NARCO TENTACLES

JEFFREY KAYE: In a southern California neighborhood, police equipped with armored vehicles and riot gear recently rounded up suspected drug dealers and users. Police departments conduct military-style raids like this across America, and while they seem to be purely local drug busts...

POLICEMAN: Go back inside! Go back inside!

JEFFREY KAYE: ... in fact, police targets are the sometimes unwitting retail ends of global drug networks, based in Mexico and supplied by Colombians. Drug-related murders and epidemic corruption in Mexico and along the U.S.-Mexico border highlight the vicious competition among the four main Mexican drug syndicates. At stake is the immense income generated by the illegal narcotics trade. The drug syndicates, according to the U.S. Government, make $7 billion a year. That's almost as much as Microsoft earned last year. In the United States, seizures of narcotics and cash show that the far-reaching tentacles of powerful Mexican drug cartels are shaping the face of organized crime.

A recent case involving seizures of massive quantities of drugs and money highlights the far-flung influence of one cartel north of the border; it also demonstrates the enormous challenge confronting law enforcement in facing transnational multi-layered narcotics businesses. That case involved 34-year-old Jorge Castro who in March pleaded guilty to two of twelve federal narcotics charges. In a plea agreement Castro admitted trafficking in tons of cocaine, and tens of millions of dollars. A judge sentenced him to nearly 17 years in prison. Although he was arrested in Los Angeles, Castro is a Mexican citizen. More importantly, according to U.S. authorities, Castro was part of the notorious Mexican drug organization headed by brothers Benjamin and Ramon Arellano-Felix. Castro is related to the men. Headquartered in Tijuana, across the border from San Diego, the Arellano-Felix organization is said to be one of the most ruthless and powerful crime syndicates in the world. It is bel!
ieve
d responsible for the murders of dozens of Mexican prosecutors, judges, police officials, suspected rivals and journalists. According to Michael Braun of the U.S. Drug Enforcement Administration, the DEA, Castro took his orders directly from Arellano-Felix leaders.

MICHAEL BRAUN: Jorge Castro was the highest ranking member of the AFO, Arellano-Felix organization, that was ever arrested on U.S. soil. The Castro organization, Jorge Castro, also known as "jefe" or the boss, was a -- he was responsible for the daily operations of a core cell in the Los Angeles area that was responsible for distributing multi-hundreds of kilograms of cocaine all across the United States.

Investigating Jorge Castro

JEFFREY KAYE: The DEA was one of six federal and state agencies that 15 months investigating Castro's organization. The investigation led to 50 arrests in Southern California, Georgia, New York, Illinois, and Texas. But the Castro network was only one of many connections to Mexican drug syndicates. This informant considered reliable by the DEA says the Arellano-Felix group uses numerous operatives like Castro to run U.S. operations.

INFORMANT: (speaking through interpreter) I think there were 20 to 30 people, more or less.

JEFFREY KAYE: Doing what?

INFORMANT: (speaking through interpreter) Lieutenants of the cartel.

JEFFREY KAYE: Meaning running operations in the United States, is that what you mean?

INFORMANT: (speaking through interpreter) Yes.

JEFFREY KAYE: Peter Smith, director of Latin American studies at the University of California, San Diego, has studied narco traffickers. He says Castro's distribution network serviced what is essentially a major business enterprise.

PETER SMITH: They do the things that we would expect corporations to do. They form transnational partnerships when necessary. They vertically integrate their operations when that is advantageous, which would mean coming into the retail market in the United States. They diversify their product lines. The Arellano-Felix group not only does cocaine but also does methamphetamine in a growing measure, and also transships heroin and marijuana as well. They are willing to make overhead investments to protect their market share. You might call it corruption, you might call it bribery. But, it comes back to shipping more goods than they really expect will reach the market because they expect that usually 10 or 15 percent of the shipments are going to be caught.

JEFFREY KAYE: Castro was indicted with eight Southern California subordinates. Like traditional mob families, several were related to each other. To transport drugs and to avoid detection, they operated on a need-to-know basis with two wings, one responsible for drugs, the other for cash.

MICHAEL BRAUN: The reason that these organizations are highly compartmentalized, I mean, it is just smart business sense on their part. If one of these folks gets taken down, they really can't identify anyone other than, you know, those that they work with on a day-to-day basis.

Low-profile lives

JEFFREY KAYE: The top men in Castro's organization did not call attention to themselves. They lived middle class lives in suburban Southern California neighborhoods like this. One key associate, Luis Valenzuela, now a fugitive, lived in this house across the street from a neighborhood watch sign. He owned a restaurant in a nondescript shopping mall. The organization used houses and businesses in the LA area as temporary warehouses for drugs or money. Castro workers used vehicles, often equipped with hidden compartments to transport drugs within the U.S. and money to Mexico. Often, the hiding places were activated through a combination of switches. LA Deputy Sheriff Gene Johns who was part of the task force that investigated Castro demonstrated an elaborately constructed hiding place. He asked us to conceal his face.

GENE JOHNS: You touch it, you think that you are hitting the roof of the vehicle.

JEFFREY KAYE: Looks like the roof.

