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How a Mexican Drug Cartel Makes Its Billions
- danso 14y ago> Michael Braun, the former chief of operations for the D.E.A., told me a story about the construction of a high-tech fence along a stretch of border in Arizona. >“They erect this fence,” he said, “only to go out there a few days later and discover that these guys have a catapult, and they’re flinging hundred-pound bales of marijuana over to the other side.” He paused and looked at me for a second. “A catapult,” he repeated. “We’ve got the best fence money can buy, and they counter us with a 2,500-year-old technology.”
- tgrass 14y agoThis is the border in Arizona, south of Sierra Vista. I often drive the international road and rarely see anyone else...not even border patrol. One does not need a catapult. http://postimage.org/image/wtie29yrb/ http://postimage.org/image/wtie29yrb/
- startupfounder 14y agoAre drones patrolling the area from above?
- tgrass 14y agoThere's a conspicuous blimp that flies about sixty miles to the north. I'm not sure of drones. I camp out there a lot and have never seen them. [edit] it's an aerostat, not a blimp: Fort Huachuca is about fifteen miles to the north and "is home to a radar-equipped aerostat, one of a series maintained for the Drug Enforcement Administration by Lockheed Martin. The aerostat is based northeast of Garden Canyon and, when extended, supports the DEA drug interdiction mission by detecting low-flying aircraft attempting to penetrate the United States." http://en.wikipedia.org/wiki/Fort_Huachuca http://en.wikipedia.org/wiki/Fort_Huachuca
- blhack 14y agoWell...the drones aren't exactly huge, and they're flying really high up in the air, so it's doubtful that you'd see them.
- hexagonal 14y agoThe MQ-1 has a wingspan of two dozen feet, and a service ceiling of 26,000 feet. (ten thousand feet lower than a 747) It's also got a pretty tinny piston engine, with a fairly distinctive sound. Think more "cessna with missiles" than "RC plane". EDIT: Just checked the wikipedia pages for both: MQ-1 Predator Cessna 172 Wingspan 8.22m 11m Gross weight 1,020kg 1,111kg Service ceil. 25,000ft 13,500ft Cruise speed 90kn 122kn
- gregpilling 14y agoThe blimp is out of Ft Huachuca and it is equipped with cameras, and there is a drone unit stationed there also. I sold some test equipment there in 1999 to TRW, now named something else.
- blhack 14y agoThere is also a really tall tethered balloon around there somewhere. Well...at least there is on the map, :-P, I've never seen it in real life.
- base698 14y agoDoes it really matter? It's kind of a big data problem at the best case. How do you detect who is a smuggler and who is a just lost in the desert? Do you send patrols to stop every single person? My intuition is that's cost prohibitive and an arms race with the cartels. They'll just get more sophisticated and buy off the drone operators.
- gregpilling 14y agoI have ridden along that on my motorcycle and noted the many places that the barbed wire was cut and their were large vehicle tracks running across the border. Spent all day down there a couple of times doing some fun dual sport riding and not once was I questioned by a Border Patrol officer. The border is basically unsecured around there and as far as the eye can see to the east.
- tgrass 14y agoWhich is why it's one of my favorite spots.
- vacri 14y agoTo be fair, fences are an even older technology.
- abruzzi 14y agoAlso impressed that the cartel smuggles cocaine on 747s that they own. That's a large operation.
- Eliezer 14y agoI'm a bit surprised by this; I'd expect spy satellites to be able to spot a rogue 747.
- ovi256 14y agoYou're assuming the money that bought a 747 can't buy a fake company for registration, plane manifests, flight plans and whatever else is needed to make it look legal.
- DasIch 14y agoIndeed. Where do they take off and land those planes? I don't think a flat stretch of grass will do.
- jonknee 14y agoWith their cash flow they could own a company like DHL outright. A 747 is small potatoes.
- startupfounder 14y agoJoaquín Archivaldo Guzmán Loera is a true hacker, he continually breaks into the most secure country in the world by exploiting it's weaknesses. "The cartel makes sandbag bridges to ford the Colorado River and sends buggies loaded with weed bouncing over the Imperial Sand Dunes into California." Because of this, even when he is caught and send to a maximum security prison he is able to organize an escape by hacking the prison system. "...[Joaquín Archivaldo Guzmán Loera] was transferred to the Puente Grande maximum security prison in Jalisco...Guzmán carefully masterminded his escape plan, wielding influence over almost everyone in the prison... The escape allegedly cost Joaquín $2.5 million... According to officials, 78 people have been implicated in his escape plan." - Wikipedia (http://en.wikipedia.org/wiki/Joaqu%C3%ADn_Guzm%C3%A1n_Loera http://en.wikipedia.org/wiki/Joaqu%C3%ADn_Guzm%C3%A1n_Loera)
- vecinu 14y agoIt sometimes blows my mind how much power money can buy. This gentleman seems to also have a powerful charm.
