BLOOD TRADE: MEXICO WAS NEW HOME FOR ALLEGED DRUG KINGPIN CRAIG PETTIES

Feds Describe Disciplined Business Run By Cell Phone

Memphis Commercial Appeal Posted July 4, 2010 at 12:01
a.m.

QUERETARO, Mexico -- When the little girl saw the children move into
the house nearby, she was excited.

"My daughter said, 'Oh, Mommy, I'm going to have neighbors to play
with!'" her mother recalled.

But they never saw the children come out again.

The mother had seen the man of the house just once, as he moved in.
She noticed he was black, a rarity in this part of Mexico. And she saw
that men were constantly moving in and out of the house and the
windows were always closed.

In an interview nearly two years later, she spoke through protective
bars in her garage and asked that her name not be published.

Why was she nervous?

Heavily armed men had invaded her street and arrested the neighbor,
filling the area with lights and the sound of trucks and helicopters.
She had heard the footsteps of snipers on the ceiling as she and her
family cowered inside.

And shortly after the raid, she had learned who the neighbors were:
the family of a 31-year-old man who had emerged from the streets of
South Memphis to become an internationally wanted fugitive.

By the time Craig Petties was arrested in Queretaro on Jan. 10, 2008,
authorities say, he was operating a vast drug-trafficking business in
conjunction with a branch of one of Mexico's most notorious cartels.
They say it was an operation that spread violence and chaos on both
sides of the border.

Petties still awaits trial, and he and his lawyer have declined
comment.

But the story of his arrest and deportation back to Memphis shows how
deeply drug money has affected even the most promising corners of
Mexico, a country with a historically weak government and a culture of
official corruption.

It also shows that drug purchases on the streets of Memphis, bribes in
Mexico City and murders for hire on both sides of the border are part
of the same economic system.

Petties disappeared from Memphis in 2002, officials say, and in August
2004 he was added to the U.S. Marshals 15 Most Wanted list. It's
unclear when he arrived in Mexico, and most of his life in that
country is a blur. So are the lives of at least three other members of
the organization who also fled the South to live in Mexico for a time.

A U.S. official says that because of corruption, Petties received
warnings about efforts to catch him and moved from place to place
within Mexico. According to this official, Petties had been noticed by
Mexican authorities more than once and had been let go because of
cartel influence.

Different type of 'hood

In Queretaro, Petties lived in a new subdivision called Milenio III.
To get there, you drive up a steep hill away from the traffic and the
fire-breathers spitting flaming gasoline for tips. You pass a fancy
coffee shop and bounce over rows of speed bumps.

Although there are huge Arabic-style archways and mansions here with
turrets like the Taj Majal, Petties lived, for a short time at least,
in a modest white stucco house on a cobblestone street. It was
unoccupied and available for rent when reporters visited in December.

It overlooks a steep valley, with cacti, hummingbirds and red stone
cliffs. You can look down and see cars and trucks, and trains like the
ones Petties had burglarized in Memphis years earlier.

Little is known about his time here. Representatives at the U.S.
Embassy in Mexico City wouldn't talk about their hunt for Petties, and
Mexican authorities released limited information.

But a few things are clear.

Petties was living under the protection of the Beltran Leyva cartel,
with whom he had done business in the U.S., the former attorney
general of Mexico, Eduardo Medina Mora, has said.

The group was led by the Beltran Leyva brothers, a group of five or
six men who would later break off from the larger Sinaloa Cartel,
based on Mexico's Pacific coast.

Medina Mora said that Petties became a broker for the cartel, "using
his contacts in the United States to secure and speed up the traffic
of drugs to the north."

Petties' flight to Mexico may have even helped him expand the
trafficking business beyond Memphis and into Georgia, Mississippi,
North Carolina and Texas, DEA agent Abe Collins wrote in a 2008 affidavit.

By at least 2007, federal officials in Memphis knew Petties was living
in Mexico and believed he was receiving cash payments funneled back by
couriers.

Collins cited the case of two men caught in south Texas in December
2004 with about $129,000.

Officials also believed Petties was running his drug business
long-distance using cell phones.

Several alleged Memphis traffickers met with Petties in Acapulco in
March 2004, according to Orlando Pride, a convicted member of the
organization quoted in a 2007 affidavit by Collins.

Pride said Petties provided the group with a code sheet for phone
calls that "consisted of lines with numbers and coordinating letters."

