Former Governor of Mexican State Extradited for Conspiring to Import Hundreds of Tons of Cocaine and Money Laundering through Lehman Brothers

LawFel.com –
PREET BHARARA, the United States Attorney for the
Southern District of New York, and JOHN P. GILBRIDE, the Special
Agent-in-Charge of the New York Field Division of the Drug
Enforcement Administration (“DEA”), announced today the
extradition from Mexico of MARIO ERNESTO VILLANUEVA MADRID, the
former governor of the Mexican state of Quintana Roo, on charges
that he accepted millions of dollars in bribes from the notorious
Juarez Cartel, in exchange for assisting in the importation of
over two hundred tons of cocaine onto American streets.
VILLANUEVA MADRID was also extradited on a second Indictment in
which he is charged with laundering nearly $19 million in drug
proceeds through accounts at Lehman Brothers in New York and
elsewhere.

VILLANUEVA MADRID was turned over by the Mexican
Procuradoria General de la Republica (“PGR”), or Attorney
General’s Office, to agents of the DEA and deputies of the United
States Marshals Service (“USMS”). He was flown by DEA Air Wing
jet to White Plains, New York, and arrived late Sunday.
VILLANUEVA MADRID is expected to appear in Manhattan federal
court later this afternoon.

According to the Indictments and other documents filed
in Manhattan federal court:
For over 20 years, the Juarez Cartel has been one of
Mexico’s most notorious and violent cocaine cartels, responsible
for the importation of hundreds of tons of Colombian cocaine over
the Southwest U.S. border. From 1994 to 1999 alone, led by
ALCIDES RAMON MAGANA and JESUS ALBINO QUINTERO-MERAZ, the Cartel
transported over two hundred tons of cocaine into Texas and
Arizona, and subsequently to major U.S. cities including New
York.

In 1994, the Cartel established operations in the
eastern Mexican state of Quintana Roo, which is where the resort
city of Cancun is located. Under arrangements made with
Colombian cocaine organizations, Juarez Cartel speedboats with
armed crews rendezvoused off the Atlantic coast of Central
America with Colombian speedboats. The Colombian boats were
laden with shipments of cocaine ranging from one to three tons.
On the high seas, usually at night to avoid detection by U.S.
Coast Guard and Mexican naval patrols, the cocaine was offloaded
from the Colombian boats and loaded onto the Juarez Cartel boats.
The ton-quantity shipments of cocaine were transported to
Quintana Roo port cities, including Cancun and Calderitas, as
well as the state capital, Chetumal. The shipments were also
taken at times to the country of Belize, which borders Quintana
Roo to the south, and transported to Quintana Roo by truck, or by
small planes leaving from clandestine airstrips in Belize.
By 1994, VILLANUEVA MADRID was the sitting Governor of
the State of Quintana Roo. He had previously served as Mayor of
Cancun, and in April 1993 was elected Governor of the State. In
1994, to ensure that its cocaine shipments would travel safely
through Quintana Roo without interference from law enforcement,
Juarez Cartel leaders MAGANA and QUINTERO reached an agreement
with VILLANUEVA MADRID. Under the agreement, VILLANUEVA MADRID
was paid between $400,000 and $500,000 for each shipment of
cocaine that the Juarez Cartel transported through Quintana Roo.
From 1994 through 1999, the Juarez Cartel paid
VILLANUEVA MADRID millions of dollars in narcotics proceeds. In
return, VILLANUEVA MADRID placed the police and state government
infrastructure of Quintana Roo at the disposal of the Cartel.
State and federal police officers provided armed protection for
Juarez Cartel boat crews as they offloaded cocaine from
speedboats, and escorted the cocaine shipments — which were
hidden inside tanker trucks — as they traveled through the
state. State government airplane hangars were used to store and
offload cocaine shipments that arrived by plane from Belize.
Cartel members were provided with state police identification
cards and firearms permits, so that they could travel through
Quintana Roo with impunity.

By late 1995, VILLANUEVA MADRID had accrued millions of
dollars in narcotics proceeds. During this time period, in an
effort to hide the illicit funds, he began transferring them to
bank and brokerage accounts in the United States, Switzerland,
the Bahamas, Panama and Mexico, many of which were held in the
names of British Virgin Islands shell corporations. Several of
these accounts were established at Lehman Brothers, Inc.
(“Lehman”) in New York, with the assistance of CONSUELO MARQUEZ,
a Lehman registered representative.
In 1998, Mexican authorities began investigating
VILLANUEVA MADRID for violations of Mexico’s narcotics, organized
crime and corruption laws. In March 1999, VILLANUEVA MADRID’s
term as governor of Quintana Roo expired, and with it his
immunity from prosecution under the Mexican constitution. That
month, VILLANUEVA MADRID fled and remained a fugitive for over
two years. In April 1999, the PGR disclosed that it had issued a
warrant for VILLANUEVA MADRID’s arrest on narcotics, organized
crime and corruption charges.

