Latest / Deadly Intentions / Inside the Jalisco New Generation Cartel: How CJNG Rose From Sinaloa

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Inside the Jalisco New Generation Cartel: How CJNG Rose From Sinaloa · Deadly Intentions

• 0:00
  Are they fighting Mexican government?
• 0:02
  They're fighting everybody. Not only did they step forward,
• 0:04
  but they had a strong arm wing. They had a strong ARM wing and
• 0:08
  they had control of ports and they had the connection with
• 0:12
  Chinese and they had the labs. Sounds like they're
• 0:16
  indestructible. With respect to current era,
• 0:25
  today in Mexico, the most powerful network is referred to
• 0:30
  as the Jalisco New Generation Cartel and this group came about
• 0:36
  roughly around 2011. So fairly recent.
• 0:39
  Sure. It's about 15.
• 0:40
  It's about 15 years old. By cartel standards.
• 0:42
  Well, here's the thing. Those are the Jalisco's.
• 0:46
  Yeah, the guys in Jalisco were 20 years ago, the Sinaloa
• 0:51
  Network, which the US government calls a cartel.
• 0:54
  That network was enormous. And the Jalisco faction of that
• 1:00
  network was led by a couple of drug Lords, one of whom was
• 1:05
  named Nacho Cordonell. Ignacio, everyone just calls him
• 1:08
  Nacho. So you had Nacho Cordonell and
• 1:11
  Armando Valencia. And so you had essentially what
• 1:13
  were these two families that had come together to form an
• 1:16
  alliance and they represented the power structure in Jalisco
• 1:24
  operating out of Guadalajara and make we're the primary group
• 1:28
  responsible for the surrounding states in Colima, Nyati and
• 1:31
  parts of Michoacan. This particular faction was
• 1:36
  incredibly important within the Sinaloa network because in
• 1:41
  Mexico, power is defined by proximity to either powerful
• 1:48
  political figures or key strategic assets.
• 1:55
  And So what made Jalisco particularly powerful was both
• 2:01
  of the ports on the Pacific Coast, like the two big ports in
• 2:05
  Mexico, all within their territory.
• 2:09
  Well, you can't reproduce a port.
• 2:11
  No. Those are strategic assets that
• 2:14
  if you control now, not only are you able to import enormous
• 2:20
  quantities of coke, this is where the Venezuela operation
• 2:23
  came in with with respect to cargo ships Ultimate.
• 2:26
  Alternatively, you also were able to bring in the chemicals,
• 2:29
  whether it's the precursors coming in from India or the pre
• 2:33
  precursors coming in from China. Either way, you're able to bring
• 2:37
  that into the country. In and out.
• 2:40
  Well, yes, yeah, I. Mean more I mean that you and it
• 2:43
  starts with having a port. Sure, of course.
• 2:45
  And so having that, so now not only are you able to bring these
• 2:48
  materials in for yourself, but you're also able to charge fees
• 2:52
  for other groups. So if you're a group out of a
• 2:57
  state that wants to say, hey, we got chemicals coming in from
• 3:00
  China, well, you have to pay the fee to bring it in through the
• 3:05
  airport. It's called diesel.
• 3:07
  And so these are alternative revenue streams.
• 3:10
  And it gives them a lot of power because now other groups have to
• 3:15
  make nice. It would it would it?
• 3:18
  If I'm completely wrong here, then by all means, but it would
• 3:21
  it would it be somewhat, somewhat close to what's
• 3:24
  happened to the Strait of Hormuz right now with regards to the
• 3:26
  control of a shipping lane? And it's a joke.
• 3:29
  You got to you got to do business with us or not.
• 3:31
  Under under terms. Yeah, on their terms.
• 3:33
  And so for instance, the family, this would.
• 3:34
  Be the drug portion of. That, yes.
• 3:36
  And the Valencia's in particular, and we're going to
• 3:39
  be referring to them, quite frankly throughout this episode,
• 3:42
  they're the ones who had control over the port in the Mexican
• 3:45
  state of Colima. And so there was a standing
• 3:48
  arrangement between Lobo Valencia and the port officials
• 3:54
  were they were able to bring into Mexico any container
• 4:00
  unexamined for $1,000,000 per container for those 40 foot
• 4:04
  shipping containers. A.
• 4:05
  Million per. A million per.
• 4:07
  Unexamined. Unexamined.
• 4:08
  So if you had, you know, stuff a lot of coke into those, 5K in
• 4:12
  those. Imagine how much coke you can
• 4:14
  put in one of those 40 footer. Yeah, you send five of them.
• 4:16
  It's just enormous quantities. I.
• 4:18
  Mean ton. Yeah, and you're guaranteed to
• 4:21
  get it through because, you know, it's $5,000,000 and you
• 4:23
  get the unexamined a clerk lessons for you.
• 4:25
  And this is where the Venezuela aspect came in, because in
• 4:28
  Venezuela they can load the containers onto the ships and
• 4:32
  not get interfered by the authorities.
• 4:33
  And then when it gets to Mexico, it comes through Colima, the
• 4:36
  port, and it's guaranteed entrance center.
• 4:38
  It's just a bulletproof operation.
• 4:40
  You just got to grease all you got to grease everybody all
• 4:42
  along the way, don't you? It's a million per container.
• 4:45
  Well, yeah. No, of course.
• 4:47
  I mean, there's a, you know, in Mexico, they operate under the
• 4:49
  La Plaza system of criminal governance.
• 4:51
  So everybody's getting a piece, the chief of police, the
• 4:53
  senator, the local military, up and down the line.
• 4:56
  The dog catcher, yeah, but. The individuals that have access
• 5:00
  to the officials in those ports were the operatives that were
• 5:06
  associated with the Valencia Group.
• 5:09
  And they're now able to say, hey, look, go and source all the
• 5:13
  product you want in South America, bring it through the
• 5:15
  port. We're going to charge you.
• 5:16
  Well, let's say you know, they'll charge you on a
• 5:19
  percentage basis. We're going to take 25% of the
• 5:21
  law. So if it's is that?
• 5:25
  Is that modern day? Oh yeah, that's that's modern
• 5:27
  day that that was. Obvious when you speak of that,
• 5:30
  that we speak of that now, today.
• 5:31
  Well, today the leader of the the leader of the individual
• 5:36
  identified by the US government as the leader is Juan Carlos
• 5:40
  Valencia. And it's just another in a long
• 5:44
  line of Valencia's, you know, a decade ago, the most
• 5:50
  effectively, the most powerful narco in Mexico, certainly the
• 5:53
  wealthiest, was Abajo Valencia. 99.9% of people, you know, in
• 5:59
  the drug trafficking world in the United States never even
• 6:02
  heard of this guy. He was way bigger than fucking
• 6:04
  Chapo. Like this guy was on an entirely
• 6:07
  different level. You don't ever hear about him.
• 6:10
  Before that you had Lobo Valencia, Before that you had
• 6:13
  Armando Valencia. This has been going on for the
• 6:16
  past 35 years that I know of. So wait 3-4 generations deep
• 6:19
  right now? Well.
• 6:20
  This third, the third generation, yeah.
• 6:23
  And so the that's just an, that's some insight into how
• 6:28
  power accrues. And so with respect to Jalisco,
• 6:33
  they were the anchor of the prior Sinaloa group, the Sinaloa
• 6:40
  network, because they were able to get stuff through the ports
• 6:43
  also because they have these are coastal States and they
• 6:47
  controlled Kalima, Naiadi as well as the coastal areas of
• 6:51
  Haleisco. And there's a lot of commercial
• 6:54
  fishing. And so a separate operation is
• 6:57
  the maritime operations where you'll have, you know, tuna
• 7:01
  boats leave some little village in Naiadi, go out into the ocean
• 7:04
  under the guise of fishing, rendezvous with the narco sub,
• 7:07
  take possession of the load, bring it back into the country
• 7:09
  under the guys are returning home with the catch.
• 7:13
  Will there be any to it on that boat?
• 7:14
  Well, I'm sure there may be some cover, cover fish, right?
• 7:17
  Yeah. But I mean the guys, you know,
• 7:18
  but they arrange for the local officials, whatever the
• 7:23
  inspectors are, they're getting looked out for, right.
• 7:27
  And so, and this is this is they were able to control the
• 7:32
  maritime operations coming in from the Pacific.
• 7:34
  They're able to control the shipping coming in through the
• 7:36
  ports. And later on, we're going to.
• 7:39
  Locked up. Oh.
• 7:40
  Man, that's why that's how ABBA hell that's it was the most this
• 7:43
  is the wealthiest narco family in Mexico by.
• 7:49
  By the history. So out of all narcos, the
• 7:54
  Valencias. The Valencias who are currently
• 7:56
  in charge. And and yes.
• 7:58
  And I think we're going to get to there's a $25 million bounty.
• 8:02
  Yes, well, the guy, like I said, the individual whom the
• 8:04
  government has identified as currently being our government.
• 8:08
  Our government, yes, this is Metro's son-in-law and Armando
• 8:12
  Valencia's biological son, and that's this individual right
• 8:16
  here. And just a few weeks ago, the US
• 8:19
  government put in place a $25 million bounty for him.
• 8:22
  For him, yes, and that was only just a few weeks ago.
• 8:24
  Yes, well, he and what you know, what complicates matters is Juan
• 8:28
  Carlos is an American citizen. Yeah, born in Orange County,
• 8:32
  right? Yeah, he's in Southern
• 8:33
  California in suburban LA, down in Orange County.
• 8:36
  And he that complicates matters because although he's, let's
• 8:41
  say, nominally in charge of the group that the US government has
• 8:44
  designated a foreign keyword organization, the actions that
• 8:50
  can be undertaken targeting an American citizen are very
• 8:53
  different than the guy in Yemen or Afghanistan.
• 8:55
  Oh, really? So.
• 8:57
  Yeah, just like you. Not only.
• 8:59
  Do you have more rights? He's an American citizen.
• 9:02
  So you think that maybe you would think that maybe that
• 9:04
  would give them you could be more aggressive to an American
• 9:07
  citizen as compared to well, no. Because you have to be, you
• 9:10
  know, if it's just some. I guess they have civil rights,
• 9:13
  they have rights within our. Constitution.
• 9:15
  Some guy in Iraq, they just hit him with a drone, Yeah.
• 9:19
  But if it's an American, you're killing an.
• 9:20
  American. Yeah, now you've got you.
• 9:22
  Got. So it's a whole different deal.
• 9:23
  A whole. Different.
• 9:24
  It's a. It's a.
• 9:25
  It complicates matters. $25 million.
• 9:28
  And this most recently to Juan, right, Juan, Juan Valencia.
• 9:34
  Juan Carlos Yes. Juan Carlos Valencia, who is
• 9:37
  third generation Valencia. At least.
• 9:40
  At least, and there's a most recently just put is will this
• 9:44
  be from the DEA or from the CIA or FBI?
• 9:47
  The the State Department has a rewards program where they I.
• 9:52
  Did we have one on Osama bin Laden?
• 9:54
  Yes, we did. And Saddam Hussein, and I don't
• 9:57
  know if we had one on him or not.
• 9:58
  But he was actually the leader of a country that's a different.
• 10:02
  That a whole other. Yeah, that's this is.
• 10:04
  Now, is this the largest reward we've ever had on a guy?
• 10:07
  No, I believe so. Yeah, I've never heard of such a
• 10:10
  thing, 25,000,000. Yeah, that's, you know, and keep
• 10:13
  in mind just a few weeks ago when they imposed a 25,000,000
• 10:16
  on him, it was part of $100 million package for eight guys
• 10:20
  within the Jalisco network. Now, have we?
• 10:23
  This is publicly, and we've identified this guy as Public
• 10:27
  Enemy #1 within the Valencia cartel.
• 10:31
  Are they? What's it Jalisco New
• 10:33
  Generation? Are we close to getting them?
• 10:36
  Do do we want to get them? Is this all dog and pony show?
• 10:39
  Is it optics? Well, look, I have no doubt that
• 10:41
  the US government would like to get them.
• 10:44
  The exposure, the risk that he poses are to the political elite
• 10:49
  in Mexico. And so there's some fairly
• 10:53
  credible reporting just in the last couple of weeks, if you're
• 10:56
  familiar with the Spanish language media, that it appears
• 11:01
  that Juan Carlos may have made an arrangement with the
• 11:04
  political structure in Mexico or he's they're they've
• 11:08
  disassociated themselves from the fraction of the former
• 11:14
  Sinaloa cartel led by Guzman's family.
• 11:17
  Like that's the big target. Oh.
• 11:20
  Is Guzman's son. Who's still?
• 11:23
  Who's who's running wild out there?
• 11:24
  So yes. And so he is.
• 11:26
  Now if we want him, do we have a bounty on him?
• 11:30
  Certainly OK, but. And when you say bounty Pete,
• 11:35
  that's not the old school. Bring him in in a in a body bag
• 11:39
  When. I think today's bounty is more
• 11:40
  about Intel and capturing the. Capturing the individual I had,
• 11:44
  I had a friend who was involved in bounty hunting and he
• 11:49
  participated in a numerous, you know, operations to track down,
• 11:53
  you know, bail jumpers and that kind of stuff.
• 11:55
  And he came into this program and he was like one person away
• 11:59
  from somebody that was really wanted.
• 12:03
  And it was in fact the guy that ran the Plaza for them in
• 12:06
  Guadalajara. He got to that guy.
• 12:09
  And that guy was protect. He was, he was responsible for
• 12:11
  the security detail of a narco that was really wanted by the US
• 12:17
  government and. He got that close one.
• 12:19
  Guy, he got one guy away, so he called, you know, he was working
• 12:23
  with an agent's DEA, I believe out of Chicago and Homeland
• 12:27
  Security out of North Carolina. And he, he's like, look, you
• 12:32
  know, I'm one guy away. I, I, he could snipe the guy.
• 12:37
  But as far as snatching him up and bringing him, he's like,
• 12:39
  they got 100 men around him and he's a in Guadalajara.
• 12:42
  It's 1000 miles to Los Angeles. You're not going to snatch him
• 12:45
  up, put him in the trunk and just drive.
• 12:46
  Drive No. And he was told that they can't
• 12:49
  sanction a non judicial extrajudicial unalive right.
• 12:57
  This you got. Basically to stand down.
• 12:58
  You got to bring him in if you want to collect the, you know, I
• 13:01
  think it was 10 million for that guy.
• 13:03
  But you can't. He's like, come on, you guys
• 13:04
  had. You're 1000 miles in New Mexico.
• 13:06
  Hey, what are you going to put him?
• 13:08
  Put him in the back of your truck and and and and you're not
• 13:10
  no. You know you're never going to
• 13:11
  make it out of there, no. And so it unfortunately
• 13:14
  squandered his opportunity to come up on that $10 million
• 13:17
  payday. Man, Can you imagine?
• 13:19
  Do they pay? I mean, does the government pay?
• 13:21
  I mean, there are. A number of cases where the
• 13:24
  government often times screws the people.
• 13:28
  Up. Really.
• 13:30
  I mean not I don't know how, I don't know what the frequency
• 13:32
  of. Hit him on some kind of
• 13:34
  technicality. You.
• 13:35
  Know just the the the cases that get publicized or that get
• 13:41
  litigated are the guys who got screwed like so it could be just
• 13:44
  a small sample or it could be a large sample like I just have no
• 13:48
  way I guess. You really never have a way to
• 13:50
  know if they they paid out or. Not there's no, there's no like
• 13:53
  the cases that are reported are those where the guys are
• 13:56
  claiming that they got screwed, but it could be just a small
• 13:59
  subset of the overall larger pool.
• 14:01
  We just, I just don't know what the size of the data set is.
• 14:04
  So no, with respect to Juan Carlos, he's currently, he's
• 14:07
  currently the guy in charge. Now, in order to put things in
• 14:10
  context, 6 months ago, seven months earlier this year, there
• 14:14
  was a highly publicized effort by the Mexican special forces
• 14:18
  targeting the man who was then undisputably the leader of
• 14:21
  Jalisco New Generation. And he's known throughout the
• 14:25
  United States primarily by his handle, El Mencho now.
• 14:29
  I've heard of that, sure. And he was a the he was a
• 14:35
  throwback to an era that doesn't work in the present context.
• 14:44
  He made, you know the the problem with the new generation
• 14:47
  is because they were previously part of the Sinaloa faction when
• 14:51
  they broke away. This goes to show you how big
• 14:54
  Sinaloa actually was when they broke away.
• 14:58
  Now this new generation was just a subset of the previous in a
• 15:01
  law they've seen a law was just enormous at that .20 years ago
• 15:05
  and when the new generation coalesced.
• 15:12
  The problem is, is they didn't learn the lessons that the old
• 15:15
  generation had learned. Like I can speak from my
• 15:18
  personal experience, you know, growing up throughout my
• 15:21
  formative years, my father spent a tremendous amount of time
• 15:23
  trying to impart, like impart wisdom that he gained from a
• 15:27
  lifetime of experience. And of course I didn't listen
• 15:30
  and I end up making every mistake that he told me not to
• 15:32
  make. The old timer knew No, didn't
• 15:34
  he? Exactly.
• 15:35
  And so then the. Old timer knew and we're us
• 15:38
  young guns. We just won't listen.
• 15:40
  Just won't listen. And then it gets to be about
• 15:41
  1015 years after the fact and we go and Dad had it.
• 15:46
  I mean, Pops had it, right? That's right.
• 15:48
  And so the new generation guys, when they stepped up, it was
• 15:51
  literally a handing over of control.
• 15:53
  Like then, you know, as we'll discuss, the several of the
• 15:56
  Valencias were apprehended and the other half of the holy
• 16:00
  school group led by natural Colonel, he was taken down.
• 16:04
  And so like it was literally they passed the baton to their
• 16:06
  sons, their nephews, their son in laws, like the cousins.
• 16:11
  And so this new crop of guys came in, IE the new generation,
• 16:14
  they stepped forward of Valencias and Coronel's Sonora,
• 16:18
  we're rocking and rolling. The guys in Juarez we're rocking
• 16:20
  and roll. I mean, these are just enormous
• 16:22
  structures that were top down. However, these were top down
• 16:26
  structures located near the border.
• 16:31
  You can go from the financial district in Tijuana to the
• 16:34
  border. It's like 3 or 4 miles.
• 16:37
  Well, you can control. You can set up an operation to
• 16:39
  control a city. It's impossible to set up a a
• 16:43
  network where you're going to control 1000 miles.
• 16:47
  Or to get from Sinaloa to LA, it's 1000 miles.