- AncientPC 14y agoNot just a carrot, but a carrot and a stick. If you don't comply, your family and friends can and will be harmed. It's a large reason why Mexico military forces stays anonymous by wearing balaclavas on duty and getting rid of the short hair requirement.
- eieio 14y agoAlso notable are the stories of what he has done since his escape: "In 2005 on a Saturday evening, Guzmán reportedly strolled into a restaurant in Nuevo Laredo, Tamaulipas, with several of his bodyguards. After he took his seat, his henchmen locked the doors of the restaurant, collected the cell phones of approximately 30 diners and instructed them to not be alarmed.[26] The gangsters then ate their meal and left – paying for everyone else in the restaurant.[27]" (from the same wikipedia article, of course)
- hef19898 14y agoHe also seems to have very ... sophisticated understanding of markets, supply chain maagement and logistics. that and a very healthy sense for risk management. One only has to tip his hat in the light of these operations. Which dosn't mean they don#t have to be stopped. Maybe legalizing would help, but I'm not sure if legalizing heroine would actually do something good. what you have to do is to wreck havoc with their supply chain. But in order to do that you have to discard philosophie and biases first. Something I don't seen coming any time soon as long as politians all over the place only think in names in fugure hats. As the article mentioned, removing Chapo won't do any good, the worst case ould be the zetas taking over his supply network and logistics, something that doesn#t thrill me a lot. How you actually disruopt his operations, hard guess. At the minimum it would involve some serious leg work and analyzing. Continous analyzing and leg work. Again somethiing I don't see western law enforcement fit to do right now. and as long as intelligence is running their asses of in pursuite of some afghan hill billis that won't change anytime soon. My 2 cents.
- jboggan 14y agoI'd be really curious to know what their IT department looks like.
- wmf 14y agohttp://web.archive.org/web/20021014183134/http://www.business2.com/articles/mag/0,1640,41206,00.html http://web.archive.org/web/20021014183134/http://www.busines...
- dsirijus 14y agoWell, 'cept the subs part, it doesn't really sound like much. Someone should offer them services. :)
- vecinu 14y agoNumerous drug submarines have been uncovered since the article was written. It seems that they are badly made, some sink, others just break down. I found their software engineering to be much more advanced than their submarines.
- kvnn 14y agoI found their software engineering to be much more advanced than their submarines. Care to go on?
- vecinu 14y agoSorry for the late reply. I remember reading an article (That I cannot seem to find at the moment) about US border agents stopping a Cartel submarine dead in its tracks. What they found is a minimalistic submarine, capable of transporting a small load of product to a destination. They've found other submarines that have sunk due to their bad quality. I think we're confusing actual military submarines with a makeshift version.
- vecinu 14y ago
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- joejohnson 14y agoI wonder is Ignacio "Nacho" Coronel is the basis for Gustavo on Breaking Bad.
- acangiano 14y agoReading this article made me think about how well researched Weeds and Breaking Bad are.
- fkn 14y agoI'd be interested in knowing how they were able to buy Boeing 747s. Those are huge transactions, you can't simply buy planes with cash. I would assume that it would be through shell companies, but wouldn't (or shouldn't) Boeing be careful about who their customers are?
- peregrine 14y agoTimes are not great for plane airlines, I'm sure a struggling airline CEO would have no issue selling a plane to ShellCorp with a large bag of money.
- abalashov 14y agoAirlines in the developed world almost never own planes, especially in the dimensions of any typical commercial airliner. The other problems that plane ownership brings (besides routine maintenance, which the airlines do own) are outside the desired core competency of airlines. The leasing of aircraft to commercial airlines is quite an industry in itself, and the transactions often involve complex, multilateral bond financing. There are almost always complex financing arrangements involved. Few buy a 737 with a bag of cash anymore than one buys a skyscraper outright. It is done by some of the world's less creditworthy airlines, and American has a penchant for owning, but it is increasingly not the normal industrial practice. Investors go in on planes just as they do on any other massively expensive capital goods. Thus, the key for a drug cartel would be to get the various intermediaries involved in the aircraft leasing and financing process (some of which are surely quite corruptible) to lease one to ShellCorp, or buy on the secondary market, as some have suggested. The bigger mystery for me is how they manage to fly in the context of overall international airspace control and air traffic control. Like someone else said, a 747 can't take off and land on a desolate patch of grass. Law enforcement and intelligence aren't stupid; they know how much money is in the "air charter" business, and it definitely won't pay for a 747. Charter companies use much smaller aircraft. Edit: Unlike airlines, drug cartels actually do have the cash to buy a $138m plane outright, yes. But that would set off enormous alarm bells, because nobody otherwise obscure does that. Edit: http://www.nytimes.com/2007/05/10/business/10flyboy.html?_r=1&pagewanted=all http://www.nytimes.com/2007/05/10/business/10flyboy.html?_r=...
