The rise and fall of El Chapo’s first business empire

Among the guests at the launch-party for a drug-traffickers’ air-taxi service in December 1990 was one Miguel Angel Segoviano -- an accountant in Mexico City with barely three months on the team.

When he arrived at the cocktails, he noticed a man reprimanding the pilot Miguel Angel Martinez, his friend and boss -- because he was crying.

Segoviano approached the man and told him to leave Martinez alone.

"I said he should let him cry and asked why he was bothering him, '' Segoviano recalled.

Suddenly, he felt a friend grab his arm and pull him away up to the second floor, where he was warned he had screwed up -- dangerously. "He told me I had made a big mistake and that I would get myself killed because the man I had spoken to was the owner of the company. He told me it couldn’t happen again. ''

The man the accountant had complained to was none other than Joaquin Guzmán Loera, alias El Chapo. He was the owner of the company being inaugurated that day on the pretext it would fly Mexican businessmen around in luxury Lear Jet planes.

Guzmán not only forgave Segoviano, but he ended up blindly trusting him and shared all his criminal organization’s accounting secrets.

Five years later, Segoviano revealed to jurors in the Federal Court of Southern California (San Diego), many of those same secrets, appearing as the U.S. government’s star witness.

Segoviano’s testimony and that of other witnesses led to the fall of Guzmán first drug empire in the United States. The hundreds of testimonies and documents obtained in the investigation could be used by the U.S. government in a trial against El Chapo, once he is extradited.

Guzmán's lawyers in Mexico have argued that the allotted time for prosecution of this case has expired, and that some of the evidence was obtained illegally. But Mexican judges have ruled that those arguments are not relevant in the extradition process and must be heard in an American court.

The sophisticated methods described by the anti-narcotics operation that culminated in the arrest of top traffickers in the United States, contradict any claim that El Chapo Guzmán was a low-ranking employee or even just a lieutenant of the Sinaloa Cartel fell out of favor with his boss, Amado Carillo Fuentes.

Court documents, reports from anti-narcotic agencies and interviews with witnesses on both sides of the drug war show that from early ‘90s Guzmán was already employing tactics that to this day are associated with his particular brand of business and violence.

He had built two border tunnels to strict architectural requirements. One had a hydraulic mechanism that lifted up a pool table to reveal the entrance. Twenty-four years later, a similar mechanism was used in an escape from a house in Culiacan.

Guzmán made millions in exports from a factory that mixed cocaine with sand in cans of La Comadre, a brand of Mexican chili; he controlled rail routes that crossed half of Mexico and reached warehouses in southern California transporting trainloads of marijuana or cocaine; he already had international ties spreading as far as the Thai heroine markets controlled by the Sanguadikul brothers; and he added to this empire an air taxi-service whose real purpose was to transport money and weapons from the United States.

From the start, he handled power and violence with the same subtlety that allowed him to survive and become the boss of Sinaloa Cartel. Maybe that is why Segoviano did not see in him the characteristics of a narco boss the day he confronted him.

"I never thought that was Joaquin Guzmán. I mean it was that Joaquin Guzmán just looked like a normal person, an employee, '' the accountant said during the trial.

By then, Guzmán’s business was already worth millions, bankrolling his capacity to buy off corrupt officials. Segoviano himself explained that his job was to stash cash in his house that came from Tijuana and passed through Mexico City’s international airport. That was possible because Humberto Pérez, another member of the organization, "had already spoken with the top attorney general officials so that the jets arrived without being inspected. ''

“How much money are you talking about?” the prosecutor asked Segoviano.

“10 million dollars each time,” he replied.

Some of that money was used for planting marijuana, financing new cocaine operations and paying bribes. In just one example, according to Segoviano, Guzmán authorized the payment of one million dollars to a judiciary official.

It quickly became Guzmán’s philosophy was to spend as little money as possible. This was made clear by the way he reacted when he found out how much his men paid for a phone that he gave to actress Kate del Castillo.

“How much does the Blackberry cost?” Guzmán asked one of his lawyers in a text message. The lawyer ignored the question but El Chapo insisted: "At nine o'clock, you tell me the price, please. ''

With the same concern, El Chapo demanded that Segoviano rescue the furniture of a house he owned in Mexico City that had been raided by the authorities and was under special surveillance. Police had discovered that this was the house where hit-men hired by Guzmán and his friend Hector El Guero Palma carried out their executions.