• 16:49
  To get from Guadalajara to LA it's 1200 miles.
• 16:51
  From Metro County to LA, 1500 miles.
• 16:53
  But three miles ain't shit. Right.
• 16:55
  And so they, they tried, Jalisco tried to replicate the previous
• 17:00
  models that were utilized by border adjacent organizations.
• 17:07
  Now none of those, those all got collapsed over the course of the
• 17:09
  years. Also like the group that we call
• 17:11
  today, the Waters cartel, it's got nothing to do with the
• 17:14
  previous Waters cartel. It's just guys that happen to
• 17:16
  live in Juarez. It's like calling last year
• 17:18
  Chicago Bears the equivalent of the 85 Bears.
• 17:21
  Right. They just, they just happen to
• 17:22
  play in the same city. Live in the same city.
• 17:24
  But it's got nothing to do with one another.
• 17:26
  Well, the current waters quote UN quote cartel.
• 17:29
  It's got nothing to do with the previous group.
• 17:31
  The old school guys. The Tijuana group got nothing to
• 17:33
  do with the Tijuana from 30 years ago. the US government
• 17:36
  just slapped that same label on geographically because that's
• 17:40
  it's, it's easy to just brand them that way.
• 17:44
  And so, but the reality is all of those groups, the vertically
• 17:49
  integrated ones, were taken down by the American government
• 17:54
  working with their lackeys in the Mexican government.
• 17:58
  Whoa. Jalisco tried to replicate that
• 18:00
  model despite the fact that one, it never succeeded and two,
• 18:05
  they're 1000 miles from the border.
• 18:07
  Whereas the reason why Sinaloa succeeded for 35 years they ran
• 18:12
  is because they were horizontally based.
• 18:16
  It's not a top down leadership structure.
• 18:18
  There was never any leader to the Sinaloa cartel.
• 18:21
  Every. It's a collection of
• 18:22
  organizations led by men you know, with 3rd and 4th grade
• 18:25
  educations. And it grew from 5 or 6
• 18:28
  organizations to 20 years ago there was over 70.
• 18:32
  Just this enormous fucking network.
• 18:35
  Well, no one leader had authority over any other
• 18:38
  organizations met. It's just a collection of
• 18:40
  organizations that came together.
• 18:42
  Well, the larger the number of network, the, the, the strength
• 18:46
  of your network, the resilience increases with each additional
• 18:49
  organization being brought on board.
• 18:53
  Whereas and. So that's why when you took down
• 18:55
  one or two groups, well, the overall network remained in
• 18:59
  place. One or two groups were.
• 19:00
  Nothing. You take out Chapo Guzman to
• 19:02
  this they said they sold more product the next year than the
• 19:04
  year before with Chapo and you know this is going on for the.
• 19:09
  Man, you asked the average American.
• 19:10
  Chapo. Chapo.
• 19:11
  Yeah, no. Chapo Chapo or Pablo Escobar.
• 19:16
  Well, that's a different context that that was in Colombia.
• 19:18
  Sure. Yeah.
• 19:19
  But you know, we, we. We just have like these four or
• 19:21
  five names. Certainly.
• 19:23
  That have been handled, but really there's seventy of them,
• 19:26
  if not more. Yes.
• 19:27
  Well, and look, don't get me wrong, you know, Guzman's
• 19:29
  organization was pivotal in the smuggling context, which is
• 19:33
  distinct from the distribution context or the transportation
• 19:36
  context. I mean they, they, each of the
• 19:38
  organizations specialized. They had their lane or their
• 19:40
  niche. Sure.
• 19:41
  You know, the guys that are at the border aren't running tuna
• 19:45
  boats, and the guys in Acapulco that handled the private
• 19:49
  civilian aviation operation aren't digging tunnels because
• 19:51
  they're 1800 miles from the border.
• 19:53
  The geography plays an enormous role in all of our lives.
• 19:57
  And skill set and so the the pilots aren't going to be
• 20:01
  digging ditches and the ditch diggers aren't going to be
• 20:03
  flying the plane. That's right.
• 20:04
  And so because Sinaloa was nowhere near the border, they
• 20:10
  had to set up a different type of structure.
• 20:13
  And it's because of that what they initially was perceived as
• 20:16
  being a big disadvantage ultimately turned to be the
• 20:18
  reason why they were able to survive.
• 20:20
  Well, Jalisco disregarded that experience that Armando Valencia
• 20:26
  learned that Nacho Cortonella learned, like the old heads,
• 20:29
  they knew you can't run a top down, particularly if you got to
• 20:33
  go 1000 miles. And so the initial structure was
• 20:39
  centered around Menchel, who initially he was more of just a
• 20:45
  figurehead. Intro.
• 20:48
  The guys that were running thing were the Valencia, Abel
• 20:50
  Valencia. Then you know, T, who has the
• 20:53
  gold makes the rules. And so when the Valencia group,
• 20:59
  which is known as the Squinies, well they had the financing.
• 21:04
  So they said, OK, well, who are we going to put out front?
• 21:06
  Because whoever's out front is going to be targeted by the
• 21:08
  Americans like nobody with any sense wants to be out front.
• 21:11
  No. And so when Chapo got foisted
• 21:14
  out front, he took the heat for all of these other people, but
• 21:19
  everybody was focused on the shiny object.
• 21:22
  Which was Chapo. Which was Chapo.
• 21:24
  And you know, there were at least a half a dozen guys in the
• 21:26
  Sinaloa network at that time that were bigger than Chapoa,
• 21:30
  but no one in the States really heard about these people.
• 21:33
  Well, the similar dynamic happened with Jalisco where Abel
• 21:36
  Valenza said, you know what, let's put my brother-in-law out
• 21:39
  front. So he's a family member,
• 21:41
  kinship, Thai, he's a kunyado, but he's someone that they can
• 21:47
  have access to and influence. Now, later on, Menchel kind of
• 21:51
  turned into Frankenstein. But at the outset, that was the
• 21:56
  plan. And initially, when Jalisco
• 21:59
  broke away from Sinaloa, it was just two organizations, 2
• 22:04
  critical organizations, the Colonel's and the Valencias.
• 22:09
  And so they started expanding. Initially it was, well, they,
• 22:14
  they fought for control of Guadalajara.
• 22:16
  Guadalajara is another key strategic asset because
• 22:18
  Guadalajara is the capital for narco money laundering.
• 22:23
  You know, when most Americans think about Mexican culture,
• 22:27
  you're actually thinking about our image is what takes place in
• 22:31
  Guadalajara. That's to us, that's Mexico.
• 22:35
  Well, Guadalajara's critical because 50 years ago, when the
• 22:39
  Mexican government established the Plaza system of criminal
• 22:41
  governance, the money laundering apparatus was built in
• 22:46
  Guadalajara. And this isn't the guys that
• 22:49
  launder the money for the narcos.
• 22:51
  These are the guys that take the money from the narcos and
• 22:54
  transfer it to the political elite to.
• 22:56
  The. Government, you know, the
• 22:58
  senders aren't taking duffel bags of cash.
• 22:59
  The president's not taking duffel bags of cash.
• 23:01
  Well, if you control. But somebody is that gets it to
• 23:05
  them. Well, sure, but that's the
• 23:07
  financial services professionals whose job it is now to surface
• 23:10
  that money and get it into the banking system.
• 23:12
  Well, that entire apparatus exists in Guadalajara to
• 23:17
  transfer the money to the political, military and law
• 23:19
  enforcement elite. Which might be one of the most
• 23:22
  important aspects because. If you control Guadalajara, that
• 23:26
  means you have access to the financial services
• 23:29
  professionals. Who have access to the?
• 23:31
  Government who have access to the government guys and so for
• 23:33
  instance when the the. Closer you can get to those
• 23:36
  guys, the more you're made. The more powerful you are
• 23:38
  because like the the equivalent in Mexico, the Minister of
• 23:42
  Public Security is their version of the FBI or the leader of that
• 23:46
  particular agency, like a combo FBICIA.
• 23:50
  Well, their director was Hanato Luna.
• 23:53
  Well, Hanato Luna was getting 50 million a year, but he was
• 23:57
  getting it from the Valencias and Gordon now.
• 24:00
  And so, like in Hinato Luna's trial, Lobo Valencia testified
• 24:03
  against. Them.
• 24:05
  Oh, really? Yeah, I gave it I man $10
• 24:06
  million. Like how?
• 24:08
  How much time did he get? Lobo ended up doing.
• 24:11
  This is in Mexico, right? No, no here.
• 24:13
  Oh, we we went and got him. Sure.
• 24:15
  When we didn't go get him, he made the mistake of coming to
• 24:17
  the US. For what?
• 24:19
  You know these the political class there are very.
• 24:23
  Entitled. Arrogant like they don't, You
• 24:25
  know, for for decades the US government has pretended like
• 24:30
  the drug trade isn't controlled by the politicians.
• 24:33
  So we never hold them accountable.
• 24:34
  And we never did. We never did.
• 24:36
  And so it was like always this effort like we'll ignore them
• 24:38
  and just focus on. So this political power of
• 24:41
  Mexico would feel feel OK to travel to his third cousin's
• 24:45
  wedding in Chicago or? Or something he, he retired, he
• 24:48
  was living in Miami and he snatched him up.
• 24:52
  And so he, you know, he was a number of individuals that were
• 24:58
  implicated in the individuals that cooperated against Chapo
• 25:01
  Guzman. Like, Guzman couldn't implicate
• 25:04
  these guys because he didn't have access to them, but the
• 25:07
  guys in Guadalajara did the. Financial.
• 25:09
  Guys and sort of, hey, we gave this guy 10 million, this guy
• 25:12
  got 100 million this guy got, but we don't know how many of
• 25:16
  the other people have already been indicted because the
• 25:17
  indictments are under seal. But when and out of Luna came to
• 25:22
  the United States, boom, they snatched them up.
• 25:24
  When General Cinfuegas came, he was walking through LAX like the
• 25:28
  international part of the airport.
• 25:29
  They snatched him up. Really.
• 25:31
  Yeah. How many how many government
• 25:34
  officials have we snatched so to?
• 25:36
  Speak Well. The Cinfuegas thing fell apart
• 25:39
  because the Mexican president essentially demanded his
• 25:43
  release. Otherwise they're going to cut
• 25:44
  off all cooperation with the DEA and expel all the agents from
• 25:47
  the country. And so like, and keep in mind,
• 25:50
  this is like when Hernando Luna was their FBI director and flag,
• 25:55
  this was their Secretary of Defense.
• 25:56
  Like these aren't these aren't small.
• 25:58
  These are cabinet level officials.
• 25:59
  These are huge. Like this guy's getting 50
• 26:01
  million, this guy's getting 60 million.
• 26:04
  You know, Hinato Luna's network was 450 million people, $450
• 26:08
  million excuse. Me for 11 months president if if
• 26:11
  the if his minister of defense and couple of his cabinet guys
• 26:15
  are getting fifty 100 million what's what's the president?
• 26:17
  There hasn't been any allegations about Galtadon other
• 26:21
  than people around Calderon said that he knew about it.
• 26:24
  You have to understand, in Mexico, the individual
• 26:31
  politicians may not be corrupt. Every one of the political
• 26:36
  parties have drug organizations within their faction.
• 26:41
  Well, you can't like. And so the current, the current
• 26:45
  president Sheinbaum, well, there are organizations that back her
• 26:49
  political party, Modena. Well, the OR the narco she
• 26:53
  targets are the ones that backed their rival political parties.
• 26:56
  Well, they're all eating at the narco through and so.
• 27:01
  Just matters what team you're. On it just matters on which and.
• 27:03
  What team's in power? What team's in power?
• 27:04
  Yes, exactly. And so the that's part of the
• 27:09
  that's where you get the development of what became
• 27:11
  ultimately the we'll say it one time.
• 27:13
  I don't want to get the the episode struck fentanyl.
• 27:17
  We'll call it fenny from here on out.
• 27:19
  From that's from which that emerged.
• 27:22
  You have two major pivots that occurred in the Mexican space,
• 27:27
  both of which involved holistic regeneration. 1 was in 2007 and
• 27:32
  one was about 2016. 16 was a Fanny.
• 27:35
  Was a Fanny in 2007 when they went all in on crystal meth.
• 27:40
  Like Breaking Bad kind of deal. But on on industrial level
• 27:44
  scale, in fact, I got the Here's the two.
• 27:48
  That was 07. Yes, because here's the two.
• 27:50
  Well, it, it began earlier. This is the backdrop, backdrop
• 27:53
  in my case, in fact. But here's like the WikiLeaks
• 27:56
  disclosure from 2008 where the State Department cable saying
• 28:01
  chemical city, Guadalajara, Jalisco and the meth trade and
• 28:05
  it breaks down how Guadalajara had become essentially the
• 28:09
  epicenter or the production of crystal.
• 28:13
  They don't explain why, like I understand why, but there's the
• 28:17
  that's the context. But these pivots were all
• 28:23
  motivated by the need to increase revenue.
• 28:30
  Gone were the days where you're paying the guy a million and
• 28:32
  he's happy. But when they start coming in
• 28:35
  saying, hey, we need 50, I need 60 million, I need 200.
• 28:40
  Well, you have to increase revenue.
• 28:41
  You got to, you're not going to make that kind of money.
• 28:43
  You'd have to pay all these crooked bastards from the coke
• 28:46
  proceeds. Now has the legalization of
• 28:49
  marijuana in the states, you know, they had one of some of
• 28:53
  the reasons why they had to pivot was because you know what
• 28:56
  used to be a huge commodity in in Mexico, pot weed is now
• 29:02
  readily available in the states. So you don't, you're not, you
• 29:04
  know, they probably don't even deal in that anymore.
• 29:06
  Do. They so it's a little bit of
• 29:09
  weed, but The thing is it's return on investment.
• 29:14
  And so if you're getting a 200% return on investment for coke
• 29:22
  and then you get a 800% return on investment for the crystal or
• 29:27
  you get a 2000% return on investment for the Syn, the
• 29:31
  synthetic opioid pills, they're producing counterfeit Oxys and
• 29:39
  they're using the Fenny to make the Oxys.
• 29:41
  People aren't buying Fenny, they're buying counterfeit Oxys.
• 29:44
  Buying counterfeit Oxys. So they think they're buying.
• 29:46
  Stepped on with Fenny. They're produced with fenny,
• 29:48
  there's just not the the active ingredients for the oxy aren't
• 29:53
  present, it's just pills made to look like oxys.
• 29:57
  Would you? Wouldn't those be deadly?
• 29:59
  That's why you had 100,000 some odd people every year for.
• 30:04
  Yeah, the. 19 The 1920212223242526 that's that's
• 30:09
  this whole thing is the counterfeit oxys.
• 30:14
  People are consuming pills that they believe are pharmaceutical
• 30:17
  in nature. Or opiates.
• 30:19
  Legitimate opiates that are prescribed, produced by, you
• 30:22
  know, one of the pharmaceutical companies and they they actually
• 30:24
  make the pills to look like. Look like pharma or Purdue or?
• 30:28
  That's right. Yeah.
• 30:29
  They're not saying no. They're taking it.
• 30:30
  And of course, you know, the the dosages have you have to be, you
• 30:37
  know, obviously you have to be very careful.
• 30:38
  And quite frankly, the the people producing it, most of
• 30:42
  them are just mom and pops. It's not the way the American
• 30:47
  government portrays it. You know, the the cartel
• 30:50
  organizations are the buyer of them.
• 30:53
  There's like they run to farm gate.
• 30:56
  Right. And if you've got 20 different
• 30:59
  organizations in the area, they're all making it.
• 31:01
  None of them are cartel. Cartel just buys all the crop.
• 31:05
  They're, they're essentially the, the, they're the, they're,
• 31:10
  they're essentially like in farming where you have all the
• 31:12
  farmers that, that bring it to the grain, to the mill to drop
• 31:18
  off your corn to the big silos. You're basically the cartels,
• 31:22
  just the Wrangler of all the farmers that are making this
• 31:25
  stuff. That's right.
• 31:26
  And so they're not having control over quality control
• 31:31
  under production. Now the labs, because you'll see
• 31:33
  these labs that you'll see them like in the news every once in a
• 31:35
  while, it's like 3 Mexicans with two buckets out in the jungle.
• 31:39
  Like that's not a cartel operation.
• 31:41
  They have massive operations, but their labs are all
• 31:44
  subterranean. They go under, yeah.
• 31:48
  And so they know build, you know, because, you know, last
• 31:50
  year it was highly publicized there.
• 31:52
  For a decade, the CIA had been running drones all over the
• 31:56
  country. Well, think about it.
• 31:59
  All those CIA drones didn't stop any of the Fenny.
• 32:03
  They they didn't get one subterranean.
• 32:05
  Well, because The thing is, is the people that the US
• 32:08
  government reached out to was the guy getting the 50 million.
• 32:12
  And so when we make the proposal to him, they didn't know that he
• 32:16
  was taking the 50 million a year.
• 32:19
  So he says, yeah, yeah, let me consider the proposal.
• 32:21
  I'll run it by my president. It was 10 days to come up with
• 32:23
  an answer. As soon as he gets off the
• 32:24
  phone, he calls, his contacts say, hey, this is what the
• 32:26
  gringos are up to. They're going to fly drones or
• 32:30
  thermal imaging capabilities. Jolisco in particular,
• 32:36
  everyone's subterranean because State of Jalisco is home to the
• 32:39
  tequila industry. So all tequila that is marketed
• 32:42
  as tequila has to come from Jalisco.
• 32:45
  Oh. Really.
• 32:46
  Yes, that's what I'm saying. Most Americans think of Mexican
• 32:50
  What's? Tequila made out of.
• 32:51
  The aguave plant. As I knew it was a plant.
• 32:55
  And so now you can have tequila equivalents that are produced
• 32:59
  outside of Jalisco, but that's called mescal.
• 33:03
  Those aren't tequila. And so there are large numbers
• 33:09
  of tequila distilleries in Jalisco.
• 33:11
  Which are fine. Which are fine.
• 33:12
  So then you open up a distillery, but before you open
• 33:15
  up the distillery, you build the subterranean area and you put
• 33:18
  the distillery on top. That way when you've got the
• 33:20
  drones flying overhead with thermal engine capability, we're
• 33:22
  just making tequila. They pick up the heat
• 33:24
  signatures. What's in that warehouse?
• 33:25
  Oh, tequila. Really underneath?
• 33:30
  Underneath hold on operation well they got they're producing
• 33:32
  you know 1015 hundred 1800 lbs of meth a week a week you can
• 33:38
  you can structure a lab to do about realistically about 1518
• 33:44
  £100 probably in the room this. Big.