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- revelation 14y agoThis is a 101 on capitalism. Raw capitalism, where killing someone is cheaper than settling on a solution that works for everyone. One where power amasses. But most importantly: where all actors are innovating. You can be amazed at crudely built submarines and private cell relay stations but really its just market pressure at work. Which brings us back to the obvious conclusion: prohibition doesn't work; the market will find its way. It doesn't need intricate portraits like this one to make that clear.
- mullingitover 14y agoYes, exactly. The war on drugs is a perfect example of capitalism v socialism. In the red corner we have black market capitalists engaged in an enterprise with extremely high risk premiums. In the blue corner we have socialized law enforcement. If you truly believe that capitalism is the superior force, you can't help but know that the war on drugs is absolute unwinnable folly.
- WildUtah 14y agoUpvoted for quality. But I disagree with your choice of colors. The communist/socialist side is traditionally colored red.
- guelo 14y agoThe only way to stop these large criminal enterprises is to legalize the stuff. Just like alcohol prohibition created some of the most notorious American criminals, South American drug prohibitions produce powerful criminals down there. There isn't any large crime related to South American cocoa or coffee imports. Legalize it and then spend money and make laws regulating consumption, it would greatly reduce the misery in our corner of the world.
- paulhauggis 14y agoAt this point, I doubt it will help. Why? The cartels thrive in countries where you can essentially buy off any official. When you legalize drugs, they aren't going to suddenly stop selling it. They will now have a legal business which will continue to fund their criminal empires. We most likely will see an increase in other crimes, like extortion and kidnapping. Drugs are still illegal in the US and we don't really see the same kind of crime in our country because the police actually (for the most part) do their job. If you really want to stop the violence, stop the corruption. I know the recreational drug users of HN don't really want to hear this..
- dsrguru 14y agoPeople who have lived in big cities in the U.S. would strongly disagree with you. There are entire areas that are dangerous to walk in thanks to drug gangs. Legalize the stuff and dealers can't continue forcing out the competition with guns, since that competition will be the local supermarket.
- praptak 14y agoI admit that I (in a way) root for those guys. If they can move around such quantities of physical illegal stuff then we can be sure we can move around any strings of bits we choose to.
- objclxt 14y agoIt is a matter of priorities - drug enforcement isn't high up the agenda. The DEA has a budget of $2.4 billion. The NSA's budget is classified, but most analysts estimate it's at least $6 billion - over double that of the DEA. And that's just one intelligence agency. The total intelligence budget of the USA is $80 billion. Cartels could easily be dismantled if the will and money was there - it isn't, because we would rather spend that money on other things, such as nation state intelligence and counter-terrorism.
- mullingitover 14y agoThey might be dismantled, but all the incentives of illegal distribution would remain. Demand would remain, prices would climb, and inevitably new cartels would spring up in their place to fill the demand.
- theorique 14y agoThe drug trade provides a great way for three letter agencies to transport money, men, and materiel around different parts of the world. For example, the recently deceased Jon P. Roberts of Cocaine Cowboys infamy (great book, btw) is alleged to have become a CIA asset in his later years, after he was captured and removed from the cocaine importing business.
- shareme 14y agoThe obvious question..For about $15 million R and D the USA can invent a new drug to replace cocaine with none of the die effects and than offer it at far below cocaine prices.. Think of the billions saved on drug wars..
- mcantelon 14y ago"The Sinaloa is occasionally called the Federation because senior figures and their subsidiaries operate semiautonomously while still employing a common smuggling apparatus. ... To reduce the likelihood of clashes [between competing interests], the cartel has revived an unlikely custom: the ancient art of dynastic marriage. ... An associate may be less likely to cheat you, or to murder you, if there’ll be hell to pay with his wife."
- adventureful 14y agoIt's disheartening to see the intense division on this subject on Hacker News. It leads me to believe the issue gridlock will continue, and the only plausible solution (legalization) will continue to be a fantasy. And as a consequence millions will continue to be jailed, tens of thousands will continue to die and the cartels will continue to grow stronger. Small prediction: the US Government won't legalize drug use and production until the cartels are so powerful the Feds can no longer even partially contain the drug trade. Within a decade the cartels will be powerful enough to directly threaten the US President. I think that'll just about do the trick.