Segoviano sent his wife and his daughter to recover the furniture. Both were arrested.

"She lost all hope. She said that she was being held by the Attorney General, and that I should get out and forget about her,'' he said.

The wife and daughter were released months later for lack of evidence. Guzmán sent Segoviano to the United States but not before reminding him that he could "end things” with his wife and children.

The U.S. government only began to comprehend the true economic stature of the unassuming farmer from the rural town of La Tuna, Sinaloa, once they took down the Californian branch of the cartel.

The investigation culminated in the prosecution of the organization’s ringleaders:

- Enrique Avalos: a doctor who handled low-profile operations in San Diego and then in Chicago

- the Reynosos: three Mexican traders in the United States who helped hide drugs in their warehouses; and Felipe Corona Verbera: the architect who built one of the tunnels and the zoo on Guzman’s ranch in Guadalajara.

- Rafael Camarena: a lawyer who controlled the operation of a tunnel stretching from Agua Prieta in Mexico to Douglas in Arizona.

- Martínez: Guzman’s confidential driver and coordinator of drug flights arriving from Colombia.

Although the Agua Prieta tunnel had already been discovered by 1990, the largest blow to the organization came on June 10th, 1993, when the Drug Enforcement Agency (DEA) and Salvadoran police obtained Segoviano’s phone number as part of a thwarted operation to capture Guzmán.

The San Jorge warehouse operation

Guzman wanted to conquer El Salvador. The country had been slowly recovering from a civil war that lasted more than a decade. The 36-year-old narco planned on turning the country into a stopover for flights leaving Colombia carrying drugs.

Fighting between government troops and the Farabundo Marti National Liberation Front (FMLN) had left 75,000 dead and a formidable arsenal of rifles, explosives and grenade launchers unused. El Chapo also wanted weapons.

Now at peace, the country was starting to rebuild its institutions. It created the Executive Anti-Narcotics Unit, a branch of the police. A detective at the time, who asked to be identitifed only by his first name, Alfredo, was witness to Guzmán’s plans in El Salvador. The detective led a joint investigation with the DEA that sought to arrest the Mexican drug lord. Alfredo had to leave the country because of threats.

From a place he preferred not to identify, he told Univision what he remembered of the operation. Other testimonies and hundreds of court documents reviewed by Univision have made it possible to reconstruct this relatively unknown chapter in Guzmán's story.

The ball got rolling in April 1993. The Salvadoran police and DEA agents, managed to infiltrate a group of intermediaries of the Sinaloa cartel who were living in the capital. The Salvadorans pretended to be corrupt officials willing to facilitate the cartel’s business.

Around April 20th, Juan Manuel Penilla Gonzalez, one of Guzman’s men, hired Jose Granados Turcio to monitor a warehouse on the outskirts of San Salvador. The warehouse was near to a storage center with schoolbooks belonging to the United States Agency for International Development (USAID). Granados was one of the detectives pretending to be corrupt.

"If you're loyal, you’ll get good money,” Penilla said to Granados inside the warehouse located on Calle Antigua in San Antonio Abad. Penilla presented himself as a 38-year-old engineer from Guadalajara, Mexico. El Chapo Guzmán arrived in San Salvador on April 21 to inspect the new trafficking hub. He arrived from Honduras aboard a Sasha airlines plane.

He used a fake passport in the name of Jose Luis Ramirez, and was accompanied by two other men.

The DEA gave Guzman VIP treatment

“So they went to the airport to wait for him. They gave him special treatment so that he would never go through immigration or anything, but only through the VIP lounge of the airport where his people were waiting with our people,” Alfredo said.

Guzmán stayed in room 274 of the Presidential Hotel convinced that he had successfully bought into El Salvador. In the afternoon, he visited the warehouse where the cocaine would be stored. Granados, the undercover officer, welcomed him. Penilla presented Guzmán as the top boss.

From there, they travelled in a white minibus to La Plaza El Trovador. They went to a bar. By pure coincidence, Alfredo and his men were in the same bar.
“Our surprise was that after 40 minutes of trying to relax there, a minibus arrives and out comes El Chapo with some other people that we hadn’t seen at the hotel and there was a woman with them as well,” Alfredo recalled.

A fight broke out in the bar providing an opportunity for the detectives. "Among our people, we had a professional photographer, who took advantage of that moment because El Chapo and his people got scared when they saw that there was a fight. Our guy managed to take some pictures," Alfredo said.