• 33:49
  I need to sell all my equipment, open me up a lab.
• 33:52
  Yeah, I get busted so fast. But I mean, well, down there
• 33:55
  it's all protected. Oh yeah, so I have to pay off
• 33:57
  all the authorities? Around here, pay.
• 33:59
  Off the state police. Well, that's why they had to
• 34:01
  start and correct. Pay off all the commissioners.
• 34:03
  Pivot to the more lucrative product because they got to all
• 34:07
  these greedy bastards got their hands out.
• 34:09
  And it's not they're not taking the, the 50 GS anymore.
• 34:12
  Like no, no, no, pal, it's a massive scale up.
• 34:17
  And so with respect to, well, just to tie the bowl on
• 34:21
  Mitchell, Mitchell tried to replicate the, the Tijuana
• 34:25
  model. Essentially, he wanted to be
• 34:26
  like an Ariano, but he didn't appreciate the fact that the
• 34:31
  context was entirely different. And so they put together this
• 34:37
  massive operation. But in doing so, he, you know,
• 34:41
  became an enormous target. 1. He became an enormous target
• 34:44
  because the quote UN quote cartel that had connections to
• 34:50
  Morena were Sinaloa. And so a decade ago when Jalisco
• 34:57
  started really causing problems for Sinaloa ports, like don't
• 35:01
  let the Sinaloa product come through.
• 35:03
  But now you're going to, you're getting taxed.
• 35:06
  And it's not just the taxing. It's like, no, maybe we won't
• 35:09
  let it through. This bust it.
• 35:12
  Or they'll throw it to their people, the cops will bust it,
• 35:14
  and then the cops will sell it out the back door right back to
• 35:16
  Jalisco. And optically it looks great.
• 35:19
  Every. Every look.
• 35:20
  Every. Oh the back up we got we 15
• 35:22
  tons. Today, Yeah, they, they, they
• 35:23
  did. You know the Americans will give
• 35:24
  them an attaboy, give them awards.
• 35:27
  It's just amazing how how deep, how deep seated and shady all of
• 35:33
  this really. Is all of it is.
• 35:34
  And it's all about positioning and power and or you're
• 35:39
  geographically located and who who controls what well.
• 35:42
  Remember, the Mexican government needed to come up with a
• 35:45
  mechanism that allowed them to, not the government, the Mexican
• 35:49
  political class. Now, at the time, the Mexican
• 35:52
  government had under the control of one party for decades.
• 35:56
  And so the party that created this structure didn't anticipate
• 36:01
  rival political parties at some point taking over presidency.
• 36:04
  Them losing them. Losing power and so everything
• 36:07
  was great so long as the pre political party was running
• 36:10
  everything. Then once once pre got beat.
• 36:13
  Once pre got beat, now you got problems because you've got
• 36:16
  different cartels, now they've got different political parties.
• 36:19
  So now you've got the feds targeting this group, you got
• 36:22
  the state guys from the other party targeting that group.
• 36:25
  But when you've got that kind of dynamic, it allows for the
• 36:28
  political class to actually increase the demands.
• 36:33
  The new party, Any party. And so when the when the system
• 36:41
  was created, they said, OK, well, we're going to delegate
• 36:43
  different areas. They call them plazas.
• 36:46
  And so this group is responsible for that Plaza.
• 36:49
  And that guy collects the taxes on behalf of the political
• 36:51
  class. And so this wasn't a system that
• 36:56
  emerged indigenously. This was created by the
• 37:00
  political class. Now it kind of went off the
• 37:03
  rails a little bit. They kind of they lost control
• 37:07
  to some aspect, but nevertheless they still sell to this day.
• 37:11
  Impunity, that's what they sell. You got the green light to
• 37:14
  operate in this area. And to this day, yeah.
• 37:16
  Of course. This very day, that's the way it
• 37:19
  works. The way it works.
• 37:22
  Now that doesn't mean everybody in the government, of course, is
• 37:26
  corrupt, but. Are there people in the Mexican
• 37:30
  government that are as proactive as we are with regards to
• 37:36
  stopping the drug trade from Mexico or no?
• 37:39
  Well, look, yes, in Mexico, the current attorney general is
• 37:44
  someone that Dave at least has taken at least two shots in his
• 37:47
  life already. Oh, really?
• 37:51
  The guys that you know, guys that don't take the bribes or
• 37:55
  the payments. Are the ones.
• 37:57
  That that are, they're vulnerable.
• 37:59
  But keep in mind it's not at the state and local level, it's
• 38:02
  bribes at the federal level, it's demands.
• 38:06
  So when the general comes to you and says hey, look, I need 20
• 38:09
  million a year and 10 million from my staff, you have no
• 38:13
  choice because you're whatever group you have option isn't more
• 38:20
  powerful than the Army. Does does Mexico still have a
• 38:25
  pretty decent army? Well, certainly because they
• 38:28
  have us all American equipment. Those are American helicopters.
• 38:32
  Those are American heavy equipment.
• 38:33
  You know, these are, they're all trained.
• 38:35
  It's they're using all American platforms.
• 38:38
  And so like we have special forces in Mexico today training
• 38:42
  people. And of course a lot of Mexican
• 38:45
  special forces come to the United States to get trained and
• 38:48
  brag. And so there's a deep
• 38:51
  relationship between the Mexican and American political class
• 38:56
  with respect to military matters, intelligence matters,
• 38:59
  and our economies are essentially integrated.
• 39:03
  Where I take issue with your statement is the US government
• 39:09
  maintains the position that they're trying to disrupt the
• 39:12
  drug flow, when in reality what they're actually doing is just
• 39:15
  targeting traffickers. Picking and choosing.
• 39:19
  Well, they they're trying to get as many traffickers as you can,
• 39:22
  but taking out a kingpin does nothing to destabilize the drug
• 39:28
  flow. In fact, it actually
• 39:30
  incentivizes an increase in the flow.
• 39:32
  It just optically looks great back home.
• 39:35
  That's just yes. But like the Guzman deal, The
• 39:38
  Guzman. Deal I mean.
• 39:39
  Like you said there was 70 plus Guzman's but we only knew of 1.
• 39:44
  We I. Mean you know we only made an
• 39:46
  example of 1. At the, at the time of the, the
• 39:49
  Guzman capture, it was the network had shrunk to about 45.
• 39:57
  It wasn't the, the previous massive group you had Jalisco
• 40:02
  broke off, the Northeast broke off.
• 40:06
  You know, even a few years later, Sonora broke off.
• 40:09
  And so today you're up to about 13 cartels.
• 40:11
  That's it. What's an enormous number?
• 40:15
  But not not as big as it used. To be no, no, no, no seen the
• 40:19
  law prior to it this articulating it was 45
• 40:22
  organizations. Right.
• 40:23
  Right. That was one network.
• 40:25
  Today you've got 13 networks. Oh shit, I've.
• 40:29
  Done. 13 organizations. It's 13 cartels.
• 40:31
  It's 13 networks. Yes, it has UN unmeasurable.
• 40:36
  Yeah. And so like in Los Angeles, we
• 40:38
  have 3 cartels that operate like LA is the primary, primary base
• 40:43
  of operation for three of them still.
• 40:45
  Yes, of course. Now dude within LA having three
• 40:50
  is there are they like one does coke, one does meth, one does
• 40:54
  Fanny. Each are individual cartels, so
• 40:57
  they all operate independently. Like within the Sinaloa
• 41:00
  structure, you had one organization handled the
• 41:04
  distribution office, let's say 20 years ago at its peak, the
• 41:08
  distribution office was ran by Zambada's operatives.
• 41:12
  The, and the distribution office was actually ran out of my
• 41:16
  hometown, West Covina. The smuggling office was ran by
• 41:25
  Chappa Guzman's organizations. So Guzman's group would bring
• 41:27
  the product in, drop it off to his people in LA.
• 41:30
  They didn't drop it off to the distribution office.
• 41:33
  Most of the product in the United States at the high level
• 41:36
  is actually sold in, you know, in Los Angeles.
• 41:38
  Like if you're a first tier wholesale level customer, you
• 41:42
  don't, if you're operating in Boston, you don't buy it in
• 41:45
  Boston. You source it in LA and then you
• 41:47
  sell it in Boston. Now does that get you delivery
• 41:51
  to Boston like you said they the way that no.
• 41:53
  Because if you take possession like the the kilo that I, the
• 41:56
  kilo I could sell you for 18 in LA, you're going to sell in
• 42:00
  Chicago for 23. Well, that $5000 differential,
• 42:03
  that's your profits. You're not going to buy them at
• 42:06
  23 in Chicago because then who are you going to sell them to?
• 42:09
  Some smaller guy at 27. I got to buy them at 18.
• 42:11
  You got. To get them in LA, Yeah.
• 42:12
  So the overwhelming majority of first tier host level customers.
• 42:16
  Are in LA. They set up accounts in Los
• 42:18
  Angeles. Now the cell, the distribution
• 42:23
  office in LA will deliver the product, the regional hubs.
• 42:28
  So if you're out of Boston, you take possession of your product
• 42:30
  in New York, you're out of Milwaukee, you take possession
• 42:32
  of your product in Chicago. If you're out of, you know,
• 42:37
  Gainesville, you take possession of your product in Atlanta.
• 42:41
  And so they've got 3 regional hubs, and then they have a
• 42:43
  logistical hub right outside of Fort Bragg, which serves as the
• 42:48
  small distribution office for the Mid-Atlantic.
• 42:50
  States including Texas. No, the Texas is controlled by
• 42:56
  three different cartels. Well, just the state of Texas
• 42:58
  is. Well, yeah, because you got
• 43:00
  remember these are police school Sinaloa and the United Cartel on
• 43:05
  a Michoacan operate out of Los Angeles.
• 43:07
  Those are Pacific Coast states in Mexico, whereas South of
• 43:11
  Texas you've got the group in the Mexican state of Tamaulipas,
• 43:14
  which is the Gulf Cartel. They operate out of Houston,
• 43:17
  whereas you've got the group in Juarez, which is right across
• 43:22
  from El Paso. So if you're a Mexican national
• 43:25
  from Chihuahua living in Boston, you go to El Paso, whereas if
• 43:29
  you're a Mexican national living in Boston from Tamaulipas you go
• 43:31
  to Houston, whereas if you're from Sinaloa, Jalisco, Colima,
• 43:34
  Nayari, Durango, you go to Los Angeles.
• 43:38
  Yeah, it's just about where you geographically live.
• 43:42
  It's just where you're from in Mexico determines where you're
• 43:47
  where your American hub is. So if you're from the Northeast,
• 43:50
  depending on which factions, so one of the factions operate in
• 43:53
  San Antonio, one of the factions operate in Dallas.
• 43:56
  Now, is LA still the to this day the biggest?
• 44:00
  Sure. Certainly.
• 44:02
  And we know that. I mean, I'm sure our, our, our,
• 44:04
  all of our drug guys know that. And why aren't we just crawling
• 44:08
  all over Los Angeles? Or are they?
• 44:12
  Cause the effort really isn't to disrupt the drug flow, it's the
• 44:17
  target traffickers. U.S. government has spent a
• 44:20
  trillion dollars in the past 40 years arresting drug dealers
• 44:25
  without disrupting the flow. Right.
• 44:27
  Nothing's ever stopped the flow. So the right Yeah.
• 44:31
  So you all that money spent targeting low level crack
• 44:34
  dealers in Cleveland is a waste if you're targeting cartel guys.
• 44:39
  But the cartel guys are hard to target because it's a small
• 44:41
  number of people. You know, 20 years ago when
• 44:44
  Steven Lowe was at his peak, they had 15 guys in LA that
• 44:46
  handled 80% of the cocaine. Like if you're not targeting
• 44:49
  those 15 guys, you're not targeting cartel.
• 44:53
  The administration for the distribution office with maybe 3
• 44:55
  or 4 guys. The transportation office in LA,
• 44:59
  which is separate from the smuggling office, separate from
• 45:01
  the distribution office that was run by Nacho Cordonell's
• 45:03
  operatives. Sounds like a seven or eight man
• 45:04
  team. So, and only two of the guys are
• 45:11
  cartel. The other guys are loading
• 45:13
  trucks. Yeah, the guys loading trucks
• 45:15
  aren't cartel. They're worker bees.
• 45:17
  Yeah, they're just. The guys loading the vans aren't
• 45:19
  cartel no. The American government
• 45:20
  characterizes them as cartel. Like no but I mean in reality
• 45:24
  it's 15 distributors in LA for the coke side, 3 or 4 guys on
• 45:28
  the administration for the office.
• 45:30
  It's a 20 man team that are actual Cargill.
• 45:33
  Guy like that's all the cartel there really is.
• 45:36
  That's it. Now let's say each of those guys
• 45:38
  have a right hand man. So those 15 guys, so now you're
• 45:40
  talking 30 operatives, 15 of which have operational authority
• 45:45
  along with the leadership. So you're talking maybe 40 guys
• 45:48
  in total or 80% of the cocaine for Sinaloa?
• 45:52
  Still to this day. No, Sinaloa today is much
• 45:54
  smaller, so today is probably probably 10 guys if not less.
• 45:59
  Wow. Much more, much smaller.
• 46:02
  Yeah, but then you have a separate office for the meth, a
• 46:05
  separate office for the weed, a separate office for the
• 46:07
  synthetics. So you've just got multiple.
• 46:10
  Now out of all the out of all the drugs, which has the highest
• 46:14
  return like you said? Synthetic opioids.
• 46:18
  That's the biggest return. Sure, because the chemicals
• 46:21
  aren't illegal. They can buy the precursors.
• 46:25
  They're not even buying the precursors because the Trump
• 46:28
  administration did put a lot of pressure on China.
• 46:30
  And in 2019, China criminalized the precursors that are used to
• 46:37
  produce the synthetic opioids. And So what the group did
• 46:42
  protect the Jalisco is they said, OK, fine, we'll just buy
• 46:45
  the chemicals that could be used to make the precursors.
• 46:51
  They're buying pre precursors right?
• 46:53
  They're buying what it takes to make a precursor.
• 46:56
  The ingredients for the precursor.
• 46:58
  Like in in my case, when we would start the manufacturing
• 47:01
  runs because we had a chemistry professor from USC involved.
• 47:04
  There's nothing illegal at the lab like UPS was delivering it.
• 47:08
  We're ordering chemicals from Germany, we're ordering
• 47:10
  chemicals from Switzerland, chemicals from California,
• 47:12
  chemicals from Jersey. Everything was delivered by UPS,
• 47:15
  100% legal. And then you just conduct the
• 47:21
  reactions to take it from the legal substance to generate the
• 47:24
  precursors, then you conduct the reaction to produce the product.
• 47:28
  Well, there was a investigative report by Reuters where it
• 47:32
  indicated that there was, I believe it was like 3500.
• 47:34
  Thirty $700.00 worth of legal chemicals was enough to produce
• 47:40
  somewhere in the neighborhood of four to 600,000 at wholesale
• 47:44
  prices, and so the economics of the drug trade in Mexico has
• 47:52
  fundamentally altered. When when you were in that world
• 47:56
  and you said you have a chemist from USC, was that obviously guy
• 48:01
  number one in the whole operation with regards to making
• 48:05
  it happen? No, the guy putting up the money
• 48:07
  make it happen. Well, yeah, outside of the money
• 48:10
  aspect, the chemist is probably. He's the one who taught us how
• 48:13
  to manufacture. And once, once the chemist
• 48:16
  taught you, then you could you do it on your own.
• 48:18
  Because we we worked with him for two years and then the next
• 48:21
  four years was just. You fire him or just say OK he
• 48:24
  was just part of. Coming He was an older
• 48:25
  gentleman, he was in his 60s and he just.
• 48:28
  He got out clean. He got wiped out when 2 divorces
• 48:30
  and he needed to come up on a little bit of money.
• 48:33
  And so he did what he did. And ultimately, initially it was
• 48:36
  just developed the formulas and teach us.
• 48:39
  And then it was like, well, he'll stick around and he'll
• 48:41
  take, you know, a couple of dollars per dose, but he'll
• 48:45
  provide the business that served as the cover.
• 48:47
  And so for the first two years there was nothing clandestine.
• 48:50
  No, it was his business. It was his business.
• 48:52
  We had the fire marshals coming through 4 * a year in
• 48:54
  examinations. We had government, you know, we
• 48:56
  were in California, so you had OSHA, all kinds of EPA people,
• 48:59
  environmental regulations coming through.
• 49:01
  We had government bureaucrats coming through our lab all the
• 49:03
  time. They.
• 49:05
  Had no idea what they're making. Because they're dealing with the
• 49:08
  retired chemistry professors in his 60s who started a small
• 49:11
  business because he was bored of playing golf.
• 49:13
  From USC. Yeah, he, he was, you know, like
• 49:18
  4 decades in academia and in the private sector.
• 49:21
  They didn't realize that this business was actually a front to
• 49:25
  manufacture ecstasy and then manufacture methamphetamine.
• 49:29
  Now, prior to meeting you, did the old timer, the old chemist,
• 49:33
  did he even have any idea of that world, or did he have to
• 49:35
  get himself up to speed on the? Well, he had to get.
• 49:38
  Himself up to speed on the on the how to make it, so to speak.
• 49:41
  Yeah, because, you know, we were, you know, when I met him,
• 49:43
  I was 21. Let's say you're a young you
• 49:45
  were just a young dude. So like, it's like, well, this
• 49:47
  is what we want to produce. It's called ecstasy.
• 49:49
  He's like, he'll take it. You just put it on.
• 49:51
  It's a it's a instrument called a gas chromatograph, and it
• 49:54
  breaks down to chemical composition and.
• 49:56
  He probably had one of those that you.
• 49:57
  See, he was able to, he had access to one.
• 49:59
  He's like, OK, this is, this is are.
• 50:00
  They pretty expensive. They sound expensive.
• 50:02
  Yeah, yeah. So for back then, I don't know
• 50:05
  what it is today, I'm sure China makes them cheap, right?
• 50:07
  But but yeah, back then it was very.
• 50:09
  So you basically at that point you just put up a pill in on
• 50:13
  this. Device down and he.
• 50:14
  It would, and it would analyze what is.
• 50:17
  What's in it? He wouldn't put the pill on
• 50:18
  there. You can just break it up and
• 50:23
  dilute it in a solution. Yeah, right.
• 50:25
  And then it and. Then you drop it on there and
• 50:26
  it'll give you. It's because it's.
