Devils, Deals and the DEA

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Devils, Deals and the DEA

Why Chapo Guzman was the biggest winner in the DEA's longest running drug cartel case

by David Epstein, ProPublica
December 17, 2015
This story was co-published with the Atlantic.

FOR 14 MONTHS, the first thing Dave Herrod, a special agent with the Drug Enforcement Administration, did every morning was boot up his laptop and begin tracking a 43-foot yacht with Dock Holiday painted on the stern.
In the summer of 2005, the DEA had intercepted a conversation in which members of a Mexican drug cartel known as the Arellano Félix Organization discussed buying a yacht in California. Herrod and his colleagues studied the classified ads in yacht magazines and determined that the Dock Holiday was the boat the AFO members wanted. DEA agents then managed to get on board and install tracking devices before the sale went through. That’s when Herrod started watching the boat on his laptop.

Since the early 1990s, the Arellano brothers — the inspiration for the Obregón brothers in the movie Traffic — had controlled the flow of drugs through what was perhaps the single most important point for illicit commerce in the world: the border crossing from Tijuana to San Diego. Much of the AFO’s success derived from its predilection for innovative violence. The cartel employed a crew of “baseballistas” who would hang victims from rafters, like piñatas, and beat them to death with bats. Pozole, the Spanish word for a traditional Mexican stew, was the AFO’s euphemism for a method of hiding high-profile victims: Stuff them headfirst into a barrel of hot lye or acid and stir for 24 hours until only their teeth were left, then pour them down the drain.
Dismantling the AFO had been an official project of the U.S. government since 1992, and an obsession of Herrod’s since the year before that, when he’d started chasing the cartel as a rookie agent stationed near San Diego. A former athlete, he spent years guzzling Pepsi and Mountain Dew to power through long workdays. His health, like everything else, took a backseat to the AFO case.

After the sale of the Dock Holiday, the trackers showed the vessel hugging the coast of Mexico’s Baja California peninsula, rounding the tip of Cabo San Lucas, and heading north into the Gulf of California to La Paz. Once in a while, it sailed to Rancho Leonero, where Javier Arellano Félix, the head of the AFO at the time, had a beach house. Herrod knew that Javier loved deep-sea fishing, and he was convinced that the cartel’s chief executive was using the boat. So the DEA launched Operation Shadow Game. The plan: Watch the Dock Holiday to find out if Javier would be on it, then intercept the boat should it stray beyond Mexico’s territorial waters.
For six weeks, the U.S. Coast Guard cutter Monsoon stood sentinel off Baja California, waiting for the yacht to venture more than 12 nautical miles off the coast and into international waters. But it never did. On August 12, 2006, Operation Shadow Game came to an end. The Monsoon set off for other duties, and Herrod left his laptop dark for the first time since the previous summer.

Two days later, he got a call at 8 a.m. from the Florida-based Joint Interagency Task Force South, which was still monitoring the tracking devices. The Dock Holiday had left Mexican sovereignty south of Cabo San Lucas. The men on the boat were chasing marlin, zigzagging in and out of international waters: out to 19 miles, back to 10 miles, then out to 15, then back to 12. The task force wanted to know whether the Coast Guard should board the Dock Holiday if the opportunity arose.

Herrod had only a hunch as to who was on the boat. The DEA had deemed the operation an expensive failure and pulled its on-the-ground surveillance weeks earlier. Agents who had worked on the AFO case for years were being reassigned entirely. Herrod figured he’d never have another chance to catch Javier outside of Mexico. Without asking his supervisors, he gave the order: Send the Monsoon back.

