Public Enemy Number One

ALCAPONE USED TO RULE CHICAGO. ELCHAPODOES

T

he cocaine and heroin came into the city by truck, roughly 1,500 to 2,000 kilos of it every month. The trucks

I

cruised in on Interstate 80 through Iowa, 1-94 through Wisconsin, 1-57 through Missouri and 1-65 through Indiana. Once in Cook County, the drugs were distributed to various stash houses: a warehouse on South Sayre just off the Stevenson Expressway, a condo in the southwestern suburb of Justice.

Margarito and Pedro Flores, 20-something Mexican American twins from Chicago, would then distribute the drugs to a dozen or so couriers. The couriers, in turn, would sell the drugs to dealers, in batches of between 20 and 100 kilos, in exchange for tens of thousands of dollars. The drugs trickled down to the streets, to neighborhoods like Pilsen and Little Village, where local gangs took control of the sales. Each gang

was divided into sections—usually designated by the intersection on which it worked—and followed its own code of conduct. The cocaine and heroin were then sold off, under

the protection of an armed gang member stationed at the corner to ward off cops and rival gangs.

The house in Hinsdale was nothing special. A one-story home with a garage and green lawn, it stood out only because it paled in comparison with the bigger homes surrounding it in the affluent western suburb. Inside, the Flores brothers counted their cash. The bills were ones, fives, 10s, sometimes 100s. They put it through money-counting machines. Sometimes they tallied up as much as $4 million.

There were other places: a sprawling one-story home in Palos Hills, an apartment in Chicago's West Town neighborhood, another in Lakeview.

In warehouses and the homes that had garages, the Flores brothers and their crew would dismantle vehicles and install secret compartments—in the roof of a Ken worth semi-tractor or in the side panels of a Nissan Murano, for example. The money was packaged and then shuttled off out West. One vehicle alone could carry several million dollars in illicit drug proceeds. In Riverside, California, body-shop owner Francisco Espinoza, a.k.a. Little Man, would allegedly await the goods. From there, it was just a three-hour drive south to the Mexican border and a half-day's drive beyond that to the northwestern state of Sinaloa. Authorities claim the cash was poured into legitimate businesses and back into the legitimate financial system: into a seafood restaurant, mall, cattle ranch, day-care center. Sometimes, the money was hidden in stash houses in Sinaloa. The Flores brothers were, on occasion, summoned to Sinaloa to verify delivery of the cash. Some of that money was later taken to the dozens of casas de cambio—

money-exchange houses—on Calle Benito Juarez Oriente in the Sinaloan capital of Culiacan, where the money was changed into pesos and flushed back into the legitimate world.

It's impossible to know how much money flowed into Mexico at the hands of the Flores broth­ers, but between 2006 and 2012 the Mexi­can military seized roughly $180 million

in U.S. currency; seizures in Sinaloa accounted for about 25 percent of the total. In a spate of seizures during just one month in 2008, U.S. authorities took more than $15 million in cash from the Flores brothers' properties in Chicago.

This is the story of how the authorities tracked the Flores brothers' rise from a

pair of street dealers to kings of the Chi­cago drug underworld, as they gradually built a U.S.-based empire for their boss, Joaquin "El Chapo" Guzman Loera, head of the Sinaloa cartel and the most wanted drug trafficker in the world.

In 2005, U.S. authorities got their first lead. At a traffic stop in Chicago, a sus­pect was carrying an illegal weapon. He claimed he needed protection against lo­cal drug traffickers. He led the feds to a man selling drugs on a street corner. That man, in turn, led authorities to a Chicago-based ranking member of the Insane Deuces (continued on page 152)

PUBLIC ENEMY #1

(continued from page 134) gang who had apparently been making regular calls to a Mexican drug supplier.

The authorities followed the chain up­ward, to the Flores brothers. The twins, whose father hailed from Sinaloa, were living between Pilsen and Little Village. They had invested in several businesses—a restaurant, a barbershop—through which they could launder drug money.

Agents from the Drug Enforcement Administration didn't know exactly what they'd stumbled onto. The Flores broth­ers had been indicted in Milwaukee a few years before. According to court docu­ments, they were responsible for the dis­tribution of cocaine and heroin through­out the Midwest.