GENE JOHNS: It looks exactly like a showroom roof.

JEFFREY KAYE: How difficult was this to detect?

GENE JOHNS: Very difficult. It took four hours.

JEFFREY KAYE: What was in here?

GENE JOHNS: 40 kilos of coke. Five of these units - eight kilos per metal tray.

JEFFREY KAYE: Braun says the well-financed traffickers have been helped by the availability of state-of-the-art communications technology.

MICHAEL BRAUN: They're using cell phones; they're using fax machines; they are using pagers to communicate. Again, some of the cell phones are encrypted. Some are not; they go to great lengths, okay, to make their operation as precise as they can.

JEFFREY KAYE: To investigate, Castro and his network, agents got federal court orders to wiretap 29 phones. They listened to hundreds of phone calls. Suspicious traffickers often spoke in crudely disguised code.

CALLER: (speaking through interpreter) They are the girls, they are very pretty to go to the dance.

JEFFREY KAYE: Girls, the word used by Juan Carlos Perez Lopez, one of those indicted, described cocaine.

CALLER: (speaking through interpreter) Yes, because they told me it was an hour and a half.

JEFFREY KAYE: An hour and a half was 150 kilograms of cocaine. Some calls were ominous. In one, Jorge Castro seemed to order two murders.

JORGE CASTRO: (speaking through interpreter) You go and invite that girl to go out somewhere and pick her up and kill her.

JEFFREY KAYE: Police say they don't know if Castro's organization actually carried out the hits. But as with other organized crime groups, according to this informant, violence and intimidation were common.

JEFFREY KAYE: Was Castro or his organization responsible for any murders?

INFORMANT: (speaking through interpreter) Yes. I don't know which ones.

JEFFREY KAYE: In the United States or in Mexico?

INFORMANT: (speaking through interpreter) In both places.

JEFFREY KAYE: Over drug-related disagreements?

INFORMANT: (speaking through interpreter) Yes. They are called adjustments of accounts.

JEFFREY KAYE: Adjustments of accounts. Someone owed someone money and didn't pay them, or drugs and didn't pay them?

INFORMANT: (speaking through interpreter) Correct.

Wire taps and stakeouts

JEFFREY KAYE: Wire taps often led police officials to stakeouts. Traffickers commonly exchanged money and drugs in public areas, such as this shopping center parking lot in Ontario, California. Police surveillance video of the lot in January, 1998, shows a common technique, switching cars. A courier gets out of one car and gets into the passenger's side of a nearby vehicle. At the same time, a man with a baseball cap, later convicted as a Castro associate, gets into the first car. Both cars leave. The switch is made. As drug wholesalers, the Castro organization often used gangs to serve as vast retail networks. Castro's group commonly sold the narcotics on consignment to gang leaders.

The Castro investigation also led to the arrests in mid 1998 of these three men whom authorities consider links between the Castro organization and street gangs. The men are charged with possessing more than 600 pounds of cocaine. Police say they were led to the men after a wiretapped conversation. All three have pleaded not guilty to drug charges, and to allegations that they have ties to two gangs: a Santa Ana, California street gang and the powerful Mexican mafia, which is a U.S. prison-based gang. Prosecutor Howard Gundy says drug syndicates in Mexico use members of the Mexican mafia as distribution agents.

HOWARD GUNDY: They'll contract with a member of the mafia who then uses individuals from criminal street gangs for these, the actual leg work and muscle work that's involved in moving the large quantities of cocaine; they'll be the mules and enforcers and so forth.

JEFFREY KAYE: But despite those arrests and the arrests of Castro and his associates, drug distribution has continued. This March, police mounted an anti-drug raid in the same gang's community, Santa Ana. At the time of Castro's arrest, the U.S. attorney in Los Angeles declared, "The indictment of Castro and his co-defendants will significantly disrupt the domestic operations of one of Mexico's most notorious drug-trafficking operations." But this informant says the Arellano-Felix organization quickly recovered.

INFORMANT: (speaking through interpreter) Always when there is people at this level, when they are the bosses like this, they always have someone else, so that they are there. They have those people.

JEFFREY KAYE: Has Castro been replaced?

INFORMANT: (speaking through interpreter) He has to be replaced. He probably already has been.

JEFFREY KAYE: The availability and price of cocaine have also not changed appreciably since the Castro arrest.

PETER SMITH: The logic of the drug war has been that if you interdict and harass and stop shipments enough, the price of the cocaine will go up so high, that people will stop buying it. We know that the prices have been going down over the last ten or fifteen years. That they are staying down -- and that the best indicator of a real change in the situation would come from cocaine prices. We are not seeing a sharp increase in prices.

MICHAEL BRAUN: We're doing the best we can with what we've got; again, we're keeping a cap on it, and without the local state and federal law enforcement focusing efforts on drug enforcement, you tell me. What do you think it would be like out on the street? It would be a lot worse than it is now.

JEFFREY KAYE: The federal war on drugs costs $17 billion a year. Despite occasional victories such as the assault on the Castro organization, soldiers in the war as well as critics agree that as long as there is strong demand for narcotics and the ability to pay, the drug trade and the growth of organized crime will continue.