PUBLIC ENEMY NO. 1
How a controversial cartel and its colorful leader bring heroin here
PART 4 OF A SERIES

By Jessica McBride - Special to The Freeman

Sept. 12, 2014

WAUKESHA — If you wrote a novel about Joaquin “El Chapo” Guzman’s exploits, no one would believe it. They might believe the gunfight that killed an archbishop at a Mexican airport, but you’d probably lose them when he escaped prison in a laundry cart. And they’d never believe the beginning of his end started in Milwaukee.

Experts say the Mexican cartel Guzman co-leads controls 80 percent of Chicago’s drug market (including heroin) and brings 25 percent of all drugs into the U.S. As with any monopoly, this generated avid government attention. This isn’t just the story of a distant cartel, though; Waukesha gets almost all of its drugs from Milwaukee, and Milwaukee from Chicago, says Capt. Frank McElderry, who runs Waukesha County’s Metro Drug Unit. And those drugs — fueled by a much purer form of heroin than in the past — have led to a crisis here.

Whereas the poppy fields grown by Johnson & Johnson off Australia’s coast are used to make legal opioid pills, poppy fields in Mexico and Central America supply our area’s heroin and are targeted by the government’s “war on drugs.” The profit margin for both? Billions. The drugs are chemically similar and produce the same high.

Two Great Lakes partially penning in Wisconsin ensure it’s not going to be a major illegal drug hub for elsewhere but rather an “end-destination state,” says James Bohn, who runs the local DEA office. Heroin comes to Milwaukee from Mexico, sometimes brought directly from the border by illegal immigrants, but usually through Chicago, concurs Mark Manthy of the Wisconsin High Intensity Drug Trafficking Area.

“The border is porous,” says McElderry. “It comes over in truckloads.”

“Scarface” and speedboats are 1980s stereotypes. Cocaine is waning. Feds put pressure on the “the Caribbean theater,” pushing cartels to border routes, says Jack Riley, who runs the Chicago DEA region (Afghan heroin goes to Europe).

Chicago is a perfect drug distribution point for a Mexican cartel: A transportation center, it has the Midwest’s largest Mexican population, is near populous cities, and organized street gangs help deal. “This is their main hub,” Riley says. “They have a toxic business relationship with the street gangs here. In the last two years, heroin has become the drug of choice, hand-in-hand with an explosion in prescription drug use.”

The cartel that emerged from agricultural northwestern Mexico and cornered Chicago’s market starting in about 2006 — Sinaloa — is the world’s most powerful. Violence in Juarez? Them. Fast and Furious? The Los Angeles Times says 40 guns ended up with the cartel’s enforcer.

Guzman was declared a foreign kingpin and indicted in multiple federal courts — a “modern-day Pablo Escobar,” says Bohn. Others call him Zorro. After his prison escape, he went into hiding, but married a beauty queen and raked in billions. The Chicago Crime Commission labeled Guzman “public enemy number one.”

The last gangster called that? Al Capone.

“How the cartels work influences places like Wisconsin,” says Bohn.

Authorities got their big break when Guzman called Chicago twins Margarito and Pedro Flores to a Mexican mountaintop in 2005, just 10 years after OxyContin’s launch had spiked American pill demand (most heroin addicts start with opioid pills).

The twins’ immigrant father had cartel ties. The brothers, in their 20s, ran barbershops and restaurants as covers in Chicago’s Pilsen and Little Village areas, says the book “El Narco.” They agreed to become Chicago’s wholesale point; the cartel would funnel them millions in cocaine and heroin.

The cartel’s logistics coordinator was son of Sinaloa’s co-leader. Vicente Zambada-Niebla is a “narco junior,” impetuous, flashy, with bodyguards and military weapons. Think Sonny Corleone. Pretty boy Vicente, one Chicago magazine said. The link between Mexico and Chicago, who made sure drugs got there and cash got back, Zambada was critical, court records show.

U.S. Attorney General Eric Holder called heroin a growing, urgent public health crisis this spring, saying the government was stepping up enforcement at all levels of the “supply chain” from opioid pills to heroin. The DEA has opened more than 4,500 heroin investigations the last three years; heroin seized along the Southwest border is up 320 percent.

A Milwaukee drug investigation led authorities to the “head of the snake.” U.S. Attorney Steve Biskupic indicted a group of Milwaukee cocaine dealers. Authorities followed them to the Flores twins, who were also indicted without fanfare for cocaine dealing, the same year as that mountaintop meeting.

“They fled to Mexico, where they became much bigger traffickers,” says Bohn.



Making a deal — with the feds

Three years later, the twins resurfaced — to a Milwaukee agent. They wanted to deal. “Suffice it to say, they made a business decision and a personal safety decision,” Riley says cryptically.

Bohn’s uncomfortable talking about them. The case was transferred to Chicago with aspects ongoing.

“It was a collaborative effort,” he said. “Lots of people deserve credit.”

Riley says the twins exemplify the government’s strategy: striking at the “heart” of the organization. He describes them as the “ideal choke point targets” who could lead downward to Milwaukee street dealers causing violence and upward to cartel leadership. It all stemmed from a street deal in Chicago tracked to Milwaukee and that back to the twins, who had suburban Illinois stash houses.