The DEA worked the suspects for in­formation. In 2005 the brothers alleg­edly flew to Culiacan to discuss business opportunities with Sinaloa's supposed number two, Ismael "El Mayo" Zambada Garcia, his son Jesus Vicente "El Vicen-tillo" Zambada Niebla and several other members of the organization. During those meetings, the Flores brothers ne­gotiated a new deal through which they would distribute cocaine and heroin, ac­cording to court documents. The deal was akin to the one cut by the Colombian cartels in the 1990s, when pressure from U.S. authorities in the Caribbean forced the cartels to enter into a new partner­ship with Mexican traffickers. The Mexi­cans bought the product directly from the Colombians and took control of distribution—and consequently carried all the risks as well. The Flores brothers were about to create their own cartel.

But mistrust between the Sinaloans and the Chicago-based crew remained high. In June 2005, when Illinois state troopers found 398 kilograms of cocaine after a routine inspection near the city of Bloomington, Zambada Niebla ordered the Flores brothers to produce law en­forcement records to prove the load had been confiscated by the cops. They did, and Zambada Niebla let them off the hook. But back in Sinaloa, Arturo and Alfredo Beltran Leyva—two longtime ac­complices of El Chapo's as well as cartel leaders in their own right—were appar­ently becoming increasingly suspicious.

Could the Flores twins be trusted?

DEA special agent Jack Riley had gone head-to-head with El Chapo before. Sta­tioned in El Paso in 2008, Riley had de­clared it was his priority to bring justice to a chaotic border region. He went for the in-your-face approach, no doubt intending to bait the drug lord. Riley had once conduct­ed an interview with a Ciudad Juarez-based reporter during which he'd declared his de­sire for justice. But El Chapo wasn't having it. Days later, the DEA intercepted wiretaps of phone conversations in which his people discussed chopping off Riley's head.

The veteran DEA agent knew the best way to get El Chapo and his organiza­tion would be to nail their Chicago af­filiates. He intended to make arrests, pinpoint the distribution routes and attack the choke point where the car­tels and gangs intersected. Sometimes a random arrest yielded a big fish. When a bright, sharp-dressed lawyer turned up at the scene of an arrest to represent a street dealer, the DEA knew it had nabbed someone who might lead it back to the cartels. Back to the mountains of Sinaloa. Back to El Chapo.

Riley has a reputation for being no-nonsense. Fellow DEA agents consider him a trustworthy ally in the increasingly dangerous war on drugs. He has worked for the DEA for 28 years, first under­cover and then directing informants. He earned his stripes on the streets of Chicago before being sent to Milwaukee and St. Louis, among other cities. After a stint as an instructor at Quantico, he went back to the Chicago field division. In 1998, he headed to Washington to lead counter-drug investigations and prosecu­tions against Mexican drug-trafficking organizations. He then spent a year in El Paso before he returned to Chicago.

Chicago had changed. Or maybe it hadn't. Riley had to figure out what he was working with. Chicago is, of course, well-known for Al Capone and the gangster heyday of Prohibition. But in the decades since, it has remained a breeding ground for criminality. It has never been an easy city to police. It is a prime hub for the transport of illicit products: Dozens of railway lines lead into and out of the city. Outside traffickers—Colombians, Dominicans and Puerto Ricans—have long shipped in their drugs to be distributed throughout the Midwest. Local smugglers have used some of the city's thousands of warehouses to store illicit goods. Auto mechanics have been recruited for the construction of secret compartments in vehicles. With a poverty rate of roughly 20 percent, Chicago has been ripe for exploitation. In neighborhoods such as Humboldt Park and Garfield Park, more than 30 percent of residents live in poverty.

During the 1920s and 1930s, Mexican immigrants flocked to Chicago, with many eventually settling in Pilsen and Little Vil­lage. In the 1950s, a man from the Mexi­can state of Durango moved in to exploit a potentially vast workforce. Jaime Herrera Nevares, a former state judicial police­man, launched what came to be known as a "farm-to-arm" heroin operation. He cultivated poppy in the mountains of Du­rango and Sinaloa (where he had ties to old-time drug lord Ernesto "Don Neto" Fonseca Carrillo, who is serving a 40-year sentence in Mexico), processed and pack­aged it in the cities there and moved it directly to Chicago. The entire process was controlled by members of the Her­rera family, making it the first cartel to operate on U.S. soil. By the late 1970s,

the Herrera organization was believed to be grossing $60 million annually, import­ing more than 700 pounds of heroin into the country each year. The Herrera fam­ily controlled as much as 90 percent of lo­cal heroin distribution.