At 1 p.m., 13.1 nautical miles off Mexico, the Coast Guard intercepted the Dock Holiday. Herrod waited at the office in San Diego, pacing back and forth, as the Coast Guard collected identification from those on board. Agents shuffled past his cubicle asking for updates, like restless children on a road trip. After two hours, he got a message from the Monsoon: eight men and three boys on board. At 4 p.m., photographs started coming through by e-mail. The first two faces, those of the captain and a crewman, were unfamiliar. So were the next two. Could he have been wrong? Then came the fifth picture, and it took Herrod’s breath away: a mustachioed man in a pale-yellow Lacoste shirt, reclining on white-leather seats. This was “El Nalgón,” or “Big Ass”: Manuel Arturo Villarreal Heredia, the 30-year-old chief enforcer for the AFO. According to agents, he was known for his facility with knife-based torture.

Herrod had never seen the young man in the sixth photo, though he had the Arellano family’s heavy eyebrows. Next came pictures of the three children and another unfamiliar man. In the final photo, staring wide-eyed into the camera, was a compact, square-jawed man wearing a thin gold chain that disappeared under the collar of his salmon-colored T-shirt. His pursed lips were framed by stubble and his eyebrows arched in subtle confusion. Herrod and an agent sitting beside him shot out of their chairs. The man was Javier.
 
Javier Arellano Félix, the head of the AFO drug cartel, was on his yacht when it was intercepted by the Coast Guard after it strayed beyond Mexican waters. Javier was the AFO’s Michael Corleone: he left Tijuana, but was called back to the family business, and showed his talent for calculated violence.

The youngest of the Arellano brothers, he was the AFO’s Michael Corleone. He hadn’t asked to be in the family business — had left Tijuana and gone to business school, only to be called back — but, like Corleone in The Godfather, the young overlord had displayed a talent for organized crime and calculated violence. As the head of the AFO, he had directed hundreds of killings and kidnappings in Mexico and the U.S.

Javier’s arrest would be hailed by officials in the States as a decisive victory in what may have been the longest active case in the DEA’s history — a rare triumph in the War on Drugs. “We feel like we’ve taken the head off the snake,” the agency’s chief of operations announced. I can’t believe it actually fucking worked, Herrod recalls thinking.
But did it? Herrod is 50 years old now and nearing the end of his career with the DEA. In the time he spent hunting the Arellanos, his hair and goatee went from black to salt-and-pepper to finally just plain salt. He’s proud of the audacity and perseverance it took to bring down the cartel, and he knows he helped prevent murders and kidnappings. But when he looks back, he doesn’t see the clear-cut triumph portrayed in press releases. Instead, he and other agents who worked the case say the experience left them disillusioned. And far from stopping the flow of drugs, taking out the AFO only cleared territory for Joaquín Guzmán Loera — aka “El Chapo” — and his now nearly unstoppable Sinaloa cartel. Guzmán even lent the DEA a hand.

This is the story of the investigation as the agents saw it, including accounts of alleged crimes that were never adjudicated in court. “Drug enforcement as we know it,” Herrod told me, “is not working.”

Dave Herrod came to the DEA in 1991 from the U.S. Customs Service, looking for work with more gravity. He was 26, just two months out of the academy, when he got his first tip: Two vans, one tan and one blue, parked near a liquor store at Third and Main in Chula Vista, had recently crossed into the U.S. with one ton of cocaine. The tip came from a man named Joe Palacios, a Mexican who would have been a DEA agent had he been born a few miles north. Instead he earned his living as a DEA adjunct, gathering intelligence in exchange for payment. Agents called him “Eye in the Sky,” because they operated him like a satellite: Direct him to a target, and he would send back information. The tip sounded preposterous. A ton of cocaine, parked in the open in Chula Vista? But sure enough, there, at Third and Main, was a tan van with the windows blacked out. Agents followed it to a house, where they found the blue van.

Inside the two vans, they discovered 1.8 tons of cocaine bricks where the seats should have been. The DEA is going to be easy!, Herrod thought. He had no idea that the drugs belonged to the AFO, and that he’d just stumbled into the investigation that would haunt him for the next 20 years. But he got a hint that this was not an isolated bust when agents discovered that the vans had been let through the Tijuana crossing by a corrupt U.S. border inspector named John Salazar. After flunking a polygraph, Salazar came clean: He had been taking bribes from smugglers.
 