• 50:29
  Well, you'd have to get some really pure good stuff in order
• 50:33
  to find out, because you want to make good stuff, right?
• 50:34
  I mean you want. To make once he determined what
• 50:36
  the actual. Or you could determine the
• 50:39
  strength of it once you determine the makeup of it.
• 50:41
  Yeah, because then once he's like, oh, OK, what you're
• 50:42
  producing is the 3/4 methylene dioxide compound.
• 50:48
  It's like, OK, well, then how do we produce that?
• 50:50
  Then he just, you know, I took him.
• 50:52
  I would drive him up to the chemistry library at UCLA and
• 50:54
  just spend a couple days there and he's going through the
• 50:56
  books. OK, this is here.
• 50:59
  Then how are we going to make this?
• 51:00
  Well, it requires these two compounds or they're restricted.
• 51:04
  Fuck. OK, let's go back up the list.
• 51:06
  The next one. Oh, DEA restricted it.
• 51:08
  The next one. Next one.
• 51:09
  The next one. You go back six or seven steps.
• 51:11
  Oh, this is. Legal.
• 51:13
  We can buy. This I can buy this for 40 bucks
• 51:15
  a gallon, but you know you're spending 200 bucks to make 300
• 51:19
  grand. Really that kind of 200 bucks to
• 51:24
  make 3? 100 grand in total, the 2 for
• 51:26
  that particular chemical. Then the other one that would
• 51:29
  normally go on the black market for 4500 bucks costs maybe $30 a
• 51:32
  gallon to make. So all in on the chemicals was
• 51:37
  probably, you know, less than $1000.
• 51:39
  For $300,000 worth of stuff. To produce about 20,000 doses,
• 51:47
  about 200 between 200 and 300 grand wholesale.
• 51:51
  At the top wholesale. One of the reasons why Jalisco
• 51:54
  really was able to generate as much return as they did is they
• 51:58
  focused much of the coke into Europe.
• 52:03
  That's a much more lucrative market.
• 52:05
  Like here the United States is just saturated because it's the
• 52:07
  market's flooded, whereas it's not flooded in Europe.
• 52:12
  And so by having that capacity to get it in through the port,
• 52:16
  then they can turn around and sell it to their wholesale
• 52:19
  customers in Europe for an extraordinary return.
• 52:22
  But you know, that's why the, the Queens, the Valencia's, you
• 52:26
  know, Abdel Valencia made their money, a lot of it from the Coke
• 52:29
  side in Europe. If you show up in LA and you're
• 52:32
  buying them, what you do with them is your business.
• 52:34
  Like it's just another LA transaction.
• 52:36
  Like the government's like aha, he's sending product to Osaka,
• 52:39
  Japan, fucking crazy. Like this guy's in LA buying
• 52:42
  them. What he does with it is his.
• 52:44
  It's his business. He's taking them to Osaka,
• 52:46
  Japan. Yeah, You're not.
• 52:47
  I'm not in the fucking. I never been to Japan.
• 52:49
  Yeah. And so the same thing with the,
• 52:51
  you know, the Australian. There's a guy, in my case,
• 52:53
  Australian Bob. Well, he wasn't charged, but he
• 52:55
  was involved. You know, he was picking up
• 52:58
  loads in LA, sending them to Australia, and my other buddy
• 53:00
  was taking them to Japan. Enormous.
• 53:03
  Markup. Just markups, just just
• 53:05
  ridiculous prices. And so now with respect to
• 53:10
  Menchel's mistake was he tried to replicate the vertically
• 53:16
  integrated model, that's the first 1/2 he did.
• 53:20
  He had the geographical disadvantage that I don't think
• 53:22
  he appreciated. And so in order for him to be
• 53:25
  able to maintain control, they had to exhibit a higher degree
• 53:29
  of violence. And so another one of the
• 53:34
  lessons that the older wiser dies, the old generation knew
• 53:39
  was like, look, that's the last resort violence.
• 53:42
  Whereas Jalisco, that was their essentially their first move.
• 53:47
  And so they built these very powerful paramilitary wings.
• 53:51
  And so when you start engaging in that kind of activity again,
• 53:55
  you become a lot of attention from law enforcement,
• 53:59
  particularly because 15 years ago when Jalisco was born, when
• 54:05
  they broke away from Sinaloa, well, the political party in
• 54:09
  power was the pawn political party.
• 54:11
  They were in bed. But Sinaloa, this is the guy's
• 54:14
  getting 50 million a year. That guy's getting 60 million a
• 54:16
  year. These eleven guys are getting
• 54:17
  450 million. I mean, it was just and.
• 54:20
  So doing. Business The Mexican government
• 54:22
  under control at a pawn political party was targeting
• 54:25
  Jalisco and these guys were hyper violent, which made it
• 54:35
  easy for them to distract. Like look at those bad guys over
• 54:38
  there. And so now, of course, you're
• 54:40
  coming on the radar the Americans and you're providing
• 54:44
  the individuals in the Mexican government with an opportunity
• 54:47
  to look tough, like they're taking a bite out of crime when
• 54:50
  the reality is they're deflecting attention from the
• 54:52
  guys that are paying them the 50 mil and they're focusing on
• 54:55
  their arrivals. And so ultimately what Mitchell
• 55:00
  built was, you know, it was a cult of personality essentially,
• 55:07
  and he tried to replicate, you know, the Mayor Daley model on a
• 55:12
  in a country and it's just ultimately wasn't sustainable.
• 55:16
  And so today what you see is essentially a little bit of a
• 55:20
  fragmentation. You see a a decentralization
• 55:24
  effort it taking place now the but when Menchel was at its
• 55:29
  peak, like they had branched out.
• 55:32
  They're extorting the mining interests, they're extorting the
• 55:35
  fishing interests. They have massive call center
• 55:38
  fraud. They're running a massive fuel
• 55:41
  and keep in mind, you know, the individual organizations
• 55:43
  operating in their respective territories.
• 55:46
  And so the organization operating in the territories,
• 55:50
  Mexico, produces a lot of petroleum.
• 55:52
  So they're just, you know, they're just plugging right into
• 55:55
  the pipelines and stealing the fuel.
• 55:58
  So there I mean it was it. Was It's all free, It's all
• 56:01
  profits. Right.
• 56:02
  Just. Like, like today, it's an
• 56:03
  enormous business, particularly now with gas prices.
• 56:06
  And, you know, a lot of contraband fuel gets taken into
• 56:08
  Texas. Really.
• 56:10
  Oh, yeah. It's enormous operations.
• 56:12
  Big, probably huge tankers. And yes, of course.
• 56:15
  Ripped off tankers, so to speak. They have modified trucks that,
• 56:18
  you know, they have engineers and they go and they go have,
• 56:21
  you know, a whole fleet of these Jerry rigged trucks with huge
• 56:24
  tankers on them and they just. Pipe right into the deal.
• 56:27
  Right into the thing, just start pumping it out.
• 56:29
  Right out in the. Finery, yeah.
• 56:31
  Think about what? A tank.
• 56:32
  I mean hell, a tank full of semi fuel might be more than drugs
• 56:36
  right now. That's that's questionable, but
• 56:40
  nevertheless before. I'll take a I'll take a tanker
• 56:44
  full of coke all day over some. Fucking geography is
• 56:48
  determinative. So if you're nowhere near the
• 56:51
  border, nowhere near any ports, if you're in central Mexico away
• 56:54
  from everything, why are you going to make money?
• 56:55
  What are you going to do? You can buy product and sell it
• 56:58
  to other people, but it's not, you know, there's like, no, it's
• 57:00
  more, it's more lucrative for people in those groups to focus
• 57:04
  in that area. It's like we're going to extort
• 57:05
  the mining. We're going to extort or steal
• 57:09
  the fuel, or we're going to run call center fraud to get
• 57:14
  gullible Americans to think they're buying timeshares.
• 57:18
  So is everybody or are there is just a lot of fraud that happens
• 57:22
  out of Mexico just I mean, whether it's stealing a fuel
• 57:26
  tanker or doing a call center, is it just massive fraud because
• 57:30
  they don't have what the oversight that we do or the the
• 57:34
  N towel the. Enforcement, right?
• 57:36
  Like the police officers are getting paid.
• 57:39
  When they respond, they make sure to respond after trucks
• 57:41
  have already cleared. We went by there and there was
• 57:44
  no trucks. We're hot in their trail.
• 57:47
  Or I mean. And so, and you know, there's a.
• 57:50
  And then the and then the cop makes a phone call to the guy
• 57:52
  who owns a tank hers and be like, look, and they're on to
• 57:54
  you a little bit here, boy. You know well let you know.
• 57:57
  Well, that a little bit. And so, you know, there's a
• 58:00
  mutually beneficial relationship where it's a common motif to
• 58:10
  just stick it to the man. You know, even the police
• 58:13
  officers, that's not a well paid job in.
• 58:16
  Mexico, you know, and it's dangerous.
• 58:18
  And just one that they sort of getting their, you know, them,
• 58:21
  it's like, OK, he's just selling.
• 58:22
  He's selling fuel. They're getting their.
• 58:24
  Vague those are those are you know those are Mexican
• 58:27
  government has a monopoly on the production so it's just the rich
• 58:31
  elites extracting wealth from the poor areas and not returning
• 58:36
  any to the community. So from their perspective, steal
• 58:38
  the fuel we. Got to get ours.
• 58:40
  Exactly. And so that's that's a common
• 58:43
  sentiment that's expressed throughout much of Mexico.
• 58:46
  And so Jalisco new generation was able to capitalize on that
• 58:50
  because what they essentially did is created what's
• 58:52
  essentially A franchise model. And so if you're, you know, you
• 58:57
  can come to them and say, hey, well, our hustle is, you know,
• 59:00
  we're we're extorting all the restaurants along the coast
• 59:05
  because we have control of the fisheries.
• 59:07
  Nice hustle. OK, what do you guys need?
• 59:08
  We need capital and we're going to need protection and we're OK.
• 59:11
  Then they come to a mutually beneficial relationship.
• 59:13
  And so Jalisco expanded into much more traditional organized
• 59:20
  crime activity, whereas for, you know, 3 decades, you know, it
• 59:25
  was just a huge drug trafficking.
• 59:27
  Drugs. Now we're getting into just.
• 59:29
  And now they're extorting the logging across the entire
• 59:32
  spectrum. It's much more along the lines
• 59:35
  of a traditional Rico type group with different clusters engaging
• 59:41
  in different types of criminal activity, and it ultimately just
• 59:48
  wasn't going to be sustainable if it's built around a.
• 59:52
  Colonist is this is is this back in the day or?
• 59:56
  Is this like this? Is happening today.
• 59:59
  So for here, this is the the drug network, which as of 18
• 1:00:07
  months ago was a network of 27 organizations and that was
• 1:00:12
  Helusco New Generation. And each one of those
• 1:00:15
  organizations has its own kingpin, has its own Mensho.
• 1:00:19
  But with respect to that network, they had to fall in
• 1:00:23
  line much more than like the Sinaloa guys.
• 1:00:25
  Like if we don't care what you do, just make sure you guys do
• 1:00:27
  what you're supposed to do. How you guys run your own
• 1:00:30
  internal affairs, that's on you guys.
• 1:00:33
  Whereas with Jalisco, they were actually much more involved with
• 1:00:39
  the day-to-day operations and ultimately that proved to be
• 1:00:45
  unsustainable simply because they made themselves too big of
• 1:00:47
  a target. And he crossed certain red
• 1:00:51
  lines. And we can get to that as now.
• 1:00:53
  Let's just jump back to the beginning so people can get a a
• 1:00:56
  contextual understanding. And so the Mexican government
• 1:01:02
  creates the La Plaza system of criminal governance in the late
• 1:01:04
  1970s. Over the course of that next
• 1:01:07
  decade, up until 1989, it was two networks, 1 based on the
• 1:01:14
  Pacific Coast side ran out of Guadalajara, and then a second
• 1:01:17
  network ran out of the Gulf side.
• 1:01:20
  These are what became known as the Gulf Cartel and Guadalajara
• 1:01:23
  Cartel. In 1989, the Guadalajara Cartel
• 1:01:27
  disarticulated, and so each of the relevant plazas became their
• 1:01:32
  own little baby cartels. We had one in Sinaloa, one in
• 1:01:35
  Sonora, one in Juarez, one in Tijuana.
• 1:01:37
  They were all little standalone entities.
• 1:01:39
  So the first full year of operations for Sinaloa as a
• 1:01:42
  standalone entity was 1990. And so for the next 17 years,
• 1:01:47
  there was a status quo that was well understood between all
• 1:01:53
  participants. No attacks on American law
• 1:01:56
  enforcement. Don't harm American civilians in
• 1:02:00
  Mexico. Don't bring heat on the Mexican
• 1:02:02
  government in the event you get apprehended.
• 1:02:05
  You're going to serve your time in a Mexican prison.
• 1:02:08
  Which is sweet as all hell for the cartel guys, but a 17 year
• 1:02:13
  period was a equilibrium. Now the cartels started fighting
• 1:02:20
  for one another against one another, but that's just
• 1:02:22
  different groups of criminals fighting for control of plazas.
• 1:02:25
  The Mexican government doesn't care as long as they're getting
• 1:02:27
  paid whether you control the city or that guy controls it.
• 1:02:30
  Just make sure the trains run out of time.
• 1:02:33
  And so for that decade of the 90's the biggest groups were
• 1:02:37
  Tijuana and the Gulf because they were in tight with the pre
• 1:02:40
  political party. The other groups were on their
• 1:02:42
  back feet. In 2000 power shifted to a
• 1:02:47
  different political party. So now the Pawn political party
• 1:02:51
  takes over Sinaloa backed Pawn. What seen a little was kind of
• 1:02:57
  on their last leg. They were on their last legs.
• 1:02:58
  Yeah, we've talked about before. They were they.
• 1:03:00
  Were dying on the vine. They were dying on the.
• 1:03:01
  Vine and they their their horse won the race.
• 1:03:04
  Their horse yes, it was a long shot and it.
• 1:03:06
  And it was a long shot and they cashed in.
• 1:03:09
  They cashed in because within 18 months you got the Tijuana
• 1:03:11
  cartel was decapitated and thousand of their operatives
• 1:03:14
  were in prison. A year later, the head of the
• 1:03:16
  Gulf cartel gets knocked off. I mean, it's just massive
• 1:03:19
  attacks by the one political party.
• 1:03:22
  This. Is 90.
• 1:03:23
  This is in 2009. 2009. 2002 thousand yeah.
• 1:03:27
  So 2002 Tijuana gets decapitated.
• 1:03:29
  O3 The Gulf gets decapitated. So by O3 they they have
• 1:03:34
  eliminated the. Leadership structure of the two
• 1:03:36
  networks that were the biggest financial backers of their rival
• 1:03:40
  political party. How did that?
• 1:03:43
  How'd the long horse? How'd the long shot win?
• 1:03:46
  Just there was just so much corruption in Mexico at that
• 1:03:47
  point. Like the the previous party, the
• 1:03:50
  last president from the Mexican, there was a president named
• 1:03:54
  Salinas and it was discovered that he had like one of his
• 1:03:57
  brothers had like hundreds of millions of dollars in his bank
• 1:03:59
  account. And it was like so brazen and
• 1:04:02
  even the Mexican like. Even the people in on it were
• 1:04:05
  like, come. On man, what are you?
• 1:04:06
  What are you doing? Like you can't do that, you
• 1:04:07
  know? And plus, like their, their
• 1:04:10
  narco, they're like their drug czar was living in a drug Lord's
• 1:04:13
  house. He's getting 10 million.
• 1:04:15
  Like this general's dirty, that general's dirty, that general's
• 1:04:17
  dirty. Now in the 1990s, the one
• 1:04:22
  operation that was successful for Sinaloa was the one
• 1:04:25
  associated with the Valencias because Armando Valencia.
• 1:04:28
  Back to the Valencias. Partnered with Amado Carrizio
• 1:04:31
  and Isabel Zambada and they created an operation where they
• 1:04:34
  were using modified civilian airliners to bring product into
• 1:04:38
  Mexico. We talked about that on the
• 1:04:40
  other episodes. And so that was that was come.
• 1:04:42
  That's 30 tons a month, which was an absolute bulletproof
• 1:04:46
  operation because they had the generals paid off.
• 1:04:50
  And so that's and and. And huge quantities via the air.
• 1:04:54
  Well, it's 14131415 tons, depending on which model
• 1:04:57
  airplane, right? So if you bring in 2 tons, you
• 1:05:00
  know, 2 airplanes a year, a month, that's 30 tons a month.
• 1:05:02
  Three, you're talking 40 tons a month.
• 1:05:04
  In LA. No, there's landing gate in
• 1:05:06
  Sonora. It's an OK.
• 1:05:08
  And then the uniformed military Mexican personnel would unload
• 1:05:11
  the plane and then under military guard, transport the
• 1:05:15
  product and then. Under military guard.
• 1:05:17
  Yeah, of course we're not going to let the local police get in
• 1:05:20
  the middle of this. That's what happens when your
• 1:05:22
  political party wins the. That that was that was pre.
• 1:05:25
  Everybody was in on this gangbang at that point.
• 1:05:28
  They were all just pigs eating at the narco through at that
• 1:05:30
  point. And so the other aspect that
• 1:05:35
  really distinguished Valencia from the other narcos was he
• 1:05:41
  partnered with the group out of the Mexico state of Colima, the
• 1:05:44
  Amescuo brothers, and they're the ones that pioneered
• 1:05:48
  methamphetamine now. The Colima group were the ones
• 1:05:50
  that were manufacturing the product, but they were supplying
• 1:05:54
  it to Armando Valencia's group. They had the distribution
• 1:05:57
  capacity in Los Angeles. And so like out of the Sinaloa
• 1:06:01
  affiliated groups in the 90s, you had the two offices, you had
• 1:06:06
  one office in LA County which was responsible for the COPE,
• 1:06:11
  which was ran out of West Covina for somebody's people.
• 1:06:13
  And what O Palma's guys were out of Santa Monica?
• 1:06:16
  Well, the office that was in Orange County was the
• 1:06:18
  Valencia's, which is why the guy at the beginning, Juan Carlos,
• 1:06:22
  if you see, he was born in Orange County, like here's his
• 1:06:25
  birth certificate. That's part of the problem is
• 1:06:27
  he's an American. He's an American citizen and his
• 1:06:29
  birth certificate? And that's the guy who's still
• 1:06:31
  running on the show. Today, that's the guy.
• 1:06:32
  Who's this guy today? He's an American citizen born in
• 1:06:35
  Orange County. Now, he's certainly not in
• 1:06:37
  Orange County. He's certainly.