The DEA began to investigate Her­rera Nevares and his son Jaime Herrera Herrera more thoroughly, arresting af­filiates in Chicago as well as in Mexico. As they expanded to Denver, Los Ange­les, Miami and Pittsburgh, the Herreras left trails. In 1979, the DEA launched a special Central Tactical Program to target the Herreras and their network. On July 23, 1985, after a two-year investigation known as Operation Durango, 120 mem­bers of the organization (out of 132 who were indicted) were captured. Just three years later, Mexican authorities arrested Herrera Nevares and his son.

While the Herreras dominated the Hispanic and suburban markets, as well as controlled the distribution routes out of Chicago, local African American gangs emerged on the South Side and West Side. Incarcerated for the mur­der of another drug dealer, 30-year-old Mississippi-born Larry Hoover seized on an opportunity to build an organization of hardened criminals.

"It is time for us to go to school, learn trades and develop all of our talents and skills," wrote Hoover in a 1981 memo to would-be followers, "so we will become stronger in society. We cannot wait for the system to teach us. We must take it upon ourselves to learn all we can about this world. We, as an organization, will not stand still and die."

It was with these words that the Afri­can American gang world was consoli­dated in Chicago under the leadership, from prison, of Hoover and his Gang­ster Disciples. At the gang's height it had 30,000 militant followers. Hoover repeatedly—and publicly—urged them not to resort to violence but instead to study and learn useful skills.

His rhetoric failed to win over the au­thorities. While Hoover was preaching the good word, his followers were practic­ing the evil deed of drug trafficking. The authorities began to connect the dots: Hoover's organization operated under a hierarchical system. The top players in the gangs were assigned titles such as gover­nor, regent or coordinator. Each governor had about 1,000 foot soldiers under his control to sell drugs on the streets. Un­derage scouts helped distribute the drugs without the cops knowing. Members of Hoover's inner circle had nicknames; the big man himself was known as the Chair­man, while various accomplices went by Pops, Crusher, Heavy and Khadafi.

The Gangster Disciples had their own rules. At regular meetings, usually run by the governors, discipline and orders were dished out. Lower-ranking gang members were required to pay dues—a percentage of the profits they made from dealing dope—known as "the weekly."

Stealing money, alerting the cops to illicit activity, failing to show respect for gang leaders and missing meetings constituted violations. The punishment, according to prosecutors, was vintage Capone: a beating with a baseball bat. Gangster Disciples paid the Chairman the equivalent of roughly one day of drug profits per week from sales that exceeded $100 million per year.

Hoover and his organization went to great lengths to launder money. According to court documents, they poured dollars into local political organizations and charity concerts. Hoover also encouraged his followers to in­vest in property rather than the flashy cars and accessories so commonly associated with drug traffickers and mobsters. Their invest­ments also served to give Gangster Disciples better standing in the community, winning over skeptical hearts and minds.

In 1995 Hoover was sentenced to life behind bars. Dozens of his associates were imprisoned; others splintered off to form their own gangs. To this day, former mem­bers of the Gangster Disciples are still be­ing arrested. Some estimates put the gang's current numbers as high as 18,000.

By the time Hoover was sentenced, the Gangster Disciples weren't the only game in town. Demand for cocaine, heroin, methamphetamine and marijuana had been growing.

The power vacuum was quickly filled. Almost overnight, Chicago became the only city in the United States to have rep­resentatives from every major Mexican drug-trafficking organization: La Familia Michoacana had representatives in Ber-wyn, Hickory Hills, Oak Lawn, Boling-brook and Joliet. Los Zetas had a presence

at the intersection of the Little Village and North Lawndale neighborhoods, as well as on the South Side. The Gulf cartel and the Juarez cartel were believed to have set up cells scattered throughout the city. It was around this time, in the mid-1990s, that El Chapo began to eye Chicago. One of his Sinaloa cartel lieutenants alleg­edly began scouting the city for spaces in which to store drugs for later distribution to New York. A warehouse in Franklin Park was leased by a Sinaloa cartel affili­ate. It came to be known by El Chapo and his crew as "the Chicago Warehouse" and "the Big House," according to court docu­ments. Even in those early days there was mistrust between the Sinaloa higher-ups and their Chicago brokers. According to an indictment, one of the Chicago-based crew members was summoned back to Sinaloa in October 1994 to explain the loss of a cocaine shipment and the finan­cial proceeds. Still, it wasn't long before the Sinaloa cartel settled in for the long haul, establishing itself in Little Village and Pilsen.

