West Coast, 1 based out of
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  the Gulf, which is name was the Golf cartel in Mexican state of
• 11:30
  Tamaulipas. And so, but the larger the 2 was
• 11:33
  Guadalajara, but it was such an enormous expansive area that
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  they had regional offices. So one of them, they called them
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  plazas. So one of them was in Sinaloa,
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  one of them was in Sonata, one of them was in Waters, one of
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  them was in Tijuana. This was all Guadalajara cartel
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  territory. And all based out of Colombia.
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  All based I know this is the Mexicans based out of
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  Guadalajara, the capital of this Mexican state of holy school.
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  But the products coming. From the Colombians, now come to
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  these guys who had this massive marijuana importation operation
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  and say, hey, we'll pay you guys to transport our material.
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  So initially, the Mexicans were simply logistics.
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  Just mules mules. They're getting paid 1000 per
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  unit per kilo. So the Colombians would bring it
• 12:12
  to Mexico, drop it off to the Mexicans.
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  The Mexicans would use their network, transport it into the
• 12:17
  United States, and then drop it off to the Colombians.
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  In, in, in US, in the US, you're.
• 12:22
  Just delivery service. So now for instance the.
• 12:25
  So see, a lot of people don't know that.
• 12:27
  So when when, when Colombia made its pivot to Mexico and got in
• 12:32
  bed with with the Guadalajara. Guadalajara, yes.
• 12:35
  Now they're just using the cartel, the Mexicans, the the
• 12:38
  Mexican to transport to get it across the line to then re
• 12:42
  deliver it with the Colombians. The Colombians, they're just now
• 12:44
  they just, they farmed out the transportation aspect.
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  Now this becomes important because the group in Sinaloa,
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  that particular fraction of the Guadalajara network, were
• 12:53
  assigned responsibility for the cartel from Colombia, based out
• 12:56
  of Cali, not Pablo's, the other one.
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  Oh, OK, OK. Sinaloa was always the redheaded
• 13:02
  stepchild and so they got the smaller of the Colombian groups,
• 13:06
  the other ones got the more lucrative.
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  But the reason why it's important is because the Cali
• 13:11
  sell their number one in the United States.
• 13:14
  Their primary distribution office was located in Los
• 13:16
  Angeles. So Sinaloa got the task of
• 13:19
  taking Colombian product from Mexico to LA.
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  So they had to establish their infrastructure in LA to receive
• 13:26
  the shipments. Later on, LA becomes their home
• 13:29
  of base of operations in the United States.
• 13:31
  Well, it has Genesis when they were transporting on behalf of
• 13:34
  Colombians. That's how they started.
• 13:36
  Yeah, the guy number one for the Colombian cell at the time was a
• 13:38
  guy named Mario Villa Bona. Mario and I got to become pretty
• 13:40
  good buddies, and we were in prison.
• 13:42
  And so that was Guzman's operation.
• 13:47
  Like Guzman was never the leader of the Sinaloa cartel.
• 13:49
  He's the representative from the Sinaloa faction that dealt with
• 13:52
  Guadalajara. When the Colombians started
• 13:55
  paying the Mexicans to do in this transportation, all of a
• 13:58
  sudden the read, the number of loads getting intercepted
• 14:01
  started dropping precipitously because they abandoned the South
• 14:04
  Florida route to come in through Mexico.
• 14:06
  Now Mexico is a very different proposition because you got a
• 14:08
  2000 mile border, right? If it's not very well protected.
• 14:11
  Well, not just that though, when you when they formed the South
• 14:14
  Florida Task Force, they started intercepting 3040 fifty 60% of
• 14:17
  the loads coming into South Florida and Reagan took 1000 DEA
• 14:23
  agents and put him in Miami. Or you can concentrate a force
• 14:28
  of agents in a city now instead of focusing on a, you know, the
• 14:34
  South Florida area now they got to have 2000 miles.
• 14:38
  So was there ever a point during the Reagan era when he had all
• 14:42
  this attention down in South Florida where once the
• 14:45
  Colombians had pivoted, did there, was there ever a time
• 14:49
  where the DEA agents is like, we can't, it's not coming in like.
• 14:52
  No, they, they, they still continued.
• 14:54
  It's just the lion's share began shifting like it wasn't a
• 14:58
  precipitous. Did they know it was shifting?
• 15:00
  Certainly OK. And do they know where it was
• 15:03
  coming in through? As far as?
• 15:05
  It's like they'd how well look. The different as like they.
• 15:08
  'D shifted. From other organizations, there
• 15:10
  were still groups in Columbia that were still coming through
• 15:12
  South Florida. It's not like it wasn't 90% down
• 15:14
  to zero. It was a slow decrease.
• 15:17
  So within a decade, Los Angeles was getting the 90%.
• 15:22
  But it was a a, a slow, gradual shift, right, that the federal
• 15:27
  authorities didn't really pick up immediately.
• 15:31
  Back in the 80s, was this all Pablo Well?
• 15:33
  No, remember you had two cartels.
• 15:34
  You had Cali and Medellin. Now, Medellin was the one that
• 15:37
  everybody got the big headlights for headlines for, but that
• 15:41
  wasn't the one relevant to Los Angeles because Cali operated
• 15:43
  out of LA. Was it smart for Cali to be a
• 15:46
  little bit under more of the IT was probably waste.
• 15:48
  That's why they were able to keep rolling, you know?
• 15:50
  Glitz. And glamour.
• 15:51
  And have their own island in the Bahamas like Pablo did.
• 15:54
  And all that, he brought a lot of attention on them and that
• 15:56
  led to his his groups getting decapitated.
• 15:58
  And so the Cali guys were the much more smarter of them.
• 16:01
  They were more professional, more business oriented, as
• 16:03
  opposed to Escobar, which was blowing up planes out of the sky
• 16:06
  and taking the Supreme Court hostage.
• 16:08
  He was his worst, own worst enemy, wasn't he?
• 16:10
  I mean, didn't he, didn't they build a prison for him?
• 16:12
  He had to go do prison and he built his own prison.
• 16:15
  I mean, you know. And so the point is, is so when
• 16:18
  you had the pivot to the Mexico contracting with the Mexicans,
• 16:24
  when the Columbians made that move prior to the DEA South
• 16:29
  Florida task Force, they're bringing in 4 tons a month.
• 16:32
  With the interception of the flight, they scaled the
• 16:34
  production, double up production, triple up production
• 16:37
  to compensate for all the lost load.
• 16:39
  So when they pivoted to Mexico, they were no longer producing 4
• 16:42
  * a. Month now they're producing 20
• 16:43
  they're. Producing 3 times as much,
• 16:45
  right? So it resulted in the market
• 16:47
  getting flooded. Right, but not through Miami.
• 16:50
  Yes, as now you started getting the transition through the
• 16:54
  Mexican border. So it became a much more
• 16:57
  diffused problem for customs and the DEA because Monday have a
• 17:02
  2000 mile border and now you've got multiple plazas, you got the
• 17:05
  guy shooting into Houston, you got the guy shooting into El
• 17:08
  Paso, the guy shooting into Phoenix.
• 17:09
  All of a sudden, now you've metastasized the problem.
• 17:12
  You had a small little cancerous cell, now you've spread.
• 17:16
  It and when they. I like that Metastasized.
• 17:18
  I love. It and when they triple up
• 17:19
  production now you had a flooding of the market.
• 17:23
  So remember 30 months period, Reagan, them in official search
• 17:26
  were, you know, boasting that they had broken the backs of the
• 17:29
  Colombian cartels. Well, a year later they were in
• 17:32
  full panic mode because once the market got flooded, they had to
• 17:35
  figure out how are you going to market three times as much
• 17:37
  product without disrupting the pricing power because they
• 17:42
  didn't want to undermine their profits.
• 17:44
  When they tripled their production, quadruple their
• 17:46
  production. This So like in United States,
• 17:48
  you have a wealth distribution that's in the form of a pyramid.
• 17:51
  The euphemistically 1% is obviously at the very top of the
• 17:54
  pyramid. And you've got like, say the top
• 17:55
  10%, which represents the lion's share of, you know, 50 to 60% of
• 17:59
  the wealth of the population. Then you've got what was
• 18:01
  ostensibly a middle class today a shrunk, but you've got a
• 18:04
  middle class, a working class. And then the poor, the poor at
• 18:08
  the base of the pyramid is the biggest, the biggest subsection.
• 18:12
  So that represents a large potential customer base.
• 18:15
  But the problem with poor people is they got no money.
• 18:17
  So that's the advent of crack. That's how they figured out, OK,
• 18:21
  this is how we're going to market three times as much
• 18:23
  product by selling it to poor people, right?
• 18:26
  Dilute the quality of the material.
• 18:27
  We can sell 10 and $20 rocks that the average anybody can buy
• 18:31
  compared to what's a key going for at that time.
• 18:34
  They were making, they were making $25,000 profit per kilo.
• 18:37
  In the history of of cocaine being consumed in America and
• 18:42
  not like back in the 20s and 30s where it may have been legal and
• 18:45
  it was supposedly in Coca-Cola, but like in the, let's say in
• 18:47
  the heyday of it, what was the highest price on the market
• 18:51
  like? And I know that it had a lot to
• 18:53
  be with where you lived. If you lived in Detroit, it
• 18:56
  might be higher than if you lived in LA, but like in your
• 18:59
  under, in your dealings or understanding of it, what's the
• 19:02
  high as it? Was it ever 60 a key?
• 19:05
  Was it ever 40 a key? Well, depending on what market
• 19:08
  you're taking it to domestically in the United States, yeah, I
• 19:11
  can only speak as to the 1990s era from personal experience,
• 19:14
  right. And.
• 19:16
  What was the highest you ever heard it was selling for?
• 19:19
  34 in Vancouver. Because Vancouver is so far
• 19:23
  away. Yeah, 2029 to 30 in Honolulu.
• 19:27
  They're going for about 2425 in New York, about 2324 in Chicago.
• 19:34
  See, they're far and then close. You get to LA.
• 19:36
  What's and then what's LA 15? I was.
• 19:37
  Getting them for 15, you can flip them for 18.
• 19:40
  So you can make them 3A key, but you're getting them for 15, but
• 19:43
  the guy in Vancouver is paying 35.
• 19:45
  Yeah, it's just. Geographically, which is why
• 19:47
  they come to LA. Oh, the Vancouver guys.
• 19:50
  Yeah, Most of the large scale drug trafficking in the United
• 19:54
  States that's operating on American soil, most of it
• 19:58
  whether it's involving the two primary groups in Mexico,
• 20:01
  Sinaloa, Jalisco, it takes place in LA.
• 20:03
  No large scale Mexican national trafficker is buying product in
• 20:07
  New York. No.
• 20:09
  They're buying it in LA, they're selling it in New York.
• 20:11
  Will the people paying the New York price aren't the Mexicans?
• 20:15
  No, those are the Americans that pay the New York price, right?
• 20:19
  Nobody from Sinaloa, Jalisco, Michoacan, Colima, Nayadi,
• 20:22
  Durango, Sonora. They're not paying 24.
• 20:24
  No, they come now. They get them for 15.
• 20:26
  Right now LA was Ground Zero of probably the cheapest where you
• 20:30
  could get it. Well, here in the United States,
• 20:33
  you can get it if you're from one of those particular states
• 20:36
  that the Sinaloa network operate.
• 20:38
  Did cartels ever know what the other cartels?
• 20:41
  Were selling for they maintain they have to maintain equitable
• 20:44
  pricing. Sure.
• 20:44
  So you. Know because if they're selling
• 20:46
  them cheaper in LA then people are going to buy them.
• 20:49
  Something to get there. See, you have to understand the
• 20:51
  overwhelming majority of Mexican nationals that are traffickers
• 20:56
  in the United States from any of the states that are ostensibly
• 21:00
  Sinaloa. Core.
• 21:03
  Sinaloa, Halis, Comicho, Khan, Nayeri, Colima, Sonora, Durango.
• 21:07
  The overwhelming majority of Mexican national traffickers
• 21:09
  from those states are not cartel.
• 21:12
  No, and you told me when we were talking once, some of the most
• 21:14
  valuable people within that whole pecking order are the
• 21:17
  truck drivers. Well, no.
• 21:18
  That's how you facilitate the transportation.
• 21:20
  That's where the Americans get involved, that these these are
• 21:23
  the Mexican nationals or Mexican Americans with kinship ties.
• 21:28
  So if you marry a woman whose cousin is a member of a
• 21:31
  organization in the Sinaloa network down in Mexico, you're
• 21:33
  good. You're in.
• 21:35
  Or if you have, you know, your uncle, somebody's cunado or
• 21:38
  somebody's compadre, you're in. But otherwise, if you're not, if
• 21:42
  you don't have the kinship tie and you're an American, they
• 21:44
  don't care if you're Mexican American.
• 21:46
  No, they don't care. Go to LAPD, go to LA Sheriff's
• 21:48
  Department. How many Mexican Americans are
• 21:50
  there? A lot see, in the United States,
• 21:53
  as a precondition of being employed by law enforcement, you
• 21:56
  must be an American citizen. There's no foreign national FBI
• 22:00
  agents, DEA agents, LAPD. You have to be an American
• 22:04
  citizen. So for them to deal with an
• 22:06
  American citizen in the United States, it has to be someone
• 22:12
  with a kinship tie, otherwise they don't deal with Americans.
• 22:16
  Like, none that in fact. That's just like rule #1 isn't
• 22:18
  it? Yes, because that's how the
• 22:19
  Colombians got knocked out. Mario's operation got knocked
• 22:21
  out because he was dealing directly with Americans.
• 22:25
  It is why the history. Just when I get invited to speak
• 22:27
  for law enforcement groups or to give talks to college kids, you
• 22:31
  know, taking advanced graduate degrees, they in order to you
• 22:35
  understand what's going on today, you have to understand
• 22:37
  the history. That's what we're kind of doing
• 22:38
  right now. Well, so here's a little bit of
• 22:40
  that. Yeah, it does a little bit of
• 22:40
  the history. And so the lesson learned when
• 22:44
  the Colombians got taken down because Mario was dealing
• 22:47
  directly with American citizens, one of whom was a famous
• 22:50
  trafficker from Los Angeles named, I'll use this euphemism,
• 22:54
  Harry O And Harry O is the individual who put up the money
• 22:58
  to bankroll Death Row Records. OK.
• 23:00
  Yeah. Well, I know Mike very well.
• 23:01
  Mike and I got to be really good friends, and he dealt directly
• 23:05
  with Mario. Well, there were several of
• 23:07
  these guys who were American citizens, African Americans who
• 23:11
  were dealing directly with the Colombia.
• 23:13
  Now the Colombian lived over in Santa Monica, like the very nice
• 23:17
  area of Santa Monica, kind of where like George Clooney has a
• 23:20
  beach house and Julia Roberts like that section of and, but
• 23:24
  you got young black guys that are in their 20s coming up from
• 23:28
  South Central. Right into Santa Monica.
• 23:31
  So, and one of them was an individual named who went by his
• 23:34
  nickname was Waterhead Bow. And everybody in South Central
• 23:37
  knew, you know, Waterhead Bow had the plug, and now he was the
• 23:41
  one who had the connection. So the best to plug.
• 23:43
  Yeah, so that's what that that's the euphemism, right?
• 23:46
  The waterhead bow, The waterhead bow.
• 23:48
  Unfortunately the authorities start following waterhead bow
• 23:52
  and so the DEALAPD, they're watching.
• 23:55
  You got this 24 year old kid, 25 year old kid, just back in the
• 23:57
  1980s and he's driving around in, you know, big boy bends.