- antimora 14y ago“A catapult,” he repeated. “We’ve got the best fence money can buy, and they counter us with a 2,500-year-old technology.”
- GoodIntentions 14y agoseeing as stone walls have been around for minimum 20000 years, and wooden fences likely much longer, I find his comment kind of funny. Catapults are cutting-edge tech compared to a fence..
- user49598 14y agoHere's a link to story on the Wisconsin hunter that stumbled upon a marijuana farm operation on public land. http://fox6now.com/2012/05/17/cartels-invade-the-northwoods/ http://fox6now.com/2012/05/17/cartels-invade-the-northwoods/
- user49598 14y agoWhats the easiest way to stop people from breaking the law? Change the law.
- nfriedly 14y agoI wonder if we could find a way of making these drugs less "popular", similar to how we've done with smoking. That might require legalizing them, so I'm not sure it would actually reduce consumption. But it would hurt the cartels either way.
- alexqgb 14y agoThere's a direct correlation between misery and drug use, as well as a direct correlation between misery and high levels of social inequality. People who agonize between the dangers of prohibition vs. the dangers of legalization (or even decriminalization) are doing so in the context of a highly unjust society that offers virtually no social mobility, no access to the courts for anyone who isn't fantastically rich, no prospect for wage growth for anyone who isn't already in the top 10%, no job security for anyone not worth putting under contract (i.e. nearly everyone), and the terrifying prospect of loosing access to the health care system in the event of a job loss - all of which imposes tremendous levels of anxiety and insecurity for the vast majority of its members. In spite of all this, we're still rich enough for most people to have some disposable income. Add that to the conditions under which most people live, and it's no wonder that the US is, per capita, a tremendously big consumer of drugs. Given this environment, either option will have predictably bad results. But a society that was far less friendly to the winner-take-all ethos, and more concerned with basic health and economic security for a large middle-class population would find that drug coming down to much more manageable levels, making the decriminalization route a much more attractive option.
- ferringham 14y agoDont blame Mexico for US generated demand. If not Mexico then some other poor country would supply. The US should legalize to finish the cartels off.
- Osiris 14y agoLaws could punish behavior that affects other people rather than behavior that does not. With alcohol, it is legal but certain actions that involve alcohol are not, like driving. So, driving while high would be illegal and there would still penalities for committing other crimes while using drugs, but casual use that affects only oneself would not be illegal. However, there may be other consequences to actions like higher medical premiums or getting fired from a job for misuse, etc. To me, laws should be designed to protect people from other members of society, not to protect people from themselves. Breaking someone else's things is illegal, but breaking your things is not.
- GoliMaster 14y agoI've found this article to be 100 times as effective when listening to this as I read it: http://www.youtube.com/watch?v=4-wtJuqyKko http://www.youtube.com/watch?v=4-wtJuqyKko
- blhack 14y agoIf you guys have interest in this topic, this is a good blog to watch: http://www.borderlandbeat.com/ http://www.borderlandbeat.com/
- alan_cx 14y agoWhy does government follow policies that make drugs so incredibly profitable?
- Mz 14y agoThe folks I know who work for the government are pretty rule driven. Folks like that seem to think that rules have real power over people in a way that isn't true -- as if the rule itself has intrinsic power to stop people from doing X rather than the rewards and punishments which get tied to it.
- WayneDB 14y agoThe market for illicit drugs rivals that of oil. Factions in our government and governments around the world can make money secretly from it. Powerful people also see the value of playing both sides. They profit by producing it and they also profit by owning stock in many private prison corporations here in the USA where we have the highest percentage of non-violent prisoners.
- dreamdu5t 14y agoPreaching to the converted. What's the point of these articles if they have no impact on legislation or the national conversation?
- patrickgzill 14y agoOpium Wars - there is at least 1 President who had connections in some way or another to this earlier form of the drug trade. FDR (via his maternal grandfather Warren Delano). There are others who also became President, (starts with a B) who are alleged to have been heavily involved while in a secretive government position.