Hoover had fallen, but heroin from the hills of Sinaloa kept flowing along the high­ways into Chicago.

One of the heroin highways in Chi­cago is the Eisenhower Expressway. Bill Patrianakos was a habitual pot user who, along the way, tried other drugs includ­ing cocaine and opiates such as OxyCon-tin. He'd been totally clean for about eight months when he decided he needed a reward. Heroin. He'd give it a shot, try it once and "be just fine."

Patrianakos went online, searching law enforcement sites for the areas of Chicago that had the most heroin-related arrests. More arrests meant more dealers. He found the portion of the map with the highest concentration of red dots, got in his car and headed for the heroin highway.

It's not hard to find a dealer near the Eisenhower. Take any exit between Har­lem Avenue and the Loop, and you'll find one. Patrianakos asked a few passersby. Eventually one guy walking down the street, an addict, offered to lead the way if he would share some of the heroin. The addict went into a building; Patrianakos waited in the car. Ten minutes later, the deal was done: Heroin in hand, Patriana­kos had made his contact. "At that point we formed a strange friendship, and he was my heroin guy," Patrianakos recalls. "I'd call him, he'd say to come on up to the city. He'd take me to the best dope spots. We'd do our drugs, and I'd go back home."

Within weeks, Patrianakos was using ev­ery day. His cash began to run out. Ninety percent of his money went to heroin, five percent to gas to drive to get the heroin, and five percent went toward food. "My cash flow was destroyed," he recalls. He started stealing from his sister, then his mother, then his father. He even started counterfeiting $100 bills on his computer.

Patrianakos was concerned about the DEA and the city cops, but he thought he'd be able to outsmart them. He had rules—never

use fake cash in the same store twice, for in­stance. But desperation always strikes an ad­dict. Patrianakos broke his own rules, going to Walgreens to buy prescription pills. The cashier rejected Patrianakos's fake $100. Pa­trianakos played dumb and began to walk toward the door. He heard a call being placed for the manager. As he backed out of the parking lot, an employee came out of the store and wrote down his license number. "I got you! I got you!" she screamed.

Patrianakos went home and destroyed the fake bills and the computer. He tore apart the printer. Weeks went by, and no cops showed up. He was in the clear. He went on a trip to visit family.

When he got back, agents were waiting for him at the airport. There was a war­rant for his arrest. Patrianakos spent the night and the next day in Cook County Jail. He then went into treatment and be­gan his long recovery.

According to official statistics, in some Chicago-area counties as many as 50 people overdose on heroin each year. Ac­cording to Patrianakos, who is now on the board of the Heroin Epidemic Relief Or­ganization, many of the customers are sub­urban white kids who want to take a stab at heroin. A gram of Mexican brown—the cheaper stuff—goes for about $100; Mexi­can black tar can reach as high as $200.

Despite the drug violence, Patrianakos doesn't think the war on drugs in Chicago is as bad as it can seem. The cops, for ex­ample, take no pleasure in locking up kids who buy heroin. "The police turn a blind eye when it makes sense," he says. "The law may often be black-and-white, but in life there is nothing but shades of gray. The Chicago police seem to understand this when it comes to users." He thinks people are finally starting to understand the folly of filling prisons with drug addicts. A lo­cal program called Drug Court allows first-time offenders who are not drug dealers but who committed a crime as a direct re­sult of addiction to pay a fine, get a job, do community service, quit using drugs and go to school. Complete the program and the charges are dropped; one's record can be expunged after a year. Last year, Illinois passed a Good Samaritan law that grants immunity to anyone caught with a small amount of drugs when they call for help in the case of an overdose—juveniles no lon­ger have to fear arrest if a friend overdoses and needs medical care. "I don't think the drug trade in Chicago or anywhere in the world will ever be stopped," says Patriana­kos. "If I were king for a day, my solution to the drug trade problem would be to ad­mit it can never be stopped and only mini­mized. Then, instead of going after the supply, I'd go after the demand."