• 24:01
  Right. Waterhead Bow, Yeah.
• 24:03
  And so one afternoon they're following Bow and he leaves
• 24:07
  South Central and he's driving over into Santa Monica is not
• 24:10
  necessarily the area where you're going to see guys from
• 24:12
  South Central hanging out in. So now he's, you know, they're
• 24:15
  watching him. He meets with an individual at a
• 24:16
  cafe. They talk.
• 24:18
  Well, it's Mario. So now they're like, well, who's
• 24:21
  this guy who's this Latino that he's meeting with in Santa
• 24:23
  Monica? Now we know who he is.
• 24:26
  Follow him. So the American citizen
• 24:28
  unwittingly led the FBI, the DEA and LAPD.
• 24:33
  To the big guy. To the number one, so when the
• 24:36
  Colombian cell later on gets taken down, they got knocked off
• 24:39
  right around my graduate from high school 19871988, right
• 24:42
  around there when that cell got taken down, they took out
• 24:47
  Mario's group and with the group that takes over is the group
• 24:53
  from Sinaloa in LA. Well, the first rule they
• 24:56
  implement is none of our distributors can talk to an
• 24:59
  American period, unless he's married.
• 25:02
  Kinship, Kinship. Thai.
• 25:04
  Your dad's got to be someone's connado, somebody's compadre.
• 25:06
  You got to have to be married to somebody.
• 25:07
  You better be someone's Primo. You got to forget verification.
• 25:09
  You got to get verification. If you're a Mexican American,
• 25:12
  you can be a Mexican national because they know you're not a
• 25:17
  FBID. Snitches are.
• 25:19
  Different Oh no, they know that you.
• 25:20
  Can't be you? Can't be employed.
• 25:22
  By an American law enforcement. So you're not an undercover cop.
• 25:25
  So on American soil, they use citizenship to filter out law
• 25:27
  enforcement. Now to filter out the
• 25:29
  informants, they have two methods.
• 25:33
  First of all, you have to for Sinaloa, you have to be from one
• 25:35
  of the relevant states that are Sinaloa territory I've already
• 25:37
  identified. The second thing is you have to
• 25:40
  come to the table at during my era it was at least 200 kilos.
• 25:46
  Like if you ever come to the table with three and a half
• 25:48
  million, don't. Don't even.
• 25:49
  They're not talking to no broke Dick jokers.
• 25:50
  That's that's your initiation. That's that's, you know, that's
• 25:53
  for you to get an account with one of the distributors.
• 25:55
  So that means if you're some guy from Boston, because at the time
• 25:58
  for the first five year, the cartels operations, like the
• 26:00
  first full year that they operate as a standalone entity
• 26:03
  was 1990 for Sinaloa. The Guadalajara network had
• 26:07
  imploded in 1989 and those different factions formed with
• 26:11
  today we know as the modern cartel era.
• 26:14
  And so the group out of Sinaloa, since they were responsible for
• 26:17
  shipping product to LA, they already had the infrastructure
• 26:20
  in LA. In LA, but not.
• 26:22
  That was their run. They didn't go to Phoenix, they
• 26:23
  didn't go to, they go to LA to drop off the Mario and so.
• 26:27
  But they didn't deal with when the Mexicans shipped to LA, they
• 26:31
  have to have a team on the LA side to receive the shipment.
• 26:33
  Then one of their guys will take a van and drop it off to the
• 26:36
  Colombians. So when the Colombians got taken
• 26:39
  out, the only group left standing were the Mexicans from
• 26:42
  Sinaloa. So now the guys from Tijuana
• 26:44
  operating in San. Diego in LA went from just being
• 26:47
  deliverers to. Taking over the market to back
• 26:49
  up a little bit, Sinaloa's doing the transporting for Cali.
• 26:53
  Yeah. So for the first few years they
• 26:55
  were just getting paid 1000 per kilo.
• 26:56
  Right, just they're they're just the.
• 26:57
  Straight runners logistics. Yeah.
• 26:59
  First and foremost, that's what they all are, are logistical
• 27:02
  networks. A few years into the operation,
• 27:05
  the head of the Guadalajara network, man named Feliz
• 27:08
  Gallardo, got an idea and said, you know what, you guys are
• 27:10
  making a shit ton of money. We're making 1000.
• 27:12
  We're. Making 1000 per, he says we want
• 27:16
  to renegotiate, we'll handle all the transportation, but we want
• 27:19
  to get paid in product. And so he wants to, it's a
• 27:23
  payment in kind fee structure, right?
• 27:26
  So instead of 1000 per unit, they'll say, you know what,
• 27:29
  we'll take a third of the load if you want to get 12 tons in
• 27:32
  LA. If you want to get 8 tons in LA,
• 27:35
  send 12 tons. Because we're clipping.
• 27:37
  We're taking 33 tons for us. That's how we're going to start
• 27:40
  getting paid. I thought they start getting
• 27:41
  paid? And that started in win.
• 27:43
  Right around 87. Yeah.
• 27:45
  I was still in high school one day and that's when.
• 27:47
  I started kind of becoming less of a Colombian thing.
• 27:49
  Well, I just sort of request. So the Colombians are rocking
• 27:51
  and rolling. Mario's the biggest on the West
• 27:53
  Coast, right? The biggest traffic on the West
• 27:55
  Coast, Mario. Volume is Mario.
• 27:56
  Doing he's getting 8 tons, 10 tons, 12 tons at a time.
• 27:59
  And this is in the 80s, so this is an enormous quantity.
• 28:02
  What kind of money was that guy making?
• 28:03
  But he remember he was the number one on behalf of Collie.
• 28:07
  He was a collie guy. So he was there.
• 28:08
  He was responsible for their office.
• 28:10
  But technically there's like 8 or 9 other cartels right?
• 28:13
  Well, this is in Columbia. Era.
• 28:14
  Oh, Columbia era. So.
• 28:15
  There's two cartels in Columbia. We hadn't gotten to the Mexican.
• 28:17
  Era so like Ben Medelline operated out of Miami and New
• 28:20
  York, Miami was their primary hub, right Collie went Los
• 28:25
  Angeles and so when about 87 once the Mexicans once the
• 28:32
  Sinaloa guy started taking payment in kind, they're getting
• 28:35
  one third 30% of the load, 40% of the load they had to be able
• 28:39
  to they had to set up their own distribution operation.
• 28:41
  They had to get it out. So that they can cash out.
• 28:43
  Right. Otherwise, they just got
• 28:45
  products. They're great at getting there,
• 28:46
  but are we good at selling it? So now they get the 12 tons
• 28:49
  delivered to them in Mexico, they take the 12 tons to LA,
• 28:51
  they drop off ate the Mario, they keep the four.
• 28:54
  Well, now Guzman's got to figure out, OK, how are we going to
• 28:56
  distribute it? Because Guzman had the smuggling
• 28:58
  organization. He didn't have the distribution
• 29:00
  organization. He had the cross the.
• 29:02
  Border cross the border logistics so then he reaches out
• 29:05
  to other guys from Sinaloa who had the marijuana already
• 29:08
  operating right hey you guys got.
• 29:10
  Distribution template with weed. We need the distribution
• 29:13
  capacity. Right, we got to do a pivot
• 29:15
  somewhat from weed. Can you guys help distribute
• 29:20
  coke? So then they had to set up a
• 29:21
  parallel infrastructure to handle the coke, right?
• 29:24
  So this is what got Sinaloa into the distribution.
• 29:27
  And that's all going through LA. All going through LA.
• 29:29
  So what? Obama sends up a team.
• 29:31
  We're talking about circa here. 8780. 88788 yes.
• 29:36
  So this is where that's going on we're now.
• 29:37
  Like is 8788 was LA just an absolute fucking rock star?
• 29:42
  I mean just on. Fire you had the that was the
• 29:46
  batter ram era with Daryl Gates going crazy.
• 29:48
  You had the whole, you know, Ground Zero for the crack
• 29:50
  epidemic, right? Because when Mario needed to
• 29:52
  figure out how they're going to market the large quantities of
• 29:55
  product to poor people. It was one of the African
• 29:59
  Americans from South Central who had on a pilot program had begun
• 30:04
  breaking down cocaine, coke into freebasing it into into rock.
• 30:08
  But they dilute the quality of it to make it inexpensive.
• 30:12
  A guy in LA, you know, whatever ethnicity, a guy that's on the
• 30:16
  poor side of the pyramid as you speak, you know, he can't get a
• 30:20
  key. He can't even buy an 8 ball, you
• 30:22
  know, but he can't even buy that.
• 30:23
  But he can buy a $15 crack rock all day and get a pretty decent
• 30:28
  high, right? I.
• 30:30
  Mean I've never done it but I don't know how but I mean I can.
• 30:34
  Supposedly they say that you know, it's, it's a, you'll never
• 30:37
  get as high as the first time and they're always chasing that
• 30:40
  high. Well, I don't know about that,
• 30:41
  but I know that from a pharmacological perspective it
• 30:45
  was much lower in quality. So this notion that crack was
• 30:49
  more potent was false right? Now it may have impacted you
• 30:55
  physiologically different because you're taking a larger
• 30:57
  hit at a single time. So it's concentrated, but it's a
• 31:00
  much lower quality materials, it's diluted.
• 31:03
  The purity levels are insignificant.
• 31:04
  Right, that's why you're getting it so cheap.
• 31:06
  That's right, you're getting. So cheap, right?
• 31:07
  I mean, otherwise you're. Not paying.
• 31:09
  You're not getting quality at that price.
• 31:10
  You couldn't buy it $20 bag of cocaine, I don't think, Could
• 31:14
  you? I mean how that would be very
• 31:15
  insignificant amount? Well, no, I mean you could
• 31:18
  that's time. I think grams are going for like
• 31:19
  80 to $100, but that's again really diluted.
• 31:22
  But if keys are going for 15, oh.
• 31:24
  No, no, LA, the keys are going for 15 at the time.
• 31:27
  No, no, this is only later on. At this point the Colombians
• 31:29
  still maintain control. They didn't want to flood the
• 31:32
  market. The only reason why the
• 31:34
  production, the only reason why the amount increased was because
• 31:38
  they had triple up production in in Colombia in response to the
• 31:42
  South Florida Task Force, is that interception effort.
• 31:44
  And so suddenly the US government had unwittingly
• 31:47
  incentivized the Colombians to scale up production.
• 31:50
  So rather than disrupting the drug flow, you incentivized A
• 31:53
  doubling and tripling of production.
• 31:55
  And then you got. They got the Mexicans.
• 31:58
  Clipping. Clipping 1/3 of it.
• 32:00
  Which was a win win because for the Colombians, they're paying
• 32:02
  dirt cheap for the product on Colombia.
• 32:04
  And the Mexicans are getting screwed in only 1000 a key.
• 32:07
  Yes, but now they're taking all the risk, they're making a lot
• 32:09
  more money. Is the biggest in the whole
• 32:12
  scheme of things Pete is getting it.
• 32:14
  Is the transportation aspect one of the biggest risks?
• 32:17
  Absolutely Right. And the Mexicans were only
• 32:19
  making 1000 a key. They're getting screwed.
• 32:21
  Getting screwed. So yes.
• 32:22
  And so now they were saying. Who was the brilliant guy and
• 32:24
  and and Mexican? Those he's they.
• 32:29
  Said Heyman would take a. 3rd The leader of the Guadalajara
• 32:32
  network was a former police officer and federal official in
• 32:34
  Mexico named Police Gallardo. He was the point of contact with
• 32:37
  the government officials. So he was the one, the guy that
• 32:40
  got. The whole thing was built by the
• 32:41
  government. People think you're dealing
• 32:44
  with, you know, bad guys, Mexicans or third grade
• 32:46
  education stuff doesn't. You're dealing with the
• 32:48
  government you're talking with. At the time, yes, it was all he
• 32:51
  was. The one that said we need 1/3?
• 32:53
  We'll take a third off the federal.
• 32:54
  We want one third off the top, 30 percent, 40%, the second
• 32:57
  prong of the Colombian the US operation.
• 32:59
  We got, we've established kind of how it established.
• 33:01
  In addition to targeting the distribute, the importation
• 33:03
  operation, they started targeting the distribution
• 33:06
  operation in the Colombians. See if the US government wanted
• 33:09
  to say we're going to disrupt the trafficking, which is not,
• 33:12
  look, that's a reasonable goal, but you have to go about it in a
• 33:17
  intelligent manner so that you don't disrupt that aspect that
• 33:22
  is beneficial. Had they left the Colombian
• 33:25
  distributors alone, they would have never flooded the market.
• 33:28
  Right, like you said, we, but you could have.
• 33:30
  Targeted the Colombian customers like the Americans that are
• 33:33
  buying from the Colombians. Target them all you want, but
• 33:36
  once you displaced Mario's group two years into the Mexicans
• 33:42
  having a parallel distribution to cover for their one third,
• 33:44
  they got to cash out, right? So they set up a parallel
• 33:46
  distribution operation. Well, when you took out the
• 33:48
  Colombians, who's left? The Mexicans.
• 33:51
  Mexicans, Mario. No, Mario.
• 33:53
  'S Colombia, Mario's clipped. Chapo's friends Chapo hands with
• 33:57
  the distribution muddling. Is this where we his?
• 33:59
  Buddies. So now I've seen the lowest
• 34:00
  faction are taking over distribution in LA.
• 34:03
  So did the did the the Mexicans? There were the last people
• 34:06
  standing. When When the cube, when the
• 34:08
  Colombians got taken out in LA, Mario and the boys were the
• 34:11
  Mexicans. Like hell yeah.
• 34:12
  Like they got, we inherited the entire market.
• 34:15
  Right by default. By default.
• 34:18
  So they implement their rules. We're going to set up our
• 34:20
  distribution operation, take over everything and no talk to
• 34:23
  greens, talking to to Americans, period, period.
• 34:27
  Unless Mexican American chinchip tie.
• 34:29
  Now, if you're an American citizen, you want to buy
• 34:30
  product, you go to Mexico, see, they deal with, they'll deal
• 34:34
  with you in Mexico, they won't talk to you.
• 34:37
  They're not good on American soil.
• 34:38
  Indiana. So when you see people on
• 34:39
  YouTube saying Oh yeah, I was dealing with the Sinaloa Cartel,
• 34:42
  like are you fucking crazy? Unless you went.
• 34:45
  To Mexico, you're not. Yeah, unless you're sourcing it
• 34:48
  in Mexico, because on American soil they assume every
• 34:50
  American's law enforcement. Right, right.
• 34:52
  And they have all the feds and everybody paid for in Mexico.
• 34:56
  So if I go down there and talk to them in Mexico, I'm.
• 34:58
  In Mexico, you're putting your life in their hands.
• 35:01
  Right. You go down there to buy 300
• 35:03
  units, OK, that's fine. You're going to get them a lot
• 35:05
  cheaper. Those keys that cost 15,000 per
• 35:07
  in LA get them in ninety 9500 and DJ.
• 35:09
  But. You're in Mexico.
• 35:12
  Maybe they decide, You know what?
• 35:13
  We'll keep the three million and put this gringo in a ditch.
• 35:16
  Right. And does it.
• 35:17
  And that happened. Well, certainly it happens.
• 35:19
  That's why the DEA doesn't send their agents into Mexico.
• 35:23
  They lure them here, right? But but if you don't talk to
• 35:27
  Americans, you insulate the distributors.
• 35:30
  And when we get to the main part of the story, I'll show you how
• 35:33
  they're able to insulate their operations, right?