• 1:06:39
  Not coming to the US. Never, never, never.
• 1:06:43
  I mean unless he cuts a deal. And and what would a deal like
• 1:06:46
  that be come serve two years and those guys get?
• 1:06:50
  You know, they get, they get some sweet deals.
• 1:06:55
  You know my like the guy, one of the guys I'm acquainted with, my
• 1:06:57
  buddy Jay, he had to do 12 on 14, something like that.
• 1:07:02
  I mean, it's still a big number. But he did. $3 billion with a
• 1:07:05
  product. Well, OK, so let's just say you
• 1:07:07
  got a guy like that. I mentioned any names that did
• 1:07:09
  $3 billion, don't know what that would be as far as take home,
• 1:07:13
  but let's just say quite a bit. And so you do with with doing
• 1:07:18
  your 1214 or whatever your deal you cut, that doesn't mean
• 1:07:21
  giving your money up, does it? I mean, you could have some
• 1:07:24
  stuff certainly spread here and there and everywhere.
• 1:07:27
  Couldn't. I don't know what he did, but
• 1:07:29
  presumably. Yeah, I'm the same, just.
• 1:07:31
  Yeah, like Jay gave up chop up. Like they wore the body wires
• 1:07:35
  against chop up. And so he got that kind of a
• 1:07:38
  deal. Now this guy.
• 1:07:39
  That had to be a hell of a deal. That had to be that.
• 1:07:43
  That was, that was the ultimate. Well, he was the biggest
• 1:07:46
  trafficker in the United. States right so.
• 1:07:48
  Like when you're the the biggest in the country.
• 1:07:51
  So your guy Jay wore the wire on Chapo.
• 1:07:54
  Now, did Jay ever have to be worried?
• 1:07:57
  In Mexico, yes. He'd have to be worried.
• 1:07:59
  In the United States, no. They don't operate.
• 1:08:01
  That way, no. So he was cool here, like he
• 1:08:05
  ain't going down. There, No, I mean, he went into
• 1:08:07
  protection, I'm sure, but no, he's not.
• 1:08:09
  He'll never go to Mexico. You know you're talking now that
• 1:08:14
  a decade ago. Yeah.
• 1:08:16
  Not more. Yeah, well, it was like 15 years
• 1:08:17
  ago when they wore the wires and a decade ago when Guzman got
• 1:08:20
  knocked off. And so at this point.
• 1:08:21
  Guzman died in prison. No, he's still.
• 1:08:23
  He's still at the. At ADX.
• 1:08:25
  At Was that in? Is that in Kansas, Colorado.
• 1:08:28
  Colorado in the middle of nowhere.
• 1:08:30
  In Florence, that's the subterranean facility.
• 1:08:34
  Is that the only subterranean facility we have?
• 1:08:36
  That I know about. But now with respect to 2007,
• 1:08:40
  when the Mexican Supreme Court redefined their law that allowed
• 1:08:45
  for the the sending of Mexican nationals to the US, even
• 1:08:48
  though. It was in O7.
• 1:08:49
  O seven well late O 6 early. O seven well.
• 1:08:53
  When we redid the law. When they redid the law and then
• 1:08:57
  called it on and actually started implementing it by
• 1:08:59
  sending people to the US, that changed the dynamic.
• 1:09:02
  The status quo ended. Oh, it had to.
• 1:09:05
  Because now the people that are in power had a lot more
• 1:09:10
  leverage. Which, if I can guess, the price
• 1:09:15
  goes up, skyrocketed, skyrockets.
• 1:09:17
  It went from the. Because if you see your boy
• 1:09:21
  getting sent to Houston on a on a federal fucking trial.
• 1:09:24
  We're all going to. ADX I'm paying three times what
• 1:09:26
  I'm. Paying now what a problem with
• 1:09:27
  the ADX is what the ADX. I mean, these are just, you
• 1:09:30
  know, that's not banging 50 hookers in a year in in a sweet
• 1:09:34
  Mexican prison. No, it's, it's, you know,
• 1:09:37
  serious time. And so the, you know, a decade
• 1:09:42
  earlier. Excuse me.
• 1:09:43
  Yeah, about 15 to 20 years earlier, the Secretary of
• 1:09:47
  Defense was charging 10 million a year, which was a lot of money
• 1:09:50
  for the mini trainees. Yes.
• 1:09:52
  Went up to 60 million. 60 million.
• 1:09:56
  The FBI. Director is saying their
• 1:09:58
  equivalent of the FBI. Director is saying I want 50
• 1:10:00
  million. Now, if you don't pay the 50
• 1:10:03
  million, that's fine. We're going to arrest you and
• 1:10:04
  we're going to send you to the United States and you're going
• 1:10:07
  to go to ADX and so. So you come up with that fucking
• 1:10:11
  50 million real fast. Yes.
• 1:10:12
  So now the amount of like the US government characterizes it as
• 1:10:16
  if the the narcos are corrupting the politicians.
• 1:10:19
  It's the other way around. The political class are
• 1:10:22
  extorting the narcos. Either you play ball and provide
• 1:10:27
  this much in personal payouts or this much in structured payments
• 1:10:31
  to the political party, or we snatch you up, send you off, and
• 1:10:37
  we'll get somebody else to take over the Plaza and don't pay.
• 1:10:40
  Right, we'll find some way to fucking pay.
• 1:10:42
  And so that caused. Or had to be complete shit shit
• 1:10:47
  show. That's what caused a massive
• 1:10:48
  spike in the production of crystal meth, because.
• 1:10:53
  They needed that fucking extra revenue.
• 1:10:55
  Source. That's why.
• 1:10:56
  We can't live on coke alone. We're not making enough money to
• 1:10:59
  pay all these greedy politicians.
• 1:11:00
  Yeah, on just coke alone. We're only making a 200% return
• 1:11:03
  on the coke. We we got a we need to scale up.
• 1:11:05
  Yeah, and that's why this is like the the WikiLeaks, there's
• 1:11:09
  the the WikiLeaks disclosure of that's what they say, you know,
• 1:11:13
  Chemical City, Guadalajara. Well, in 2008, they're like,
• 1:11:16
  hey, there's been a massive explosion in the production of
• 1:11:20
  crystal meth in Guadalajara. Now they don't say it's because
• 1:11:23
  of the greedy politicians. Quinn tripling demand of the
• 1:11:26
  payment. What used to be 10 million in
• 1:11:28
  protections, now 60 and it's they.
• 1:11:30
  Don't say that it's across the board.
• 1:11:32
  Everybody scaled up, local police chiefs, the local
• 1:11:35
  prosecutors, the judges, everybody scales up.
• 1:11:39
  So if you have an enormous increase in the structured
• 1:11:42
  payments you have to make, you have to have a corresponding
• 1:11:45
  increase in revenue. Well, they weren't going to be
• 1:11:47
  able to make the money on the coke you.
• 1:11:50
  Have to have another product. And so they went all in on the
• 1:11:54
  crystal. And who was in a position to
• 1:11:56
  profit Cornell and Valencia because they had the ports, they
• 1:12:02
  had the pre-existing relationship with the Chinese,
• 1:12:04
  the Chinese organized crime networks.
• 1:12:06
  And you know, Guadalajara is not only culturally the heart and
• 1:12:12
  soul of Mexico, but it's also one of their primary technical
• 1:12:17
  hubs. Kind of maybe equivalent to
• 1:12:19
  their Silicon Valley. Google's there, like American
• 1:12:23
  tech companies are down there. You've got universities and it
• 1:12:26
  mentions it in the WikiLeaks report that one of the problems,
• 1:12:30
  the State Department report that WikiLeaks disclosed indicates
• 1:12:34
  that one of the problems is you've got a large number of
• 1:12:37
  students and professionals who have training in chemistry who
• 1:12:44
  are available to recruited. And so if you're a normal
• 1:12:48
  civilian. In our own backyard.
• 1:12:50
  In their own backyard. And so they pivoted into
• 1:12:55
  building these enormous labs, scale up the production like
• 1:12:59
  back, you know, the 1990s labs producing 300 lbs at a time, a
• 1:13:04
  big size lab. Yeah, I was gonna say that era.
• 1:13:06
  They went into multiple 1000 LB labs at this point.
• 1:13:10
  Think about the infrastructure you have to have to have that
• 1:13:12
  type of manufacturing. Room this big?
• 1:13:15
  So room this big could do 3000 lbs.
• 1:13:20
  It could do 15 to 1800. In a month or a week?
• 1:13:24
  A week? In a week.
• 1:13:27
  Wow. So you're talking about you're
• 1:13:30
  talking about 30 by 15. Yeah, just a little 450 square
• 1:13:37
  foot facility just turning out 1500, two 1000 lbs a week, you
• 1:13:43
  know, 8 to 10,000 a month. That's just one shot.
• 1:13:46
  One shot and that's in Mexico. And that's in Mexico, of course.
• 1:13:51
  And then it'd be brought up here.
• 1:13:52
  So now because. And remember, they're buying the
• 1:13:54
  chemicals. They weren't illegal.
• 1:13:56
  Yeah. Buying them?
• 1:13:58
  They're buying retail prices for non controlled chemicals so the
• 1:14:02
  profit margins are just enormous.
• 1:14:04
  Like in my era, the pounds of ice were going for LA wholesale
• 1:14:08
  prices of 15 to 17,000 per. Per pound.
• 1:14:12
  Per pound. Two years ago, one of my
• 1:14:16
  buddies, I knew the guy very well from prison.
• 1:14:18
  He was selling 3 for 20. Really.
• 1:14:23
  Wow. And so just this enormous drop
• 1:14:27
  in the value per unit, but massive increase in the number
• 1:14:30
  of units. And so by changing the what the
• 1:14:35
  American government praises, the Mexican government's getting
• 1:14:38
  tough on these narcos actually incentivize them to triple up
• 1:14:42
  production. The unintended consequence
• 1:14:46
  because now you gave the greedy political class in Mexico to
• 1:14:49
  hammer to go and they say, look, you know what?
• 1:14:51
  I need 30, I need 40. I need 50.
• 1:14:53
  Like their DEA chief guy down there, not our DEA, but their
• 1:14:56
  equivalent or DEA guy. He's getting 30 million a year.
• 1:14:59
  The FBI, the FBI equivalent is getting 50.
• 1:15:01
  The Secretary of Defense is getting 60.
• 1:15:02
  These guys, they're getting a billion dollars a year just in
• 1:15:04
  payments. How can they?
• 1:15:06
  How can they survive, I mean. So the North Coast had to, they
• 1:15:09
  had to pivot to a much more lucrative compound.
• 1:15:13
  And so the 2007 shift away from coke to crystal was a direct
• 1:15:20
  result of the exposure they now face of getting coming to the
• 1:15:24
  United States. So in order to avoid that, they
• 1:15:26
  had to raise the money to pay the greedy politicians what they
• 1:15:28
  were demanding. In exchange for that, the
• 1:15:31
  politicians, of course, are going to protect their guys,
• 1:15:33
  disrupt the operations, compromise operations, make
• 1:15:36
  unauthorized leaks of confidential information go.
• 1:15:38
  Get that, Go get your. Competition.
• 1:15:39
  Get the competition, deflect the tension and you know they're
• 1:15:42
  going to. They're working with you.
• 1:15:43
  They're working. They're compromising at every
• 1:15:45
  turn. That's that's O 7.
• 1:15:47
  That's that's O 7. And so now when this huge amount
• 1:15:53
  of money starts coming in, Jalisco at this point is getting
• 1:15:56
  extraordinarily powerful to the point where the the leadership
• 1:16:02
  was Nacho Cortonel. And at this point Lobo Valencia,
• 1:16:05
  another one of the Valencias, Lobo Valencia ends up getting
• 1:16:12
  arrested in a shootout. And it's pretty very well
• 1:16:20
  rumoured, but pretty highly well sourced that Guzman double
• 1:16:26
  crossed Valencia because the Jalisco faction was the most
• 1:16:34
  independent of the Sinaloa network.
• 1:16:36
  And Nacho Cornell, he was a bigger trafficker than than
• 1:16:41
  Guzman. Like, he had the crystal.
• 1:16:44
  Guzman was making the 200% on the coke and the smuggling.
• 1:16:48
  He didn't have the 800% return on the crystal, on the crystal.
• 1:16:53
  And so Guzman's Nacho, Cordonal's partner was Lobo
• 1:16:56
  Valencia. You knocked Lobo Valencia out,
• 1:17:00
  you knocked Lobo Valencia's brother El Tigre out.
• 1:17:03
  All of a sudden now, who steps in to become Cordonal's partner,
• 1:17:07
  Guzman. Guzman.
• 1:17:09
  And that's when you know Guzman ultimately married Nacho
• 1:17:12
  Cordonal's niece. I'm a Cordonal.
• 1:17:15
  That's how they solidify their their alliance.
• 1:17:22
  But he's but he double crossed. He double crossed the Valencias,
• 1:17:25
  then a year later Doctor Cordon Nuggets double crossed.
• 1:17:30
  Oh, who double crossed him? Perceived to be Guzman.
• 1:17:37
  That's why Jalisco broke away. The new generation is like, Oh
• 1:17:39
  no, you this is the second guy you got lower Valencia knocked
• 1:17:42
  off. You got thee gonna knock it off
• 1:17:44
  now. You got Nacho Cordonell knocked
• 1:17:45
  off. You cock suckers are double
• 1:17:46
  crossing us. You're trying to steal this.
• 1:17:49
  Yeah, you're trying to take our pie.
• 1:17:50
  Now prior to these events happening in O 9 and 10, the
• 1:17:56
  Valencia Cordonelle group in in Jalisco formed the first
• 1:18:01
  paramilitary group because at this point they were having wars
• 1:18:05
  with a group out of Tamaulipas called Zetas.
• 1:18:08
  And so they're having these battles, these shootouts, so
• 1:18:10
  they. Created their paramilitary wing,
• 1:18:12
  which they called the Matazzettas, which in Spanish
• 1:18:14
  means Zeta killers. And this is where the Quarter
• 1:18:19
  Nell and the Valencias really demonstrated their ability to
• 1:18:24
  put something together outside the scope of normal cartel
• 1:18:28
  operations. Because the men that they
• 1:18:31
  recruited, they were able to get their hands on 4 American
• 1:18:33
  special forces members, two special forces guys that were
• 1:18:37
  Green Beret, a Delt 11D force guy who was Special Forces Green
• 1:18:45
  Beret, 2 Navy Seals, excuse me, and then another guy from the
• 1:18:48
  75th Ranger Regiment. Well, these four guys were the
• 1:18:55
  training set for what became known as the Matazetas, which
• 1:18:59
  was a paramilitary wing responsible for defending
• 1:19:05
  Jalisco's interests within the Sinaloa network.
• 1:19:09
  Trained by. 4. These were Americans LED at that
• 1:19:12
  point by American Special. No, I mean they led the Marshall
• 1:19:17
  aspect. So like the Valencia's put one
• 1:19:22
  of their people out front, mentor Abel, Valencia's
• 1:19:26
  brother-in-law. So you're going to have, And
• 1:19:28
  then with respect to the Cordon L side, they had Cordon L's
• 1:19:33
  nephew and one of his cousins. Like there's always going to be
• 1:19:36
  a kindred, a kinship tie. We're not handing the keys over
• 1:19:40
  to four Americans. No.
• 1:19:43
  But the guys that operated and built out that capacity were the
• 1:19:47
  American Special Forces. And so the Matazetas were
• 1:19:52
  engaged in this campaign targeting the Zetas at the time
• 1:19:57
  that Lobovessa gets knocked off, Nacho Coronel gets knocked off.
• 1:20:00
  And so they had the paramilitary wing and they didn't turn on
• 1:20:04
  Sinaloa. So now you had between 2011 and
• 1:20:09
  12, you had an uneasy truce which broke down when the
• 1:20:16
  Mazzetta's were unleashed. And this is what became the new
• 1:20:20
  generation. Lobo Valencia's gone.
• 1:20:24
  He has gone natural. Cornell's gone.
• 1:20:26
  Here comes the nephews, here comes the, here comes the new
• 1:20:29
  generation steps forward. And they had this paramilitary
• 1:20:32
  wing. Right.
• 1:20:34
  Not only did they step forward, but they had a a strong arm
• 1:20:37
  wing. They had a strong ARM wing and
• 1:20:39
  they had control of the ports and they had the connection with
• 1:20:44
  the Chinese and they had the labs.
• 1:20:46
  Well, it sounds like they're they're in.
• 1:20:49
  They're indestructible. Well, they were.
• 1:20:52
  They didn't have the political protection.
• 1:20:54
  No, they didn't. No, because this is when Sinaloa
• 1:20:57
  was at third peak. OK, so now they're sending the
• 1:21:00
  Paan political party. Or sin the government.
• 1:21:04
  Government is coming after Jalisco.
• 1:21:06
  Jalisco, meanwhile, has these trained operatives.
• 1:21:08
  They've got the the matazetas that are out there, you know,
• 1:21:11
  they're putting in work. And are they fighting Mexican
• 1:21:14
  government? They're fighting, they're
• 1:21:16
  fighting everybody at this point.
• 1:21:18
  They're fighting everybody. They're fighting Sinaloa.
• 1:21:20
  They they actually were able to push Sinaloa out of Jalisco,
• 1:21:24
  then they got them out of Kalima, then they got them out
• 1:21:26
  of Nayedi. Like they established their
• 1:21:29
  foothold and then they start expanding.
• 1:21:31
  And so like as of last year, the area marked in red is the
• 1:21:38
  territory controlled by Jalisco. Oh man, there's not much left.
• 1:21:44
  And so initially it started simply in that area.
• 1:21:47
  If you look at this map, the blue dot down in Mexico.
• 1:21:51
  That was Jalisco. That's.
• 1:21:52
  The Guadalajara, their base of operation was red, of course.
• 1:21:56
  The red dot is Los Angeles, which is their primary base of
• 1:21:58
  operations in the US. And the green dots are their
• 1:22:01
  regional hubs. They have one in Chicago, New
• 1:22:03
  York, Atlanta, and they have one in Seattle.
• 1:22:07
  And so, but when it began, it was simply fighting for control
• 1:22:11
  of Guadalajara, fighting for control of Jalisco, fighting for
• 1:22:16
  control of Kalima Nayarit. And at this point you had with
• 1:22:20
  the Lobo and now Tigre knocked off.
• 1:22:23
  This is where Abbejel Valencia steps up.
• 1:22:27
  He's the financial arm Los Queenies.