The organization exercised "great phone discipline," meaning members
frequently changed numbers to prevent wiretaps, Collins wrote.

One alleged lieutenant would destroy telephones immediately after each
of his conversations with Petties, who disguised his voice on the
phone, Collins quoted defendant Orlando Mays as saying in another affidavit.

Justified paranoia

This discipline helps explain how Petties was able to evade
authorities for years. It also reflects paranoia. The Craig Petties
described in official documents was convinced that others would betray
him.

And he was right. By 2007, several of his top lieutenants were in
prison, and his organization was riddled with informants willing to
give up secrets and record conversations in exchange for lighter
sentences, affidavits show.

And the group had been infiltrated by least one undercover officer --
Therman Richardson of the Memphis Police, who later won a high-level
award for the risky work.

The federal government says Petties and others in the organization
ordered killings of people they considered threats. His organization
is accused in six slayings, including that of informant Mario Stewart,
fatally shot in his garage in an upscale southeast Shelby County
neighborhood in March 2005.

In June 2007, he allegedly ordered the killings of four other Memphis
rivals, and even suggested that he send his "cleanup boys" from Mexico
to do it, a plan that was eventually rejected, according to a Collins
affidavit.

The person hired to do the killing, Orlando Mays, decided he needed
help.

So he talked it over with a friend. But that friend -- unnamed in
records -- was a federal informant who recorded the conversations,
Collins wrote.

Mays was arrested and awaits trial.

It was a spy game much like the Cold War. And it even extended to the
U.S. Embassy in Mexico City.

The newspaper El Universal reported in October 2008 that an embassy
employee may have passed information about the search for Petties to
the Beltran Leyva cartel.

The incident highlights a disturbing fact about modern Mexico. Drug
money means everyone is suspect and some paranoia is justified.

Half-sibling's success

As Petties lived on the run, his half-brother Paul Beauregard was
achieving fame as rapper DJ Paul of the group Three 6 Mafia.

By 2004, the group had signed a contract with Columbia Records and was
even producing its own movies.

Two years later, DJ Paul and co-writers would receive an Academy Award
for one of their musical contributions to the film "Hustle & Flow," a
song called "It's Hard Out Here for a Pimp."

To date, the group has sold 6.4 million albums, according to Nielsen
SoundScan. Song titles include "Let's Plan a Robbery" and "They Bout
to Find Yo Body."

Some songs, like "Trap Boom," make clear references to transporting
and distributing large amounts of drugs: "I went to Key West and
picked it up, back in Memphis broke it up."

Their music is known even in Queretaro. "It's cool," says Victor
Guerra, a lanky 25-year-old who breakdances for tips at traffic lights.

Hunters are hunted

For Mexican law enforcement, the threat of death is real, so much so
that police sometimes wear ski masks in public and the federal
prosecutor's office bans employees from keeping photos of loved ones
in their offices to prevent them from becoming targets.

So how was Petties arrested?

Interviews and records suggest that Petties and his associates were
newcomers in Queretaro, and that the operation that removed them was
run entirely by Mexicans. U.S. officials weren't on the scene until
Petties was already in custody.

According to one source with knowledge of the case, it all started in
2007, when a man approached Queretaro officials with a bold proposal.

He said he represented Arturo Beltran Leyva, whose cartel wanted the
right to operate in the area. In exchange, the cartel would give the
authorities whatever monthly payment they wanted.

Agreeing to such a demand would be highly unusual in the United
States. In Mexico, where drug money fuels a long tradition of
corruption, it isn't.

This time, the answer was no. Investigators began to follow the man.
Weeks later, the investigation led them to a house where someone
important was hiding. It turned out to be Petties.

Some speculate that there may have been other forces at work. To
understand this, you have to understand Queretaro.

A safe, prosperous city

Queretaro, pronounced keh-reh-TA-ro, is the name of a central Mexican
city of 730,000 and the state that surrounds it.

It's a center for higher education and an economic powerhouse where
factory workers make parts for cars and airplanes.

But it has another notable characteristic: safety. Its statewide
murder rate is about one-fifth that of Memphis.

It's a sharp contrast from Ciudad Juarez, on the Texas border, where
there were more than 2,500 killings in 2009, most drug-related.

You can stroll through Queretaro's old plazas alongside cheerful
schoolchildren and businessmen in suits.