DEA Special Agent David Herrod spent most of his career chasing the AFO, but now he feels disillusioned. (Joe Pugliese, special to ProPublica)

A few months later, Jack Robertson — another special agent, only slightly less green than Herrod — officially opened the DEA’s case targeting the Arellano brothers. Robertson was as idealistic as investigators come: empathetic and devoutly Christian, with a knack for getting young gang members to open up. He was also ambitious, and he’d been hearing about the AFO, which had just begun to dominate the Tijuana corridor. One informant was afraid to even utter the Arellano name.

Robertson says his boss, Michele Leonhart — who would go on to become the head of the DEA — thought they could wrap the case in six months. But six months in, the case was just getting under way. The Arellano brothers kept themselves insulated from their street dealers and low-level thugs — hit men had to pass requests for permission to murder through a dispatcher, who would relay a coded answer back. So agents had to start by pressuring arrested smugglers to give up information about their superiors, and then work toward identifying the key lieutenants in Tijuana and Mexicali. These were the men who took orders directly from the brothers.

Following on the success of the vans’ seizure, the DEA began working with the Customs Service on Operation Bus Stop. The idea was to follow Sultana Express tour buses, which were thought to be smuggling drugs across the border. Palacios would tail the buses once they entered Mexico to see where they were getting loaded up with drugs. On his first attempt, he slid in behind a bus as it passed into Tijuana but was immediately pulled over at gunpoint by Mexican police demanding to know why he was following the bus. Palacios talked his way out of trouble — What bus? — but suddenly the case felt bigger.

U.S. agents were disappointed that Palacios had lost the bus so quickly. But that night, he did a complete grid search of Tijuana, scouring the city one street at a time. At 6 a.m., he called Herrod from the beach community of Playas de Tijuana, where he read the plate off a Sultana Express bus. “I just could not believe he pulled that off,” Herrod told me. He marveled at Palacios’s tirelessness, and his courage.

For months, Palacios followed buses to an AFO warehouse, where they were fitted with secret compartments and loaded with cocaine. Based on his surveillance, U.S. authorities made more than 50 arrests north of the border over the course of nine months and intercepted drugs, guns, and grenades.

The agents and their bosses were ecstatic, but Palacios was nervous. He’d noticed the AFO stepping up its countersurveillance. He spoke with Herrod about ensuring that his family would be taken care of should something happen to him. His wife had just had a baby, their fifth. Herrod tried to reassure him. “We’re doing some great things,” he said, “but if you’re getting a funny feeling, just bail. It’s not worth anybody’s life.”

Palacios was paid a few thousand dollars a month, Herrod told me, some of which he spent on gas and on hiring people to help him keep watch. Herrod urged the higher-ups on the investigation from both Customs and the DEA to rent Palacios a new car each week, so that his brown van wouldn’t be recognized. After repeated requests, Herrod said, the government finally bought Palacios a used Volkswagen Rabbit that barely ran. He didn’t end up driving it.
One Monday afternoon in March 1992, Palacios didn’t respond when Herrod paged him “911,” their code to drop everything and call immediately. Herrod called Palacios’s wife. She couldn’t reach him either. That night, Palacios’s number popped up on Herrod’s phone, but the caller quickly hung up. Desperate, Herrod and a colleague asked a Mexican police commander to search for him. “He said, ‘Oh, yeah, we’re right on it,’?” Herrod told me.
Late that Friday, just as Herrod was arriving home for the weekend, his phone rang. It was the resident agent in charge, his boss’s boss, telling him that Palacios had been found. “Great!,” Herrod exclaimed. “Where the fuck has that guy been?”

“You don’t understand,” the agent in charge told him.

An AFO enforcer had caught Palacios in his van with binoculars, a laptop, and a bedpan. He was executed, his body tossed on a hillside in Rosarito Beach, a coastal town 10 miles south of the border. Herrod went to Mexico to identify the body; it was the first corpse he’d ever seen. Palacios’s lips were swollen. His chest and arms were purple from blunt trauma. His throat had been slit from beneath one earlobe to beneath the other.

