A former executive of the Bank of Mexico received government contracts worth over $30 million despite his conviction years earlier of being a financial operator for the Juárez Cartel.
Four boxes stuffed with 37,000 twenty-dollar bills had been deposited into a black Ford Ecosport truck parked near the intersection of Ave. Universidad and Eje 5 Sur.
The wad of bills, which weighed more than 30 kilos, added up to a fortune: $740,040. But that is just one of the million-dollar transactions the truck's driver presumably carried out via his currency exchange office as part of a sophisticated money laundering network for the Juárez Cartel.
This article was originally published by Artistegui Noticias in collaboration with CONNECTAS and the International Center for Journalists. It was translated, edited for clarity, and reprinted with permission, but does not necessarily reflect the views of InSight Crime. See the Spanish original here.
One by one, the cardboard boxes were taken out of a grey compact car belonging to Juan Ignacio Izquierdo Sánchez, identified by authorities as being responsible for the logistics of receiving and shipping dollars between Mexico and Colombia.
Officials said that federal police who had been tracking the operation appeared after the boxes had been transferred to the truck on the busy avenue in Mexico City.
Mexico's Attorney General's Office (Procuraduría General de la República – PGR) said the driver of the truck, Rodolfo David Dávila Córdova, confessed that the money belonged to the Juárez Cartel, and that he laundered money by making electronic transfers in different parts of the country via his currency exchange offices. The PGR identified Dávila Córdova as the Juárez Cartel's contact with Colombian drug suppliers, and as the person responsible for the cartel's commercial and financial transactions.
The two alleged operators of the cartel were thrown into Altiplano prison, where they were sentenced by the Fourth District judge for using illicit capital to carry out financial operations.
The arrests occurred more than a decade ago, on October 26, 2005. But it is relevant now because one of the alleged cartel operators has become a contractor for the administration of President Enrique Peña Nieto, and is involved in the president's hallmark social program: the National Crusade Against Hunger (Cruzada Nacional Contra el Hambre). More than 396 million pesos (approximately $30.2 million, at 2013's exchange rate) were handed over to nonexistent businesses for services that were never carried out. This case involved the Autonomous University of Morelos State (Universidad Autónoma del Estado de Morelos) and a former leader of the New Alliance party (Nueva Alianza) who is now an official at that academic institution.
Along with the boxes filled with cash, the investigative agents found in the Ecosport truck documents that allowed them to identify the leadership structure and operational zones of the Juárez Cartel.
The documents also led authorities some 16 days later to Ricardo García Urquiza, alias “The Doctor,” who had assumed the mantle of the cartel following the killing of Rodolfo Carrillo Fuentes in 2004 in Culiacán. According to the official report, the kingpin was captured close to the Perisur shopping center as he arrived for a meeting with a contact that was planning to send him a cocaine shipment from Colombia.
At the time of his capture, García Urquiza was carrying a pistol with a golden handle that was encrusted with diamonds and had the Yin Yang symbol. But the most important discovery derived from his arrest was documents revealing the business structure he had managed to create for the Juárez Cartel.
One example: authorities reported the seizure of 51 accounts in Banamex, Bancomer, Banorte and HSBC that were used to pay the cartel's drug traffickers.
In García Urquiza's house in Colonia Insurgentes Cuicuilco, authorities seized a document that contained information about how he concealed the illegal operations. He used either male or female names to indicate the day of the month and the hour of meetings where drug shipment transactions occurred.
“We are going to see Teresa in Pedro's house,” meant that the shipment would arrive on the fifth of the month at 8:00 p.m.
Authorities found $2,886,000 on one of his accomplices known as “The Accountant.” The wads of twenty-dollar bills were wrapped in plastic, presumably ready to be sent to Colombia to pay for drugs. Agents also found accounting records that revealed expenditures, the cost of the drug shipments, and commissions that the cartel paid to traffickers and authorities linked to the criminal organization.
The seized documents revealed the size of kingpin García Urquiza's operations: he was buying shipments of at least five tons of cocaine, which according to the PGR made him the principal drug wholesaler operating in Mexico at the time, responsible for between 15 and 20 percent of the cocaine shipments to the United States. The government estimated that his operations earned between $660 million and $1 billion per year.
Rodolfo David Dávila Córdova had an alias that described him perfectly: “The Consul.” He was called that because the alleged Juárez Cartel intermediary had contacts with federal authorities.
From 1988 to 1990, Dávila Córdova had worked for the Bank of Mexico as deputy manager of domestic exchanges. One of his responsibilities was to establish the policy of buying and selling of currencies, in addition to monitoring international transactions in the exchange markets. He later worked as the deputy director of real estate for the Secretary of Communications and Transportation (Secretaría de Comunicaciones y Transportes – SCT). Dávila Córdova worked for the federal government until 2003.
Prosecutors say Dávila Córdova was recruited by the Juárez Cartel to carry out money laundering operations via the exchange center “Envíos del Ahorro,” in which he was a partner with 32 percent of shares.
Authorities say the exchange house's branches in Illinois and Texas were used to send drug money to the head Envios del Ahorro office in Michoacán. The transactions appeared as remittances sent from fellow Mexicans in Chicago or McAllen.
“This man [Rodolfo David Dávila Córdova] was the one who physically managed the payments and trafficked the funds through the exchange houses,” said the then-head of the PGR Daniel Cabeza de Vaca in November 2005.