- Futurebot 14y agoI believe that in order to fix drug policy, we need to think about the issue a completely different way. The main issue is the basic one of sovereignty of the self; the ability to do whatever you want with your own body without imposing costs on others. It's the very same idea underpinning the legalization of suicide. It's bigger than this, but that's for another post. The short version is that all laws should be guided, first and foremost, by the harm principle. Keep in mind the one thing that is paramount with applying the harm principle: /without imposing costs on others/. So what we should do is make smoking anything where others can inhale it without consent illegal and legalize everything else-whether snorted, injected, swallowed or absorbed of all drugs. The only places you should be allowed to smoke are designated private smoking facilities with air filtration systems or your own home if you install an air filtration system yourself. I cannot refuse or consent to inhaling smoke (and where I live, it's a constant assault on your respiratory system. If the people using it ate, snorted, or injected it, there would be no problem). Otherwise, just legalize and regulate; you should have to go through a process to determine whether you're fit to use certain types of drugs, sign consent forms, and agree that any costs incurred due to potential addiction are your own and will not be borne by the state (including things like alcohol - nothing would be exempt from the basic health indemnification. Addiction programs would be covered, though.) If you agree, you're sold drugs by state-chartered companies that are tightly regulated, including pricing, to eliminate the black market. If you use them for medical purposes, you'd be able to bypass the process with a prescription (subject to the same regulations about methods of use.) We should also deign to move hardcore addicts into treatment programs, or, in the case of those who are incorrigible, to long-term "use and protection" facilities. Finally, we should have designated locations with medical personnel, security, and addiction counselors where addicts could use drugs without fear of personal harm and without being public nuisances. With a harm reduction-based system, the entire apparatus surrounding the drug war crumbles. The income of smugglers and dealers disappears. The need for most costly state organizations to fight it goes away. The violence largely disappears (what's the nominal level of violence surrounding nicotine and alcohol?) Regarding DEA funding. Under the system I outlined, this agency would actually get useful: to crack down on and prosecute black market (for those who want to go around the screening process) drug smugglers, importers/exporters, and sellers to the full extent of the law. People are going to do drugs no matter what we do, so we should be talking about methods of use and harm reduction, not just "substances." Don't "legalize pot" or the like; protect sovereignty of the self, and reduce harm to individuals and society. Caveats: Is a full drug legalization policy feasible everywhere? In every country? I would have to give that an unqualified no. In order for a system like this to be feasible, many things are needed. - A working system of justice that is generally trusted by the populace. - A largely transparent system of governance. - A government, justice system, and law enforcement personnel that are perceived to be (and actually are) to be largely free of corruption. - A strong state that can actually enforce edicts against black market suppliers. - A strong state, stable state that would be difficult to overthrow. - A culture that truly accepts harm reduction, and does not simply regard using it as "defeat" or "moral midgetry" Most developed countries fit, or could fit this bill. There are places, however, that are so plagued by corruption, are already so violent, are so unstable, or are already basically run by drug organizations that legalizing drugs would be like legalizing murder (Mexico fits this definition, unfortunately. It appears to already be near to a full-fledged narco-state.) It's already the rule, and would basically have no effect except to make these drug organizations laugh. In those places, some of which are bordering on failed states (or successful narco-states) cannot be fixed in this way. Those places need to re-establish order, trust, and strong states. They should not be thought of as drug wars, however. They should be thought of more like "reclamation missions." Criminal organizations have gotten so powerful, that they are often their own nations inside of existing states, and those states need to "reclaim" their territory and power from said organizations. Those situations are far beyond the drugs. They're fundamentally about power. Moving beyond today's current drug-related battles, we need to ask another question: why, in the face of so much effort to combat it, do so many people still want to use recreational drugs? 1) To escape crushing poverty, despair, depression. For these, only addressing the root causes are going to get us anywhere. Economic opportunities, physical security, better social safety nets, better mental health services, etc. 2) Pure enjoyment. For this, developing largely non-addictive, side-effect-free, cheap, legal alternatives to current recreational drugs. This could be anything from better drugs to computer-neural interfaces that allow more pleasurable/realistic experiences.
- AlexDanger 14y agoCan anyone recommend a good book/author detailing the history of these cartels?
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- its_so_on 14y agoI don't like the way the author glibly compares his subject with startups like Facebook and Netflix and seemingly seriously uses real notions of economics such as 'cartel' and 'capital-intensive'. ("Sinaloa is both diversified and vertically integrated, producing and exporting marijuana, heroin and methamphetamine as well. ") It's frankly disgusting. Of course economics is the study of how people behave with money and resources. You can make these comparisons - just as you can study the economics of lynchings and torture by slaveowners to assert ownership over their property, the practices of the East Indian Company, or the (taking out touchy subject - think of warmongering; not saying such a thing exists). But please don't do it "straight" or without any irony. This isn't economics. This is death and murder (or war etc). The economics is important. But it's not the economics that keeps me - or the Coca Cola company or your uncle Jack - from arming up with an uzi and "diversifying" into this "sector". Have some decency.