The twins turning Sammy the Bull was a big deal because they were in contact with Zambada, even Guzman himself. “Over the last five years regarding Sinaloa, we’ve sent shock waves through them. This is the new face of organized crime,” says Riley.

What happened next sounds more like an episode of “Homeland,” though, than “The Godfather.”

Authorities needed the brothers to stay undercover to build the case. If they don’t operate as usual, the cartel might suspect. It’s alleged this is what federal authorities did — sort of a Fast and Furious operation with drugs.

Bohn says the Milwaukee office would never do this, and Flores/Zambada stuff is “above (his) pay grade.”

Riley, the guy above Bohn’s pay grade, says, “We would never purposely let drugs go. Not on my watch. No — that didn’t happen.”

Did the twins continue dealing drugs without DEA’s permission or knowledge? “Criminals are criminals,” Riley says. “This is a dirty business, where people get killed every day.”

But he says he doesn’t think they were doing so.





Controlled deliveries

Court records describe controlled deliveries. During one month in 2008, court documents say, authorities seized over $15 million and made a controlled delivery of $4 million from a Flores stash house to track it to Mexicali.

Zambada was observed counting drugs. Margarito Flores received 13 kilograms of heroin for $715,000. The DEA seized just 8 kilograms back, court records say. The heroin was 94 percent pure.

“How much can you get rid of in a month?” Guzman asked in one recorded conversation.

“Around 40,” Pedro Flores allegedly responded — 40 kilos of heroin.

In the trial of a twins’ Milwaukee- linked contact, the Chicago Reader said, a Milwaukee drug agent was “asked if the twins were important enough to the DEA that the agency would permit them to continue importing drugs to the U.S. during the initial phase of their cooperation, from April to November 2008.” According to the Reader, the agent replied, “They weren’t in our control. We couldn’t stop them.”

When the agent met the twins in Mexico, he said, according to the Reader: “(T)he conversations were a matter of the twins ... explaining essentially what their value could be to us and us explaining to them why it was important for them to turn themselves in.”

When asked if the twins kept sending drugs to the United States, the agent replied, “I suspected so,” the newspaper said.

“It has come out in the legal proceedings ... that the twins, in exchange for providing incriminating information and the wiretap recordings that were used to indict Zambada, were permitted to continue importing cocaine and heroin by the ton into Chicago and distributing the drugs throughout the country,” claimed Chicago magazine.



Busting Zambada

The feds busted Zambada in Mexico in 2009 as youths across Waukesha County were dying of a purer form of heroin his cartel introduced to the Midwest; the twins’ cooperation gave them a case. Zambada made noise — battling for classified documents, including those about Fast and Furious, the scandal in which agents allowed guns to reach criminals to trace them.

Zambada claimed cartel leaders, including Guzman, were working with the government through a cartel lawyer given immunity and claimed the government gave the cartel “carte blanche” to smuggle “tons of illicit drugs to Chicago” in exchange for information on rivals, court documents say.

“Factually infirm and legally unsupported,” slammed the government. But the government admitted the lawyer WAS an American informant and they’d tossed his indictment. Riley says Zambada’s charges were “obviously legal posturing. A judge in Chicago denied his motion.”

Presuming this is not a lie, why would the government want to cooperate with a cartel? Zambada argued it was overall drug strategy — “the end justifies the means” — to divide and conquer cartels. Bohn points out criminals often blame cops.

Then, Zambada was given a deal, announced a few months ago. He could get only 10 years in prison. He must cooperate and relinquish $1 billion, the plea shows.



Operation Lake Effect

Meanwhile, authorities here were back to disrupting lower-level dealers.

The latest target: An Oconomowoc-area network. A user screws up. Gets caught in a traffic stop or cops get a Crimestoppers tip. Now they will give up a dealer; the drug unit’s goal is to “interdict dealers,” McElderry says. Drug deals go down in Walmart, Walgreens, and Brookfield Square Mall parking lots.

It’s just people who know people who know people. The local “kingpin” is a Milwaukee man who moved to Oconomowoc. He’s jobless and homeless, McElderry says. At this level, “there’s no money in heroin.” One man on the supply chain got pills for cheap through BadgerCare and sold them for a profit.

The largest county heroin case was “Operation Lake Effect.” Court documents show two Pewaukee brothers got heroin from a Milwaukee man who got it from a guy who relocated to Chicago. They sometimes used a Greyhound bus. The network caused five overdose deaths.

DA Brad Schimel says Lake Effect was the “first big ring” here but usually dealers set up in Milwaukee, leaving Waukesha County full of “end users.” Milwaukee is “a lot more anonymous.”

Some Lake Effect defendants ended up with more prison time than Zambada might, but there’s a lot he knows, and Guzman might be coming to Chicago. A few months ago, after 14 years on the lam, U.S. agents arrested Guzman at a Mexican beach resort.

“It’s a very big arrest,” says Bohn. “The question is, what will take his place?” Riley says he can’t talk about Guzman because of the ongoing case but added generally that, “whenever you remove ... the CEO of a major corporation who’s been running it for 20 years, the organization begins to fragment, alliances switch, communication becomes undisciplined. There’s a lot of chaos that happens.”

Popular mythology holds that snakes regenerate. You can take Bill Gates out of Microsoft, Bohn muses, but Microsoft remains. As for the twins? Riley goes mum. Witness protection is a good bet.

Coming Saturday: One woman’s journey through drug court.