• 35:35
  Because since the birth of the modern cartel era in 1995, for
• 35:39
  35 years, 1 cell on the distribution side has been taken
• 35:44
  down in 35. Years and 35 years. 1 cell, 1
• 35:47
  cell which was the Chapo cell. Nope.
• 35:50
  It was the group headed up by a model Carrillo cell, and it was
• 35:53
  a 20 ton load got knocked off in a warehouse in suburban Sylmar.
• 35:56
  It's a suburban LA. And that's it.
• 35:59
  In 35 years, one distribution. Cell.
• 36:01
  Do we as Americans? One transportation cell got
• 36:04
  knocked off in 2006 that was headed up by Natural Cortonel's
• 36:06
  organization, and then one smuggling cell got taken down in
• 36:10
  1993, which was Guzman cell coming into.
• 36:13
  So this is how the average American thinks come.
• 36:15
  So I'm just giving it to you. I'm the average American dude
• 36:18
  that pays a little bit of attention to the news and and
• 36:20
  covers the news on my show and things like that.
• 36:22
  But if you were to ask me, man, tell me about the, about the
• 36:24
  Mexican cartel, I'd say, well, I think we just got the main dude,
• 36:28
  Chapo. I think we just got him.
• 36:30
  And I think they got him in a real high, high security prison
• 36:32
  somewhere buried in Colorado or something.
• 36:35
  And before we got him, we'd gotten like two or three other
• 36:38
  times and he dug tunnels and got in and out on what have you.
• 36:41
  But I think I think we got him. Yeah.
• 36:43
  And and that's what because they paraded Chapo all around and
• 36:47
  they and they told us this is the Mexican cartel and, and,
• 36:51
  and, and you've seen it and heard it.
• 36:53
  And that's what the storyline has been in America.
• 36:56
  Chapo was the cartel. We don't even know the Sinaloa
• 37:02
  versus, you know, the Guatemala. We don't know any of that as
• 37:04
  Americans. We just know that Chapo.
• 37:07
  Chapo For 20 years, that's all we heard was Chapo, Chapo.
• 37:09
  Chapo And they got him finally, and we got him.
• 37:12
  Chapo was arrested. Guzman was arrested in January
• 37:15
  2016, the last arrest. He gets extradited to the United
• 37:19
  States in January 2017. In 2018, there's more product
• 37:24
  than in 17. In 19, there's more product than
• 37:26
  in 18. In 20, there's more product than
• 37:28
  in 19, then in 18, then in 17. Every year there's been an
• 37:33
  increase in product that if you're.
• 37:35
  The amount of material entering the United States has increased
• 37:40
  every year for the past 35 years, despite the US government
• 37:43
  spending 1/2 a trillion dollars targeting them.
• 37:45
  And getting them, yeah, just chop, he's gonna.
• 37:47
  Speak when you take out the number one, the so-called #1 and
• 37:52
  next year there's more product than when he was on the street
• 37:54
  means he's irrelevant. Right.
• 37:58
  It's like almost like if I can use a really stupid analogy, you
• 38:01
  take out the starting quarterback and but the starting
• 38:03
  quarterback only won nine games and you put the backup
• 38:06
  quarterback in and he takes you to the.
• 38:07
  Super Bowl. Yeah, it's right, Right.
• 38:09
  The number one was irrelevant. The number one is irrelevant,
• 38:11
  you know, And then the number two guy gets hurt and the number
• 38:14
  three guy takes him. In 2024.
• 38:16
  Like when did now? When did was Chapo first
• 38:18
  arrested? 1993.
• 38:21
  Well, that way that that, but he had got.
• 38:23
  His first indictment was 1987. U.S. government spent 30 years
• 38:28
  trying to get this guy. Wow.
• 38:32
  Look, I told you when in in 2024 the cartel exploded, imploded.
• 38:37
  This is this organizational structure of Sinaloa at the time
• 38:40
  of its implosion. So hold on in 2024, Pete, this
• 38:44
  was their structure. That was their structure.
• 38:46
  That entailed. That's a 44 organization
• 38:49
  network. And the average American Pete
• 38:52
  thinks there's just like. One there's So you have one
• 38:56
  cartel, of which there are 44 organizations.
• 39:00
  That means there's 44 drug Lords within this network.
• 39:04
  There's 44 Chapo's. It's 1 you took.
• 39:06
  Out the leader of the. Guzman organization, he got the
• 39:09
  leader of the cartel. He had no authority over
• 39:11
  Cornell's organization, over Valencia's organization over
• 39:14
  Beltran. These are all independent
• 39:16
  structures. It's a collection of
• 39:18
  organizations, all those guys that you.
• 39:20
  Just said that I can't pronounce.
• 39:22
  Are they all as scary as Chapo? There were at least four guys.
• 39:25
  Bigger than Chapo in the Sinaloa network that we never heard
• 39:29
  about. I mean, if you're in a high
• 39:30
  level trafficking community, of course you knew what I mean.
• 39:32
  But as far as the American citizens, we only know one thing
• 39:35
  you only do. Two Pablo Escobar and Chapo.
• 39:38
  There were at least four men. At the time that Chapo was being
• 39:41
  paraded as the second most wanted man in the planet, right
• 39:44
  behind below by behind bin Laden.
• 39:46
  Yeah, there were at least four guys bigger than Chapo now in
• 39:49
  that organization alone. Yeah.
• 39:51
  And that network. Alone now so.
• 39:53
  By. Today's standards as we're
• 39:55
  travelling down our timeline, what's next after after we've
• 39:59
  established that that that actually the cartel is that big
• 40:03
  and it's not just Chapo as we all all think what what's next
• 40:07
  well, today we have the. Group Well, 15 years ago, this
• 40:12
  44 organization network right was 60 organizations, if not 70
• 40:18
  between 60 and 70 Sinaloa. Yeah, that's 20. 24/20/20. 4,
• 40:23
  but 15 years prior to that Sinaloa.
• 40:26
  In the mind of the United States, of the American public,
• 40:28
  you're talking 2008, 2007, 2008, 2920 years ago.
• 40:34
  Sinaloa was. Massive.
• 40:38
  You're saying 60? Plus, yes, it was a 60.
• 40:41
  Plus, yeah, yeah, yes. So 20 more added to this. 25
• 40:45
  more organizations added put. It this way, one of the factions
• 40:48
  was the group out of Jalisco. Headed up by.
• 40:53
  Two primary organizations, 1 led by Natural Coronel, 1 led by the
• 40:57
  Valencia family. At the time the leader was Lobo
• 41:00
  Valencia. This represented the Jalisco
• 41:03
  faction of the Sinaloa Cartel well in. 201020. 11 The Jalisco
• 41:08
  faction broke away today. That's the Jalisco New
• 41:11
  generation. Well, the largest cartel in
• 41:14
  Mexico today was a subset of Sinaloa 20 years ago, the
• 41:19
  biggest ones today. Were just a a faction Yeah 1.
• 41:23
  Faction of Sinaloa 20 years ago Sinaloa was massive in two.
• 41:27
  1006, 2007 2. 1008 right now has.
• 41:30
  Leadership changed, or is it pretty much the same family in
• 41:34
  today's world? 44 organizations.
• 41:36
  Oh, wait, Yeah, but how many are there today?
• 41:39
  The factions, the cartel? No.
• 41:40
  Longer technically exists today as a, so there's factions.
• 41:44
  So like this? Out of the 44 groups, like 11 of
• 41:46
  them will get together. They've got their own group
• 41:48
  right? 12 formed a separate faction.
• 41:50
  These are all operating now independently.
• 41:51
  These little baby cartels after the big 2020. 4 implosion and
• 41:55
  dis implosion how? Did that happen?
• 41:58
  That's a long story, but it. Resulted in a betrayal between
• 42:00
  the Guzman, so that needs to be an episode in.
• 42:02
  Itself like the 2024 implosion of the cartel.
• 42:06
  So now when you get back to what was happening.
• 42:08
  In LA in the 80s, yeah, back to where we need to be.
• 42:10
  So when the Americans took out the Colombians, so you crippled
• 42:15
  the importation operation and you decapitate the Colombian
• 42:19
  distribution operation, American Americans.
• 42:22
  Thinking we got it, we got it, there was team.
• 42:23
  USA The problem is the Mexicans now take over the distribution
• 42:28
  but but the Mexicans can't. Get it?
• 42:32
  The Colombians were paying the. Mexicans to transport to the
• 42:35
  Colombians, but they, the Mexicans got the transportation
• 42:38
  fee, they got that down the Colombians.
• 42:40
  Sold it to. American customers, When the
• 42:43
  Colombian distributors got removed, the Mexicans took over.
• 42:47
  Well, the Mexicans don't control supply, right?
• 42:50
  That's where I was going to get at.
• 42:51
  But they controlled the transportation.
• 42:52
  And the distribution. So how do they get it?
• 42:54
  Or here's. Look at it from the Colombian.
• 42:56
  Perspective If the Colombians control production and
• 42:58
  distribution, they have an incentive not to flood the
• 43:00
  market. The Mexicans are transportation.
• 43:03
  When the Mexicans take over distribution, they're now the
• 43:07
  ones supplying product to the American market.
• 43:10
  So the Colombians produce. The Americans consume what are
• 43:14
  the Mexicans distribute the middle men, right?
• 43:17
  How do middle men make their money on volume?
• 43:20
  By taking out the Colombians. You put in place a group who's
• 43:24
  incentivized to flood the market they make.
• 43:27
  Money on a. Per unit basis.
• 43:29
  See. They used to make it on both.
• 43:31
  Sides now they're making it on the Colombians.
• 43:33
  They were the Colombians. We're making the profit on the
• 43:35
  fat juicy. Profit margin, well, so in the
• 43:37
  back of the day. Before they take out Mario and
• 43:40
  and LA before they take out the Colombia, see if I I'm going to
• 43:42
  see if I got this right. OK, because I'm the average dumb
• 43:45
  person watching this podcast. So prior to 89, prior to
• 43:49
  88888988 when they take out Mario in Santa Monica, they are
• 43:55
  the Colombians are making it in Colombia and they're using the
• 43:59
  Mexicans to take it to LA and drop it off and then.
• 44:02
  Take it then they're. Then one of their own, Colombian
• 44:04
  Mario, is now distributing, handling the distribution
• 44:07
  operation on. American on the volume of tons.
• 44:09
  Tons. A fraction of what the Mexicans
• 44:11
  are doing. They're making money here and
• 44:13
  they're. Making money here production.
• 44:15
  Well, the Colombians. And Colombians get their money
• 44:16
  from the distribution end 'cause they got their people right.
• 44:19
  But then when they. Cut out when they cut out the
• 44:21
  Colombians, all of a. Sudden the Mexicans take over
• 44:23
  distribution, right so. The there's so now the profits,
• 44:27
  the big profits. They're not going back to
• 44:29
  Colombia. The Mexicans are keeping the
• 44:30
  profits, right. So now the Mexicans.
• 44:32
  Are being the. Middlemanians are no longer the
• 44:34
  distributors. They're no longer.
• 44:36
  They lost the distribute. The manufacturers, that's.
• 44:38
  It that's right. So now.
• 44:39
  You got the Mexicans incentivized to flood the market
• 44:41
  because they're making a lot more money per unit.
• 44:44
  The Colombians are making a lot less money per unit.
• 44:46
  So to make up the differential, what have we done?
• 44:48
  Now? I do incentivize to produce
• 44:49
  again. So it goes from 4 tons a month
• 44:51
  in 82 to 80 tons a month in 97, right?
• 44:55
  Because the. Because the Colombians no longer
• 44:57
  get the distribution money, they're only getting
• 44:59
  manufactured. Now they're only making 8000.
• 45:01
  Per unit they got to make up the differential, right?
• 45:03
  It's just simple free market. Anybody with the elementary
• 45:06
  understanding of capitalism, why didn't the.
• 45:08
  Government take out the Mexicans too, or they never knew about
• 45:11
  them because there's a lot more Mexicans in the United.
• 45:12
  States than Colombians, Yeah, and it's harder.
• 45:15
  To probably pinpoint that the Mario's sell.
• 45:19
  At its peak, was less than 10 men and while.
• 45:23
  It's difficult for. Americans to say, well, like a
• 45:25
  lot of Americans are going to know what's the difference
• 45:27
  between a Colombian and a Mexican, I can assure you
• 45:29
  there's not a Mexican who doesn't can't distinguish a
• 45:31
  Colombian from a Mexican, right Well there.
• 45:33
  Isn't a large Colombian. Population in LA, Los Angeles.
• 45:37
  Is not only the. Second largest city in the
• 45:39
  United States it's also the largest city in the United
• 45:42
  States that Hispanics. Majority population of.
• 45:46
  Hispanics probably next to Miami.
• 45:48
  Right, Los Angeles is a larger. Percentage.
• 45:52
  LA is predominantly a. Hispanic.
• 45:54
  It's the largest city with a predominantly Hispanic
• 45:57
  population, of which the majority of those are Mexican
• 45:59
  and Mexican Americans. Second largest city in America.
• 46:02
  But the majority of that population is Hispanic.
• 46:06
  It's Hispanic. So identifying those.
• 46:08
  So you might have a small. Groupings of Colombians.
• 46:12
  We got 2/3. Million Mexicans.
• 46:14
  In LA, if not more. Right like what are we talking
• 46:16
  about million I think, I think the population is 12 and out of
• 46:20
  LA the. Majority, well a good segment of
• 46:23
  it are from Jalisco. So you got a lot of Jalisco
• 46:27
  native Mexicans and a lot of Michoacan native Mexicans.
• 46:31
  Well, Michoacan and Jalisco were two of the primary states for
• 46:35
  Jalisco. Sinaloa, they operated out of
• 46:37
  Guadalajara, which is in Jalisco at the time, right?
• 46:40
  So everybody's got a. Cousin in LA.
• 46:41
  Yeah, yeah, yeah. Everybody's, everybody's got a
• 46:44
  cousin in LA that's a famous. Saying in Guadalajara that
• 46:46
  should be a song. Everybody's got a.
• 46:47
  Cousin in LA, yes and so. By removing the Colombians, you
• 46:53
  put the Mexicans in place. Now they're able to increase the
• 46:57
  distribution now was there. So as they increase the
• 47:00
  distribution, just like Mario was the head Colombian, did
• 47:04
  there end up being a main Mexican?
• 47:06
  Yes. Well, the remember not.
• 47:08
  Maine 'cause you have. Multiple.
• 47:11
  Organization Well at the in 1989, the Guadalajara network
• 47:18
  was. Disarticulated it.
• 47:19
  Collapsed so each. Of the 5 or 6.
• 47:22
  Different regions. Well, it broke out into little
• 47:25
  baby cartels. What we essentially when the US
• 47:27
  broke up the AT&T back in. The 80s and you had the.
• 47:31
  Little baby bells, right? Right.
• 47:32
  Same thing happened. They broke up big telephone
• 47:34
  that's right. So now when the predecessor?
• 47:36
  Guadalajara group broke up, The group in Tijuana became it's own
• 47:39
  network, the group in Waters became it's own network, the
• 47:41
  group in Sonora. They all just stepped up
• 47:43
  operations. They all went independent.
• 47:45
  Right on a smaller scale. Individually on a smaller scale.
• 47:49
  But collectively? Probably this is what happens.
• 47:52
  It's. Called a multipolar trapping
• 47:53
  game theoretic terms. What you introduced now was a
• 47:56
  element of competition. The last thing you want, if your
• 48:00
  goal is to disrupt the drug flow, you do not want to
• 48:03
  introduce competition into the marketplace because now they're
• 48:06
  all going to have to do what to gain market share?
