José Treviño Morales

At least a half-dozen federal agents wearing military-like uniforms and baseball caps with the FBI insignias stood by Treviño Morales's ranch in Oklahoma on 12 June 2012.[10] The raid in Oklahoma netted to Treviño Morales and his associates; however, several other raids were carried out by federal agents across the states of Texas, New Mexico, and Oklahoma, where he had properties.[9] Federal agents and prosecutors are trying to seize their properties, bank accounts, and horses. Authorities issued a seizure warrant for 41 horses that deemed most valuable to the money laundering operation in an effort to prevent them from being sent south into Mexico.[10] The government ordered to ensure the care of the other 384 horses in the ranch.[10] Nonetheless, it is difficult for the authorities to seize live animals because it is expensive to feed and take good care of them.[9]

Several raids were also carried out by the Mexican authorities in Mexico; the arrest of several cartel members in the state of Veracruz was what led to the investigation of Treviño Morales' assets in the United States.[11]

A day after Treviño Morales was arrested by federal agents, people in the Oklahoma ranching community claimed that he was a "good neighbor".[12] Others recall Treviño as a "family-oriented, hardworking bricklayer" who had just moved from Texas to Oklahoma to raise horses.[13] Nonetheless, his ranch – the Zule Farms – was seen suspiciously by many of his neighbors.[12] According to reports by The Houston Chronicle, Treviño Morales was not laundering money discreetly; his tax records state that he made around $70,000 in 2008 and $58,000 in 2009,[14] but he somehow managed to buy a giant spotlight for his ranch, buy huge portions of land during an economic recession, and make significant improvements to a company that was not known for making large profits.[12] Neighbors questioned how Treviño Morales, his wife, and the company's associates could afford to buy top-notch horses all in cash. It is estimated by the prosecutors that Treviño Morales spent over 20 million U.S. dollars.[12]

It wasn't just the cash payments that brought attention to Treviño Morales and caught the eyes of those in the racing industry.[15] Treviño Morales had earned a reputation for always paying his bills and giving out handsome prices for some of the elite horses across the nation. "They paid their bills and didn't cause any trouble," the director of the Oklahoma Quarter Horse Racing Association said.[15] While it is common for foreigners to pay in cash for their transactions in the horse racing industry, the payments of Treviño Morales were "noteworthy in value."[15] The quality of the horses they were buying and the amount of money they would spend to buy them "raised some eyebrows."[15]

Following the arrest of Treviño Morales, the U.S. Embassy in Mexico issued a security message on 12 June 2012 for American citizens living or planning to travel to Mexico.[16] The message asked Americans to be aware of the incident involving Treviño Morales' arrest, and asked them to be prepared for any violent retaliation by Los Zetas for the arrests. The embassy stated that given the history and resources of the drug trafficking organizations, Americans in Mexico should maintain low profile and heighten their awareness.[16] The message, found on the official page of the Consulate General of the United States in the Mexican border city of Matamoros, Tamaulipas, states the following:

"The U.S. Embassy alerts U.S. citizens traveling and residing in Mexico to the enhanced potential for violence related to today’s arrests of Transnational Criminal Organization (TCO) associates and family members residing in the United States ... These arrests could result in some form of retaliation and/or anti-American violence ... maintain a low profile and a heightened sense of awareness."[17]

Moreover, the communiqué urged Americans to defer non-essential travels to the state of Tamaulipas and register at their nearest embassy online, via phone call, or in person.[18] Previously in February 2012, the United States Department of State issued security warnings to Americans in Mexico, but particularly in Tamaulipas. It prohibited Americans to travel outside the city limits of Reynosa, Nuevo Laredo, and Matamoros due to the risks of armed robberies and carjackings.[19] The department also encouraged them to not frequent casinos or adult entertainment establishments within the cities, and established a midnight to 6 a.m. curfew.[19] Most of the reported crimes, however, happen from Matamoros to Tampico on the Mexican Federal Highway 101, especially through the municipality of San Fernando, Tamaulipas and in northern Tampico.[19]