Sitting in his office in the John C. Kluczyn-ski Federal Building at 230 South Dear­born Street, Jack Riley ponders the idea of legalization. What would happen if the drug war ended tomorrow? After all, it has been a 40-year slog, with about $1 trillion in taxpayer money spent with questionable results. "It would be chaos," Riley says.

Riley works for the DEA alongside doz­ens of other agencies under the same roof. FBI, IRS, ATF—you name it, they're at 230 Dearborn. It hasn't always been this way: In the 1990s, interagency tensions and turf wars prompted FBI director Louis Freeh to suggest the DEA and FBI merge. It never happened, but coopera­tion has increased. This is the way inter­agency counter-drug operations work these days: The DEA, with its specialized expertise in international drug operations, is often top dog, sharing its intel with other officials. Each agency has its own portfolio. The FBI, for instance, contributes mainly through its expertise in sustained, long-term investigations. There have been ups and downs, some big victories and some missed opportunities. Riley is clearly proud of his accomplishments; he's equally proud of the working relationships he's built with fellow law enforcement agents in Chicago.

Chicago has come a long way since the days when aldermen were affiliated with gangs, but some criminologists have pub­licly claimed that city politics and gangs re­main connected in a shadowy alliance that refuses to break.

Aside from the challenges presented by going after criminals—the city has 12,000 officers on its police force and an estimated 100,000 gang members—the Chicago Po­lice Department has long fought to main­tain its integrity. The case of Saul Rodri­guez has again placed Chicago's police under scrutiny. After police officer Glenn Lewellen arrested him and turned him into an informant, Rodriguez, head of a lo­cal drug-trafficking gang, teamed up with Lewellen in 1996. They formed "the En­terprise," according to prosecutors, who alleged that members of the Enterprise robbed, kidnapped and even murdered rival drug dealers for their proceeds. Lewellen, meanwhile, kept the group in­formed about police investigations into the Enterprise's activities.

Around 2003 a member of the Enterprise began to buy cocaine from a pair of twins, according to court documents. Rodriguez learned that these twins had access to large amounts of cash and cocaine and were well connected to Mexican suppliers. Rodriguez was introduced to them at Hoops Gym in Chicago; they began to play basketball to­gether. Rodriguez and Lewellen—who had retired from the Chicago Police Department the year before—plotted to kidnap at least one of them and hold them for ransom. The twins, Rodriguez learned, were wanted on money-laundering charges in the United States and frequently made trips to Mexico.

In the spring of 2006, having failed in various bids to kidnap the twins, Rodri­guez and his crew stole more than 300 kilos of cocaine from them. The twins noticed, as did their cartel contacts. The cartel or­dered Rodriguez to kidnap two suspects and interrogate them, which Rodriguez did despite knowing who was responsible for the theft. According to court docu­ments, Rodriguez and his crew beat the men prior to releasing them.

After Lewellen and Rodriguez teamed up in 1996, Lewellen managed to keep the DEA at bay by arguing that investigating Rodriguez would hamper police investiga­tions into other drug organizations. But in early 2009 Rodriguez overplayed his hand. At a meeting at the Polekatz strip club in suburban Bridgeview, a source of his pro­posed stealing 600 kilos of cocaine from an unnamed Mexican cartel. Soon after, in April of the same year, Rodriguez and several other members of the Enterprise were arrested. The source had been a DEA informant; the cocaine deal had been a sting operation. Lewellen was arrested in November 2010 and sentenced to 18 years. Other members of the Enterprise received up to 60 years. Rodriguez, having testi­fied against his former cohorts to avoid the death penalty, faces up to 40 years under a plea deal.

In 2012, Rodriguez was allegedly ap­proached by a fellow inmate at the Metro­politan Correctional Center. The inmate, Vicente Zambada Niebla, a.k.a. Vicentillo, supposedly asked for Rodriguez's help in getting rid of two twins who ran a major drug-trafficking operation in Chicago. Their names were Pedro and Margarito Flores.