Herrod vowed to bring Palacios’s killers to justice. But they weren’t the only ones he blamed. An American agent never would have been expected to operate with so little support, he told me.

“We abused him,” Herrod said, “telling him to stay on stuff for weeks on end. Imagine doing surveillance 24/7 for 10, 12, 14 straight days. He was going to die eventually. You can’t do what he was doing, against the people he was doing it against, for that long a time and survive.”

The U.S. government gave Palacios’s family $350,000. But Herrod couldn’t stop thinking about Eye in the Sky, and the contrast between his fate and that of John Salazar, the corrupt border agent Palacios had helped catch. Salazar was sentenced to 30 years, but had to serve only five because he provided information that helped law enforcement intercept marijuana shipments. According to Office of Personnel Management records, he was allowed to keep his government pension.

That Jack Robertson’s boss thought the Arellano brothers could be caught in six months shows just how little American law enforcement knew about the drug leviathan to the south.

For the first 20 years of the War on Drugs, started by President Nixon in 1971, Mexican traffickers were a footnote, little more than border smugglers for Pablo Escobar, the Colombian billionaire drug trafficker. But in 1989, in an attempt to kill a Colombian presidential candidate, Escobar orchestrated the suitcase bombing of a commercial airliner that happened to have two Americans on board. That put Escobar in the crosshairs of the U.S. military. Four years later, he was gunned down after a massive manhunt.

As Ioan Grillo observed in his 2011 book, El Narco, “Typical of drug enforcement, solving one problem had created another bigger one.” The U.S. Navy blocked smuggling routes to Florida, and trafficking spidered along the Mexican border. Into the post-Escobar vacuum strode a cadre of ambitious Mexican criminals, including Benjamín Arellano Félix. The second-oldest of seven brothers — he was 37 when Escobar blew up the plane — Benjamín became the first head of the AFO. By the early 1990s, the cartel was smuggling in 40 percent of the cocaine consumed in the United States.

Months before Joe Palacios was killed, Benjamín threw a first-birthday party for his daughter at his ranch outside Tijuana. A home video shows the cartel family in its prime: the brothers dressed in garishly patterned short-sleeved button-downs, their wives in pendulous earrings and large sunglasses. Beneath a sprawling white tent, guests sipped from brown bottles of beer and red cans of Coke. Alongside an inflatable bouncy castle was a veritable menagerie — not just miniature horses and llamas, but also zebras, reindeer, and ostriches.

Less obvious, but no less exotic, were the cars: the bulletproof blue Toyota 4Runner given to a top AFO enforcer, and next to it the bulletproof white Dodge Shadow that belonged to Eduardo Arellano Félix, the saturnine brother known as El Doctor because he had once been a practicing doctor. Ramón Arellano Félix’s armored Grand Marquis was something out of a video game, wired to deliver an electric shock to any stranger who touched it; in the event of a chase, a button inside would release a trail of oil.
 
Benjamín Arellano Félix threw a first-birthday party for his daughter at his ranch outside Tijuana. A home video captures the cartel family in its prime, plus a veritable menagerie, including miniature horses, llamas, reindeer and even zebras.

Ramón, the fifth of the seven brothers, was building a reputation as the most ruthless killer in Mexico. Carne asada — “grilled beef” — was the term he used to describe the practice of throwing a body on a bonfire of car tires to incinerate it. Rumor had it that Ramón would sit calmly and barbecue his own dinner in the flames. He wore ruby-, sapphire-, and emerald-encrusted watches and a skeleton belt buckle with diamonds for eyes. He once shot a bouncer at a bar because the man had asked him to pour his beer from a bottle into a cup.

As brutal as the brothers were, their first line of defense was not their own men but Mexico’s law enforcement. Mexican officials’ corruption “wasn’t a matter of if, but when,” Herrod told me. The head of Mexico’s equivalent of an attorney general’s office received $500,000 a month from the cartel, a former AFO lieutenant told investigators. Certain military generals made $250,000 a month. Prosecutors were paid à la carte. The system was so effective that AFO prisoners would occasionally escape torture houses only to be returned to the cartel by the very police into whose arms they had fled.

