Mexico's New Cocaine Kingpin is Cashing In

0:05So if I wanted to get a meeting with El Mencho, what would I have to go through in order to get to him? It'd be tough doing. He is known for very, very strict security measures. He basically is up in the mountains of Jalisco. He's surrounded by something like five security rings, each ring with a couple of hundreds of gunmen, and there are minefields that you have to know your way around. If you go, we know from a couple of people who we were told went up there that they're hooded. They have to leave all electronics behind. And they're taking on what is a six-hour journey up into the mountains of Jalisco.

0:55He sounds extremely heavily guarded and extremely hard to get to. Yeah, he is. By all accounts, he is. That's our colleague Jose de Córdoba, who's based in Mexico City. The reason El Mencho, whose full name is Nemesio Osuguera, is so well-guarded is because he's become one of the most powerful drug lords in the world. And he's feeding America's seemingly insatiable appetite for cocaine. You should know that the cocaine trade has really exploded and it has expanded enormously in the last couple of years. And so that's, you know, the U.S. has, not that it ever went away, but the U.S. has rediscovered cocaine.

1:40According to one drug testing company, cocaine consumption in the western part of the U.S. has gone up by 154 % since 2019. And U.S. and Mexican authorities say El Mencho is the key supplier for a huge part of that market. I think without question, he's the most important drug trafficker in Mexico, which would make him one of the most important drug traffickers in the world, if not the most important drug trafficker in the world. How would you describe him? Like, what's he like as a person? I think he's rather ruthless. I think I would say his main quality. He's ruthless, he's aggressive, and he's been very ambitious.

2:24He's been in this business for a number of decades, since the 80s. And he's been able to rise to the top in what is a, you know, kill or be killed environment. Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudsen. It's Wednesday, October 15th.

2:51Coming up on the show, the rise of El Mencho.

3:17So that credit is so easy as I can. You can also buy your credit at auxmoney.com. Auxmoney. Credit. Just online.

3:33Nemesio El Mencho Osuguera came from humble beginnings. He's a former Mexican cop who grew up poor, growing avocados in the state of Michoacan, immigrated to the U.S., lived in California for a while. In the U.S., El Mencho pled guilty to selling heroin and spent three years in a U.S. prison. After he finished his sentence, he was deported back to Mexico, where he got involved with a cartel. He quickly moved up the ranks. In U.S., the Mexican authorities say he developed a reputation. He's a very good killer. He is a gunman and an enforcer and a killer. He's known for his violence. By the 2010s, El Mencho had established himself as the leader of a spinoff group, now known as the Jalisco New Generation Cartel.

4:23They're a very violent group, and they haven't been shy about confronting state authority. The Jalisco cartel shot down a Mexican army helicopter, killing nine people in 2015. The same year they ambushed a bunch of Jalisco state police, killing 15 of them. As Jalisco was establishing itself, the country's most infamous cartel, the Sinaloa cartel, was about to start coming apart.

4:57Just a few years ago, Sinaloa was the largest supplier of drugs into the United States. That included cocaine, heroin, methamphetamine, marijuana, fentanyl. the cartel had its hands in many different lines of business. And it was headed up by Joaquin Guzman, a.k.a. El Chapo. Who is El Chapo? Who is El Chapo? El Chapo is the most well-known, the most famous, the most notorious drug trafficker in modern Mexican history. And he's one of the founders of what is known as the Sinaloa Cartel. El Chapo was captured and arrested in 2015, but he was able to escape through a mile-long tunnel dug into his prison cell's shower.

5:44Video footage of his escape was shared on the news. And then he goes around where the toilet is, and you see the dramatic moment. There it is right there where El Chapo disappears into the tunnel. In 2016, he was arrested again, seemingly for the last time. He's extradited to the U.S. where he goes on trial and is found guilty, and he's now serving a life prison in terms. What happens then is that he has to, El Chapo turns over his business empire. He turns over his part of the business to his four kids. They're known as the Chapitos. The Little Chapos. The Little Chapos. With El Chapo out of the picture and his sons, the Chapitos, in charge, the Sinaloa cartel started to fracture.

