Chepe Diablo / Photo courtesy of Factum

The vice president of El Salvador, Óscar Ortiz, is closer than he has claimed to the illegal activities of José Adán Salazar Umaña, alias "Chepe Diablo," who was arrested on April 4 on money laundering charges.

The investigation that led to the capture of Salazar Umaña and three others indicates that Ortiz is not only a shareholder in a company involved in the case, Desarrollos Montecristo S.A. of C.V., but also that the vice president personally carried out activities that the Attorney General's Office itself describes as "money laundering methods."

Oscar Ortiz's words on this subject have been few. However, they contrast with the investigation that the Attorney General's Office has carried out over the last three years, resulting in 39,800 pages consisting mainly of financial reports. While the current vice president and main face of the governing Farabundo Martí National Liberation Front (Frente Farabundo Martí para la Liberación Nacional - FMLN) has insisted that this company "was never active" and "never operated," a group of prosecutors specializing in money laundering say otherwise. 

*This article was translated, edited for clarity and length and published with the permission of Factum. It does not necessarily represent the views of InSight Crime. See the Spanish original here.

According to the indictment brought by the Attorney General's Office, Salazar Umaña's group, made up of several dozen companies, laundered more than $215 million over the past 12 years through various methods, one of which directly involves Vice President Ortiz. Salazar Umaña was also considered, from 2014 until a few days ago, an international drug kingpin by the United States. And according to media and police investigations in El Salvador, he is the alleged head of the Texis Cartel, a criminal group dedicated to drug trafficking and money laundering

2017-04-17-Chepe-Links1

Diagram showing Vice President Ortiz's links to Chepe Diablo / Courtesy of Factum

The charge filed in court on April 8 makes two references to the company Desarrollos Montecristo, in which Chepe Diablo and Ortiz are partners. It appears for the first time on pages 43 to 46 of the more than 2,000-page document. There, prosecutors allege that the company "has had quite irregular behavior" and describe it as a "shell" company, such as those that, according to the Attorney General's Office, are "used to legitimize finances of illicit origin" and do not have normal operations or income.

According to the inquiry, the method used by Chepe Diablo to launder money through this partnership consisted of buying and selling land located on the island of Montecristo, on the coast of the department of San Vicente, at irregular prices. And in this case, Ortiz was not only a founding partner of Desarrollos Montecristo, but was himself the one who bought and sold the same land several times to the same company at prices that prosecutors say are suspect.

"One of the methods used by [Salazar Umaña] for the legitimation of finances is, specifically, the founding of shell companies for the purchase and sale of overvalued real estate to then sell undervalued, which makes it possible to introduce money into the illicit traffic of properties [whose] legal origin is unknown. And in order to hide their criminal responsibility, they do it through fake people, where those who are in charge of [the companies] are precisely the shareholders behind them," the Attorney General's Office states in the documents.

In the case of Montecristo, this method can be divided into two steps. And prosecutors say Vice President Ortiz participated in both. 

The first step is the creation of shell companies. According to San Salvador's Commercial Registry, Ortiz is a founding partner of Desarrollos Montecristo, along with Chepe Diablo and businessman Rogelio Cervantes. 

This company, although it would later be involved in buying and selling land, never submitted balance sheets to the registry, never reported an exact address, and never requested permits to extend invoices. It seems to have been born to be a company that, as Vice President Ortiz himself has assured, "never operated."

SEE ALSO: Coverage of Chepe Diablo

The second step of the money laundering method used by Desarrollos Montecristo, according to the Attorney General's Office, is the buying and selling of land at irregular prices. In this step, the participation of Ortiz is evident. As documented by the Attorney General's Office, the three properties that the company acquired ended up arriving "undervalued" in the hands of the vice president. That is to say, the company bought expensive and sold cheap to one of its own partners. 

On this subject, one of the prosecutors in the case against "Chepe Diablo" makes the following observation: "Desarrollos Montecristo, which supposedly was a company that specialized in buying and selling real estate for tourism development, took losses even though it is a specialist in those businesses. Every company is constituted with a single purpose that cannot be more than the profit motive. That is, a company always seeks a win-win, not to buy and to lose." 

According to sale and purchase records stored in the Real Estate and Mortgage Registry and documented by the Attorney General's Office, Ortiz participated in at least five purchases and sales of the same land that generated losses to his own company. Strangely enough, according to the Attorney General's Office, this land went from being worth $40,000 to $10,000 in ten years, and ended up in the hands of the current vice president. According to prosecutors, this is an unexpected price change. The logic of the market indicates that the land should have gained, not lost, value. 