The Government of the state of Tamaulipas rejected the security message issued by the U.S. government and classified it as an "overreaction."[20] In their defense, the Mexican authorities noted that Tamaulipas is safeguarded by federal forces, and that there is currently no correlation between the arrest in the U.S. state of Oklahoma and the situation in Matamoros and the rest of Tamaulipas.[20] They also said that the incident is merely a media backlash and ignores the efforts the Mexican government is implementing.[21] Moreover, Julio Almanza Armas, a politician from Tamaulipas, stated through Milenio that the reality in Mexico is not how the U.S. portrays it.[22] He said that the drug-related violence that occurs in Tamaulipas often happens in isolated circumstances.[22] He accepted, however, that Mexico lives through harsh times, but reiterated his stance in support of Tamaulipas.[22]

After an indictment was unsealed on 12 June 2012, the chief of the Internal Revenue Service (IRS) criminal investigation stated the following:

"This case is a prime example of the ability of Mexican drug cartels to establish footholds in legitimate US industries and highlights the serious threat money laundering causes to our financial system."[2]

— Richard Weber

Horse racing is a "perfect vehicle" for laundering money from drug proceeds and hiding it from the authorities.[23] The drug industry makes billions of dollars a year, so drug traffickers often find themselves unable to ship the cash back to Mexico, and end up laundering it in the United States. Buying ranches across the U.S. is a viable way of laundering money.[23] When the money is not laundered, it ends up in the hands of the territorial bosses for counting and further distribution.[23] But when the cartels turn to laundering, they make "investments in racing quarter horses purchased via bulk currency payments, wire transfers, structured deposits and bulk currency deposits."[23] With push-to-talk Nextels, BlackBerries, UHF/VHF radio communications, the Mexican cartels can oversee their laundering operations on U.S. soil.[23]

Treviño Morales' money laundering case serves as a worrisome reminder that the operations of the Mexican drug cartels does not end at the U.S. border with Mexico.[24] In addition to overseeing multimillion-dollar smuggling corridors, the drug trafficking organizations often launder their money in the United States.[24][25] Of these, the state of Arizona was identified by federal agents in 2012 as the "consolidation point" for drug earnings.[26] According to InSight Crime, what is more amazing than the Zetas' operation is the blatant manner in which they carried it out in the U.S.[24] Treviño Morales made no efforts to hide his activities and wealth, had no problem giving interviews to journalists, and even called his horse "Number One Cartel."[24] This attack is one of the most profitable money laundering schemes of Los Zetas, and is considered by the U.S. authorities as essential for the War on Drugs, since it will hurt the Zetas financially and help dismantle the violent criminal syndicate.[27]

On 15 June 2012, three days after the arrest of Treviño Morales, his nephew – Juan Francisco Treviño (a.k.a. El Quico) – was arrested in the industrial city of Monterrey. He was accompanied by a cousin, two unidentified women, and a couple of AR-15 rifles.[28] Jesús Chávez García, his cousin, was wanted by the United States for drug trafficking, and was one of the inmates that escaped during a massive jailbreak inside a prison in Nuevo Laredo, Tamaulipas in 2010.[28][29] Days later, Francisco Antonio Colorado Cessa, a businessman from the Mexican state of Veracruz with deep ties with Los Zetas, turned himself in to the Mexican authorities. He was accused of acting as a straw purchaser of racehorses and securing contracts with worth up to $100 million in Mexico's national oil company, Pemex.[30] Finally, Gregorio Villanueva Salas, nicknamed the Czar of Piracy for his involvement in the production and distribution of piracy products, was arrested by the on 14 June 2012.[31] Aside from being a senior member in the Zetas' financial sector, Villanueva was responsible for carrying out grenade attacks on schools, media outlets, and military bases in the border city of Matamoros, Tamaulipas.[32]

These series of arrests target those who were suspected of laundering millions of dollars for Los Zetas in the legitimate economy. This attack on the Zetas is a response to the long-standing criticisms made to Felipe Calderón for his security policies.[33] In addition, it fits the proposed strategy of his likely successor, Enrique Peña Nieto.[33] He announced that if voted in, he will appoint Óscar Naranjo as his security advisor, a prominent Colombian police general. Peña Nieto promises that Naranjo's incorporation will bring Mexico into a more robust focus on the financial networks of the criminal groups, just like the strategy that was implemented in Colombia.[34] Nonetheless, it is still unclear whether attacking the financial sectors of the drug cartels will bring down the violence.[33] But that is not to say that the series of arrests after the capture of Treviño Morales should not be deemed as noteworthy and significant.[33]