6:31It's important to note that, you know, the Sinaloa cartel is not a, you know, top-down hierarchical structure. It's kind of a loose confederation of families, many of whom are related by marriage. One of the other powerful families in Sinaloa was led by El Mayo Zambada. El Mayo Zambada, who is the great patriarch of the Sinaloa cartel. He is 75 years old, has been in the business for 50 years, has never spent a night in jail, and has a reputation for being able to bring people together to mediate these disputes, many of which are violent or have the potential to be violent disputes. Last year, one of the Chupitos decided he wanted to get out of the drug world, and he started talking with U.S.

7:23prosecutors looking to make a deal. This is according to people familiar with the case. So through his lawyers in New York, he basically starts negotiating his surrender. And during those long talks, he offers to bring in El Mayo Zambada, who is like an enormous catch. Busy offering them, I can deliver you this. Yeah, I want to sweeten the deal. Let me sweeten the deal. I'll bring in El Mayo Zambada. The U.S. officials don't believe him at the time, but he sets this plot in motion. So he sets up a meeting that El Mayo goes to, but it's not a meeting. It's basically he gets kidnapped. He gets kidnapped, they shove him into a plane, and they fly him up to right outside of El Paso, where both men are taken into custody by U.S.

8:22officials. The Chapitos' betrayal of El Mayo Zambada set off a civil war inside the Sinaloa cartel. On one side, El Chapo's sons, the Chapitos. On the other side, El Mayo's son, who led a faction known as the Mayitos. And that civil war would create an opening for El Mencho. That's next.

9:01The Civil War within the Sinaloa cartel has been brutal. For the last year, it's been nonstop killing every day. There's been a total of about 2 ,000 people have been killed. Another 2 ,000 have been disappeared or are missing. Most of them are probably dead. The warring factions have also been attacking each other's labs or leaking their locations to the Mexican government. The Mexican government has sent something like 10 ,000 troops there, but it's been largely unable to stop the violence. By last December, the Chapitos were starting to lose. They were desperate. You know, the Mayitos basically had the Chapitos on the run.

9:42And what we were told is that the top Chapito guy sent his right-hand man to negotiate with El Mencho. The Chapitos asked El Mencho if he would help supply guns, money, and men to help him fight. And in return, according to people familiar with the meeting, they offered El Mencho unlimited access to a very prized possession. Basically, the deal is that the Jalisco cartel, El Mencho, will be able to use all these tunnels that the Chapitos control to send drugs into the United States without paying a fee for the use of those tunnels. For decades, the tunnels have been one of Sinaloa's most critical advantages.

10:26They gave the cartel another avenue into the U.S. that was harder to detect than going through traditional border checks, which the cartel also did. In the past, the only way a rival cartel could use the tunnels was if they paid a hefty fee. How big of a victory was this for El Mencho to get access to these tunnels? People consider it a big deal because it makes getting all these drugs into the United States easier and cheaper for the Jalisco organization. So it's seen as a big deal. I mean, the fact that they control these routes now is a big plus for them. And that's not the only outcome of the deal.

11:12The Chepitos and Almencho also agreed to split the drug market. The Chepitos, which had been increasingly focused on fentanyl, would take that market. And Almencho would take cocaine. This proved to be a fateful decision. While fentanyl was extremely lucrative, it was cheap to make and easy to sell, it was also facing a growing crackdown by the U.S. government. You know, there are tens of thousands of Americans who are dying of drug overdoses, fentanyl overdoses in the U.S. And the U.S. is forced to do something about it. When President Trump is elected, he makes it a top of the list issue with Mexico.