• 48:09
  Lower prices. Lower prices the.
• 48:11
  Lower if you remember. You're trying to.
• 48:12
  Discourage use, right? You're incentivizing them to
• 48:14
  lower prices. But when they lower prices, they
• 48:16
  got to make up the differential by doing what?
• 48:17
  Sell even more. So now you've said having one
• 48:20
  group, you've got five or six groups all incentivized to keep
• 48:23
  increasing and then that's also where they start.
• 48:25
  Whittling it down to crack well, the Mexicans didn't deal with
• 48:28
  that the. Mexicans that that that was
• 48:29
  that's an American phenomenon. OK, yeah, that's that's far.
• 48:32
  I've seen documentaries. That said, the American
• 48:35
  government is who introduced crack.
• 48:37
  I don't believe that, yeah. That's that's what.
• 48:39
  They said to to finance, to finance the Iran Contra.
• 48:43
  No, that was a issue that. Involved Mario because.
• 48:47
  It was Mario's people in Colombia.
• 48:49
  And the people that were the middle men in Honduras that were
• 48:52
  part of Mario's group. But wait, Mario had some
• 48:55
  tentacles. Didn't.
• 48:55
  He, his uncle was one of the. Biggest guys in Colombia.
• 48:58
  Wow. Yeah, all.
• 48:59
  Right. So we're so now.
• 49:01
  But the Colombians are gone. We're in LA.
• 49:03
  We're just. Fighting, we expect the guy ran.
• 49:04
  Contra thing really quick. What you had were, you know it
• 49:07
  way better than I, traffickers who were working as assets for
• 49:12
  Central Intelligence, they weren't working as traffickers
• 49:16
  for CIA. They were traffickers
• 49:18
  moonlighting as sources for the CIA.
• 49:22
  So it's completely so when the Americans.
• 49:23
  Yeah. So when people say.
• 49:25
  Well, you know, the CIA had these.
• 49:27
  They weren't employing them to further the trafficking, the
• 49:30
  people that were facilitating the flow of weapons to the
• 49:35
  freedom. Fighters, essentially.
• 49:36
  The contras in Nicaragua happened to be drug traffickers,
• 49:40
  but they had the landing strip, so of course they're going to
• 49:42
  be. Who are you going to talk to?
• 49:44
  People don't realize how. Shady Reagan was, yeah, but I
• 49:47
  mean, look, they. Were I mean the the funding of
• 49:50
  the Contras was shady right? But the Yeah, but the the notion
• 49:54
  that they were. Riveting to Coke.
• 49:56
  No, I know the guy that ran the operation in LA, He didn't deal
• 50:00
  with any CIA guys. He was dealing with the African
• 50:03
  Americans who themselves came up with the crack.
• 50:06
  With the crack. Royal didn't deal with the
• 50:08
  crack. So the black guys came to.
• 50:10
  Him and said hey. We can.
• 50:12
  We can distribute because they lived in South Central, they
• 50:14
  didn't have big customers and they figured out how to
• 50:16
  freebase. It how to freebase is a little.
• 50:19
  Different is it? Yeah.
• 50:20
  They were essentially just turning it from, they were
• 50:23
  cooking the powder form into a base.
• 50:26
  And so they were going to. But it's not the freebasing that
• 50:29
  Richard Pryor had that was the more expensive, exclusive
• 50:31
  version. This was that was actually
• 50:33
  making cocaine more. Powerful.
• 50:35
  This is kind of. Dumb ghetto.
• 50:36
  The ghetto. Version this is dummying it down
• 50:39
  to make it go further so they can sell it for cheap.
• 50:41
  Cheaper of course, right? And.
• 50:42
  So. So would the average African.
• 50:44
  American guy buy like a key and then turn it and then turn that
• 50:49
  into 5 keys or whatever however whatever.
• 50:51
  They're for. How are they using?
• 50:52
  Yeah, but they're just right whacking it.
• 50:54
  But they're just whacking. They're only getting.
• 50:55
  You know, 10/20/50 bucks, well, there's a lot of, there's a lot
• 50:58
  of money to. Be made if, but it's got to be.
• 50:59
  It's risky because you're dealing at a retail level.
• 51:01
  So it's a lot of hand to hand, right?
• 51:03
  It's it's there's a lot of. Exposure.
• 51:05
  That's where you. Get the street quarter mentality
• 51:06
  the the guys that you know, the cartel level guys aren't
• 51:08
  standing the corners, the guys that you know are, you know they
• 51:10
  got. Semis that are going to
• 51:12
  warehouses and so when? Yes.
• 51:14
  And so when the when the Colombians got knocked out, the
• 51:18
  two of the organizations from Sinaloa sent their distribution
• 51:21
  teams to Los Angeles. They handled the coke.
• 51:24
  It's just two now. At the time, Sinaloa only
• 51:26
  consisted of 1/2 a dozen organizations.
• 51:28
  You had the organization led by Guzman that handled smuggling,
• 51:31
  and then you had the organization led by Amaro
• 51:32
  Carrizo, who was one of the distributors from Sinaloa.
• 51:35
  You had another guy named Amal Zamata.
• 51:37
  Then you had another individual, Beltran, and then you had
• 51:40
  another guy what, Obama, who was ostensibly the leader.
• 51:43
  If there was going to be a leader for Sinaloa, it'd be
• 51:45
  what, Obama at the time? Guzman only.
• 51:47
  Had five Guzman. Was in his 30s so so LA only had
• 51:50
  five. Guys, no, no, Sinaloa.
• 51:52
  Only had five organizations. Sinaloa only had five guys.
• 51:55
  LA had two organizations handled distribution.
• 51:59
  And then they had Guzman handled.
• 52:00
  The transportation, well the Sylmar bust happened where they
• 52:04
  knocked off a 20 ton load that took out Amaro Carrillo cell.
• 52:08
  Zambada cell took off the main office.
• 52:10
  They referred to them as offices.
• 52:11
  So there was a Sinaloa office in LA for distribution.
• 52:14
  Zambada's organization took control of the distribution
• 52:16
  office, and this is. Circa 90. 1990, yeah.
• 52:21
  And for the next 35 years, they had it, and so 35.
• 52:24
  Years. The Zambada cell.
• 52:28
  The Zambada cell. The office within the LA
• 52:30
  Network. LA Network.
• 52:32
  And so. The Zambada office had a 35 year
• 52:35
  run, 35 year, 34 year run. Now what took what?
• 52:38
  What end up? Taking them the implosion.
• 52:40
  Oh, The Implosion, which isn't, which is a podcast in itself, so
• 52:44
  that I mean, they're still operating.
• 52:46
  But it's not operating at scale. It's only that faction of let's
• 52:50
  say 10/11/12 organization anytime there's a big bust it.
• 52:53
  Just fucks up the scale because there's little.
• 52:57
  There's tentacles that always come in there.
• 52:58
  Oh, sure, because everything's built on redundancy.
• 53:00
  Right, right. So it's all like.
• 53:02
  You had. I can usually speak right now
• 53:04
  even though they got. The big cartel bust of 2024,
• 53:07
  There's been people now that are there's all four factions have
• 53:10
  offices. Now.
• 53:13
  They still use LA, it's just. Now you got four groups
• 53:16
  operating probably more product than before cumulatively, right?
• 53:20
  Each of them are operating at a smaller scale.
• 53:23
  But when the aggregate, it results in more product because
• 53:25
  they're all scrambling to gain market share, to raise capital,
• 53:27
  to buy more political protection in Mexico.
• 53:29
  So you're incentivizing more sales every time you disrupt a
• 53:31
  group and that's of almost a podcast.
• 53:33
  In itself, the political protection out of Mexico because
• 53:36
  the average American is not cannot comprehend how they do it
• 53:40
  over there. That's why last year, Trump set
• 53:43
  off. Like a bit of a scandal where he
• 53:44
  came into office and he said, look, there's an intolerable
• 53:46
  alliance between the Mexican government and the drug cartels.
• 53:48
  100% correct. But but that pissed people.
• 53:51
  Off and scared them. Because he said it.
• 53:55
  Been going on for 50. Years.
• 53:56
  He's the only one. To say it, yeah, the system's
• 53:58
  been. In place now since the late 19.
• 54:00
  70s it's called La Plaza. That's the system of criminal
• 54:05
  governance. Utilized by the.
• 54:06
  Mexican government, where Mexican political, business and
• 54:09
  military elite are able to extract wealth from the drug
• 54:12
  trade without getting their hands dirty called la Plaza La
• 54:15
  Plaza system and it's. Been since the early 70s.
• 54:17
  Late. 70s probably developed. After Richard Nixon's big.
• 54:20
  War on drugs, you know, there it took place within the context
• 54:24
  of. Mexican government's efforts to
• 54:26
  suppress leftist sympathizers. It was a anti communist effort
• 54:32
  bankrolled by the CIA called Operation Condor.
• 54:35
  Really. Again, the CIA didn't create the
• 54:37
  Mexican. Cartels.
• 54:38
  No, they paid the Mexicans to. Unalive.
• 54:42
  The Communists, right, And the Mexicans said, well, all we got
• 54:44
  all this free and gringo money, let's establish this over here.
• 54:48
  So they created a, they took three of the main drug kingpins
• 54:52
  out of Sinaloa, moved them to Guadalajara.
• 54:54
  Now later on, the American government called that the
• 54:55
  Guadalajara cartel. And really, these are just the
• 54:58
  representatives of the Mexican government, Pete, Why are we so
• 55:01
  misinformed? Do you realize that 50% of all
• 55:04
  the profits went? To Mexican officials.
• 55:06
  Officials off the top. So 50 percent, 50% of the
• 55:11
  profits went right to the government that that was their
• 55:14
  fee boom. Boom, and their and their rules
• 55:16
  pied. To them were keep our names out
• 55:18
  of your mouth. Well, they don't talk to the no,
• 55:21
  what I'm saying is. Like you know how they get their
• 55:22
  might. Like, you know, that's a whole
• 55:24
  other how they get. Them then they don't talk to
• 55:27
  poncho with the 3rd grade education.
• 55:29
  There's a way of transferring the money from the narcos to a
• 55:32
  political class. Can't even get into that because
• 55:34
  that's a whole podcast. Because when?
• 55:35
  They when the Mexican government created.
• 55:37
  The distribution operation we're talking about, the certain
• 55:40
  countries, they've got the separate.
• 55:41
  Money laundering. Operation which has been running
• 55:43
  for 50 years, which you know a lot about, yeah, but that's,
• 55:45
  that's actually my. Back my primary background.
• 55:47
  Is best operations and how Mexico works and I remember
• 55:51
  talking to you when I first met you.
• 55:52
  My first time when or my second time and you were talking about
• 55:56
  how they launder it through banks and loans and it's just
• 56:01
  it's it. I cannot wait for us to do that
• 56:03
  podcast because I was so riveted and people have no idea about
• 56:07
  how advanced and calculated the Mexican government is on this
• 56:12
  whole thing in back in the 1990s during my era.
• 56:15
  There's a major. Scandal in Mexico, because the
• 56:16
  president at the time was it was discovered that the president's
• 56:23
  brother had a series of Swiss bank accounts with hundreds of
• 56:28
  millions of dollars parked in it.
• 56:30
  That was President Salinas. Well, those hundreds of millions
• 56:33
  of dollars represented President Salinas cut from the drug trade.
• 56:39
  OK, like the Mexican president. Doesn't talk to the.
• 56:42
  Narcos, he doesn't talk to the senator.
• 56:44
  So like everybody, there's a way to get the money.
• 56:48
  To a. Close family member, so it'll be
• 56:51
  the Mexican senator's wife. So we have a when the
• 56:55
  distribution. Operation.
• 56:56
  In LA took over by the Mexicans right it incentivized late late
• 57:00
  80s early yes it incentivized them to build out their
• 57:05
  distribution capacity now for the first five years so you.
• 57:10
  Had the two offices, you had the one office.
• 57:12
  By Zambada and Amato Carido. Amato carido people get knocked
• 57:15
  off. Zambada has his team, they take
• 57:16
  over the office. What Obama sends the second
• 57:19
  group. So you had two teams in LA for
• 57:21
  the first five years of the cartel's existence.
• 57:22
  There's seven or eight guys in LA that handle all distribution.
• 57:24
  That's it, That's it. That's it.
• 57:27
  Seven guy. Making a lot of money.
• 57:29
  They're not making them, they're distributing.
• 57:31
  And that money gets sent back. They're just what?
• 57:34
  What? But I mean the volume you're
• 57:35
  divided by. I mean huge.
• 57:37
  And so for the first five years. So like 9090?
• 57:41
  590 to yeah. 90 to 90. Well, things.
• 57:43
  Changed in 1994 because for the first five years there was only
• 57:48
  distribution in LA. So if you're a Mexican national
• 57:51
  from Sinaloa, Jalisco, Michoacan, Colima, Nayari,
• 57:55
  Durango and your Sonora and you're coming to buy minimum of
• 57:59
  200 keys, right, that's what you got to step up with.
• 58:02
  So if you're a Mexican national. Living in.
• 58:04
  Boston from one of those Mexican states, you had to come to LA,
• 58:07
  right? And you had to bring 3.5.
• 58:09
  Million with you to get the 200 right and then you had to.
• 58:12
  Get it back to Boston. That's right.
• 58:14
  Because you, you, your guys just they didn't.
• 58:16
  They didn't for the first three years they had.
• 58:18
  No, the first transportation sells that they were bringing it
• 58:23
  from Mexico to LA and then the guy from Boston would come to
• 58:26
  LA, he'd buy it most of the time they'd handle their own
• 58:29
  transportation. The guys from Boston, yes.
• 58:31
  So now. The Mexicans.
• 58:33
  Established 'cause when they were transporting for
• 58:35
  Colombians, loads would come. To Mario in.
• 58:39
  LA and sometimes Mario say, hey, we'll take two of these tons to
• 58:41
  New York. So there was an LA to New York
• 58:45
  logistical run. They didn't.
• 58:47
  They didn't distribute. Right, they had it.
• 58:49
  Established though. But they had it established
• 58:50
  probably as part of the weed gimmick.
• 58:52
  Nope, I don't know about the weed gimmick.
• 58:54
  I'm simply saying that with respect to the Colombians, they
• 58:56
  had to be able to get product from LA to Boston to New York.
• 59:00
  Yeah. Then when?
• 59:02
  The Sinaloa. Guys took over for the first few
• 59:05
  years. They did primarily all their
• 59:08
  distribution out of LA. The Boston guy would come to LA.
• 59:11
  And now you. Can get it in New York the.
• 59:16
  Sinaloa will transport it for you.
• 59:18
  Oh, they will. To New York, They.
• 59:20
  Don't take it to Boston. Take it to New York.
• 59:22
  Take it to New York. So the East Coast guys?
• 59:24
  But that comes with. A premium, probably.
• 59:25
  Well then, yeah, of course you. Had to pay the premium.
• 59:27
  That's the transportation. Fee but you're not it's still
• 59:29
  cheaper than the New York price right?
• 59:30
  Right by far. So if you.
• 59:32
  Buy them in LA for 18 you. Pay 1000 per unit.
• 59:34
  You get them for 19. You sell them in New York for
• 59:36
  25. But that 5000 key differential,
• 59:37
  that delta represents your profits and you're not touching
• 59:39
  it. Technically, of course, they
• 59:40
  handle. Everything right?