In addition to Envios del Ahorro, authorities linked the former Bank of Mexico executive to Casa de Cambio Internacional -- later named Ribadeo -- which was also involved in money laundering.
Eight years after being incarcerated and three years after he was released, Dávila Córdova became a contractor for the National Crusade Against Hunger.
In two transactions carried out between October and December 2013, two business of which Dávila Córdova is either a partner or the legal representative received more than 396 million pesos ($30.2 million) from the federal program.
The business are called Grupo Comercializador Cónclave SA de CV and Prodasa SA de CV.
The signature of the Juárez Cartel operative is found on a National Crusade Against Hunger contract for 207,779,000 pesos (approximately $15.8 million), where he appears as Conclave's legal representative.
His brother signed a second government contract worth 188,662,000 pesos (approximately $14.8 million) as the legal representative of Prodasa SA de Cv.
In Prodasa's charter, Dávila Córdova is listed as the principal partner, with 70 percent of the shares.
Together, the two contracts awarded to businesses linked to Dávila Córdova added up to 396 million pesos ($30.2 million). Most of these funds were transferred to a network of related companies in fake operations.
Both Cónclave and Prodasa are shell companies that charged for services that were never delivered. The physical addresses that appeared on the invoices correspond in reality to a medical office and the office of a law firm.
During the subsequent investigation authorities looked for Dávila Córdova at the addresses listed on the invoices, but did not find him.
On April 15, 2015, an agent from the Mexico's tax collection office (Servicio de Administración Tributaria - SAT) went to Altiplano prison in search of Dávila Córdova. The agent went to collect a fine that a judge had imposed on the inmate five years earlier. But Dávila Córdova wasn't in his cell. He had already been released.
An employee at Altiplano then conducted a search through the prison's database, and found that Dávila Córdova had left the premise on October 26, 2010.
The PGR announced that Dávila Córdova had been found guilty by a federal judge just eight months before the Juárez Cartel financial operator was set free.
Days before being released, Dávila Córdova was working on an alternative plan: an injunction with Gilberto García Mena, alias “El June,” before the second circuit court of the State of Mexico, for alleged torture and medical neglect, according to court file 1188/2010.
García Mena had been incarcerated in Altiplano since 2001 and was serving a 43-year term for drug trafficking and possession of firearms. The PGR had identified him as one of the top lieutenants of the Juárez Cartel.
On October 21, 2010, Dávila Córdova was notified that the court had authorized his and García Mena's request for a lawyer in the injunction case. The defense lawyer was no longer necessary, however, since five days later Dávila Córdova left the prison after completing his five-year sentence.
On Thursday September 26, 2013, at 3 o'clock in the afternoon, Dávila Córdova met with Wistano Luis Orozco García, former head of the of New Alliance political party in the Federal District. The Juárez Cartel operator handed Wistano a sealed envelope that contained his proposal for becoming a contractor for the National Crusade Against Hunger, records show.
Wistano was an intermediary for the Secretary of Social Development (Secretaría de Desarrollo Social – Sedesol) in Morelos, the state where Dávila Córdova lives.
After retiring as president of New Alliance in Mexico's capital at the beginning of 2013, Wistano became the coordinator for special projects at the Autonomous University of Morelos. His responsibilities included looking for businesses that could equip President Peña Nieto's Crusade Against Hunger brigades.
Sedesol commissioned the Autonomous University of Morelos State to equip the brigades; the university subcontracted Dávila Córdova's shell companies. Dávila Córdova was also a candidate seeking to become a Sedesol supplier. On September 26, 2013, he went to the Center of Research for Engineering and Applied Sciences (Centro de Investigación en Ingeniería y Ciencias Aplicadas) to formalize his petition.
Representatives from three other businesses bidding on the contract were present at the meeting, which took place on Ave. Universidad 1001 in Cuernavaca.
Two of the companies were eliminated right away. The only candidates left were Dávila Córdova's Grupo Comercializadora Cónclave and Bombasa SA de CV.
The following afternoon, Wistano Luis Orozco signed a contract awarding 207,779,715 pesos (approximately $15.5 million) to Grupo Cónclave. It was an express appointment.
History repeated itself two months later. On November 29, 2013, Dávila Córdova's brother attended a meeting at the university and submitted a proposal in a sealed envelope. Prodasa SA de CV was awarded a government contract for 188,662,900 pesos (approximately $14.1 million) 11 days later.
Wistano Luis Orozco declined to comment for this article.
“Will you say something on this topic?” he was asked.
“No, absolutely not,” he answered.
There are many indications that the bidding for Sedesol contracts awarded to Dávila Córdova's shell companies was rigged. In the contract given to Grupo Cónclave, businesses only had one day to acquire guidelines for the bidding process, which resulted in only four bidders having time to register. Two of them were disqualified almost immediately. Meanwhile, companies only had three days to register for the contract eventually awarded to Prodasa.
A government audit found at least 10 other irregularities in the bidding process. It found that the shell companies lacked the minimum documentation required to make a bid.
These irregularities were reported to the SAT and to the Attorney General's Office, which is now investigating the multi-million dollar fraud allegedly carried out by Dávila Córdova at the expense of the Crusade Against Hunger program.
*This article was originally published by Artistegui Noticias in collaboration with CONNECTAS and the International Center for Journalists. It was translated, edited for clarity, and reprinted with permission, but does not necessarily reflect the views of InSight Crime. See the Spanish original here.