11:54And he basically tells Mexico that Mexico has to dismantle these cartels and stop the fentanyl trade, or the U.S. will put all kinds of economic pressures on it, namely through tariffs. What does the crackdown on fentanyl mean for the Chapitos and Sinaloa? What starts to happen? The fentanyl trade has been very much disrupted. It's what I'm told from people who follow it closely. They've had to get out of Sinaloa. You know, Sinaloa was, and Culiacán in particular, was full of all these labs. I think they've had to disperse over lots of different areas of Mexico. Meanwhile, for El Mencho, the cocaine market was moving in the opposite direction.

12:47There's been a boom in cocaine production in Colombia. You know, they're producing a huge amount of cocaine, and the prices have fallen in the U.S. for cocaine by half from what they used to be five years ago. Now, El Mencho and his Jalisco new generation cartel is sitting atop the drug world. All of a sudden, their chief rival is, you know, is, like I said before, is immersed in this bloody civil war. they really, I think, can't attend to business. So they take over a lot of the business that the others can't deal with. You know, they are expanding. And they are seen now as the next threat to Mexico.

13:37And El Mencho, is he sort of seen as like the next El Chapo? Well, yeah, I think in the sense of that he's the biggest guy, the biggest drug boss in Mexico now, yes, he's seen as that. Not only is El Mencho's cocaine business booming, Jalisco is also making money from other avenues too. According to security experts, the cartel acts as a parallel government in the state of Jalisco and other areas of Mexico that they control. It makes money from taxing goods like tortillas, chicken, and cigarettes. It controls construction companies that build roads, schools, and sewers. And it's even found a huge income stream in smuggling illicit fuel.

14:18How do people in Mexico, in the areas that he dominates, how do they feel about him and his cartel? Well, he has, on the one hand, a reputation for ruthlessness. And so they fear him. But on the other side, you know, in poor areas of Mexico, they are glad to be getting, you know, the food, the medicine, the bands for the town fiesta that he pays for. So I think what you think depends where you're sitting on his table. There are even songs about him called narco ballads. Narco ballad is, well, just what it sounds like. It's a ballad about the heroic deeds of some of these, of the important narcos.

15:10And right now, Mencho has a lot of them. Can you sing one of them for me? I don't think I can. Let me see. I have one here that if you want, I can say the words to. Sure. What does it say? Yo soy Mencho. Soy aquel que le peleo al gobierno y que le sobran huevos.

15:33I will now translate that. I am Mencho. I am he who fights the government. I am he who has balls aplenty. And there's another part that says, Ahora tiemblan los soldados cuando miran mi comando, ni se acercan. Me gusta pelear los gallos. I'll translate that. Now the soldiers tremble when they look at my men. They don't get close. I like cockfights. I like horse races. The U.S. says El Mencho is now one of the most wanted fugitives in Mexico. The State Department is offering up to$15 million for information leading to his arrest. What do you think it's going to take for U.S. and Mexican authorities to bring El Mencho down?

16:27Well, I think good intelligence and good coordination and a lot of luck. What is El Mencho's rise to power and his current control on the drug trade right now? Say about the overall drug war. I guess it shows the power of the drug trade in Mexico. Well, it's interesting because it feels like the U.S. government and the Mexican government had spent so much time and effort to try to break down the Sinaloa cartel, and they got El Chapo. But immediately in the decline of the Sinaloas comes the next new power. And it's just like whack-a-mole. Well, it is whack-a-mole. It is a giant game of whack-a-mole.

17:13And, you know, this has been going on for decades. You know, one big guy is taken down and then he's replaced by another guy. And that other guy who replaces him gets to the top after a lot of violence in which all these rivals basically kill each other. And then the winner gets to the top. And as a result, there's a lot, usually there's a lot more killing. There's a lot more violence. So that doesn't really do very much. I think the U.S. really has to work a lot harder at lowering drug use of Americans. I mean, that's a big part of the problem, the demand side. Unless you stop demand, you know, supply will meet it.

18:10That's all for today, Wednesday, October 15th. The Journal is a co-production of Spotify and the Wall Street Journal. Additional reporting in this episode by Steve Fisher and Santiago Perez. Thanks for listening. See you tomorrow.

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