An alleged front man for fugitive Veracruz Gov. Javier Duarte has acquired a string of properties in a suburb of Houston, Texas, offering a further demonstration of the importance of the United States in laundering the proceeds of criminal activity in Mexico.
Facing dozens of criminal complaints against him and his subordinates, former Gov. Duarte took a leave of absence from his post in mid-October, just a couple of months before he was set to leave office, and subsequently went underground.
Investigators have focused largely on Duarte’s possible theft of public money. The Wall Street Journal recently reported that $2.6 billion of federal transfers to Veracruz remain unaccounted for. Animal Político has reported that authorities have identified 33 shell companies that received hundreds of millions in contracts from Duarte’s government without providing the goods and services promised.
Duarte has also been accused of fostering ties to drug cartels, presumably giving them free reign in the state in exchange for bribes. An alleged commander of the Zetas told VICE News earlier this year that Duarte originally struck a deal with the notorious crime group, but betrayed them in favor of the Jalisco Cartel.
In a May appearance in the state, former President Felipe Calderón accused Duarte of giving the Zetas control over state police departments in Veracruz. On October 23, the magazine Zeta reported that two suspected co-conspirators in Duarte’s alleged corruption schemes also had ties to organized crime, suggesting that criminal infiltration of his government may play a growing role in the ongoing investigation.
The investigations into Duarte have identified a handful of alleged front men, who have presumably been used to stash assets in Mexico and the United States without sparking the curiosity of journalists, banking officials or law enforcement. As reported by Reforma, an unnamed lawyer testified last month before Mexico’s Justice Department that he was involved in the creation of Duarte’s strawman network, which is likely a sign that officials are closing in on the ex-governor’s illicit assets.
Two such figures are Veracruz businessman José Antonio Bandín Ruiz and his wife Mónica Bayaban. While not prominent figures, Bandín Ruiz went to high school together with a Moisés Mansur, a long-time friend of Duarte and another alleged front man. This relationship was apparently enough to bring Bandín Ruiz into Duarte’s orbit.
Anticorruption websites in Veracruz have reported that Mexican justice officials have launched investigations into the couple’s holdings, which expanded enormously under the Duarte governorship. In addition to a mansion in the state of Mexico and a five-bedroom, 4,600-square-foot home in outside of Houston, public records in Texas show that Bandín Ruiz and Babayan have founded nearly 30 companies inside the state.
Many of these LLCs were set up as vehicles to own houses in The Woodlands, the subdivision outside of Houston where Bandín Ruiz and wife own a home in their own name. The companies set up for real estate have names that correspond to their addresses; for instance, 83 West Jagged Ridge LLC is the owner of a house at 83 West Jagged Ridge Circle, and 87 West Jagged Ridge LLC, which is the owner of a house at 87 West Jagged Ridge Circle. It appears that all of these LLCs were formed during the Duarte governorship, which began in 2010.
There are approximately 17 such firms that correspond to addresses in The Woodlands. Most are moderately-sized homes worth a few hundred thousand dollars each. Some documents related to the homes’ purchases are signed by Bandín Ruiz.
Bandín Ruiz’s other firms appear connected to various additional economic activities. He and an associate named Jaime Riverte founded two businesses apparently dedicated to building — Reban Safety LLC and Reban Construction LLC. He and his wife have a similar series of businesses, including Banba LLC, Banba Offices LLC and Banba Land and Development LLC.
InSight Crime Analysis
Duarte’s alleged front man Bandín Ruiz appears to have built a network of assets in the United States worth millions of dollars. If the suggestions that the assets comprise some portion of Duarte’s allegedly ill-gotten wealth prove true, this represents one of a growing number of examples of Mexican political corruption and drug money being laundered in the United States, especially in the border region.
One of the most prominent prior cases shares many similarities with Duarte’s: Prosecutors in Texas have spent much of the past several years targeting assets belonging to former Coahuila governor Humberto Moreira and his closest aides. Like Duarte, Moreira has been accused of both pilfering state money and of accepting bribes from the Zetas. Prosecutors have seized a San Antonio home belonging to Moreira’s mother-in-law; a shopping center and a bank account with more than $2 million belonging to his former treasurer, Héctor Javier Villarreal Hernández; and a bank account with $1.8 million that belonged to Rolando González Treviño, a media mogul who moved money for Moreira. Villarreal Hernández and González Treviño have both also pleaded guilty to criminal charges in the United States.
American officials have also cracked down on money connected exclusively to organized crime. In 2012, for instance, federal authorities seized a ranch in Oklahoma, the home of a stable of pricey quarter-horses that had won millions in races around the border region. The horses were the property of José Treviño Morales, the brother of Zetas leader Miguel Ángel Treviño, who is currently in custody. Authorities accused the horses of being a mechanism for laundering the Zetas’ profits.
SEE ALSO: Coverage of Money Laundering
These cases, and countless less prominent ones like them, demonstrate the growing popularity of the United States as an area for laundering money through physical assets. The reasons behind the appeal are obvious: It’s far from Mexican officials and journalists tasked with monitoring supected drug traffickers and corrupt politicians, and the assets are denominated in dollars, protecting them from a sliding peso and offering the promise of a solid rate of return. Moreover, lax US laws allow criminal groups to make use of shell companies that help to hide the true source of the dirty money.
Major Texas cities like Houston and San Antonio are popular locales, both because of their proximity to Mexico and because of the existence of a wealthy social elite, meaning a fast-living political front man won’t necessarily draw attention from his neighbors. As a result, despite these recent high-profile takedowns and increased US attention on foreign in money in real estate, such laundering schemes will likely continue.
This offers another demonstration of the interconnectedness of the United States and Mexico in terms of organized crime. Not only do drugs go north as cash and guns go south, but some of the criminal proceeds become intermingled with the licit economy through laundering schemes. Greater sharing of intelligence between the two nations could reduce gangsters’ success in exploiting the United States to launder ill-gotten gains, though it is unclear if this would always be a wise use of resources. As InSight Crime has noted in the past, while cracking down on dirty money can make organized crime marginally less attractive, it is not clear that it helps reduce violence, and such work can be extremely labor-intensive.
In contrast, using better tracking of illicit financial networks to expose dirty politicians is an undeniably laudable goal that could improve Mexican governance and limit organized crime’s influence over the state. And in cases like that of Duarte and Bandín Ruiz, their carelessness makes illicit assets low-hanging fruit for US officials.