To avoid suspicion, the detectives pretended to destroy the photographer’s film. But the real film was already in a safe place. Univision gained access to two of the photos showing Guzmán accompanied by a young woman. “They left the place in the early hours, boarded the minibus and Juan left them at the hotel and went to the house in Maquilishuat (a district of San Salvador),” the official record reads.

The next day, Guzmán visited a runway close to the deserted beaches of El Tamarindo, two and a half hours from the capital, in the south of the country.

"They always traveled in the vehicle,'' wrote one of the detectives in the operation journal.

After the lightning visit, Guzmán traveled to Guatemala on April 23 on a flight from TACA airlines. He would not have been in a good mood. Two days earlier, Mexican authorities had struck against a shipment he had put a lot of sweat into organizing. Police in Tecate had seized the trailer with 7.3 tons of cocaine hidden inside 1,400 chili boxes. The shipment had been heading for Tijuana where it would continue on to California.

The shipment arrives

But business could not stop. El Chapo needed money to finance the war against his competitors. At dawn on May 4, Guzmán's men arrived at a place near the runway he had inspected. In the distance, the police that knew of the operation saw "a big four-engine plane '' landing. They could not take pictures because they lacked the necessary night vision equipment, according to their statements.

Alfredo said he could see that one of the tires of the plane burst because the runway was too short for such a big plane and the pilot was forced to slam on the brakes. The pilot and co-pilot, wearing military uniforms, went down from the plane, which was also military green, Alfredo said. They were worried about the tire.

"One pilot said he wanted to set fire to the plane, but they decided against it because it would create too much of a fuss. So they changed the tire as best they could to be able to fly back empty,” Alfredo added.

El Chapo’s men loaded the goods into a white Hino van. It was the same vehicle that detectives saw entering the warehouse in San Jorge on May 5 with the merchandise .

"There are about 150 carton boxes with heavy packages inside, as well as about 15 mezcal sacks containing the same packages'' wrote one of the policemen in the operation’s log.

One of El Chapo’s men who arrived with the van tested the drug. He pierced a package with a knife causing a cloud of white dust. The men warned the warehouse guard to now be doubly vigilant. On another visit, they said they would leave the country for a few days, which gave the DEA and local detectives time to take pictures of the cargo and warehouse.

Several weeks later on June 9, the police were alerted that Penilla was headed to the San Salvador airport in a taxi. The detectives saw him meet three visitors who they suspected had been sent by Guzman to pick up the merchandise and bring it to Mexico. They were the Colombian Luis Fernando Muñoz Farfan and the Mexicans Jorge Carrasco Martinez and Gabriela Beatriz González Carlock.

Guzman's intermediaries stayed at the Hotel Camino Real. During the night, a police assault team burst into the rear of the hotel and arrested them in an operation that lasted just a few minutes.

Farfán and Carrasco were taken to an interrogation room where they were beaten up, according to their testimony in the case. Both said that they were placed, half naked, in front of an air conditioner all night while the police threatened to kill them and their families. One of the interrogators bragged about his experience in torturing guerrillas during the country’s civil war.

Their defense attorney Jaime Alberto Lopez Nuila detailed several other contradictions and weaknesses in the case. He questioned whether the accused were actually involved in this shipment of drugs. Why had the authorities not waited for them to show up at the warehouse? Surely, it would have been better to catch them red-handed, he said.

Initially, it was not clear how the prosecution responded. But over time, it came to light in U.S. courts that the DEA aborted their mission because of other news: El Chapo Guzmán had been arrested in Guatemala accused of murdering Mexico's Roman Catholic Cardinal Juan Jesús Posadas during a shootout in the parking lot of Guadalajara International Airport.

The detainees’ explanations for being in the country did not convince the Salvadoran judges. Farfan said he was sightseeing through Central America and the Mexican couple alleged that they were looking for commercial opportunities for agricultural products. Still, the three were freed a few months later.

It is not clear whether it was in the warehouse or in a house that Guzman had visited in San Salvador that the DEA agents found Segoviano’s telephone number (708) 795-xxxx. Either way, the number was passed on to the U.S. authorities, who interrogated Segoviano and asked if he was involved in the death of cardinal Posadas. He was also asked if he was hiding weapons in his house.

Segoviano says that he initially denied everything, but later thought better of it and decided to cooperate.

"I was tired of that lifestyle,'' the accountant said. “I was looking to find God and in my heart I was open to Him. It was a terrible organization. Lies everywhere.”