• 1:22:31
  Well, he puts his brother-in-law Menchel out front.
• 1:22:35
  He's the front guy. You're the front guy who also
• 1:22:37
  had responsibility for the Matazetas.
• 1:22:40
  Who ran the military ring of it or the?
• 1:22:42
  Protection part, yeah. So you know what?
• 1:22:45
  What became Jalisco New Generation was essentially A
• 1:22:51
  paramilitary wing that got involved in drug trafficking, as
• 1:22:55
  opposed to the inverse, which is normally traffickers building a
• 1:22:58
  paramilitary wing. And so they've always operated
• 1:23:01
  on a very different, much more militant structure.
• 1:23:06
  But it's it's not. Even to this day.
• 1:23:09
  Sure, Because today the Matazetas are no longer present.
• 1:23:13
  They've got two different groups.
• 1:23:15
  They've got those Deltas, which is one of their paramilitary
• 1:23:19
  wings, which took the name because of the original Delta
• 1:23:22
  Force guy, and then they've got a second individual, second
• 1:23:25
  group called Grupo Elite, which is Juan Carlos's group.
• 1:23:30
  They're still around. Yeah.
• 1:23:32
  So that those are the 2. So you had the Mata Zetas
• 1:23:36
  morphed into two separate paramilitary wings that are
• 1:23:40
  operational today. That's it.
• 1:23:43
  Well that's the two that are the most highly publicized.
• 1:23:46
  These are the ones controlled by Jalisco proper.
• 1:23:48
  Remember it's the 30 plus organization network.
• 1:23:51
  They all have their their gunman.
• 1:23:55
  It's just that the 2, the core Jalisco group out of Guadalajara
• 1:24:02
  had the financing and the capital to be able to build out
• 1:24:06
  something that the other groups weren't able to match.
• 1:24:11
  And so when you had the increase in the amount of crystal, which
• 1:24:15
  we had that massive flooding of crystal into the United States,
• 1:24:18
  O 89101112, much of that's coming out of Jalisco.
• 1:24:24
  The other groups are starting to panic.
• 1:24:26
  They start shooting it out with Jalisco, they start involving
• 1:24:29
  the government. And so you had an effort by
• 1:24:34
  particularly Sinaloa to stomp out police call.
• 1:24:38
  So now the 2012 political campaign comes along, a
• 1:24:42
  different party wins the pre political party.
• 1:24:47
  He's got no ties to holy school and no ties to Sinaloa at this
• 1:24:50
  point. They're actually backed by other
• 1:24:52
  guys. But Sinaloa at the time was the
• 1:24:54
  top dog. And so the evidence that Chapo
• 1:24:58
  Guzman's trial revealed that after the pre political
• 1:25:02
  presidential candidate won office, but before he took
• 1:25:05
  office in that transitional period when he's
• 1:25:07
  president-elect, they send word to Sinaloa and say, hey, if you
• 1:25:11
  guys want to maintain the current arrangement, we're
• 1:25:13
  prepared to, you know, we know you're supporting the other
• 1:25:15
  party cock sucker, but we're prepared to maintain the status
• 1:25:18
  quo. But we need 200 million off the
• 1:25:20
  top. 200. Million, but they come in the
• 1:25:23
  front door demanding 200. Million, how does that go?
• 1:25:27
  Somebody reaches out to all the other guys, OK, we got to come
• 1:25:30
  up with this is what they want. Like if you want to maintain,
• 1:25:34
  you don't want it. They're going to unleash the
• 1:25:36
  army on you because Sinaloa, I've been paying for the past
• 1:25:39
  few years. They've watched the Mexican
• 1:25:40
  military slam Tijuana, slam waters.
• 1:25:43
  They wanted to Tamaleepas twice. Like all these operations were
• 1:25:47
  being done to indirectly benefit the law.
• 1:25:51
  They know, hey, these guys put together a 20,000 man army, just
• 1:25:54
  they're coming in with fucking tanks and Apache gunships.
• 1:25:56
  They can't fight that. Can't fight that.
• 1:25:59
  So you got to pay the 200 mil. And so Zambada sends back word
• 1:26:02
  and says, hey, look, we'll pay the 200 million, we'll give you
• 1:26:05
  100 million is a good faith deposit and we'll work off the
• 1:26:08
  back on the back end, the remainder.
• 1:26:10
  And we know that because Amada's brother testified in Chapo
• 1:26:15
  Guzman's trial that he's the one that dropped off the 100
• 1:26:17
  million. Like the deposit.
• 1:26:19
  Yeah, you drop off the good faith deposit.
• 1:26:22
  So then once Prix gets that money, they turn around and they
• 1:26:27
  go after Jalisco. Who's not playing ball?
• 1:26:32
  Well, Jalisco had protection like.
• 1:26:36
  With pre. Well, not just with Pre, but
• 1:26:38
  they had no Pre's going after them.
• 1:26:40
  They're coming after them. Their relationship was more with
• 1:26:42
  pawn pawn. But here's the thing, the local
• 1:26:46
  cops don't care. They just get paid and that
• 1:26:48
  general he just wants to get paid.
• 1:26:51
  And so there were a series of attempts in 1314 and then in 15
• 1:26:59
  where PRI is scaling up the efforts.
• 1:27:04
  And so you had an attempt to go get Mencho.
• 1:27:06
  At this point, Mencho's unquestionably to number one out
• 1:27:10
  front. He's like the new Chapo.
• 1:27:14
  And so when they go to get him, they send a, you know, a team of
• 1:27:18
  special forces guys to go get him.
• 1:27:20
  Well, police go gotten tipped off that they're coming.
• 1:27:25
  So the Matazetas at the time still the, you know, American
• 1:27:30
  Special forces trained and perhaps even at that point still
• 1:27:33
  LED groups, ambushed the special forces guy.
• 1:27:37
  The Mexican The Mexican army. Unaligned to all of them and
• 1:27:41
  left their corpses on the road. The Mexican government.
• 1:27:45
  Military Military personnel. And.
• 1:27:48
  Just two truckloads of them, unalived, left them on the road.
• 1:27:52
  What? How did that?
• 1:27:53
  Work. The Mexican government was
• 1:27:54
  infuriated. Of course.
• 1:27:55
  The Army got, you know, got into their feelings, but then they
• 1:27:59
  send another team. This is going to be an air
• 1:28:01
  assault. And so they had a bunch of, you
• 1:28:05
  know, helicopter gunships coming in to go get them and they got
• 1:28:07
  tipped off. And of course, political gets
• 1:28:10
  tipped off again. And So what happens there?
• 1:28:14
  You know, look, their first course of action is always the
• 1:28:17
  run. Like, you only stand and fight
• 1:28:19
  if you have no choice or if you get the heads up and they ambush
• 1:28:22
  the guys. They're the only group to
• 1:28:26
  actually ambush them. Like everybody else tries to
• 1:28:28
  run. Yeah, they're like no, no, no,
• 1:28:30
  no, no. Rerun shit here, take them out
• 1:28:34
  and so. You know coming in via air is a
• 1:28:37
  whole different element. Whole other element.
• 1:28:39
  And so now Metro and other guys get tipped off.
• 1:28:42
  So they jump in there to Suburbans and they take off.
• 1:28:44
  They got a little caravan trying to leave the scene, but you're
• 1:28:47
  not going to run the helicopters.
• 1:28:48
  So helicopters take their positions, they come under
• 1:28:50
  attack, runs. Next thing you know, the guys
• 1:28:53
  from Jalisco pull out rocket fired grenades, shoulder fired
• 1:28:57
  rockets, start firing rockets at the fucking helicopters, blow a
• 1:29:01
  helicopter out of the sky like everyone in the special forces
• 1:29:05
  on that helicopter died. All of a sudden there's this is
• 1:29:12
  these guys aren't popping off shotgun.
• 1:29:14
  No, these are. These are shoulder.
• 1:29:17
  Rocket launch, you know. Not just that, but they got.
• 1:29:20
  Anti aircraft missiles. And the heavy artillery.
• 1:29:23
  Can you imagine what just one of those things cost?
• 1:29:26
  I mean, you know. You're getting it from.
• 1:29:28
  Hundreds of thousands of dollars.
• 1:29:29
  No, because it's coming out of the.
• 1:29:31
  China the. Stockpiles.
• 1:29:32
  No, these are all American made weapons.
• 1:29:35
  They got man pads because all those Central American countries
• 1:29:41
  have relationships with the American military.
• 1:29:43
  And so the special, you know, the military personnel from
• 1:29:46
  Guatemala comes to the United States.
• 1:29:49
  The guys from Honduras come to the United States.
• 1:29:50
  We're all getting trained here. And we've got, you know, seventh
• 1:29:54
  group, if I'm not mistaken, special forces for the Green
• 1:29:56
  Beret are in Central America. Well, all those countries have
• 1:30:00
  American used military platforms that are American.
• 1:30:04
  And so stuff comes up missing coming out the back of the
• 1:30:07
  warehouse all the time. All the time.
• 1:30:08
  And they end up in Mexico. We're paying top dollar for for
• 1:30:12
  it. For it and so then after six, so
• 1:30:15
  after attempt number 2, after this one from air, which you
• 1:30:19
  would think are good. So then they were able to repel
• 1:30:22
  that assault. Yeah, so now we got 2.
• 1:30:25
  Attempts and now the president of Mexico, the guy that
• 1:30:26
  allegedly took the 200 mil Yeah, he announces Operation Jalisco
• 1:30:32
  send $10,000 soldiers into Guadalajara to get these guys.
• 1:30:34
  And there's no way they could fuck with that.
• 1:30:36
  Well, what they did. So we're so we're taking a third
• 1:30:40
  shot at the third shot. At the at.
• 1:30:42
  Helisco This one is the. Operating, yeah, they're going
• 1:30:45
  into Guadalajara with 10,000 soldiers and of course they get
• 1:30:47
  tipped off again. But how do you fuck?
• 1:30:50
  I mean, like now. Now you've got numbers.
• 1:30:52
  Right, But what they did is they this is where you the first time
• 1:30:55
  that you saw the strategy they utilized is they shut down the
• 1:30:59
  freeway, they stopped the freeways, flipped over the
• 1:31:03
  buses. So they created barricades on
• 1:31:06
  the buses, on the freeways with burning buses to stop the
• 1:31:09
  traffic. And they were able to create an
• 1:31:11
  escape route for them. And so as they were putting
• 1:31:15
  this, this was already off pre planned.
• 1:31:17
  This is where the American training comes in.
• 1:31:19
  And so these are when in addition to blocking off the
• 1:31:24
  entrance ways and leaving themselves an escape route, they
• 1:31:26
  also created distractions because they started bombing
• 1:31:29
  banks. They're just like blowing up the
• 1:31:31
  fucking vaults. People are just money flowing
• 1:31:33
  everywhere. Just massive pandemonium.
• 1:31:35
  And it's massive distraction, massive distraction.
• 1:31:37
  You got to put that fucking. Fire out.
• 1:31:38
  Yeah. So you've got banks blowing up,
• 1:31:40
  money floating everywhere, freeways blocked, and they were
• 1:31:44
  able to get away from the 10,000 soldiers.
• 1:31:49
  This is now 2015. Now at this point, what saved
• 1:31:51
  them is right after that, Chapo Guzman escapes from prison
• 1:31:55
  again. What in the Mexican and one of
• 1:31:59
  the tunnel gimmicks? Right.
• 1:32:00
  The last tunnel gimmick. Yeah.
• 1:32:01
  So all of a sudden now Metro went from being like all hands
• 1:32:04
  on deck go get this guy to now. We got Chapo.
• 1:32:07
  Yeah, Chapo breaks out. All of a sudden, the whole
• 1:32:09
  world's like he did it again. But all the Mexican government
• 1:32:13
  had to pivot. And go get Chapo.
• 1:32:15
  Now they're back on. They got to get this guy, you
• 1:32:19
  know, like at the prison in California, the Mexicans are all
• 1:32:21
  celebrated, had a huge party when Chapo broke, escaped.
• 1:32:25
  And so it was just an enormous level of embarrassment for the
• 1:32:28
  Mexican government. This got the heat off Mantral.
• 1:32:33
  Now, in the United States, from 1996 to 2010, you had what was
• 1:32:40
  essentially an epidemic involving synthetic opioids that
• 1:32:45
  were being legitimately prescribed, produced by
• 1:32:49
  pharmaceutical companies. In 2010, the DEA recognized here
• 1:32:52
  there's a problem. This is where the pill mill
• 1:32:54
  stuff comes in. We need to get a handle on this.
• 1:32:57
  And so with the restrictions being put on place with respect
• 1:33:01
  to the synthetics, Sinaloa was able to capitalize on that
• 1:33:06
  because they were they had access to the poppy fields ever
• 1:33:09
  from our China Special, Yeah. Absolutely.
• 1:33:11
  They were able to scale up the production of actual opium, turn
• 1:33:15
  it into, I'll say it one time, heroin, and then market that.
• 1:33:19
  Unfortunately, Well, unfortunately from their
• 1:33:23
  perspective, you have one majority of people, the guys
• 1:33:28
  that are taking the, the the. Pills don't want to inject.
• 1:33:30
  Heroin, they're not going to go with the, you know, to do that.
• 1:33:32
  No. And so although the amount of
• 1:33:37
  the the H consumption increased dramatically, 2011, 2012, 2013,
• 1:33:44
  the people who saw the opportunity to capitalize on
• 1:33:47
  this huge market, you get a tremendous demand for the DA now
• 1:33:51
  restricted access to the synthetic pills, synthetic
• 1:33:54
  opioids. That's where Chinese organized
• 1:33:57
  crime stepped in. So now you had 1314151617, this
• 1:34:03
  whole Fenny thing started exploding.
• 1:34:06
  But this was from China. This wasn't the Mexicans.
• 1:34:10
  China. This is yes.
• 1:34:12
  These are Chinese based groups producing fenny.
• 1:34:16
  The Fenny 13141516 coming from China to the US then they
• 1:34:24
  restrict the ability to ship. There was a restriction put in
• 1:34:28
  place on the the goods coming in from China because it was like
• 1:34:32
  the changes in the de minimis rules for for mailing.
• 1:34:35
  So now the Chinese pivot to Mexico.
• 1:34:39
  Who were they aligned with? Jalisco.
• 1:34:43
  Chinese were aligned with Jalisco.
• 1:34:45
  So now let's. Go back in power.
• 1:34:48
  It gives Jalisco access to the Fenny for distribution and then
• 1:34:54
  they're like, well, why don't we just produce it here?
• 1:34:57
  They had access to the chemicals at that point, the precursors.
• 1:35:00
  If I get it from China, we can make it right.
• 1:35:02
  Here, make it right here. Well, the pivot into Fenny for
• 1:35:08
  Jalisco was driven by the fact that they needed to scale up on
• 1:35:11
  the revenue. They're making, you know, 800%
• 1:35:14
  return on the crystal rather than two 100% return on the
• 1:35:17
  coke. But they needed to scale up
• 1:35:19
  because they had to buy a lot of political protection because the
• 1:35:23
  president's sending 10,000 guys at a time after them.
• 1:35:26
  So we had to stop that because the next one we won't survive.
• 1:35:28
  Yeah, yeah, At some point they're just.
• 1:35:31
  Going to we're eventually going to get.
• 1:35:32
  Our So if you're getting paid 50 million a year, how about if we
• 1:35:34
  give you 100, whatever you're getting, we'll double it.
• 1:35:37
  Just just quit fucking with, quit fucking with us.
• 1:35:40
  But in order to be able to scale up.
• 1:35:42
  To make that money, they had to have a different product.
• 1:35:44
  And you had to have a different product that was much more
• 1:35:46
  lucrative. That's when Jalisco goes all in
• 1:35:48
  on the Fenny. So now they're already
• 1:35:50
  controlling the crystal. They're running the Coke to
• 1:35:52
  Europe and. Now they're doing the US.
• 1:35:56
  Fenny, they go into the fenny for the producing the synthetic
• 1:35:58
  opioids and they're essentially take control of.
• 1:36:04
  The This is Jalisco. The holy scope because you still
• 1:36:07
  had the Chinese working with them then in 19 China prohibits
• 1:36:11
  restricts the chemicals and in China, it's not like here you
• 1:36:14
  get caught doing something they're just on a live you
• 1:36:16
  could. They'll hang.
• 1:36:17
  They'll hang you tomorrow noon. Yeah, and you'll you'll get a 15
• 1:36:19
  minute trial and then you'll charge your family for the
• 1:36:21
  bullet. 15 minutes and then they're going to kill your
• 1:36:24
  family, No. No, they're going to charge your
• 1:36:25
  family for the bullet. Oh, they will.
• 1:36:28
  Yeah, no, China's vicious. And so the Chinese are fucking.
• 1:36:30
  So they're like, you know what? Then there is the Chinese
• 1:36:33
  elements of organized crime pivot to their operations in
• 1:36:36
  Mexico. They just go all in on Mexico
• 1:36:38
  now. Well, they're all working with
• 1:36:40
  you got that's why you got the money in the 200 million.
• 1:36:43
  That's the kind of operations you had.
• 1:36:45
  Or now you had the Chinese working hand in hand with
• 1:36:47
  Jalisco. Jalisco had the distribution
• 1:36:49
  capacity in the United States. They had the political
• 1:36:51
  protection locally in Mexico. And now you had a 2000% return
• 1:36:55
  on investment. So now they're able to start
• 1:36:57
  going and buying political protection.
• 1:36:59
  All you got. Up on their political political
• 1:37:01
  alliances. So the two efforts that resulted
• 1:37:05
  in what the US government characterized as epidemics were
• 1:37:08
  responses. To political.
• 1:37:11
  To political pressure by the Mexican government, who were
• 1:37:14
  trying to squeeze the narcos even more.
• 1:37:17
  Now, does Pete, you're obviously very smart guy.
• 1:37:19
  You know this thing inside and out.
• 1:37:22
  Government officials have to know this too, don't they?
• 1:37:24
  I mean, you're not the only man in the world that knows this.
• 1:37:26
  I don't. I don't know what they know.
• 1:37:29
  But I mean, you know well. Presumably they do, of course,
• 1:37:31
  come out. Yeah, yeah, that's what I'm
• 1:37:32
  saying. Presumably, like they they have
• 1:37:34
  to know that the reason, one of the reasons why there's so much
• 1:37:37
  of this shit coming into our country.
• 1:37:39
  More so that from like at least the 2008 disclosures from
• 1:37:42
  WikiLeaks, they showed that, yeah, the the State Department
• 1:37:45
  is working with the DEA saying, hey, we got a problem in
• 1:37:47
  Guadalajara. Right.