So when Jack Robertson met Jose “Pepe” Patino Moreno, an incorruptible Mexican investigator, he quickly grew to admire the man. Robertson appreciated Patino’s humility, and respected his willingness to stand up to colleagues he knew were working for the other side. “He was one of the most decent men I ever met,” Robertson told me. “I always had a sense of trust in him that I didn’t have in anybody.” In that way, he was to Robertson what Palacios was to Herrod. In another way as well: Patino was captured by AFO members, who reportedly crushed his head in a pneumatic press and smashed his bones with baseball bats. His body, a Los Angeles Times article reported, was as broken as a bag of ice cubes.

THROUGH THE 1980s, Mexican drug traffickers had worked in relative harmony to move Escobar’s product. To impoverished Mexicans, narcos represented brave resistance to a corrupt government and imperious American law enforcement. Popular folk ballads known as narcocorridos lionized drug lords. There was enough turf and money and inventory to accommodate every criminal appetite, and the Arellano brothers and Chapo Guzmán not only tolerated each other; they worked together when it suited them.

That began to change in 1989, when Ramón murdered a man who had assaulted one of his sisters years earlier; the man happened to be one of Guzmán’s closest friends. Ramón also killed several of the man’s family members for good measure. Soon thereafter, the Arellanos declared all of Baja California their territory. “No one needed to be greedy,” Robertson told me. “But the Arellanos were like, ‘No, this is ours. Come here, and we’ll kill you.’ That did not sit well with Chapo.” Guzmán started digging the Sinaloa cartel’s first known drug-smuggling tunnel under AFO turf (a primitive one compared with the engineering marvel through which he escaped from prison last summer) and made plans to kill the brothers.

In November 1992, Ramón and Javier Arellano were at the Christine discotheque in Puerto Vallarta when 40 assassins posing as policemen burst in shooting. They’d been sent by El Chapo. One of Ramón’s bodyguards, a preternaturally poised man named David Barron Corona, shot and killed a gunman, then picked up the man’s AK-47 and held off the attackers while shoving Ramón and a top lieutenant into a bathroom. From there, he pushed them through a window and onto the roof — an arduous task, because Ramón was obese. The men clambered down a tree. On the ground, an assassin was waiting with a machine gun, but Barron killed him with his last bullet and all three escaped. Javier got away too, via a different route.

Barron hailed from a rugged neighborhood of San Diego called Logan Heights. He wore a downturned mustache and was built like a mailbox, his short arms hanging away from his body as if he’d just finished lifting weights. Skull tattoos decorated his torso, each said to represent a victim. He’d gone to prison at age 16, for killing a cross-dressing man who’d reprimanded him for urinating on a parked car.

After Barron’s performance at the discotheque, Benjamín Arellano recognized him as a fearless warrior. He bestowed upon Barron the code name “Charlie,” as in Charles Bronson, the actor famed for playing relentless vigilantes, and gave him a mission: Assemble a team of assassins who could vanquish Guzmán. Barron returned to Logan Heights to conscript about 30 enforcers from Mexican immigrant families. He offered $500 a week, plus kill bonuses. Taking out El Chapo would be rewarded with $1 million and a ranch.

Barron hired trainers — Mexican police officers and a Middle Eastern man whom recruits knew as “The Terrorist.” He equipped his men as though they were soldiers, with bulletproof vests, hand grenades, AK-47s, and night-vision goggles. “He never asked his employees to do anything he wouldn’t do himself,” a former AFO lieutenant who worked closely with Barron told me. He ordered his men to keep their mustaches neatly trimmed and to dress in Dockers and polo shirts. This would be a refined gang of assassins. They would kill for drugs, but never use them. The AFO built detox holding cells where any enforcer caught using would be stashed for a month. The sentence for a second offense was 60 days. A third meant death.

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