• 59:42
  And so for the first five years, nearly all distribution on
• 59:46
  American soil by Sinaloa's representatives happened in LA,
• 59:49
  right? So the guys from Cleveland come
• 59:50
  to LA, Detroit come to LA, Boston come to LA, Chicago in
• 59:54
  94, they shifted. And that's when you had.
• 59:56
  The two 100K minimum purchase, right And by having it limited
• 59:59
  to only the guys from those states in Mexico, you're going
• 1:00:03
  to be able to. Know one somebody in Mexico?
• 1:00:05
  Is going to have to vouch for you kinship.
• 1:00:08
  That's the American. Citizens, but someone.
• 1:00:09
  'S still going to have. To vouch for you, because when
• 1:00:11
  you set up an account with the distributor, one of the seven or
• 1:00:13
  eight guys in LA, you got to tell them, OK, well, who Where's
• 1:00:15
  your mom and dad live? Oh, really?
• 1:00:18
  Where's Where's your kids go to? School.
• 1:00:20
  Where's your mom and dad live? Your kids might be here in the
• 1:00:22
  States. With the family, but they know
• 1:00:24
  they're going to know your parents, your in laws, your
• 1:00:27
  sister, all your siblings. They're going to contact the
• 1:00:30
  people down there, have the police confirm they all live
• 1:00:32
  here. OK, fine.
• 1:00:32
  Establishment count, no problem. How much you need?
• 1:00:34
  5 million, Take it. They know you're not going
• 1:00:36
  nowhere, but they do a little vetting, don't they?
• 1:00:38
  Absolutely. That's the basis.
• 1:00:41
  That's. That's that's there's no theft
• 1:00:43
  in that level. No, because.
• 1:00:44
  Before you're able to open up an account with the distributor,
• 1:00:47
  they have to know where all your family lives in Mexico.
• 1:00:49
  They're the collateral. So if you fuck around so you can
• 1:00:52
  be an. Informant for the Americans all
• 1:00:53
  you want to. You're not setting these guys up
• 1:00:56
  right? You're not setting the Mexicans.
• 1:00:57
  You may set up Americans. But you're not.
• 1:00:59
  Setting up these guys, you're not setting up these guys.
• 1:01:00
  Because before they even. Talk to you, they know where
• 1:01:03
  your family lives. So guys that are stepping up and
• 1:01:06
  setting up. Accounts, they're pretty well
• 1:01:08
  self vetted. Well, first of all, you have to
• 1:01:10
  have a reputation that's. You have to be established in
• 1:01:12
  the community because you can't just have guys show up all of a
• 1:01:14
  sudden I need 3,000,000 worth of who are you?
• 1:01:15
  Who do you know? Yeah.
• 1:01:16
  First either I ever ask you when you talk to them, who do you
• 1:01:18
  know? Yeah.
• 1:01:20
  Who do you know? Oh, you give them.
• 1:01:21
  I know him. I know him.
• 1:01:22
  I know him OK. Then a couple days later,
• 1:01:25
  they'll. Call you back, OK, Yeah.
• 1:01:26
  Yeah, I talked to him. Yeah, yeah, he says.
• 1:01:27
  You're good, and we know where your family live well.
• 1:01:30
  That's is that second prong that's.
• 1:01:31
  If you're a. Mexican national setting up an.
• 1:01:33
  Account So here in the United States, things are if you're an
• 1:01:35
  American, they don't deal with you unless you're a Mexican
• 1:01:37
  American with kinship ties under distribution.
• 1:01:41
  They do deal with Americans and what I refer to as special
• 1:01:44
  skills. And so whether it's trucking, if
• 1:01:48
  you're a truck driver, you got a, you know.
• 1:01:49
  Owner operator, you got. A big rig, they want to talk to
• 1:01:51
  you if you're a pilot, you got a smaller airplane like King Air,
• 1:01:54
  you can fly loads or fly money. They want to talk to you, want
• 1:01:57
  to talk to you. They won't sell you the.
• 1:01:59
  Product. But they'll pay you to truck
• 1:02:01
  their product. Yeah.
• 1:02:04
  You know, if you're an American chemist, if you're an American
• 1:02:06
  banker, if you're an American engineer, anybody that's got a
• 1:02:09
  special skill, we've just scratched the surface on the.
• 1:02:12
  Cocaine, part of it we haven't even got in every every compound
• 1:02:16
  has a. Separate office, you know, so
• 1:02:18
  you're going to have a heroin office you can.
• 1:02:19
  Have a methamphetamine office. You're going to have a I'm sure
• 1:02:21
  today. If any office, every substance
• 1:02:24
  has its own. Ecosystem, so to speak.
• 1:02:26
  So now for instance, out of. The 44 Organization network or.
• 1:02:32
  20 years ago to 60 to 70. Organization network.
• 1:02:35
  Out of those 60 to 70 organizations, maybe six of them
• 1:02:38
  have people in the United States.
• 1:02:39
  That's it. That's it.
• 1:02:41
  And Sinaloa at the time. 20 years ago, Los Angeles served
• 1:02:46
  its American base of operations. At its peak, whenever doing
• 1:02:51
  there were the largest trafficking network on the
• 1:02:53
  history of the planet. You had 15 guys in LA that
• 1:02:56
  handled 80% of all the cocaine in the US for the Sinaloa, 15
• 1:02:58
  guys. Now each of those 15 guys had.
• 1:03:03
  A roster of customers, right? Sure.
• 1:03:06
  So they have 10. 1215 guys they. Handle those accounts but the IT
• 1:03:10
  came to. 15 dude, 15 dudes if you're not targeting one of
• 1:03:13
  those. 15 guys, you're not targeting cartel, you're just.
• 1:03:18
  Talking to a guy, you're talking about it a first tier.
• 1:03:20
  Wholesale level customer. Right now you could be talking
• 1:03:22
  to Jim. At the Jimmy, at the at, at, at
• 1:03:25
  the golf course. Who?
• 1:03:26
  He's 5° of separation. That's what I'm saying.
• 1:03:28
  He he might have two. Keys million three guys down the
• 1:03:32
  right he's downstream downstream yes and so the the.
• 1:03:35
  What the sleight of hand government does is they pull
• 1:03:40
  this, there's a concept in conspiracy law that allows you
• 1:03:44
  to group people together And so kind of.
• 1:03:47
  Like a racketeering. That's the premise.
• 1:03:49
  Of it, yes, and so. What they do is they say, well,
• 1:03:52
  the 15 guys are cartels because they work for somebody's
• 1:03:54
  organization and they work for what?
• 1:03:56
  Obama's organization or they work for Guzman's organization.
• 1:04:00
  These are members of an one of these 44 organizations, right?
• 1:04:03
  If you're not a member of one of these 44 organizations, you're
• 1:04:05
  not Carnell. No, like they don't view
• 1:04:08
  themselves as cartels. They view themselves as members
• 1:04:11
  of Guzman's organization. The leadership collaborate with
• 1:04:15
  one another in specific circumstances.
• 1:04:17
  And So what they do is they pull resources where it's rational to
• 1:04:22
  do. So you don't need 44.
• 1:04:23
  Organizations digging tunnels. You need one organization
• 1:04:26
  handling 6 tunnels, right? So you handle the tunnels.
• 1:04:29
  You handle the tuna. Boats.
• 1:04:31
  OK, you handle the tuna boats they each have.
• 1:04:32
  They have tasks. They have the the division of
• 1:04:34
  Labor, right? Right, they each have tasks, so.
• 1:04:37
  Now, though, Duke, there's a redundancy.
• 1:04:40
  So in case the Alpha group gets taken out and Bravo can step in
• 1:04:43
  when the motor Carrillo still got taken out, boom Mile stepped
• 1:04:45
  right in. And then what?
• 1:04:47
  Obama had the second team. He had the A-Team and the B team
• 1:04:51
  18's been running for. 34 years still.
• 1:04:53
  Still with respect to the. 15. Guys, they'll have 10/12/15
• 1:04:58
  customers. What else?
• 1:04:59
  10/12/15 customers. None of them are cartel.
• 1:05:02
  No, no, no, they're customers. They're.
• 1:05:04
  Customers 90. Percent of them are.
• 1:05:06
  Mexicans. But they're still not cartel.
• 1:05:08
  But they're not cartel, right? They're Mexicans from Sinaloa.
• 1:05:11
  But they're still not. They're not cartel.
• 1:05:13
  They're Mexicans who have family members back in Sinaloa and
• 1:05:15
  they've got at least three million.
• 1:05:17
  So they can come and talk to the distributor, right?
• 1:05:20
  See having Mexican otherwise you're not getting that.
• 1:05:21
  Close to. Distribution.
• 1:05:22
  You don't talk to you're going to get older friends at the.
• 1:05:24
  Golf course no you're. Going to talk to at best the.
• 1:05:26
  First tier host level customer. He may deal with Americans, but
• 1:05:30
  he's not cartel, no. And So what?
• 1:05:33
  The American. Government does is say we're
• 1:05:34
  going. To call the 15 Cartel and we're
• 1:05:37
  going to call all their customers they lump into first
• 1:05:41
  tier wholesale. Level customers.
• 1:05:43
  As part of the cartel, when realistically they're not.
• 1:05:46
  They're first. Level so it's 1515 fucking.
• 1:05:48
  Guys in LA right handling 80% right now east of the
• 1:05:51
  Mississippi. Well back in 1994, prior to
• 1:05:53
  that, it was 7 or 8 guys in LA. That was Sinaloa's distribution
• 1:05:57
  operation at the time. Sinaloa was the smallest of
• 1:05:59
  cartels too in Mexico. Then things changed in 1994 with
• 1:06:02
  the passage of NAFTA, once NAFTA took effect, because NAFTA
• 1:06:06
  represented the American government and Mexican
• 1:06:08
  government's efforts to integrate their economies and so
• 1:06:12
  essentially the American. Political class shafted.
• 1:06:14
  The middle and working class by integrating our economy with
• 1:06:17
  Mexico, which allowed for the movement of the manufacturing
• 1:06:21
  base South of the border. See, today a lot of people like
• 1:06:25
  to. Blame China.
• 1:06:27
  China stole our jobs. Well, you're You and I are old
• 1:06:29
  enough to remember to campaign in 1992 with Ross Perot.
• 1:06:32
  Yeah. George HW Bush, Bill Clinton and
• 1:06:34
  Ross Perot. Well, what was Ross Perot's main
• 1:06:36
  talking point? He would always make this sound
• 1:06:38
  during his speech. He'd be like, you know what?
• 1:06:42
  That. Represents sucking.
• 1:06:43
  Of our jobs, the sucking of our. Jobs and where they going?
• 1:06:46
  Mexico. Mexico.
• 1:06:48
  And everybody thought he. Was insane a decade before
• 1:06:50
  China. Meanwhile, he.
• 1:06:51
  Was a really astute A. Texas businessman who was closer
• 1:06:55
  to the situation than any a decade before China even made it
• 1:06:58
  to the. WTO and George HW Bush should
• 1:07:01
  know that because he. Was a Texas businessman as well,
• 1:07:03
  George HW Bush, but he just. But he just didn't.
• 1:07:05
  Want to deal with it? Well, no they didn't.
• 1:07:07
  Care. Right.
• 1:07:09
  Who benefited from NAFTA? Wall Street.
• 1:07:13
  And the political class? At the expense of the factory
• 1:07:15
  worker in Pennsylvania, Ohio, Michigan, Indiana, and so a
• 1:07:20
  decade before. China quote.
• 1:07:21
  UN quote. Like China was the final coup de
• 1:07:23
  grace, but a decade earlier you had massive migration of
• 1:07:29
  factories from the United States to South of the border.
• 1:07:33
  Well, once you move the American manufacturing base to Mexico,
• 1:07:37
  NAFTA allowed for the free flow of trucking.
• 1:07:41
  Which? Also equals the free flow.
• 1:07:43
  Of narcotics so now at the port of entry from.
• 1:07:47
  Tijuana into San Diego, you have 3 ports of entry, 3 border
• 1:07:52
  crossings. One of them is commercial.
• 1:07:54
  It also handles civilian vehicles, but it's also a
• 1:07:56
  commercial. It's the commercial port.
• 1:07:58
  Is the port in OTA Mesa well? That port of entry alone.
• 1:08:03
  Handles 15 to 18,000 tractor trailers a day.
• 1:08:08
  And they try like hell to get them, don't they?
• 1:08:10
  Well, it's. A.
• 1:08:14
  It's a unreasonable proposition. Because there's no physical way
• 1:08:20
  possible to physically examine each 15,000 trucks, right?
• 1:08:25
  You just physically can't do it. You can't.
• 1:08:27
  Do it like at best. They might do 1 or 2% a day.
• 1:08:31
  Really think about it. If you're OK when you're out.
• 1:08:34
  When you come look when you see those large.
• 1:08:37
  Truck stops. I had a friend who had a.
• 1:08:40
  Couple of these truck stops, one of.
• 1:08:41
  Them was just enormous all for as far as you can see tractor
• 1:08:44
  trailers there's 1000 trucks you need 18 of them where you going
• 1:08:49
  to park 15 to 18,000 tractor trailers there's no secondary
• 1:08:52
  inspection point big enough for all these trucks No, no, you got
• 1:08:54
  to send them down the road and how.
• 1:08:56
  Big are the how many customs? Officials are you have the
• 1:08:58
  border, how many teams are you going to have and how do you
• 1:09:01
  unload all these trucks are going to put all the stuff
• 1:09:04
  right? You're right.
• 1:09:05
  So the if we bust 50 trucks in one day, where are we going to
• 1:09:09
  put it all? That's right.
• 1:09:10
  So now you and on top of it, understand.
• 1:09:11
  A lot of the goods that come from Mexico now, people don't
• 1:09:14
  think of that. Yeah, a lot of the goods.
• 1:09:15
  That's why you have 3 importation.
• 1:09:16
  Cells operating in Tijuana at any given time, you have the
• 1:09:19
  overland importation operation with the tractor trailers,
• 1:09:21
  overland importation operation with the private civilian
• 1:09:23
  vehicles modified with hidden compartments.
• 1:09:25
  And then you have the cross-border tunnels,
• 1:09:27
  subterranean tunnels that are cross-border.
• 1:09:30
  Is there? Is there a lot of those?
• 1:09:32
  Sinaloa operates at least 2. If they build them in three
• 1:09:34
  tunnel arrays, there's always at least 2 because they have
• 1:09:37
  redundancy. So there's going to be at least
• 1:09:39
  6 tunnels at any given time. Now they'll have like the Alpha
• 1:09:43
  team and the Bravo team, and on the, you know, the first team
• 1:09:46
  they'll have 3 tunnels ABC. So the first team will have
• 1:09:49
  Alpha Tunnel A's, Alpha Tunnels running, Bravo's on standby,
• 1:09:53
  Charlie's mothball and then the authorities.
• 1:09:56
  Knock off Alpha tunnel they. Activate BC's on standby.
• 1:09:59
  They're already digging Delta. It's just going boom, boom,
• 1:10:01
  boom, boom, boom, boom, boom. Bravo gets knocked down.
• 1:10:05
  Charles. Activated Delta's on standby
• 1:10:07
  already. Building.
• 1:10:08
  Yeah, Really. And it probably takes the DEA
• 1:10:12
  and the federal government years.
• 1:10:14
  A few months ago, DEA found oh, excuse me.
• 1:10:16
  Customs found a tunnel a few years ago that had been
• 1:10:19
  operational for 10 years, 10 before they got it.
• 1:10:22
  And just think of the volume of that.
• 1:10:26
  Wow. And.