"Twin, you know guys coming back from the war. Find somebody who can give you big powerful weapons, American shit. We don't want Middle Eastern or Asian guns; we want big U.S. guns or rocket-propelled grenades." Zambada Niebla was talking to Margarito Flores at an undisclosed moun-taintop location in Sinaloa. It was October 2008. The Flores brother was paying a visit to his bosses. They weren't happy. Law en­forcement pressure in Mexico was mount­ing; Zambada Niebla's uncle had been ar­rested a week earlier. The bosses had fallen out with the Beltran Leyva brothers, with whom the Flores brothers had also been doing business. They were now at war with their former partners in crime. "This gov­ernment is letting the gringos [U.S. law enforcement] do whatever they want," said Ismael "El Mayo" Zambada Garcia, Vicen-tillo's father, according to transcripts of the conversation published in court docu­ments. "All we need is for them to try and extradite him [Arturo Beltran Leyva]."

El Chapo weighed in. "It's too early for that. It's going to take a long time. They are fucking us everywhere. What are we going to do?" El Mayo suggested sending the authorities "a message."

"Whatever we do, we have to do it in someone else's territory, in el humo." (El humo, "the smoke," is code for Mexico City, which at the time was under the control of the Beltran Leyva brothers.)

"Yeah, it would be good to do it in the smoke," El Chapo said. "At least we'll get something good out of it, and the Beltran Leyva brothers will get the heat. Let it be a government building—it doesn't matter whose. An embassy or a consulate, a media outlet or television station."

Zambada Niebla turned back to Mar­garito Flores, who allegedly agreed to do his best to obtain the weapons. El Chapo

and Vicentillo made it clear this was not a request but an order.

A phone call, late November 2008: Mar-garito Flores, in Chicago, asks to speak with Vicentillo, according to court tran­scripts of the recording. klokks: Hey, do you remember what we talked about? About those toys? zambada niebla: Yes.

klores: I have somebody that just got out of the service. He said he could hook me up, but they're going to charge twice as much. Is that okay?

zambada nikbia: That's fine. Just let me know. Flores had found someone willing to sell him weapons: his DEA contact. They had dis­cussed black-market prices and various types of weaponry so Flores could appear knowl­edgeable. Just days later, the Flores brothers and the Sinaloa cartel leadership made a deal for the transportation and distribution of 574 kilos of cocaine directly to Chicago.

Zambada Niebla never got the weapons. Shortly after a series of meetings with DEA agents in a Mexico City hotel in March 2009, he was arrested by the Mexican military and extradited to Chicago. His defense filed a mo­tion claiming the DEA had offered Zambada Niebla immunity from prosecution in ex­change for information provided by a Sinaloa cartel lawyer turned informant. But DEA agents have neither the jurisdiction to arrest a suspect on foreign soil nor the power to grant immunity without authorization from Wash­ington, which they lacked in this instance. U.S. government prosecutors, in turn, filed to invoke the Classified Information Proce­dures Act. Zambada Niebla's trial has been re­peatedly postponed. Judge Ruben Castillo, a veteran adjudicator of drug cases in Chicago and an Obama administration candidate for the Supreme Court, has suggested the trial could resume in December.

Since Zambada Niebla's arrest, dozens of high-ranking members of the Sinaloa cartel— as well as the Beltran Leyva brothers and sev­eral top financial operators—have been ar­rested or killed, quashing conspiracy theories that the authorities in Mexico were favoring, or even colluding with, the Sinaloa cartel. The Flores brothers' case has not yet gone to court, and El Chapo himself remains free.

DEA agents continue to insist El Chapo's days are numbered. Jack Riley has repeat­edly likened him to Al Capone, whom the authorities got on tax evasion. The mon­ey trail from the Flores brothers back to Chicago may well allow the authorities to hammer a nail in El Chapo's coffin. But re­gardless of his fate, El Chapo's legacy will live on in Chicago. The police department has begun to go after drug trafficking as if in a "ground war," as police chief Garry F. McCarthy put it, assigning more beat cops to the streets. There were 500 homicides in Chicago in 2012; police say there should be fewer this year. Whether or not the police can keep the cartels out of what has become a gold mine of a city remains to be seen.

ITS IM

SIBLE

D

o: o

if

FVirn