• 1:37:48
  So I mean, like this is not this is not secretive Intel that this
• 1:37:54
  is common knowledge for those that know about this.
• 1:37:58
  And so why can't we do anything about it or do or is it just a
• 1:38:02
  game we got to play? Is it just a game A.
• 1:38:06
  Lot of individuals within let's say like the federal law
• 1:38:09
  enforcement community who are genuine in their efforts and
• 1:38:14
  they don't really have an understanding on how the trade
• 1:38:19
  is structured and organized. And I know there's, you know,
• 1:38:22
  your, your DEA friend, like look, the guy in DEA, like the
• 1:38:25
  DEA guy in Cleveland's doing nothing.
• 1:38:28
  Right. The DA guy in fucking Boston?
• 1:38:31
  You're doing nothing if you're talking about disrupting the
• 1:38:33
  drug flow. The guy in Indianapolis, you
• 1:38:35
  know, he's, he's local yokel. Yeah, that's right.
• 1:38:37
  You're, you're the big case. There is a 5K bus, you know, and
• 1:38:40
  so you're not disrupting. I don't know that any of the DEA
• 1:38:43
  guys are doing anything, quite frankly.
• 1:38:46
  Oh no, they're they're making and.
• 1:38:48
  I don't mean that disrespect. No, no, no, of course.
• 1:38:50
  The local agents and stuff like that.
• 1:38:51
  I'm just saying they're they, the local agents do as they're.
• 1:38:53
  Told their mission is. I think it's.
• 1:38:57
  Developed to a lot of times it's an employment program for law
• 1:39:02
  enforcement because if you were serious trying to disrupt
• 1:39:05
  Sinaloa or Jalisco, take 1000 agents out of all those cities,
• 1:39:09
  put them in LA and infiltrate the trucking industry like that
• 1:39:12
  disrupts the operation. Well, yeah, I remember I talked
• 1:39:14
  to you about earlier today, like, you know, you look at
• 1:39:16
  these regional DEA guys, but you say and you've continued to say
• 1:39:21
  through all of the episodes, LALALA.
• 1:39:24
  LA if you're targeting holy score, Sinaloa.
• 1:39:27
  If you're targeting the Gulf, go to Houston.
• 1:39:29
  Sure, but you know. You have these, Houston.
• 1:39:33
  LA you have the American base of.
• 1:39:34
  Operation Chicago, New York, Atlanta, and I think you said
• 1:39:40
  right side out of Charlotte, right side out of.
• 1:39:42
  Floors, Sinaloa and they all have different huts.
• 1:39:45
  Sure. Sinaloa and Jalisco are the ones
• 1:39:46
  with the regional hub models. Right.
• 1:39:48
  But but, but what I'm saying is like if they were really, really
• 1:39:51
  adamant about thwarting some of this, you would just go All in
• 1:39:56
  all the on those cities like you like and go and get into the
• 1:39:59
  trucking and distribution deal and you got them.
• 1:40:03
  Too many. The leadership, the leadership.
• 1:40:06
  The leadership of the the special agent in charge in
• 1:40:11
  Tampa. Someone your age, my age, Like
• 1:40:13
  they're in their 50s. Yeah, well, they grew up, but
• 1:40:16
  they were in high school back in the 80s.
• 1:40:17
  And to them, being a drug warrior is Don Johnson in Miami
• 1:40:21
  Vice. Well, you're not.
• 1:40:25
  No white American driving a Ferrari is ever going to talk to
• 1:40:30
  a Mexican cartel distributor. Never, never.
• 1:40:32
  That's one of the. Rules not on American.
• 1:40:34
  You can't talk to them, you. Can deal with them in Mexico.
• 1:40:37
  You can take delivery on American soil or you're not
• 1:40:39
  talking to the distributor. You're not talking to the.
• 1:40:41
  Guy, you're getting a delivery boy delivering the load to you,
• 1:40:44
  a very different operation. If you want to disrupt the flow,
• 1:40:48
  you have to target the logistical operation because
• 1:40:52
  what they do on American soil more than anything else is
• 1:40:55
  transportation. The J Flores is source the
• 1:40:59
  product in Mexico take delivery in the US.
• 1:41:02
  But do the deal in Mexico. What they do to business in
• 1:41:05
  Mexico. Like your guy from Chicago,
• 1:41:06
  Remember we talked about him. My.
• 1:41:08
  Buddy Victoria going to Mexico, buying 900 keys at a time, take
• 1:41:10
  delivery in LA but. But did the deal in Mexico?
• 1:41:13
  Of course. And then you take delivery in
• 1:41:15
  Chicago in Chicago or take delivery in LA or take delivery
• 1:41:17
  at the hub in New York. So now if you're targeting one
• 1:41:21
  of the hubs, the only distributors that don't that the
• 1:41:25
  people that those distributors are going to talk to are other
• 1:41:28
  Mexican nationals. Which insulates them a little
• 1:41:30
  bit. That's one of the.
• 1:41:31
  Rules. That's why it's almost
• 1:41:32
  impossible to get these guys. Very few of the distributors get
• 1:41:35
  busted. I mean, guys get knocked off,
• 1:41:37
  but if you've had a 35 year run in Los Angeles, I don't think
• 1:41:41
  more than 100 guys have gotten busted in 35 years.
• 1:41:45
  So which just goes to show you how serious are we?
• 1:41:47
  Really. Well, no, because they're
• 1:41:49
  targeting the customers, not the distributor.
• 1:41:54
  Second, third level the. Second level guys.
• 1:41:56
  Not even. Not even the first level guys.
• 1:41:58
  Right. That's why I started with
• 1:41:59
  second. I've learned enough about this
• 1:42:01
  that nobody's getting the first level guys for the most part.
• 1:42:03
  And so and then what the government does is.
• 1:42:04
  Unless the Mexico government has offered them, up to you well.
• 1:42:08
  Then yeah, of course they're going to.
• 1:42:08
  They do that all the. Time.
• 1:42:09
  Yeah, that's what I'm saying, you know.
• 1:42:11
  But I mean, but then you're taking out someone's rival.
• 1:42:13
  They're not. They're not helping us.
• 1:42:15
  They're doing it because that's part of their political.
• 1:42:17
  Whenever the Mexican government hands someone over, it's to
• 1:42:21
  somebody else's benefit. Yeah, yeah.
• 1:42:24
  So Fast forward to today. And so now the spike in the
• 1:42:28
  fenny, much like the spike in the crystal, was a response to
• 1:42:33
  pressure by the corrupt political elite in Mexico.
• 1:42:37
  Yeah. Now, and that's unenforceable.
• 1:42:40
  I don't think you can enforce that, can you?
• 1:42:42
  Well, think the dynamic change and that see the 2007 created
• 1:42:47
  what I refer to as the protection market because now
• 1:42:50
  not only are they selling impunity which was from 19901990
• 1:42:53
  to 2007, now they shifted from selling impunity to selling
• 1:42:57
  protection. Either you give me the 50
• 1:43:00
  million or Poncho will give me the 50 and you go to LA, you go
• 1:43:03
  to ADX you. Go see Chapo.
• 1:43:05
  And so everybody scaled up, which in turn drove incentivize
• 1:43:10
  this massive upscale in flooding the market with now
• 1:43:13
  unfortunately the synthetics. And that's essentially.
• 1:43:17
  Where we were at because in 2019, when the Chinese
• 1:43:20
  government clamped down on the production, it now transferred
• 1:43:24
  entirely to Mexico. And so, you know, Jalisco became
• 1:43:29
  extraordinarily wealthy. I mean, Mitchell himself was
• 1:43:32
  worth over a billion dollars and that network is generating
• 1:43:34
  billions of dollars just in profits.
• 1:43:37
  That's after everybody's paid that's.
• 1:43:39
  After everybody's paid, they've got fleets of trailers filled
• 1:43:43
  with cash buried, like vacuum sealed buried and just buried
• 1:43:48
  out in the middle of the desert is dig a huge hole and drop the
• 1:43:50
  fucking trailer. And and know what the GPS number
• 1:43:52
  is. Yeah, now, I mean it, it takes
• 1:43:53
  that much time to surface all this cash into the system, but
• 1:43:58
  they have control of Guadalajara.
• 1:44:00
  Which is key. Which is key.
• 1:44:02
  Now the Mexican government I'm hearing is getting ready to
• 1:44:07
  preclude dollar denominated cash transactions in Mexico.
• 1:44:12
  So like, if you're an American citizen, you're going to go to
• 1:44:14
  Cabo. Well, you're going to have to
• 1:44:17
  convert your money to Mexican Mexican version of a stable
• 1:44:22
  coin. So you can't use American
• 1:44:26
  dollars in Mexican? That's what I'm hearing.
• 1:44:28
  I haven't. I don't know if that law has
• 1:44:29
  taken effect, but I've come across would that.
• 1:44:31
  Kill the economy. No, of course not.
• 1:44:33
  It's what it's going to do is it's going to increase the value
• 1:44:36
  of the Chinese underground banking network because the
• 1:44:39
  Mexicans are going to have the cash here.
• 1:44:42
  They sell them to the Chinese guys in Los Angeles, remember?
• 1:44:45
  We got they have, they have US cash.
• 1:44:47
  We got three, We got 3 cartels operating in LA, we got 4 triads
• 1:44:50
  operating in LA. So now the Mexican organizations
• 1:44:54
  can just sell the cash to the Chinese in LA and the Chinese in
• 1:44:59
  LA will give them the credit from there's the operatives on
• 1:45:03
  the China side, You know, they'll call some guy in
• 1:45:04
  Shanghai, Shanghai or Shenzhen or whatever, you know, buy
• 1:45:07
  3,000,000 worth of laptops and send it to Mexico.
• 1:45:12
  You drop off the 3 million in LA, you get 3,000,000 worth of
• 1:45:15
  laptops in Mexico. The guys in LA sell the 3
• 1:45:18
  million to their counterparts in China for 4 million.
• 1:45:21
  They're making 30. They're making a third on the
• 1:45:22
  back end. And you just watched it?
• 1:45:24
  And it's watched it now when the money, when the product comes
• 1:45:26
  into Mexico, it's coming in through commercial.
• 1:45:27
  Goods, right? Wow.
• 1:45:31
  And so even if you don't allow dollar denominated transactions,
• 1:45:35
  what that's going to do, it's going to disrupt the mom and pop
• 1:45:38
  guys, the guys that are laundering money through car
• 1:45:41
  wash. Laundromats.
• 1:45:43
  Yeah, the laundromats, you know, those are, those aren't very
• 1:45:46
  sophisticated operations. They now they're prevalent and
• 1:45:49
  that's how it's been working for 50 years.
• 1:45:53
  And so like, don't get me wrong, there's always going to be a
• 1:45:55
  mechanism in place where the political class can get theirs
• 1:45:58
  because we're not taking the duffel bags of cash and so.
• 1:46:02
  Always be that. There's going to be someone
• 1:46:04
  benefits if they restrict cash transactions and so.
• 1:46:09
  They got it figured out, Pete. They got it figured out both
• 1:46:11
  ways, man. Earn the cash.
• 1:46:13
  Well, the thing the night the protection market came to an end
• 1:46:17
  in January 25. Oh, so just fairly recent.
• 1:46:22
  Because that's when the the new Trump administration came into
• 1:46:25
  office. And they came in hard at the
• 1:46:26
  beginning. And they're the ones who said,
• 1:46:28
  hey, look, there's an intolerable alliance between the
• 1:46:29
  Mexican government and the cartels.
• 1:46:31
  That's 100% correct. But it's like it's been going
• 1:46:34
  after 50 feet. You know, it's 50 years in the
• 1:46:36
  in the making, but they're the first ones who took that
• 1:46:39
  position, and they started putting a tremendous amount of
• 1:46:43
  pressure on the Mexican government.
• 1:46:45
  Now they're using the drug trade as a pretext to achieve the
• 1:46:50
  objectives that they actually want, which is curtail trade
• 1:46:54
  with China and put tariffs with China, restrict access to China.
• 1:46:59
  The Chinese have access to the the Commodity, it's almost like
• 1:47:02
  we have to use Mexico by as a proxy to get back at China.
• 1:47:07
  Yeah, it's a the United States has declared ownership of the
• 1:47:10
  Western Hemisphere and all commodity based transactions
• 1:47:15
  have to be done and dollar denominated.
• 1:47:18
  That's why they knocked off the guys in Venezuela.
• 1:47:19
  They just used the drug trade in Venezuela as a justification.
• 1:47:22
  When really you said they actually put the person the the
• 1:47:25
  vice for the vice, who actually the woman was actually the one
• 1:47:28
  that was the leading odds for the cartel.
• 1:47:31
  That's who you put in charge. Of course, because they have
• 1:47:32
  leverage over her. Because she'll play ball.
• 1:47:34
  She'll play ball man Pete. And so these, and now you know,
• 1:47:41
  the Mexican government has agreed if they put tariff, 50%
• 1:47:45
  tariffs on China, they're restricting Chinese goods coming
• 1:47:49
  into Mexico to get around our tariffs, they'd come in through
• 1:47:51
  the back door through Mexico. They prohibited them from
• 1:47:54
  building ABYD plant in Mexico. We don't want the electric cars
• 1:47:57
  here to crush our auto industry. And so the the secondary
• 1:48:04
  interest is of course, they want some scalps because it looks
• 1:48:07
  good. And so you'll see the Mexican
• 1:48:10
  government sending over crops of guys.
• 1:48:13
  Like they sent over one group of like 27 guys, They send over
• 1:48:15
  another group of, you know, 20 some odd guys.
• 1:48:17
  These are just offerings. Well, yes, that demonstrates
• 1:48:20
  that the protection market isn't working because these are, you
• 1:48:23
  know, granted a lot of them were.
• 1:48:25
  So we're trying to stamp out that illicit protection market
• 1:48:29
  and Mexico is giving us some offerings, but you know it
• 1:48:32
  probably. Well, because when you got to
• 1:48:34
  squeeze like so now of last year, you had earlier this year,
• 1:48:39
  if I'm not mistaken, you had the governor of Sinaloa got
• 1:48:42
  indicted, like 10 different Mexican government officials
• 1:48:46
  have been charged. Now, we haven't pushed for them
• 1:48:48
  to get sent over. They're charged.
• 1:48:51
  In Mexico. In Mexico and Mexico, we're not
• 1:48:53
  going to hand them over. Well, we could just say, OK,
• 1:48:55
  we're going to cut off all trade, hand them over.
• 1:48:57
  That's like a shot across the bow.
• 1:48:58
  Either you play ball or not only are we going to charge you, but
• 1:49:03
  then we're going to shut down all your bank accounts.
• 1:49:04
  We're going to, you know, they haven't disrupted the financial
• 1:49:09
  services sector sector in Guadalajara.
• 1:49:12
  There was a couple of guys that they knocked off, a couple of
• 1:49:15
  the what are essentially like private equity groups.
• 1:49:19
  Hedge fund guys. Those are the guys that those
• 1:49:22
  are just shots across the bottleneck.
• 1:49:23
  We can escalate. And so to the extent that you
• 1:49:27
  were like, if the US government was serious about disrupting the
• 1:49:30
  drug flow, those are the kind of actions you have to take.
• 1:49:33
  But on a sustained basis, like disrupting the drug flow, you
• 1:49:36
  could affect much more with 500 accountants than with 10,000 DEA
• 1:49:40
  agents. That's a that's a hell of a
• 1:49:42
  quote. You're right.
• 1:49:43
  You could bring you could bring the 500 forensic accountants.
• 1:49:46
  That's right, you you can triple the network.
• 1:49:47
  Cripple them more than 10,000. DEA because like Abbehel,
• 1:49:51
  Valencia's network was responsible for Jalisco's money
• 1:49:56
  loaning apparatus. That's not the politician side.
• 1:50:00
  He's on the cartel side. Well, Abbehel Valencia was, you
• 1:50:04
  know, they're running operations in Panama, Uttagua, these
• 1:50:08
  international tax havens, What they need offshore, they need
• 1:50:12
  attorneys that are specialized in tax law.
• 1:50:14
  They need, you know, they need their accountants.
• 1:50:16
  These are all white services, white collar service
• 1:50:19
  professionals. Well, that's the linchpin.
• 1:50:23
  You can't surface a billion dollars through car washes.
• 1:50:26
  No, no, not not that. Volume and you need to have a
• 1:50:29
  mechanism to be able to transfer money to the political class
• 1:50:33
  because that judge doesn't want to Duff a bag of cash and that
• 1:50:36
  congresswoman doesn't want to Duff a bag of cash.
• 1:50:37
  And so it requires the financial services sector to essentially
• 1:50:42
  you know that. That that's how you cripple
• 1:50:44
  them, that's how you get them, and we're not there.
• 1:50:46
  Not not there yet, but I mean that's where to the extent that
• 1:50:51
  if you see that kind of a move, we're serious or we're doing
• 1:50:55
  that to say, look, we want you to do this with respect to
• 1:50:58
  China. Yeah.
• 1:51:00
  Which is generally what's going on now that's.
• 1:51:02
  Anything that happened, anything that we do is probably have a
• 1:51:05
  direct correlation to China some way shape or.
• 1:51:08
  Form. Yeah, well, in like the.
• 1:51:09
  We're that are we that are we that obsessed, scared or some of
• 1:51:15
  the both of China well. It's not, it's not scared.
• 1:51:20
  It's a recognition that the world is moving away from the
• 1:51:30
  dollar denominated system. Like this year, foreign central
• 1:51:34
  banks for the first time in decades hold more in gold for
• 1:51:40
  reserves than treasuries. Well, this is not sustainable.
• 1:51:45
  This war in Iran is not sustainable because we're not
• 1:51:47
  recycling those dollars into the American economy.
• 1:51:50
  It's just we're literally under precipice of getting greater.
• 1:51:54
  Take the great financial crisis plus.
• 1:51:58
  The housing crisis plus. COVID.
• 1:52:00
  Plus plus plus. Add those together and then add
• 1:52:02
  them to the depression. That's what we're facing.
• 1:52:04
  Take the 30s, COVID, the housing crisis of OA and.
• 1:52:08
  So the. The financial and and and.
• 1:52:11
  Add all those together and you might have the precipice of
• 1:52:14
  what? We're at right now and so.
• 1:52:15
  Is it that? Is it that fucking fragile?
• 1:52:18
  That's why, you know, last year we went to this trade war with,
• 1:52:22
  especially with China, we lost. Yeah, we did.