• 1:10:27
  That and that's. Today's world too every every 20
• 1:10:30
  metric ton shipping. That ends in lands in LA, has an
• 1:10:33
  LA price of 300 to 350 million. That's today's price and they're
• 1:10:37
  the same thing 20 years. Ago 30 years ago so.
• 1:10:38
  Really, cocaine and stuff hasn't really.
• 1:10:40
  Gone up much, has it? No, of course not.
• 1:10:42
  Has it gone down or is it pretty much just stay the same stable
• 1:10:46
  and how many people do you think And that like back in the day we
• 1:10:48
  talked about there were 15 dudes 20 years ago it was about 15
• 1:10:51
  distributors handling the. Distribution in LA now east of
• 1:10:54
  Mississippi, you've got four what are essentially you have
• 1:10:56
  three distribution hubs one in New York, one in Atlanta and one
• 1:10:59
  in Chicago. Then you have a logistical hub
• 1:11:01
  in North Carolina right outside of Fort Bragg.
• 1:11:03
  And so those are those are the four hubs, but those are
• 1:11:06
  receiving hubs those are what the trucks come from LA.
• 1:11:08
  See, what most people don't understand is Los Angeles has 2.
• 1:11:15
  Ports in LA. LA is the shipping capital of
• 1:11:18
  the United States. We have the Port of Los Angeles,
• 1:11:20
  Port of Long Beach, well that those two ports represent.
• 1:11:24
  A. Shipping a port complex that is
• 1:11:26
  the largest in the United States right back when COVID hit.
• 1:11:29
  That's the port. That was backed up and we're
• 1:11:30
  'cause we were getting a lot of most of our stuff from so now
• 1:11:34
  especially from if you've got. Yes.
• 1:11:35
  So if we were buying, you know, flat screen TV's in Nebraska,
• 1:11:40
  but they come through the port of LA 'cause they're coming from
• 1:11:42
  China, huge container ships come to one of our two parts.
• 1:11:46
  Well, LA represents not only the shipping capital of the United
• 1:11:49
  States, but because of all that shipping, LA is also the
• 1:11:52
  trucking capital of the United States 'cause you got to get
• 1:11:55
  that stuff you have to get shipped and.
• 1:11:57
  Transported to Iowa Transported to.
• 1:11:58
  Missouri transported so now Walmart and and Benton which is
• 1:12:01
  why. They chose LA.
• 1:12:04
  Because if you need to send. Product across the country.
• 1:12:07
  We need trucks. You need tractor trailers you
• 1:12:08
  can't put. 2000 kilos. In the trunk of a Toyota Camry,
• 1:12:10
  No. How many 2?
• 1:12:13
  1000 So you put them in the trucks?
• 1:12:16
  So now you have. To have mechanic.
• 1:12:18
  Shops big enough. That's why when people say they
• 1:12:20
  I heard one person say you seen a little operation in 400
• 1:12:22
  cities. Are you crazy?
• 1:12:24
  No, no way, one. One podcast, large podcast, the
• 1:12:27
  guys like. They control Myrtle Beach.
• 1:12:30
  There's 80,000 people in Myrtle Beach, right?
• 1:12:33
  Are you insane? They're.
• 1:12:34
  Like there's no. Cartel.
• 1:12:35
  Operations and no, Myrtle, no. Maybe somebody's driving through
• 1:12:37
  South Carolina, right? Right.
• 1:12:39
  They may. They might stop.
• 1:12:40
  At Myrtle Beach, Yeah. No, no, I mean, there's no
• 1:12:42
  reason. I mean like.
• 1:12:43
  You have to have a population density, population based.
• 1:12:47
  So again, there's only four hubs like you said, 400.
• 1:12:49
  Chicago. In fact, there's a This is ADEA
• 1:12:51
  map which shows the money. Hubs, the money hubs are the
• 1:12:54
  ones in red east of the Mississippi.
• 1:12:56
  You've got one in Chicago, New York, Charlotte and Atlanta.
• 1:13:00
  It's amazing that there's nothing in the middle in.
• 1:13:02
  Like a like a Colorado, there was a there was a small.
• 1:13:05
  Office for Distribution in Colorado that handled the
• 1:13:08
  Mountain West and the Pacific Northwest.
• 1:13:11
  But it's it's not a logistical hub.
• 1:13:14
  Like you don't send the money to tell all the money goes to LA.
• 1:13:17
  So in today's world. Is the DEA all over this or are
• 1:13:21
  they just picking off local dudes?
• 1:13:23
  Well, the DEA is. Targeting American.
• 1:13:28
  Customers and 1st. Year wholesale level customers.
• 1:13:31
  Here's the thing you have to understand when things don't
• 1:13:33
  make sense, there's politics involved.
• 1:13:35
  Now you have 100 senators and you go to those 100.
• 1:13:40
  Senators and say look. We're going to disrupt Sinaloa's
• 1:13:42
  operations. So all of the money that goes to
• 1:13:45
  Minnesota for cartel operations, send that to California,
• 1:13:48
  Connecticut, Send all your money to California, New York, all
• 1:13:51
  your money to California. All you Congress people, none of
• 1:13:55
  your districts are getting cartel.
• 1:13:56
  Money for the DEA. Or law enforcement all to
• 1:13:58
  California and Texas. Do you think the congresswoman
• 1:14:00
  in Nebraska is going to vote for all the money going to
• 1:14:02
  California? No, of course not.
• 1:14:05
  So they come up with this notion.
• 1:14:06
  By defining. Cartel operations to include
• 1:14:09
  first year wholesale level customers and 2nd tier
• 1:14:11
  customers. You get these DEA maps.
• 1:14:13
  Thanks. You know low operates in 400
• 1:14:15
  cities. Are you fucking crazy Separating
• 1:14:17
  4 E of the Mississippi so they. Need that.
• 1:14:19
  Boogeyman to justify to just expenditures.
• 1:14:23
  Expenditures otherwise. If you're seriously targeting
• 1:14:25
  seeing a low operations, send all your money to California.
• 1:14:28
  Go send every resource you could pull.
• 1:14:30
  Every put the agents out of Minneapolis pull them out of.
• 1:14:32
  Detroit, Tampa, everywhere. Iowa.
• 1:14:34
  Go to LA. Do you think?
• 1:14:35
  The DEA knows this, of course they.
• 1:14:37
  Know this and it's just political.
• 1:14:38
  It's just. Political.
• 1:14:39
  It's. Just nothing but political
• 1:14:40
  because you're right, that Congress lady in Nebraska, she's
• 1:14:43
  not going to vote for no money coming to Omaha.
• 1:14:45
  She's. Not going to vote for pull all
• 1:14:46
  my. Agents out of Omaha and send
• 1:14:48
  them all to LA because that's where it really is happening.
• 1:14:51
  That's right. No, that ain't happening.
• 1:14:53
  So it's a big political deal. It's a big political deal, yes.
• 1:14:56
  I mean, we could almost end it there.
• 1:14:58
  It's. A big Here's the thing, big
• 1:14:59
  political deal and we'll. Do one final illustration really
• 1:15:02
  quick. In 1994, with the passage of
• 1:15:04
  NAFTA, they Sinaloa. Because.
• 1:15:07
  They were having. An increasing the amount of
• 1:15:10
  product. All the cartels were
• 1:15:11
  experiencing an increasing amount of product.
• 1:15:12
  What Sinaloa did that was revolutionary was.
• 1:15:19
  They set up regional. Distribution hubs Chicago,
• 1:15:22
  Atlanta, NY and the logistical hub I'll set it Fort Bragg OK
• 1:15:28
  now no, it's right outside of Bragg there's a area like around
• 1:15:33
  Sanford OK now the. The distribution.
• 1:15:37
  Component of that is usually going to be right out of Raleigh
• 1:15:41
  or Charlotte. They move around right.
• 1:15:43
  But the the hubs themselves, Chicago, New York, Atlanta,
• 1:15:48
  those are receiving hubs. You might have 3 distributors in
• 1:15:53
  Chicago that are seen a lot, four guys in New York.
• 1:15:56
  Two guys. In Atlanta, there's only one
• 1:15:58
  hub. Yeah, but no.
• 1:15:59
  The Hub receives the tractor trailer.
• 1:16:01
  Because remember, the customers from the East Coast, buy them in
• 1:16:04
  LA, take delivery in the Hub. So if you're from Boston, you
• 1:16:08
  take delivery in New York if you're from.
• 1:16:10
  Cleveland, you take delivery. In Chicago, they don't.
• 1:16:12
  Accommodate you. They don't deliver it.
• 1:16:13
  The last time you go to Atlanta, you got to go to Atlanta.
• 1:16:17
  That's right. Assuming you're dealing with a
• 1:16:19
  first tier host level customer first tier, yes.
• 1:16:22
  Other than that, you're going to buy it from Fred?
• 1:16:23
  No, you can get it from, you know, Puerto Rican guys.
• 1:16:25
  Or Dominican guys, they're still coming the Caribbean route.
• 1:16:28
  These are the people that Trump's blowing out of the water
• 1:16:29
  with the boats coming out of Venezuela.
• 1:16:31
  Those are smaller operations. Usually they're supplying the
• 1:16:33
  guys that are going to the longer route with the small
• 1:16:36
  speedboats, island hopping. They're not doing you.
• 1:16:40
  Can't fit 20 tons on. Little boats, so 94, so 94.
• 1:16:44
  You had the with the passage of. NAFTA, you had the regional
• 1:16:47
  distribution hub model took effect and they introduced
• 1:16:51
  insurance. So now you come to LA, you
• 1:16:55
  purchase the product, assuming you're one of the guys that can
• 1:16:57
  purchase from the from the seven or eight men at the time.
• 1:17:00
  Well, when you made your purchase, part of the purchase
• 1:17:03
  price included insurance. So if the load gets knocked off
• 1:17:07
  on the way from LA to New York, some, you know, some officer
• 1:17:10
  pulls it over and knocks off the load in Phoenix.
• 1:17:12
  You don't take the loss, they eat the loss.
• 1:17:16
  But you're. Paying that, I'm sure you're
• 1:17:17
  going to. Pay the premium on the price so
• 1:17:19
  the price includes. Delivery to the regional hub and
• 1:17:22
  insurance see here in the United States in order for them.
• 1:17:25
  To gain market share. They couldn't make you couldn't
• 1:17:27
  lower the prices anymore? No, because your competitors are
• 1:17:30
  going to. You.
• 1:17:31
  You can't. She had to build a gimmick in
• 1:17:34
  there. Yeah, so they.
• 1:17:35
  Were able to say, OK, well we're going to.
• 1:17:36
  Add value through ensuring the loads and making it easier for
• 1:17:41
  the East Coast guys, right? And so now you just set up the
• 1:17:43
  account with the guy in LA, call him, say, hey, send me 200,
• 1:17:47
  right? You don't have to worry about
• 1:17:48
  it. You don't have to.
• 1:17:48
  Worry about it. We even got insurance on the you
• 1:17:50
  got. You got, now it's going to be.
• 1:17:51
  That much more a key though. Yeah, that's that's, that's part
• 1:17:54
  of the purchase part. That's part of the the margin,
• 1:17:56
  yeah. So, but you're still going to
• 1:17:58
  save 5 or 6. 1000 per unit. Oh yeah, absolutely.
• 1:18:00
  And with. Way less risk with a lot less
• 1:18:03
  risk because if you come to LA. And buy the product.
• 1:18:05
  Let's say you're getting it in LA for 18, you're going to sell
• 1:18:09
  it in New York for 26, in Boston for 2425.
• 1:18:12
  But now you got to transport, I got to get it out there.
• 1:18:14
  So if it gets busted. You take the loss.
• 1:18:16
  Right. Maybe and maybe get clipped.
• 1:18:18
  So now this. Alleviates one headache for you.
• 1:18:21
  Now this was established in 941990. 4 and that's when they
• 1:18:23
  insurance. And that's when they lowered.
• 1:18:26
  The minimum. Threshold to about 150 to 180
• 1:18:28
  kilos from 200 right because the hidden compartments.
• 1:18:31
  Built in the tractor trailers. Couldn't take it.
• 1:18:33
  Could hold anywhere from 100. And 50 to a. 180 depending on.
• 1:18:37
  So they adapted to to the. Transportation struggle because
• 1:18:40
  a lot of the importation from Mexico.
• 1:18:41
  Can go in the trailer, but once you get into the United States,
• 1:18:46
  the trucking companies don't fill.
• 1:18:47
  The trailer. They just come and they take a.
• 1:18:50
  Trailer they get. They get a.
• 1:18:51
  Contract. Take this lettuce to Chicago.
• 1:18:53
  They're not loading the lettuce. No, they're they're just hooking
• 1:18:56
  up the trailer. They're looking.
• 1:18:56
  At trailer number 46929 and they're loading onto it.
• 1:19:00
  That's right. So they don't load the trailers.
• 1:19:01
  So the product. Is built in the compartments in
• 1:19:03
  the in the rig, right? And so you're going to be able
• 1:19:05
  to build anywhere. From 150 to maybe a. 180 units
• 1:19:08
  per truck, so that's someday lower the minimum purchase
• 1:19:12
  requirement to that 200 to 151. 50 to 180.
• 1:19:16
  Right, depending on the. Rig.
• 1:19:17
  But with that you're getting delivery.
• 1:19:20
  Delivery to the regional hub closest to you and.
• 1:19:22
  Insurance and insurance, that's how they.
• 1:19:24
  Started gaining. Market share in the United
• 1:19:25
  States, that also helps the guy. That was maybe on the fence
• 1:19:29
  about doing it and and and it helps it helps potential, but
• 1:19:34
  you know, new customers say, listen, I'm all about getting
• 1:19:39
  Howard 100 keys in Boston, but I have no way to get it here, you
• 1:19:43
  know, so they wouldn't talk to you for 100.
• 1:19:44
  It'd be 1:50 to. 50 OK, so I'm 180 to 200, you know I'm this.
• 1:19:48
  Big slinging drug dealer guy in in Boston and but I have no way
• 1:19:52
  to get it from LA to to Boston. But you guys will get it to New
• 1:19:54
  York for me with insurance. I'm way more motivated to do
• 1:19:58
  that than if I happen to be lucky and just live outside of
• 1:20:02
  New York. It's even easier for me or
• 1:20:04
  closer to Chicago or wherever I was.
• 1:20:05
  Well, the. The regional hubs have created
• 1:20:09
  little ecosystems. You know, there's it's.
• 1:20:12
  A. It's a cluster, you know, wall.
• 1:20:14
  Street is a cluster not only of banks, but the law firms that
• 1:20:17
  work for the banks and the accounting company.
• 1:20:19
  The whole ecosystem gets created.
• 1:20:21
  You know, Silicon Valley is an ecosystem for tech LA was a
• 1:20:24
  ecosystem for the film and entertainment industry.
• 1:20:27
  Well, the regional hubs become an ecosystem that once the
• 1:20:31
  shipments arrive and you need to get it to Boston, well the
• 1:20:33
  Mexican cartel guys aren't taking it to Boston.
• 1:20:36
  Their operations end at the first tier at the regional hub,
• 1:20:39
  but you can pay one of the local.
• 1:20:40
  Groups. That's where you get like.
• 1:20:41
  Puerto Rican guys, Dominicans, the guy from Boston's not
• 1:20:44
  dealing with, he's dealing with either other Mexicans that are
• 1:20:47
  not. He has to have a local guy.
• 1:20:49
  Yeah, so now there's. Clusters of people that are.
• 1:20:51
  Dominicans, and I mean a whole ecosystem with them.
