Latin America

How former Mexican governors used the United States to embezzle billions of dollars

Among properties purchased in the United States is a $7.6 million mansion in Miami, which is part of a Mexican investigation into the former governor of Veracruz.

The Mediterranean-style five-bedroom, six-bathroom mansion with its own jetty, football and basketball court, spacious lounges and swimming pool is located in Cocoplum, one of South Florida's most exclusive neighborhoods.

It was bought with cash in August 2014 for $7.6 million by a shelf company registered in Delaware, a corporate haven which allows the identity of the owners to remain anonymous.

But purchase documents link the home to Javier Duarte, the former governor of the state of Veracruz in southeastern Mexico, a confidential source confirmed to Univision News. The company that handled the property and paid the taxes was the Mexican law firm Contreras and Janeiro, one of whose former partners, Jose Juan Janeiro Rodríguez, is under investigation by Mexican authorities as Duarte's principal frontman.

The Mexican attorney general's office (known by its initials PGR in Spanish) is investigating the funds used to buy the mansion as part of the criminal proceedings against Duarte, a former member of the ruling Institutional Revolutionary Party (PRI). Duarte fled Mexico last year and was arrested in neighboring Guatemala in April where he is facing extradition on multiple corruption charges, Univision News has learned.

His case is the most scandalous out of a staggering list of 11 Mexican former governors arrested, charged or under investigation in the last four years for embezzling at least $13.4 billion, according to estimates by Mexican authorities.

While their cases are by now notorious, the methods they used to hide the money are less well known. Besides real estate networks and banks in Mexico, they used secret corporate structures in the United States managed by frontmen, right out of the a playbook of the nation's drug cartels, according to a Univision investigation.

"They are criminal organizations operating the same way, but with different raw materials. The drug cartels are all about drugs and guns, while the corruption cartels handle public money," said Luis Pérez de Acha, a Mexican tax lawyer who is part of the Citizen Committee of the National Anticorruption System.

An examination of Duarte's close circle in Miami also illustrates the most common way that the governors have used to suck money from public accounts: through shell companies that exist on paper only, as well as international bank wire transfers.

In southern Florida, according to official sources in Mexico, Duarte operated through Janeiro's law firm, but also through Moises Mansur, an entrepreneur who was his close friend since their youth and is now accused in Mexico of being his chief frontman.

In 2011 Mansur became a partner of Rusnam Investments, a Florida company that bought at least 10 cheap properties in Miami and flipped them months later. This operation alone netted $2 million in profits, according to an analysis by Univision.

The other partners were Moises Mansur's brother, Jose Zury Mansur, and Mexican financial entrepreneur Iñaki Negrete. Another employee of Rusnam, lawyer Alfonso Ortega, became the main informant of the investigation of Duarte by Mexican authorities.

Nobody at Rusnam answered calls or messages from Univision. Negrete indicated he would speak to Univision through a person who identified himself as a public relations consultant. But after being told that one of the topics of the interview would be the Cocoplum mansion, he did not call back.

Rusnam is no longer an active company, according to Florida public records.

Investment properties

The mansion in Miami was sold through real estate agent Ana María Velásquez, who is friends with people close to the former Veracruz governor. She declined to talk to Univision.

Although the public documents for the mansion and the 10 houses do not reveal common ownership, when Univision reporters began asking questions about the companies they were contacted by the same public relations consultant for Negrete.

The Cocoplum mansion was first mentioned by the newspaper Reforma in Mexico last fall as part of the Duarte investigation. Mexican authorities have investigated the origin of the money used to purchase it, and the related bank transactions in Mexico and the United States.

The cash withdrawls in Mexico were brazen, according to Hilario Barcelata, the current president of the state pension institute in Xalapa, capital of Veracruz.

"It was public money in cash, transported very informally, in boxes, in suitcases," said Barceleta, a harsh critic of Duarte during his six-year term.

The official investigation suggests that some of those suitcases were transported over the border into the United States.

A source close to the Duarte family told Univision that Duarte entrusted Mansur with his most delicate business affairs. Their relationship was so close that Mansur, who was living in Mexico City, had a room permanently available at the official government house in Xalapa.

"He (Duarte) used to boast that he would never be caught because he had nothing in his name," said the source.

As part of the investigation into Duarte, Mexican authorities have also tracked money for other properties, acquired with the help of friends and relatives of Duarte in Texas.

US role in embezzlement

In recent months a number of concerned Mexicans have held meetings with U.S. officials in which they have raised the role that the United States plays in the laundering of Mexican public funds. They have requested that U.S. authorities take a more active approach to combating the embezzlement.

Experts say that the ease with which officials bought properties in the U.S. is a reflection of how both the banking system and the real estate industry appear to have little interest in establishing the true origin of funds, despite laws against money laundering.

"We are trying to get other countries to push the U.S. government through the Department of Justice and the courts to fight the corruption networks that exist in Mexico. It is not an easy job, but they can do it," said Pérez de Acha, a tax lawyer who is a member of the committee that monitors the implementation of an ambitious system seeking to integrate institutions fighting corruption in Mexico.

One case they looked at was that of Duarte.

Mexican officials consulted by Univision said that the Duarte case also raised the issue of how to handle the proceeds from properties acquired in the United States which were seized as part of the money laundering investigations.

One emblematic cases in which Mexico has so far received no proceeds from the sale of property seized involves the former governor between 2004 and 2010 of the small state of Aguascalientes, Luis Armando Reynoso, from the conservative National Action Party (PAN) .