In addition, the Attorney General's Office assumes that the company never officially had the money to buy these lands, since it never reported any income. According to the Attorney General's Office, "these operations are highly indicative of money laundering activities and assets." And the purchase and sale between the company and its shareholders only shows that "what the company wanted was to legitimize a certain amount of money that involved the acquisition of these properties." 

Ortiz has been, from the beginning, a partner of Desarrollos Montecristo. This raises the following questions: Is it possible that Ortiz did not know that his own company had no money to buy properties and yet was buying them nonetheless? Did Ortiz know that the money with which his own company was buying land was of illicit origin? 

After a report by El Faro, followed by a joint report from Revista Factum and La Prensa Gráfica, revealed the commercial link between Ortiz and Chepe Diablo in April last year, the vice president gave at least three interviews to different media outlets in which he tried to minimize their relationship. Since then, Ortiz has basically insisted on two things: that the company "never operated," and that he has "nothing to do with Jose Adán Salazar Umaña." 

The Smell of Money Laundering 

In its files, the Attorney General's Office details land movements with registration number 70045040, identified as Lot M58 Portion 1, located in the Montecristo canton, in the municipality of Tecoluca in the San Vicente department. This 19,246-square meter property was bought by Ortiz in 1999, while he was still a deputy in the Legislative Assembly. He bought it for the price of 500,000 colones (about $57,142). A year later, on July 31, 2000, when he was already mayor of Santa Tecla, Ortiz sold it to his newly founded company at a price of 300,000 colones (about $40,000), which meant a loss of more than $17,000 for Ortiz.

It is worth remembering that Desarrollos Montecristo had no way to pay for this land because it had no income and no bank account. The Attorney General's Office deduces, according to its investigation, that the payments could have been made in cash. 

On July 23, 2007, according to documents from the Property Registry, Desarrollos Montecristo again sold the same land to Ortiz for the price of $40,000. The fact that it was sold at the same price seven years later caught the attention of the Attorney General's Office. 

Montecristo Island is in the nearby archipelago of the Jiquilisco Bay, an attractive center for tourists and investors. Under traditional commercial logic, the Attorney General's Office points out that this land should have "undoubtedly" gained in value in seven years. However, it was sold at the same price. This, prosecutors say, implies an eventual loss of profits that the company may have taken. 

In the following years, the land changed hands twice more with irregular price fluctuations. On May 26, 2008, less than a year after it was purchased, Ortiz decided to sell the land to Rogelio Cervantes, his other partner at Desarrollos Montecristo. This time the price was also the same. But by December 7, 2012, just a few months before Ortiz launched his campaign for vice president of the FMLN headed by current President Salvador Sánchez Cerén, he bought the land again. Rogelio Cervantes sold it to him for $10,000, a price three times smaller than the one that the company originally bought it at. 

In this regard, the Attorney General's Office says, this "shows that the company was created to make totally irregular operations for the purchase and sale of real estate." 

SEE ALSO: Coverage of Money Laundering

The Attorney General's Office also has suspicions about the other two properties purchased by Desarrollos Montecristo that were later sold to Ortiz. 

The second of the properties purchased by the company covers an area of ​​8,147 square meters and was purchased for 200,000 colones (about $22,857). The land was sold by Alberto Chavarría Delgado, a laborer who by that time resided in San Luis La Herradura, in the department of La Paz, as it appears in the bill of sale. 

Ten years after that purchase, in April 2010, the company sold that land again for $5,000, a 75 percent loss from the previous value, to the then-mayor of Santa Tecla, Óscar Ortiz. According to the prosecution, this land should have been sold at a more expensive price, and never so cheaply.

The other land that the company acquired on Montecristo Island has an area of 25,067 square meters. And as stated in the Property Registry, was acquired by Desarrollos Montecristo on August 14, 2000, from the hands of Osmín Enrique Cervantes Salazar, for the price of 350,000 colones (about $40,000). 

This land also ended up in the hands of Ortiz, sold by his own company at a price of $10,000, ten years later, on October 4, 2010. This meant another loss for Desarrollos Montecristo, a company that seems to have been created to lose money. 

So Why Is Ortiz Not Being Investigated? 

In one of the recesses of the initial hearing against Chepe Diablo, a prosecutor for the Special Anti-Impunity Group (Grupo especial Contra la Impunidad), which has led the most controversial cases in the last year, reacted to questions from journalists. At an impromptu conference in a courtroom hall, a reporter asked, "Is the vice president being investigated or not?"