• 1:20:54
  So once, once, once the. Cartel, so to speak.
• 1:20:57
  Once Sinaloa gets it to New York, Sinaloa gets it.
• 1:20:59
  To New York, Chicago, Atlanta. Then then there's a whole
• 1:21:04
  ecosystem at each of those hubs, people that are making one hell
• 1:21:07
  of a living to get it to Cleveland.
• 1:21:09
  From Chicago to Cleveland, Yeah. Chicago to Indianapolis?
• 1:21:12
  Yep. Chicago to Boston?
• 1:21:14
  That's right. You know, you know.
• 1:21:15
  Chicago to Milwaukee. Chicago to Minneapolis, that's
• 1:21:18
  right. You know, Chicago to Knoxville,
• 1:21:20
  that's right. And every one of those is non
• 1:21:24
  cart. The government characterizes all
• 1:21:25
  that. As cartel.
• 1:21:28
  If you get. One in a Ryder truck.
• 1:21:30
  That's going from Chicago to Louisville and get stopped in
• 1:21:33
  Terre Haute IN that's cartel, according to them.
• 1:21:36
  According to them, yeah, that's. And that's how the current
• 1:21:39
  system works. Yes, if you define the if.
• 1:21:42
  You define the problem large enough.
• 1:21:44
  Everybody's cartel. Yeah, Yeah.
• 1:21:47
  At the base. We're basically at the point now
• 1:21:48
  where it's. It's cartel.
• 1:21:50
  If you're a Mexican, they're calling you cartel right right
• 1:21:53
  now. Do the feds really try hard to
• 1:21:57
  identify the hubs or are we back to the government?
• 1:22:00
  Of course, the the the government.
• 1:22:01
  Knows this isn't I'm being understand I'm not disclosing
• 1:22:04
  any information that's not known to the federal law.
• 1:22:07
  Johnny, do it all. Here this is simply explaining.
• 1:22:11
  How it works to? An audience that's.
• 1:22:13
  Generally not exposed to how it listen, I didn't know and.
• 1:22:17
  I thought I knew a little bit about this.
• 1:22:19
  I didn't know 90% of what you told me today.
• 1:22:22
  I didn't know dating back to the history of how the Colombians
• 1:22:25
  got knocked off in LA and how the Mexicans then just buy
• 1:22:28
  inheritance, had to take it. And then once they took it over,
• 1:22:32
  now they become the middleman. They become the middleman.
• 1:22:34
  Incentivized by volume and. Then in 90.
• 1:22:36
  Four with NAFTA. And then they build an insurance
• 1:22:39
  and delivery to it. Yes, how they started gaining
• 1:22:41
  market share and. Gaining market share because
• 1:22:43
  they were the smallest of the groups, but they were able to
• 1:22:45
  increase their distribution operation to how crack cocaine
• 1:22:49
  was introduced. Yeah.
• 1:22:50
  That was a decade earlier though.
• 1:22:51
  Yeah, but I'm just. Saying we got into that today.
• 1:22:53
  As to how, because once the Mexicans took over and the
• 1:22:56
  volume went up, then they have to get it to a lower tier.
• 1:22:59
  No, no, once the Mexicans took over.
• 1:23:00
  Transportation to Colombians. They're dealing with America.
• 1:23:03
  Their third. Yeah, they were getting their
• 1:23:05
  third. They had to feel, how can we
• 1:23:07
  dummy this down to a guy that wants to buy a $20 crack rock?
• 1:23:10
  Yeah, so that Mexican had nothing to do with the.
• 1:23:12
  Crack. No.
• 1:23:12
  Right, Right. The Colombians actually had.
• 1:23:14
  Nothing to do with the crack either.
• 1:23:15
  They were. Dealing with Americans.
• 1:23:16
  Americans don't fit the crack. And Americans.
• 1:23:19
  Invented. Crack to be.
• 1:23:20
  Able to super serve an audience that normally couldn't just take
• 1:23:23
  in the drug market in a $18,000 key.
• 1:23:26
  Oh no. At the time keys were over
• 1:23:28
  40,000. Dollars.
• 1:23:28
  And remember, this is a time when the dollar was worth a lot
• 1:23:32
  more. Yeah, true.
• 1:23:34
  You know $40,000. In 1982, Today's 100.
• 1:23:36
  And $20,000, well, you're talking, you know, 100.
• 1:23:39
  And 20,000. In today's dollars for kilos,
• 1:23:42
  here's an illustration that I think really brings it home. 20
• 1:23:45
  years ago, the largest traffickers in the United States
• 1:23:49
  who are American citizens were two brothers out of Chicago. 2
• 1:23:53
  American citizens of Mexican descent were the two largest
• 1:23:57
  drug traffickers. In America, In American history,
• 1:24:00
  I know one. Of them and his name is Jay
• 1:24:02
  Flores. He went by his Jay was his his
• 1:24:04
  handle. OK, so Jay and his brother were
• 1:24:07
  the two largest American citizen traffickers and.
• 1:24:12
  Jay dealt. Directly with Chapo Guzman,
• 1:24:16
  directly with Zambada, Directly without Tutu Beltran, Directly
• 1:24:22
  with Lobo. Valencia.
• 1:24:23
  So 4 out of the five, there's 4 heads of cartel. 4 heads of each
• 1:24:28
  organization, one of the four. Organ.
• 1:24:30
  Yeah, it's need to see a network.
• 1:24:31
  Yeah, OK. Four of the organizations.
• 1:24:33
  The Four. Of the five biggest
• 1:24:35
  organizations he dealt directly with and Jay dealt directly with
• 1:24:39
  him and his brother in A5. Year period they were.
• 1:24:42
  Responsible for nearly 2 1/2 to $3 billion worth of product
• 1:24:45
  distributor, the two largest. American citizen traffickers.
• 1:24:49
  In the history of the United States.
• 1:24:52
  Wow. Now, what's interesting about?
• 1:24:54
  This is here's a map. You have a red circle around
• 1:24:57
  Chicago, you have a red circle around the city of Los Angeles,
• 1:25:00
  and in the one down in Mexico is the city of Guadalajara.
• 1:25:03
  So now the largest drug conspiracy in the history of the
• 1:25:05
  United States involving 2 and a. Half to $3 billion worth of.
• 1:25:09
  Product. Those two American citizens.
• 1:25:15
  Out of Chicago, how many of the transactions?
• 1:25:18
  Were negotiated on. American soil.
• 1:25:21
  Zero. I was going to say 0.
• 1:25:24
  How many of the meetings in anticipation?
• 1:25:26
  Of those transactions happened on American soil 00.
• 1:25:31
  How many times was the product paid for on?
• 1:25:33
  American Soil 00. Jay Flores lived in Guadalajara.
• 1:25:39
  He was from Chicago but lived in Mexico.
• 1:25:43
  He lived in Mexico. Don't.
• 1:25:45
  Confuse an American sourcing product in Mexico with the
• 1:25:49
  cartel distributing in the United States.
• 1:25:53
  Not one. Of those transactions involving.
• 1:25:55
  2 1/2 to $3 billion represented the cartel selling anything in
• 1:25:58
  the United States. They sold it to the American in
• 1:26:01
  Mexico in in Guadalajara, in. Mexico Jay didn't have any
• 1:26:04
  kinship ties. American citizen, you got to
• 1:26:08
  deal with them. But you got to go to.
• 1:26:09
  Mexico. And when they took Jay down,
• 1:26:11
  where'd? They take him down at Jay in
• 1:26:13
  Guadalaja The. Largest drug trafficker in the
• 1:26:15
  history of the United States as an American citizen.
• 1:26:17
  Engaged in no transactions with any of the Sinaloa kingpins did
• 1:26:23
  in the US. No money exchanged in the US.
• 1:26:26
  No meetings taken in the US, No just he bought every one of.
• 1:26:31
  Those loads in Mexico. Now what did the cartel do?
• 1:26:35
  They sold him the product in Guadalajara.
• 1:26:38
  He took delivery. In the US.
• 1:26:41
  That's where they got him. They didn't.
• 1:26:43
  Distribute. So he didn't those those.
• 1:26:45
  Cartel organizations weren't selling it to J in the United
• 1:26:47
  States. No, he's buying it in Mexico.
• 1:26:49
  And they said, where do you want to take delivery?
• 1:26:50
  He could have said, hey, give it to me in TJ, right?
• 1:26:52
  He could say give it to me in San Diego, give it to me in LA,
• 1:26:57
  but because he was from Chicago. He's like give.
• 1:26:59
  It to me in Chicago. So the product went from
• 1:27:03
  Guadalajara, Guadalajara to Los Angeles to Chicago.
• 1:27:06
  Oh, so it didn't even go? Guadalajara, Chicago.
• 1:27:09
  It went LA because you got to get to the LA That's where it's
• 1:27:11
  got to go, yeah. You got to get it from the
• 1:27:12
  smuggling. Cell takes it to.
• 1:27:14
  LA, right. Then the transportation cell in
• 1:27:16
  LA, remember you got 2 off, you got the office in LA for the
• 1:27:18
  distribution office takes it to Chicago, but then you got a
• 1:27:20
  transportation office. Transportation office is a
• 1:27:23
  different. Office from the distribution.
• 1:27:24
  Office Miles Zambada had the distribution office in LA.
• 1:27:28
  Nacho Cornell had the transportation office in LA. 2
• 1:27:31
  separate organizations. When did they take Jay down?
• 1:27:34
  2008 so for the. Preceding 5 year period, all the
• 1:27:37
  loads would come heated. He'd meet with the guy in
• 1:27:39
  charge. The number one in Guadalajara
• 1:27:42
  during Jay's era was an individual whom he has publicly
• 1:27:44
  identified. The American government's
• 1:27:46
  charged him a number of times, so I'm not revealing anything
• 1:27:48
  out of pocket. An individual named Hermano
• 1:27:49
  Leavetes now that's who Jay dealt with.
• 1:27:52
  He was when Zambada, Guzman, Beltran, they dealt with Jay,
• 1:27:57
  but Jay dealt with the primary. The guy that had the Guadalajara
• 1:28:00
  office the day-to-day right was Hermano Leavetes.
• 1:28:03
  Armando now. Eight years earlier in.
• 1:28:06
  My era G had the office in LA right?
• 1:28:10
  So he was. The number one in Los Angeles.
• 1:28:13
  For Zambada, he was there for four years, then he took over to
• 1:28:16
  the office in Tijuana. He was the number one there for
• 1:28:19
  a few years, then he took over the office in Guadalajara.
• 1:28:22
  He's the corporate advancement like they have a lot of.
• 1:28:25
  Turnover people don't think. That the guy that the man to
• 1:28:28
  Zambada office in LA for the last 35 years you've had 10
• 1:28:31
  number ones for 3-4 years top then they rotate Jay would meet
• 1:28:35
  with Hermano leave Edison Guadalajara and he'd tell G hey
• 1:28:38
  GI need 900 units this week 14,000,000 worth of product 900
• 1:28:43
  keys. So now G would pick up the phone
• 1:28:45
  in Guadalajara. He calls the number one for the
• 1:28:47
  distribution office in LA and says, hey, 900 units to Chicago
• 1:28:50
  for HOTA. HOTA has the letter J in
• 1:28:52
  Spanish. So the number one in the
• 1:28:54
  transportation distribution office in LA.
• 1:28:56
  He picked up the phone. He called the number one for the
• 1:28:58
  transportation office. That's a different organization,
• 1:29:00
  one of the 44, but it's a different.
• 1:29:03
  Organization we need 9. 100 We need 900 units to Chicago now,
• 1:29:07
  so the transportation. Office guy takes a day to
• 1:29:09
  arrange. Everything called back to the
• 1:29:10
  distribution office number one in LA and says hey, we got three
• 1:29:12
  tractor trailers leaving Monday, Tuesday, Wednesday. 300 units
• 1:29:16
  per trucks will be arriving Thursday, Friday, Saturday.
• 1:29:18
  So the number one for the distribution office in LA calls
• 1:29:20
  back to Guadalajara and says OK, we got 3 trucks leaving Monday,
• 1:29:23
  Tuesday, Wednesday. Let Holta know that it'll be a
• 1:29:25
  trucks will be arriving Thursday, Friday, Saturday and
• 1:29:28
  then so then then Jay. Gets told this.
• 1:29:30
  Information. He calls his guy in Chicago and
• 1:29:34
  says, hey, we got trucks. Coming Thursday, Friday,
• 1:29:36
  Saturday. Get everything ready so then the
• 1:29:38
  trucks leave. Mondays, Tuesday.
• 1:29:40
  Wednesday. And he pays for it in
• 1:29:41
  Guadalajara. He deals.
• 1:29:42
  With them here in Guadalajara makes a payment there he.
• 1:29:46
  Has to deal with them. Yes, payments taken in
• 1:29:48
  Guadalajara. They'll take payments in
• 1:29:49
  Tijuana, whatever they say, and usually it's Guadalajara, but
• 1:29:51
  it's in Mexico. Yeah, the money laundering.
• 1:29:53
  Hub created by the. Government 50 years ago is in
• 1:29:55
  Guadalajara again, created by the Mexican government.
• 1:29:59
  That's the the financial services.
• 1:30:01
  Aspect of the operation. So once the distribution office
• 1:30:03
  in LA calls Guadalajara and says OK we got 3 trucks leaving ready
• 1:30:07
  to go. Monday, Tuesday, Wednesday
• 1:30:08
  arriving Thursday, Friday, Saturday.
• 1:30:10
  Jayden calls his guy in Chicago and says hey trucks are arriving
• 1:30:13
  Thursday, Friday, Saturday. So Monday's truck arrives on
• 1:30:15
  Thursday, the regional hub in Chicago.
• 1:30:18
  Unload the truck, take the 300 keys, put it in a van, drive the
• 1:30:21
  van to meet with Jay's guy. They meet in Denny's in the
• 1:30:24
  parking lot. They give Jay's guy the keys.
• 1:30:27
  Jay's guy jumps in the van. He drives off with the product.
• 1:30:29
  The moment Jay's guy takes possession of the van, cartel
• 1:30:31
  operation cease. Yeah.
• 1:30:33
  Cartel is done. Done.
• 1:30:35
  They play no role. In anything that happens
• 1:30:38
  subsequent to the first Terra Hosa level customer taking
• 1:30:41
  possession at the regional hub. So Thursday, Friday, Saturday,
• 1:30:46
  there's 300. Keys each day arriving, there's
• 1:30:48
  three 900 units. Jay's on the hook for the 900
• 1:30:51
  units back in Mexico. Now, if the product gets knocked
• 1:30:54
  off on route from LA to Chicago, Jay takes no loss.
• 1:30:58
  Has he got insurance? He's got insurance, So that's
• 1:31:00
  how you know. If it's a cartel.
• 1:31:02
  Operation or not, it depends. There's a, there's a, there's a
• 1:31:05
  concept called accountability and so it's but there's not a
• 1:31:10
  lot of Jays. No, no.
• 1:31:12
  Of course not. Who's how many guys are taking?
• 1:31:13
  50 million a month, That's what I'm saying.
• 1:31:15
  Like there's only what, a handful?
• 1:31:16
  Of chase handful yeah so now the.
• 1:31:20
  You know that the cartel. Is operating.
• 1:31:23
  If they eat the loss right once it gets.
• 1:31:27
  To Chicago and delivered to the first to host.
• 1:31:28
  A level customer, Jay takes responsibility.