In 2014 Texas authorities seized seven homes and land in San Antonio for $6.2 million as part of a civil lawsuit filed by the federal government after it was established that they were acquired with illegal money.

Months later a young man from Aguascalientes filed a motion in federal court in San Antonio in which he declared himself the owner of the land, the houses and the commercial center, acquired while Reynoso was governor.

The young man was Luis Armando Reynoso Lopez, son of the former governor. Reynoso López never held public office in Aguascalientes but according to several sources in the state, he head a great influence on his father.

The son of the former governor became better known in Mexico after he staged an extravagant birthday party at a family ranch on the outskirts of the city of Aguascalientes. The event included a nine-year-old DJ and a huge artificial tree with the birthday present - a Mini Cooper - hanging from its branches.

Triangulation of funds

Reynoso was convicted of embezzlement and sentenced to six years in prison. He remains free on bond.

The alleged involvement of Reynoso and his son is described in detail in seizure documents viewed by Univision. They describes one of the most common ways in which embezzled funds end up being invested in the United States.

According to the document, "Reynoso and his son conspired with each other and with others to divert money illegally from the Mexican state of Aguascalientes through financial institutions in Mexico to bank accounts established in the United States."

The money was entered into accounts in Mexico through cash deposits, Rodolfo Franco, a local journalist from Aguascalientes who denounced Reynoso said in an interview. "A bank receives in one day 200 million pesos in cash, coming from Aguascalientes' account of the governor to another account he had in Altamira, in Tamaulipas," explained Franco.

Univision obtained documents that are part of the Mexican investigation which show repeated deposits in cash in an account that belonged to the son of Reynoso from the Mexican bank Banorte.

In 2009, the last year of Reynoso's adminsitration, million dollar wire transfers were made from these accounts to banks in Texas, according to a detailed banking analysis done in Texas.

"Real estate payments occasionally involved numerous transfers and transactions using different banks and many bank accounts, opened with the specific purpose of hiding the identity of the owners and with a specific attempt to hide the nature and source of the funds," the seizure documents state.

In May 2009, Reynoso's son opened two bank accounts at BBVA Compass Bank in San Antonio. The address of one of these accounts is the house in Aguascalientes where his family has lived for years. He later opened an account in McAllen, Texas, with the Inter National Bank, as reported this year by the San Antonio Express News.

A year before, a company named Administration, Comercio y Representación Comercial, was set up in the Mexican beach resort of Cancun. According to local records obtained by Univision, the partners were two people who no public record as businessmen and had not been previously linked to the case.

U.S. investigators determined that in only three weeks $2.5 million were transferred between Aguascalientes, Cancun and Texas.

The transfers were possible thanks to the participation of another company - Logistica y Asesoría Comercial - that had the same address in Cancun. According to the investigators, this company was set up in order to move money illegally. The partners of this third company were two more businessmen with no known public record.

"The moment they made their deposits in the United States, bought houses or set up companies in the United States with that money, they were laundering money. This allowed U.S. authorities to act against them," said Pérez de Acha, who specializes in financial crimes.

In addition to the cases of Aguascalientes and Veracruz, in recent years, other Mexican ex-governors have also faced U.S. investigation for having structured similar schemes to acquire properties in the United States. The former governors of Quintana Roo - Roberto Borge - of Coahuila - Humberto Moreira - and Chihuahua - César Duarte - have pending investigations against them involving movements of money that left trails on both sides of the Rio Bravo river.

Corruption investigations

Mexico has 31 states as well as Mexico City, the capital and seat of the federal government

In addition to the cases of Aguascalientes and Veracruz, nine other Mexican ex-governors have also faced U.S. investigation in recent years for having structured similar schemes to acquire properties in the United States.

Javier Duarte is one of three ex-governors being held abroad and facing extradition. Mexican authorities are also seeking the extradition of Roberto Borge, the ex-governor of Quintana Roo between 2011 and 2016 on money laundering and other corruption charges. Borge was arrested June 4 in Panama City’s international airport as he was about to board a Paris-bound flight.

Tomas Yarrington Ruvalcaba, who served as the governor of Tamaulipas from 1999 to 2004, was arrested in Florence, Italy in April. He faces drug trafficking-related charges in both Mexico and the United States. Eugenio Hernandez, succeeded Yarrington as governor of Tamaulipas (2005-2010). He is a fugitive from the United States after he was named, along with his brother-in-law, in a 2015 federal indictment in Texas that accuses him of money laundering. He resides in Mexico and has denied the charges.

Three ex-governors are in jail. Mario Villanueva, who governed in Quintana Roo from 1993 to 1999, is serving a 22-year sentence on a money-laundering conviction. Andres Granier, who served in Tabasco from 2007 to 2012, and Guillermo Padres, who served in Sonora from 2009 to 20015, are both fighting corruption charges from jail.

One ex-governor is a fugitive. Cesar Duarte, who was governor of Chihuahua for the PRI from 2010 to 2016 is suspected of being in hiding in the United States.

Humberto Moreira, the former governor of the State of Coahuila from (2005 - 2011) was arrested by Spanish authorities in January 2016 on suspicion of money laundering and misuse of public funds. He was released for lack of evidence.

Rodrigo Medina was governor of the state of Nuevo León (2009-2015) and is under investigation for corruption.

Additional reporting by Margarita Rabin and Daily Camacaro

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