In the weeks and months surrounding his flight,
VILLANUEVA MADRID, assisted by MARQUEZ liquidated the millions of
dollars in narcotics proceeds he had deposited at Lehman, through
a series of wire transfers totaling over $11 million. These
transfers were made through an account at the Mexican bank
Banamex that MARQUEZ had secretly opened for VILLANUEVA MADRID in
the name of “Lehman Brothers Private Client Services.” A large
portion of the illicit proceeds — over $7 million — were then
deposited into an account at Lehman that MARQUEZ had opened in
the names of a non-existent Mexican family. MARQUEZ was
previously convicted in Manhattan federal court in connection
with this matter.
* * *
In May 2001, VILLANUEVA MADRID was located by Mexican
authorities with the assistance of the Mexico City Country Office
of the DEA, and arrested. VILLANUEVA MADRID had grown a long
beard and shoulder-length hair, and had been hiding in remote
areas in the Yucatan peninsula, assisted by a network of criminal
associates and former aides.
All of VILLANUEVA MADRID’s illicit funds at Lehman and
in other U.S. accounts, totaling over $19 million, were seized
and later forfeited by U.S. authorities.
Following his arrest, VILLANUEVA MADRID was prosecuted
by Mexican authorities and convicted in a Mexican court on
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organized crime and corruption offenses. He was serving his
Mexican sentence when he was extradited.
VILLANUEVA MADRID is charged with cocaine importation
conspiracy and cocaine distribution conspiracy in Indictment S11
01 Cr. 021. VILLANUEVA MADRID is also charged with conspiring to
launder narcotics proceeds, and thirteen separate additional
counts of money laundering, in Indictment S5 02 Cr. 416.
If convicted, VILLANUEVA MADRID faces a mandatory
minimum sentence of ten years in prison and a maximum sentence of
life in prison on the narcotics charges, and a maximum sentence
of twenty years in prison on each of the fourteen money
laundering counts.
Mr. BHARARA praised the extraordinary investigative
efforts of the DEA’s New York Organized Crime Drug Enforcement
Strike Force — which is comprised of agents and officers of the
DEA, the New York City Police Department, the United States
Internal Revenue Service Criminal Investigation Division, the
Department of Homeland Security United States Immigration and
Customs Enforcement, the Federal Bureau of Investigation, and the
New York State Police — as well as the DEA’s Mexico City Country
Office and Merida, Mexico, Resident Office, which together led
the investigation. Mr. BHARARA also recognized the DEA’s Offices
in Houston and Pittsburgh, as well as the United States
Attorney’s Office in Houston, and the Mexican PGR, for their
invaluable assistance in the investigation. Mr. BHARARA also
thanked the United States Marshals Service and the Department of
Justice’s Office of International Affairs for their assistance in
effectuating the extradition.
U.S. Attorney PREET BHARARA stated: “The seeds of
today’s violent turmoil in Mexico were first sewn over a decade
ago by alleged criminals like Mario Villanueva Madrid. The
Indictment charges that Villanueva Madrid turned the Mexican
state of Quintana Roo into a virtual narco-state, selling its
infrastructure and even its police to one of the world’s most
dangerous mafia enterprises. By allegedly corrupting his
powerful office for profit, Villanueva Madrid permitted the
Juarez Cartel to pump 200 tons of poison through Mexico and onto
American streets. Today, the former Governor of Quintana Roo
finally faces justice in an American courtroom. We are
profoundly grateful for the courage the Government of Mexico has
demonstrated through this extradition, and we applaud the hard
work and perseverance of the DEA, our partners in this and so
many other vital international organized crime cases.”
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DEA Special Agent-in-Charge JOHN P. GILBRIDE stated:
“The apprehension of Mario Villanueva Madrid exemplifies
international law enforcement collaboration at its best.
Villanueva allegedly abused the trust placed in him by the
citizens of Quintana Roo, when he facilitated drug trafficking
and money laundering across international borders. I
congratulate the law enforcement officials on both sides of the
U.S. Mexico border for ending Villanueva’s abuse of power and
corruption.”
This case is being prosecuted by the Office’s Terrorism
and International Narcotics Trafficking Unit. Assistant United
States Attorneys ANIRUDH BANSAL and JOCELYN E. STRAUBER are in
charge of the prosecution.
The charges and allegations contained in the Indictment
are merely allegations, and the defendant is presumed innocent
unless and until found guilty.
10-154 ###

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