• 1:31:30
  He's accountable. It don't matter if his driver
• 1:31:32
  leaves the Denny's parking lot, gets pulled over 2 blocks down
• 1:31:34
  the road, and cops find the product, you're on the hook.
• 1:31:36
  No more insurance as soon as soon as.
• 1:31:38
  My as soon as I hand that van key over to you, as soon as you
• 1:31:41
  take your man takes possession. Of the product, Money's hard.
• 1:31:43
  That's it. Now from that point forward,
• 1:31:46
  it's all. American based trafficking,
• 1:31:48
  right? Here's another man by Americans.
• 1:31:50
  All of the green dots Jay's the red dot in.
• 1:31:53
  Chicago All the green. Dots are his customers
• 1:31:56
  Milwaukee, Minneapolis, Detroit, so.
• 1:31:58
  Every, every one of those guys. Minneapolis, Milwaukee.
• 1:32:01
  Cleveland. But cartel's no longer involved.
• 1:32:03
  Nothing to do with. This But meanwhile, if a if a
• 1:32:05
  federal D if a big DEA bust happened in let's say Cleveland
• 1:32:10
  and they got 100 keys, it's one of Jay's customers, what would
• 1:32:14
  they say? Of course.
• 1:32:15
  They're going to call them cartel.
• 1:32:16
  We got the cartel, yeah. Man.
• 1:32:18
  Your cartel bus in. Cleveland Cartel's got.
• 1:32:20
  Nothing to do with that. No, there are two.
• 1:32:21
  People removed from that. Minneapolis.
• 1:32:23
  Milwaukee, Chicago. Cleveland, yeah.
• 1:32:25
  Minneapolis, Milwaukee, Cleveland, Cincinnati,
• 1:32:27
  Pittsburgh, Louisville, Indianapolis, Memphis, St.
• 1:32:30
  Louis. None of them are cartel.
• 1:32:32
  None of them. They're all Jay Flores's
• 1:32:34
  customers. Yep.
• 1:32:35
  They're just customers. They're just.
• 1:32:36
  Customers of Jay Jay's not Cartel.
• 1:32:38
  He's an American, right? He's a first tier host level
• 1:32:40
  customer. All the green dots are second
• 1:32:42
  tier customers. Yep, the second tier customers,
• 1:32:45
  the green dots, they're the ones who deal with American and
• 1:32:47
  they're the ones usually getting busted.
• 1:32:50
  Well, they're. Much the guys getting busted are
• 1:32:53
  third and fourth guys right it's rare to get a second the green,
• 1:32:57
  the second level guy because they're insulated and but they
• 1:33:00
  did get Jay Jay volunteered. Really.
• 1:33:03
  Yes, that's probably a whole. Other story.
• 1:33:05
  It's a whole other story. Yes.
• 1:33:07
  Yeah. Jay.
• 1:33:07
  Jay. Wanted out out so he said OK, he
• 1:33:10
  contacted. Them and said hey look I'm
• 1:33:12
  dealing. With Chapo, who do you guys
• 1:33:14
  want? Oh, that's a.
• 1:33:17
  Whole story itself, my friend. Beat that.
• 1:33:19
  I think that's where we leave him.
• 1:33:20
  Yeah. He wore the body wires on him.
• 1:33:21
  So, Jay. The guy we're talking.
• 1:33:23
  About Jay and his brother who ran Chicago, no.
• 1:33:26
  They ran. They were.
• 1:33:27
  First tier host. Level customers no that hold on
• 1:33:29
  they were the largest in the history of our.
• 1:33:30
  Country Yes, 2 American citizens out of Chicago.
• 1:33:33
  Who were large customers the The organization that ran the hub in
• 1:33:37
  Chicago was Nacho Cornell's organization.
• 1:33:39
  Espatagosa's organization ran New York.
• 1:33:41
  Beltran ran LA Atlanta. Excuse me, somebody had the
• 1:33:44
  office in LA and Jay said I. Went out he.
• 1:33:49
  Said I went out. Him and his brother said they
• 1:33:50
  went out so. With respect to Jay's operation
• 1:33:53
  in that five year period, those two to $3 billion worth of
• 1:33:56
  product, none of it was sold in the United States by a cartel
• 1:33:59
  distributor or paid for. This was an.
• 1:34:01
  American sourcing the product in.
• 1:34:03
  Mexico, the cartel's operations was limited to delivery service.
• 1:34:08
  Well, the cartel is a transnational logistical
• 1:34:12
  operation first and foremost. From its inception back in the
• 1:34:16
  80s, they were trucking. They were trucking for Mario,
• 1:34:20
  and they kept on trucking. Ever since.
• 1:34:22
  The distribution component in the United States is secondary
• 1:34:25
  to the logistics when the 20 ton shipment.
• 1:34:28
  Lands in Mexico. 60% of that load gets sold to American based
• 1:34:33
  customers in Mexico. Yeah, they decide.
• 1:34:37
  What hub do you want it at I. Want it at the Chicago hub, I
• 1:34:39
  want it at the Atlanta hub, I want it at the New York hub or
• 1:34:43
  they take it in LA at a cheaper price.
• 1:34:45
  Now the 40% of that 20 ton shipment that doesn't get sold
• 1:34:48
  in Mexico that comes to LA, the 15 guys sell 80% of that, right?
• 1:34:54
  So that's a whole sub sect in. Itself and the only the little
• 1:34:57
  remaining part. Goes to Chicago, goes to New
• 1:35:00
  York, goes to Atlanta, right? But the lion's share.
• 1:35:03
  Of the distribution on. American soil happens in Los
• 1:35:06
  Angeles, but the lion's share of the cartels distribution
• 1:35:09
  activity in whole happens in Mexico.
• 1:35:13
  American based. Customers go to Mexico.
• 1:35:15
  So the cartels operations with respect to the massive activity,
• 1:35:20
  the big boys, the big boys is limited to simply delivery
• 1:35:24
  because you have to understand the people who finance the
• 1:35:29
  operations. Much of that it's not drug
• 1:35:35
  cartel financing. In fact, I will have.
• 1:35:38
  An episode where we're reacting. To identify some of the
• 1:35:40
  billionaires that are legitimate businessmen who have been
• 1:35:43
  charged for bankrolling loans for this industry.
• 1:35:46
  Yeah. Because you get a. 100% return.
• 1:35:50
  In a six to 10 week period. But man, of course the cartel
• 1:35:56
  makes this. Services available because they
• 1:35:59
  want to have buy in from the political, business and military
• 1:36:02
  elite. Because the guy with the 3rd
• 1:36:04
  grade education who grew up in the Seattle Madre Mountains in
• 1:36:06
  Sinaloa, he's not even invited to the President's ball for New
• 1:36:09
  Year's Eve. No, but you know who is?
• 1:36:12
  The billionaire. The billionaire who's financing
• 1:36:14
  it? Just getting 100% routine.
• 1:36:17
  Return. Return.
• 1:36:17
  On this money and and, and what'd you say?
• 1:36:19
  And not just billionaires, it's legitimate businessman.
• 1:36:21
  In the general, because you have clusters like in Guadalajara,
• 1:36:24
  you'll have different groups. So like oil industry executives,
• 1:36:28
  they'll pull 8 guys together. They all put up 5 million.
• 1:36:32
  That'll be a 40. $1,000,000 pot of.
• 1:36:34
  Money and in the financier, it's essentially a private credit,
• 1:36:37
  private equity type model and in the financier who raises the
• 1:36:42
  capital. Will contact.
• 1:36:44
  The financial representative for the cartel and says hey, we got
• 1:36:46
  a 40 million full of capital, but then the narcos will.
• 1:36:50
  Call down to Colombia and. Say, hey, we need 20 tons
• 1:36:52
  because every 20 tons costs 40 million and so.
• 1:36:56
  Those use the money from the oil industry.
• 1:36:58
  Executives or the entertainment industry?
• 1:37:00
  Executives or the leisure in a hotel and resorts, not in Mexico
• 1:37:06
  so much, but it's a lot of leisure.
• 1:37:08
  You know, resorts are very popular.
• 1:37:09
  So you've got those type of industries where executives will
• 1:37:12
  put in a million, 3,000,005 million and put it in the pot.
• 1:37:16
  Put it in the pot. They never talked.
• 1:37:17
  To an ARCO the. Investment pot as far as the
• 1:37:19
  they're not touching. They're.
• 1:37:20
  Dealing with the guy, most of the guys in the financial
• 1:37:22
  services network in Guadalajara, these are professionals.
• 1:37:27
  If you all wear suits, you'd be shocked how many of them went to
• 1:37:30
  USC. And so they're just getting
• 1:37:32
  investment opportunities. Hey, you put in $3,000,000 and
• 1:37:34
  in 10 months, 10 weeks, you're going to get back 80% return,
• 1:37:38
  yeah, which you can't get anywhere.
• 1:37:40
  You. Can't get that anywhere.
• 1:37:41
  Period. No, it's.
• 1:37:42
  Fine, you could put the guy in a lie detector.
• 1:37:43
  He's like, no, of course I have nothing to do with the drug
• 1:37:45
  trade. I've got these.
• 1:37:47
  Wonderful. Investments, because I got
• 1:37:48
  investments. Yeah, I got an idea.
• 1:37:49
  What the financial They put up the money, these guys put up the
• 1:37:52
  money. That's another aspect that
• 1:37:55
  people don't have. Any idea about P?
• 1:37:58
  That's why the. Like for instance with Sinaloa,
• 1:38:02
  they sell 60% of the load in Mexico because.
• 1:38:07
  They're going to make back the money that they.
• 1:38:08
  Got to pay back the investors. They're going to make the money
• 1:38:11
  that they got to pay. For the political.
• 1:38:12
  Protection because remember each of Well, prior to 2000, a single
• 1:38:17
  political party in Mexico ran the country for seven decades.
• 1:38:20
  It was a political party known by the initials PRI.
• 1:38:23
  We refer to it as PRE. Well, in 2000, for the first
• 1:38:28
  time, PRI did not win the presidential election.
• 1:38:32
  Like they lost power after the guy got knocked off with the
• 1:38:34
  hundreds of millions. It was such a scandal that
• 1:38:37
  another political party and the same political party had been in
• 1:38:40
  power. For seven years, 7, seven years,
• 1:38:42
  yes, yes. So now all of a sudden.
• 1:38:43
  They're no longer in power. Well, in 1989 when you had the.
• 1:38:46
  Predecessor group part of the heart of cartel break apart.
• 1:38:49
  They formed a little baby cartels, well, two of them.
• 1:38:54
  Now you introduce an element of competition for market share,
• 1:38:57
  but you also introduce an element of competition for
• 1:38:59
  political protection, right. And when the so the two largest.
• 1:39:03
  Cartels. Out of Tijuana and the Gulf they
• 1:39:05
  were in bed with pre right but the five.
• 1:39:09
  Out of two, out of the five right the other.
• 1:39:11
  Three were getting smashed. Sinaloa was on his last leg
• 1:39:13
  going into the new Millennium. Literally Sinaloa was six
• 1:39:16
  months, six months away from getting wiped extinct, right?
• 1:39:19
  Have you talked to any of the older guys, guys like MIH
• 1:39:21
  demographic, Yes. So what saved?
• 1:39:24
  Them. Was the Christmas miracle?
• 1:39:26
  Ask any guy that's in their 50s or 60s from the Sinaloa.
• 1:39:29
  They'll tell you, oh, the Christmas miracle.
• 1:39:33
  That's when the election turned the.
• 1:39:34
  Election turned and. Vicente Fox from the.
• 1:39:37
  Different rival political party PAN won office.
• 1:39:40
  That's called the Christmas miracle.
• 1:39:41
  That's the Christmas. Miracle and that put the Sinaloa
• 1:39:43
  because Sinaloa backed. Pan right, So when?
• 1:39:48
  Pan took over the executive. Branch.
• 1:39:51
  Within 18 months, they smashed Tijuana.
• 1:39:53
  Within two years, they smashed the Golf.
• 1:39:54
  You had Benny Manariano sitting in a jail cell.
• 1:39:56
  You had Ocel Cardinal sitting in a jail cell who took over
• 1:40:00
  Sinaloa. It ain't no fun when the.
• 1:40:02
  Rabbits got the gun, so all of a.
• 1:40:03
  Sudden now they had the political power when the rabbits
• 1:40:06
  got the gun. So for the next. 12 years
• 1:40:08
  Sinaloa had their. Run through Jay Flores's era
• 1:40:10
  because Pond controlled everything well.
• 1:40:14
  Sinaloa had to make structured. Payments.
• 1:40:17
  So you're talking there's still somewhere?
• 1:40:18
  In the neighborhood, about 50. Percent of the money goes to
• 1:40:21
  pawn on, not the Mexican. Government.
• 1:40:23
  And so when people say the Mexican government is corrupt,
• 1:40:25
  yes, they're all not every person is dirty, but the poor
• 1:40:29
  party, the political. System is all compromised.
• 1:40:32
  Because all of the parties have within their coalition
• 1:40:36
  organizations that are drug. Trafficking organizations.
• 1:40:38
  Remember, they don't lose the cartel nomenclature.
• 1:40:40
  They don't. That's an American construct.
• 1:40:42
  That's that's my me. Being an American.
• 1:40:44
  Organization that's right so they.
• 1:40:45
  Assign one drug Lord for an area and you handle interacting with
• 1:40:51
  all these guys. So this general doesn't talk to
• 1:40:53
  20 narcos, he talks to 1 and the one talks to the other 19.
• 1:40:56
  But that's the guy that the US says he's the most powerful.
• 1:40:58
  No. He's the one who's responsible
• 1:40:59
  for interacting with the political class.
• 1:41:01
  Is our government that corrupt? No.
• 1:41:03
  No, that's why Trump says, look, there's an intolerable alliance.
• 1:41:05
  So. Trump is really the only one
• 1:41:07
  that's been. Honest about this particular
• 1:41:09
  act? Yes.
• 1:41:10
  He's honest, but he's they're the look, the administration is
• 1:41:14
  being disingenuous because they're not really targeting the
• 1:41:16
  drug trade. They're targeting Mexico's ties
• 1:41:19
  with China and they just need leverage.
• 1:41:22
  Pete, this is. But we could go on and on, my
• 1:41:24
  friend. And but this is a couple more
• 1:41:26
  podcasts in itself, the laundering aspect of it.
• 1:41:28
  The I remember one time I was listening to you say, you know,
• 1:41:31
  Oh my God, about, you know, the, the, the, the 300 taxi cabs in
• 1:41:35
  Tijuana that are really, really, you know, bought and paid for by
• 1:41:39
  one of these organizations. And they may or may not even be
• 1:41:43
  taxi cabs during the day, may just sit in a or the 50 fishing.
• 1:41:48
  Charter boats. You know, it's like it's just a
• 1:41:50
  whole big thing that, you know, we don't have time to get into.
• 1:41:52
  But I appreciate COD. I appreciate your knowledge on
• 1:41:54
  this, my friend. We appreciate you.
• 1:41:57
  Sitting. Through this, this was not a
• 1:42:00
  necessarily a a bad guy or a serial killer, but this was a a
• 1:42:03
  very in depth, well, really not that in depth because there's a
• 1:42:06
  lot more to it. There's a lot more the aspect of
• 1:42:09
  it, there's the the, the, the Plaza system, financial
• 1:42:12
  networks. So another episode of Deadly.
• 1:42:14
  Intentions. Don't forget to subscribe and
• 1:42:16
  tell your friend and we'll have another episode out next week.
• 1:42:20
  We have one a week and we'll have one next week as well.
• 1:42:23
  We appreciate you. Thanks.