"Our investigation has focused on José Adán Salazar Umaña and the people who were denounced at the time. What time has allowed us to do so far is to investigate the closed family nucleus of Mr. Salazar Umaña and other related people. So far, I can say that the competence of these denounced facts is what has allowed us to arrive at the people we have denounced, and that's all I can say," the prosecutor said before retreating hastily. 

Although the prosecutors in the case try not to talk about why there is no investigation against the vice president, Attorney General Douglas Meléndez mentioned something during another press conference that may shed a little more light on the situation: "Remember that he [Óscar Ortiz] has jurisdiction." 

But before Meléndez said these words, Ortiz had already sent a letter to the Attorney General's Office in which he tried to distance himself from the storm of accusations against him. And also, in a fake press conference, he allowed himself to hear a single question from journalists where he responded with a statement that, according to his assistants, he had already prepared. 

"First, let the prosecutor and the prosecution do their work as they have done it and as they are doing it. And second, I have absolutely nothing to do with it! Plain and simple, in personal terms and now as an official, I have neither a partnership nor a business with anyone," Ortiz said in early April.

The attorney general downplayed Ortiz's remarks. 

"Some documentation was made available in an informal way, but the investigations are formal, true. If we are going to investigate a person, it is not that that person says 'I am available to the Attorney General's Office' or 'here are these documents.' No. Investigations are serious and responsible. We, if required, prior to the examination that we are going to do, we will require such information, be it testimonial or documentary, related to that company," Meléndez said. 

The attorney general also said that Vice President Ortiz "must explain" his relationship with Chepe Diablo. But this, so far, has not happened. 

Chepe Diablo's Organization

Salazar Umaña was arrested on April 4, accused of running "one of the largest money laundering schemes in the country," according to the Attorney General's Office. In addition to Chepe Diablo, eight other people have been accused, including the mayor of Metapán, Juan Umaña Samayoa, and his son, Wilfredo Umaña Guerra, president of the grain company Gumarsal. These two are marked as the other key pieces of Chepe Diablo's triangle. Now they are fugitives. 

In addition to those three suspects, the Attorney General's Office has accused José Adán Salazar Martínez and Susana Noemy Salazar de Cruz, both children of Chepe Diablo, as part of the structure. Also accused are Sara Paz Martínez de Bojórquez, ex-wife of Chepe Diablo; Tránsito Ruth Mira Morales, wife of Wilfredo Umaña Guerra; Mirian Haydeé Salazar de Umaña and Romelia Guerra Argueta, the wife and ex-wife of Juan Umaña, respectively.

All of these suspects, according to the Attorney General's investigation, helped launder the approximately $215 million through their own banking products (accounts, loans, etc.) and about 100 companies. Of these 100 companies, the prosecution focused its analysis on 36. In these, as explained by Attorney General Douglas Meléndez, there are sufficient indications of involvement in money laundering. The most active company, according to the court documents, was Agroindustrias Gumarsal, with $170 million. Hotesa, S.A. of C.V., the company with which Salazar Umaña managed hotels in different parts of El Salvador, followed next with $6 million. 

Chepe Diablo has been identified in police reports since at least 2001 as the founder of a drug trafficking network operating in the northwestern part of the country known as the Texis Cartel. According to several of those reports that were published in 2011 by El Faro, the Texis Cartel is responsible for trafficking cocaine through El Salvador through the so-called "El Caminito" route, which connects with several blind spots in Guatemala.

SEE ALSO: Texis Cartel News and Profiles

For this reason, Chepe Diablo was named a "Specially Designated Narcotics Trafficker" by the US government in 2014. However, on April 8, while the initial hearing was held against Chepe Diablo and the other three captured, the United States Treasury Department's Office of Foreign Assets Control (OFAC) surprisingly removed him from the "Kingpin List."

According to a statement issued by the US Embassy in El Salvador, "Chepe Diablo" was removed because "the current information the Treasury Department has is insufficient to support the rationale that he continues to play a significant role in international narcotics trafficking," which, according to the same embassy, "should not be seen in the context of other criminal activities in which this person may be or have been involved."

At the moment, Salazar Umaña is still being prosecuted for money laundering in El Salvador, along with the three women who have been detained in connection with the case: his daughter, his wife and the ex-wife of his partner, Mayor Umaña. The head of the Fourth Court of Peace of San Salvador, Judge Nelly Pozas, determined that all four will remain in jail while the judicial process continues.

*This article was translated, edited for clarity and length and published with the permission of Factum. It does not necessarily represent the views of InSight Crime. See the Spanish original here.

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