High-ranking officials in Queretaro didn't agree to interviews when
reporters visited. But they have said publicly that while there are
illegal drug sales in Queretaro, there is no drug trafficking.

But other residents say Queretaro is a safe place not because drug
traffickers aren't there. It's a safe place precisely because the drug
traffickers are there, they say.

"There is a protection here for the drug lords. They have a truce
between them and the government," said Jose Guillermo del Hoyo.

Large payments to officials and agreements between cartels help make
Queretaro a safe haven for major traffickers and their families, he
said. Part of the deal is that violence happens elsewhere.

"It has been this safe for a long, long time," he said. "All the drug
lords have their families in here. For the kids."

Del Hoyo, known as "Pepe," knows a few things about drugs. He's the
41-year-old director of Clinica Vida, a swanky drug-treatment center
outside the city where addicts do morning yoga and stroll among pools
and manicured lawns.

Del Hoyo says he was a drug user and unsuccessful drug dealer himself,
that he once associated with major traffickers, and that he still
knows people who sell drugs.

The cartels themselves sometimes send him clients.

"A lot of drug lords have people on their organizations that need to
be clean because they have a position in the organization," del Hoyo
said. "So sometimes they send me people in here to get clean."

It's impossible to know for sure if the payments to Queretaro
officials take place. It's still harder to know if the treaty among
cartels exists, but local journalists and others believe it. "The
great narcos have families here," said Aitor Juaristi, a Queretaro
drug-prevention official.

So what was Petties doing in Queretaro?

Del Hoyo speculates that someone told Petties about Queretaro's
reputation as a safe place, but that he didn't make arrangements with
the right authorities.

Petties might not have understood the local power structure or may
have been seen as a competitor, said Wayne J. Pitts, a University of
Memphis criminology professor who lived in Mexico for years and
studied the Mexican criminal justice system.

"The thing about Mexico is that corruption infiltrates every single
aspect of everyday life," he said.

However, it's worth noting that Queretaro state has
better-than-average marks from the anti-corruption group Transparencia
Mexicana.

Troops storm in

Roberto Rodriguez was eating dinner at home when the invasion hit his
neighborhood on a Thursday night.

"One night, all of a sudden, the military came and blocked off the
streets to all of us who live here," the 21-year-old student said
outside the house where he lives with his parents.

The military assault on Petties' house was one of several local raids
that had begun on Wednesday, the local newspaper Noticias reported. In
all, 11 people were arrested, and drugs that appeared destined for
local sale were seized.

Petties' house got special attention. Investigators gathered up every
piece of furniture and brought it to a local office of the federal
prosecutor's office, or PGR for its initials in Spanish.

They also brought along the household dogs. And the little girls, who
were later released back to the custody of their mother, Latosha
Booker, the same woman who was present when Petties and others were
arrested with 600 pounds of marijuana in 2001.

She was let go without charge, said Brenda Godinez Gomez, a PGR
spokeswoman.

At a news conference, authorities showed items taken from the house,
including cases full of fancy watches. Petties had given himself up
without incident, and some of the Mexican men arrested had described
him as their "boss," a Mexican press release said.

Another account provided to The Commercial Appeal says Petties spoke
Spanish as he tried to bribe his way out, but was unsuccessful.

The full haul included seven flat-screen TVs, Apple computers, a
bulletproof vest, two pistols, more than 100,000 pesos in cash, some
marijuana, a passport in the name "Paul Walker," an electric guitar,
an Xbox 360, and a PlayStation 3.

Mexico charged Petties with weapons and drug violations, but never
pursued them. He remained in Queretaro only about 24 hours before
American officials and officials from the SIEDO, a Mexican agency that
fights organized crime, arrived to pick him up.

He was quickly transported to Mexico City, then to Houston, where he
filled out paperwork on Jan. 17.

In Memphis the next day, Petties filled out paperwork saying he had
five children, ages 16, 10, 4, 4 and 10 months. Their ages suggest the
youngest were born in Mexico. Petties said he and his wife were
unemployed and that he had no income and no assets. He received a
public defender, but private lawyers have since taken charge.

The possibility of death has been hanging over Petties almost since he
was deported from Mexico. The federal government may try to execute
him and several alleged lieutenants.

He waits in prison as attorneys pass back and forth documents about
his fate.

The content of many of these documents is held secret for security.
Even on American soil, the fear is real.