• 1:52:25
  And so they demonstrated the capacity to cripple the American
• 1:52:28
  economy. But for their alternate yuan
• 1:52:31
  based financial system to be effective, they need trading
• 1:52:35
  partners that allow them to trade in their currency.
• 1:52:38
  Well, those trading partners were Venezuela, Russia and Iran.
• 1:52:43
  All American missiles flew into those three countries this year.
• 1:52:46
  Yeah, and we took over 1. We successfully knocked off 1.
• 1:52:49
  And keep in mind, like, I'm not criticizing what we're doing
• 1:52:52
  because if you want to maintain the American standard of living,
• 1:52:54
  it's you got to do it. You can't allow that.
• 1:52:57
  This is where the men in the black suits have to do what they
• 1:52:58
  got to do. Yeah, but we ran up against a
• 1:53:02
  brick wall with respect to the Chinese, well, where China gets
• 1:53:06
  a lot of their natural resources in the Western Hemisphere.
• 1:53:09
  Silver. Well, this is where the Jalisco
• 1:53:11
  new generation comes in because Jalisco, part of their portfolio
• 1:53:18
  of racketeering related criminal activity were the ones that were
• 1:53:22
  extorting the mining interests. The silver mines.
• 1:53:25
  And the silver mines are located in the heart of cartel
• 1:53:31
  territory. You think silver is going to be
• 1:53:36
  go skyrocket? The thing is, yes, it depends on
• 1:53:40
  it. It's going to be up and to the
• 1:53:43
  right. We're just depending the the
• 1:53:45
  rate of change is going to turn on circumstances, but the
• 1:53:48
  direction is at this point on a silver.
• 1:53:54
  Silver and gold or just. Yes, but silver is an industrial
• 1:53:57
  metal. Yeah, used in conductors.
• 1:54:00
  Used in and the problem we have is not only does China control,
• 1:54:05
  you know, with respect to some of these rare earths metals and
• 1:54:07
  magnets like 99% of the production, yeah, they were also
• 1:54:11
  controlling directly and indirectly 70% of the silver.
• 1:54:15
  Well, they didn't threaten us with silver if they were to do
• 1:54:20
  so. You know, we can't, we have no
• 1:54:22
  manufacturing. You can't build sorting.
• 1:54:25
  Somebody give a fuck. 60 almost a year ago trade war with China.
• 1:54:29
  Now that's a strategic asset. In fact, last year the US
• 1:54:33
  government declared silver like a declared like a critical
• 1:54:36
  mineral and so a critical metal. And so they have to build a
• 1:54:41
  stockpile where our stockpile, our reserves are in Mexico and
• 1:54:46
  Jalisco. In targeting the mining
• 1:54:48
  interest, they're taking 2530% of that silver away from the US.
• 1:54:53
  So if that's how we insulate ourselves from China slamming
• 1:54:56
  the door on silver, well, the problem is we can't afford to
• 1:54:59
  let these narcos take. 2530. Percent of the silver off the
• 1:55:03
  top and then turn around and sell it to China.
• 1:55:05
  Yeah. So we got to get a handle on
• 1:55:07
  that. That then that's.
• 1:55:08
  And that's what we're doing. They took out Mitchell.
• 1:55:13
  They weren't thinking they're targeting the narcos because
• 1:55:14
  he's a big drug trafficker. No, no, no, no, no, no.
• 1:55:17
  No, he's fucking with the silver.
• 1:55:18
  That's a shot across the bow saying you will not interfere
• 1:55:22
  with the restrictions that we place with respect to these
• 1:55:26
  commodities. Like this is a geopolitical war
• 1:55:29
  between the US and China. And you narcos sticks.
• 1:55:32
  In your lane, you stupid. Fucking narcos, you stick to the
• 1:55:34
  coke. You third grade fucking drug
• 1:55:35
  dealers. Stop stick.
• 1:55:37
  Leave the big boys alone. Leave the big boys alone.
• 1:55:39
  And so you see this. Wow.
• 1:55:40
  No, see, that's, that's nothing that anybody's except for you.
• 1:55:45
  I mean, it's Intel that's that's I know is correct.
• 1:55:48
  But God, how we get there and, and and what's what's really
• 1:55:52
  happening when we don't have any idea?
• 1:55:54
  I'm sure that the the political elite.
• 1:55:57
  I'm buying silver. The political elite within
• 1:55:59
  Mexico are having serious conversations with their cartel
• 1:56:03
  contacts and saying, look man, keep your head down.
• 1:56:06
  Keep slinging your Fanny. No, not the Fanny.
• 1:56:08
  No. See, the problem we have today
• 1:56:10
  is you've got 13 cartels, but the two big ones were Sinaloa
• 1:56:18
  and Jalisco. Jalisco dominates the Defeni.
• 1:56:25
  Well, their rivals in Sinaloa saw them accruing all this extra
• 1:56:29
  money, all this extra power, so now they had to go in.
• 1:56:33
  The group that went all in in the Sinaloa side was the
• 1:56:36
  Chapitos, the Guzman faction. So now you've got what becomes,
• 1:56:40
  in game theoretic terms, a multi polar trap where you've got one
• 1:56:43
  group benefiting. So the rivals, they can't
• 1:56:47
  unilaterally disarm, they got a match.
• 1:56:51
  And so now you've got groups who normally weren't involved in
• 1:56:54
  something. They have to be able to fight
• 1:56:57
  fire with fire. So now you've got this dynamic
• 1:57:00
  where everybody's pursuing their short term interest at the
• 1:57:04
  expense of their long term interest because they got to
• 1:57:08
  survive the next year to worry about 10 years down the road.
• 1:57:11
  Yeah. And she's got this massive
• 1:57:13
  flooding of the market here in the United States with all these
• 1:57:16
  synthetic pills because they're all.
• 1:57:19
  They're all making. They're all.
• 1:57:20
  Arming up, they got to build enormous caps, you know,
• 1:57:25
  particularly now because the US government has designated these
• 1:57:27
  groups FT OS. So the Mexican government's on a
• 1:57:31
  tremendous amount of pressure. And so the Mexican government's
• 1:57:35
  trying to get the Guzman's, they're trying to get the
• 1:57:39
  Jalisco guy. They knocked off several of
• 1:57:41
  these guys, Hazenero, you know, high-ranking people within the
• 1:57:44
  Jalisco network. That's why there's credible
• 1:57:47
  reports already in Mexico that Juan Carlos is working with
• 1:57:49
  them. Like take this guy over here,
• 1:57:52
  take that guy over there. Like this is a standard
• 1:57:54
  operating procedure in Mexico. And so when you see a major drug
• 1:57:58
  Lord get knocked off and none of his security detail was with
• 1:58:01
  them like what they knew to disengage.
• 1:58:04
  And the Intel. And so you and.
• 1:58:06
  That's the world we're living in today.
• 1:58:08
  And that's the world you're living in today.
• 1:58:09
  And so that's where you see that.
• 1:58:11
  I have no doubt that the pressure is coming from the
• 1:58:14
  Mexican government to target the big cartels that say, hey, keep
• 1:58:18
  your heads down, stop at the Fanny, focus on the coke and the
• 1:58:21
  crystal. Coke and Crystal.
• 1:58:23
  The problem that for the American side of course is
• 1:58:26
  because the pre precursors are prevalent, non illegal.
• 1:58:33
  We can do it ourselves. We.
• 1:58:34
  Can do it themselves and so you know, two years ago when Sinaloa
• 1:58:39
  imploded or disarticulated or factions you had between Sinaloa
• 1:58:46
  and Jalisco 71 organizations 44 and one for Sinaloa 27
• 1:58:52
  organizations in Jalisco for a combination of 71 organizations.
• 1:58:56
  Well that represented the two major quote UN quote cartels.
• 1:59:02
  Well, 71 organization only represents 15 to 20% of the
• 1:59:10
  organizations in Mexico. There's over 450 organizations
• 1:59:13
  operating in Mexico. 71 of them are Sinaloa and Jalisco.
• 1:59:19
  And so you've got this Frankenstein where the economics
• 1:59:24
  of the drug trade have changed profoundly because back when you
• 1:59:27
  what you when you needed a cartel, it's because you're
• 1:59:30
  moving 20 ton loads at a time. So you need a 7 organization
• 1:59:35
  desi chain to bring the product from the border of Guatemala all
• 1:59:37
  the way to Tijuana. And then you need the operations
• 1:59:40
  out on the coast for the maritime on the Pacific or the
• 1:59:42
  go on the Gulf side for the maritime.
• 1:59:44
  Or you need the aviation groups out of Mexico City or out of
• 1:59:47
  Acapulco. Oh, if you're just ordering
• 1:59:50
  chemicals that are illegal and you're spending 3500 bucks and
• 1:59:54
  you're going to make 4 or 500 grand, what do you need a cartel
• 1:59:56
  for? You don't.
• 1:59:59
  So the overwhelming majority of organizations operating in
• 2:00:02
  Mexico today are operating outside of the cartel structure.
• 2:00:06
  So even if Jalisco and Sinaloa said hey, no more, if any.
• 2:00:10
  You got all these mom and pops. You get the mom and pops that
• 2:00:12
  are running wild. Well, yeah.
• 2:00:14
  So you essentially would for to stop that, you have to deputize.
• 2:00:18
  Would you like a year and a half ago when I was on an earlier
• 2:00:20
  program, like, look, you need to like, if you want to stop the
• 2:00:23
  mom and pops, reach out to this guy, Juan Carlos, and say, look,
• 2:00:27
  we're going to back off on the coke.
• 2:00:29
  You guys do what you're going to do.
• 2:00:30
  Just take care of this. Yeah, you got to, you got to
• 2:00:32
  almost, almost play ball with. Them you got to just deputize
• 2:00:35
  one of them and say like, you know, we're not going to come at
• 2:00:38
  you. Don't do nothing stupid.
• 2:00:40
  Play within our rules, but go get mom and pop.
• 2:00:43
  Get these guys, get these guys. You got the.
• 2:00:44
  Infrastructure to get them more so than we do.
• 2:00:47
  If you're interested in disrupting the drug flow, yeah.
• 2:00:50
  Because if you take out Jalisco New Generation tomorrow, the mom
• 2:00:54
  and pops are the the hundreds of organizations right there.
• 2:00:56
  Yeah, no, you. Really don't have a way to you
• 2:00:57
  don't have a way to to keep your thumb on them without Jalisco.
• 2:01:01
  Yeah, because the Mexican, these guys are not paying into the
• 2:01:05
  Plaza system. No, they're not playing.
• 2:01:06
  They're not paying for. Protection.
• 2:01:07
  They're not paying for protection.
• 2:01:08
  These are actually running wild. Like you said, you almost have
• 2:01:10
  to deputize Jalisco. You have to either that or you
• 2:01:13
  have to put such a tremendous amount of pressure on the
• 2:01:15
  Mexican government where they're actually going to have to go out
• 2:01:20
  and target all of these groups. But the problem is to put that
• 2:01:24
  kind of pressure on the Mexican government, you're going to do
• 2:01:26
  tremendous damage to the American.
• 2:01:28
  Economy. Well, if Jalisco just stops
• 2:01:29
  buying for mom and pop, then like you said, like you know,
• 2:01:32
  they stop buying for mom and pop.
• 2:01:33
  Stick to crystal and coke, yeah? And know what they did, But the
• 2:01:35
  mom and pops are still going to run.
• 2:01:37
  They're going to still produce, but now they got to take the
• 2:01:40
  efforts to bring it. That's water.
• 2:01:41
  Transport. They got to bring it to the
• 2:01:43
  border. Probably most mom and pops
• 2:01:44
  aren't really much on that. Well, no, they just don't have
• 2:01:47
  the they don't have, you know, they.
• 2:01:48
  Don't have the scale the. The subterranean tunnels A3
• 2:01:53
  tunnel array is going to cost between the tunnels.
• 2:01:57
  The warehouse is on the Mexican side.
• 2:01:59
  The warehouse is on the California side.
• 2:02:00
  The secondary shop, secondary set of warehouses, that's $70
• 2:02:03
  million by the time it's. All clear.
• 2:02:05
  Yeah, because you, because you said in a couple podcasts ago
• 2:02:08
  they always got 3 tunnels. They got one attack, they build
• 2:02:10
  3 tunnel array, they got a backup and one they're working.
• 2:02:13
  On, they're utilizing the Alpha tunnel.
• 2:02:14
  Bravo's on standby. Charlie's mothball.
• 2:02:16
  Yeah and then when Alpha gets knocked off, they activate BC's
• 2:02:19
  on and by your digging Delta. Every one of these tunnels has
• 2:02:23
  to have warehouses on the on the San Diego.
• 2:02:24
  Side and a backup. Well, no, the the warehouse that
• 2:02:28
  houses the egress, the exit for the tunnel, and then you got to
• 2:02:31
  have a second warehouse where you take the product from the
• 2:02:33
  first one to the second one, because you don't show nobody
• 2:02:34
  the warehouse that holds the tunnel exits.
• 2:02:36
  Right now you got to build 6. You got to buy 6 tunnels.
• 2:02:39
  As you said, that's 70 million, you know, and that's
• 2:02:41
  infrastructure that Jalisco and everybody's has, the mom and pop
• 2:02:44
  can't. They can't afford the guys doing
• 2:02:46
  4 kilos. He can't.
• 2:02:48
  Isn't spending $50 million digging tunnels?
• 2:02:52
  And so if you want to disrupt the drug flow, you know, in
• 2:02:59
  fact, I was invited to give a talk at a university in
• 2:03:01
  California, a bunch of like, you know, graduate students taking
• 2:03:04
  advanced degrees in public policy.
• 2:03:06
  And so I had to write a paper. And I explained like if you
• 2:03:09
  wanted to disrupt tunnels operations, just focusing on the
• 2:03:12
  tunnels, like why are you putting 10,000 troops on the
• 2:03:15
  border? Are you putting 100,000 troops
• 2:03:17
  on the border? We got a tunnel.
• 2:03:19
  The tunnels are going right underneath the soldiers.
• 2:03:22
  Are you people insane? It's like you see the Mexican
• 2:03:25
  government do this. It's just all dog and pony show.
• 2:03:26
  I'm watching this and you get like the Fox News crowd
• 2:03:28
  celebrating. Look at these guys.
• 2:03:31
  They're cracking down. Cracking down.
• 2:03:33
  They're deliberately not targeting the cartel operations.
• 2:03:36
  They're taking out the mom and pops.
• 2:03:38
  They're helping the cartels by eliminating their.
• 2:03:40
  And the cartels are? Going 90 feet underneath their
• 2:03:42
  feet. If you want to disrupt the
• 2:03:43
  cartel operations, you know what you do?
• 2:03:45
  You create a targeted search because there's only one area of
• 2:03:49
  San Diego where they do it. It comes with the Otai Mesa port
• 2:03:52
  of entry, which is the commercial side where you got
• 2:03:53
  the warehouses on that side, the Tijuana side going into San
• 2:03:56
  Ysidro as civilians. Most of the tunnels are in the
• 2:03:59
  commercial area because you're going to want to have the
• 2:04:01
  warehouses you have to cover businesses and the geology
• 2:04:05
  allows for tunnelling, is very conducive to tunnelling.
• 2:04:08
  So what you do is you identify every structure within a mile of
• 2:04:13
  the border. You know the tunnels, the
• 2:04:14
  longest ones are like 5000 feet. Well, it could go a mile and a
• 2:04:18
  half and conduct the targeted search of every structure.
• 2:04:22
  Every square inch. Every building for a mile into
• 2:04:26
  Mexico in this target area. And you don't rely on the
• 2:04:31
  Mexican authorities to do that. The Mexican government can say,
• 2:04:33
  you know, this is a good faith effort.
• 2:04:35
  We're going to invite American inspectors now.
• 2:04:38
  They're very sensitive about law enforcement.
• 2:04:39
  So it's not going to be FBI. It's not going to be DEA.
• 2:04:41
  It's not going to be LAPD. Well, if you want to have
• 2:04:45
  American boots on the ground to make sure that we're holding
• 2:04:48
  them honest. And firefighters, yeah, you know
• 2:04:53
  me fire marshals that are in LAA lot.
• 2:04:56
  All Trump's got to do is call Newsom and say, you know what?
• 2:04:58
  Send me 300 fire marshals, get him from LA he'll come to LA
• 2:05:02
  Send a couple 100 Orange County, send us some San Diego, send
• 2:05:05
  some. He put 3 or 400 fire marshals,
• 2:05:08
  embed them into Mexican search teams and search every structure
• 2:05:12
  along the one mile area coming into from Mexico into the OTA
• 2:05:15
  Mesa in South of OTA Mesa. Now you can put.
• 2:05:18
  Now you've. Actually, because those fire
• 2:05:20
  marshals know what are the structural anomalies in the
• 2:05:24
  buildings. Yeah.
• 2:05:26
  And so if you've got American fire marshals participating into
• 2:05:28
  searches literally within, I did the calculation within six
• 2:05:32
  weeks, every structure within that area can be searched by
• 2:05:37
  American fire marshals and you'll identify the 9:00 to
• 2:05:41
  12:00 tunnels that are operational.
• 2:05:43
  And they're done. They're done that.
• 2:05:44
  Cripples the entire sub training operation.
• 2:05:46
  Government should hire you, Pete.
• 2:05:48
  You're for hire, aren't you? They.
• 2:05:49
  Don't they? Don't they listen to the guys
• 2:05:51
  that went to Harvard? We don't know anything about
• 2:05:53
  anything. They don't know.
• 2:05:54
  They don't want to mess with some kid from LA.
• 2:05:55
  Well, you know, they're impressed by credentials that
• 2:05:59
  are very impressive in a particular context, like I said.
• 2:06:03
  But that Yale Law degree doesn't help you in a knife fight in
• 2:06:05
  Guadalajara. It does not.
• 2:06:07
  And so if you want to, you want to disrupt the drug flow, talk
• 2:06:10
  to drug traffickers. Talk to the guy that's a good at
• 2:06:13
  a knife fight in Guadalajara. I've never been in a knife
• 2:06:15
  fight, but I know how to smuggle.
• 2:06:18
  We'll leave it right there, my friend.
• 2:06:19
  Man, what a great episode. I appreciate it.
• 2:06:22
  Make sure you subscribe to our channel.
• 2:06:24
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• 2:06:26
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• 2:06:30
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• 2:06:34
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• 2:06:38
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• 2:06:40
  Pete Bubba. Deadly Intentions.
• 2:06:42
  Comes the new. The new generation steps
• 2:06:44
  forward.