Shoemaker: In Mexico, corruption Kills

Shoemaker: In Mexico, corruption Kills

By John Shoemaker/Local columnist

MetroWest Daily News

Posted Aug 12, 2012

LOS ANGELES —

I glimpsed at a horrible sight as we drove by it on a recent business trip to Monterrey, Mexico.

It was the horrific remains of a burned out casino in the heart of a major city.

White crosses in front of the Casino Royale with the names of victims inscribed on them – 52 in total, most of them women playing slot machines. It remains a crime scene untouched.

Members of the Zetas, a Mexican drug cartel fighting for control, had rolled up in broad daylight to the casino in several SUV’s and jumped out to set the front of the casino ablaze with gasoline. Panic stricken, those inside ran to the back to escape but got trapped with no exit.

The owners did not succumb to bribes fast enough.

Throughout Mexico there is a sense of helplessness even with a new government coming to power.

Many fear it will only get worse with the new party in power that had proven to be so corrupt for many years before finally electing President Fox and later, Calderon, to oust the PRI. Now they are back.

In many of Mexico’s cities, the feeling is strong that a third of the police are on a drug cartel’s payroll. “You simply cannot trust any of them”; I hear this repeated to me by so many from Mexico City to Ciudad del Carmen.

Worse, many government officials at local, state and federal levels are also on the payroll of crime families.

Drug crimes are nearly an everyday occurrence. In many countries, it is an accepted way of life.

Beyond drugs, crimes of all types flourish and often are supported by government officials.

It has been widely understood that the main reason for poor economic conditions and lack of real social progress in many countries around the world is simply due to relentless corruption in government and especially in the police organizations.

Fundamental to the problems facing countries like India, China, Mexico, Venezuela, Haiti, and so many countries of the Middle East, Africa and the Sub-Continent are doomed by endemic corruption.

This saps the energy, ambition and hope of citizens.

The wealthy city of Singapore is one well know exception. I have felt completely safe on Singapore’s streets at any hour; no drug problems. Yes, you have to give up some rights which would be unacceptable in the U.S., but the lesson is proven: when a society refuses to accept corruption, the ultimate benefit will be fundamental to that society’s future growth and development.

Studies have proven that when police forces are paid a good wage, they become less susceptible to corruption. When the police are not respected and paid low wages, the results are very predictable. Of course, a well paid police must also be supported by an independent, effective justice system.

In Mexico, they are reeling from all the guns coming into their country from America to support trade to Americans addicted by drugs. It is a vicious cycle and there seems no end in sight.

At least for America, the unrecognized success for our society really must be credited to our very competent and effective law enforcement organizations. Backed up by a solid criminal justice system, business can focus on doing business and ensure growth with jobs and economic prosperity in a fair playing field.

America is fortunate because the people not only want a professional police force, they will pay for it.
For those in Mexico, I feel their sense of resignation.

A reminder is given every day when they drive by the casino on the way to work in Monterrey and other cities with similar shrines. Many of them just give up and say those who died were just unlucky.

Unfortunately, luck has run out for over 50,000 in Mexico.

When I returned to Logan International Airport, I smiled at the first Massachusetts State Trooper I saw and saluted him.

John Shoemaker lives in Natick.

Read more: http://www.metrowestdailynews.com/opinion/x1602171278/Shoemaker-In-Mexico-corruption-Kills#ixzz23Klezpi6

Corruption in Mexico's casinos reaches across U.S. border

Corruption in Mexico's casinos reaches across U.S. border
By Tim Johnson
McClatchy Newspapers


WATERSMEET, Mich. – Hard times have been a constant for most members of the Chippewa Indian tribe known as the Lac Vieux Desert Band.

Nestled in a wooded corner of Michigan's Upper Peninsula, the tribe owns a modest casino, a hotel and a golf course. But the complex is far off the beaten path for tourists or gamblers, and many of the tribe's 600 or so members find that steady work is as unlikely as winning a jackpot.

So when a Mexico casino czar named Juan José Rojas-Cardona offered the tribe the chance to invest in Mexico's booming gambling industry, it seemed like a godsend.

But rather than a big payout, the disadvantaged Lac Vieux tribe got swindled. Its multimillion-dollar "investment" disappeared, adding the tribe to a list of victims that included a mammoth hedge fund in London, an Australian manufacturer of gaming machines, an Arizona investor and two Mexican textile tycoons.

Rojas-Cardona, however, has gone on to build one of the biggest gambling empires in Mexico. Relying on a silky sales pitch and apparent close connections to Mexico's top politicians, perhaps including presidents, Rojas-Cardona holds 60 permits to operate casinos in Mexico – even though gambling remains technically illegal there.

A horrendous act of violence on Aug. 25 first exposed the dark underside of Mexico's casino industry when gangsters firebombed the Casino Royale in Monterrey, Mexico's industrial northern hub, killing 52 people. Those arrested later confessed that they were pressuring the casino owners for payoffs on behalf of Los Zetas, one of Mexico's two biggest crime groups.

But a McClatchy probe in the months since has found evidence that the corruption in Mexico's gambling industry goes much deeper than a shakedown by drug gangs. Indeed, the entire industry appears to be deliberately opaque, designed by political barons as a way for them to hand out licenses as favors, tap casino coffers for cash, and let casino operators flout the law.

The Mexican system is so corrupt and unregulated that U.S. casino companies refuse to enter the Mexican market. That, however, has not kept Americans from being victims of the corruption.

It's unclear what, if anything, the U.S. government has done to warn investors of the risks or to help prosecute alleged scammers such as Rojas-Cardona, whose criminal record in the United States includes the dismissal of a drug charge in New Mexico.

Rojas-Cardona's life in Mexico includes a near-assassination in 2007 that was laid to drug barons or rival casino operators.

Ironically, gambling in Mexico has thrived under the National Action Party, or PAN, which swept into power in 2000 promising an end to the corruption and cronyism that had flourished in Mexico during the long reign of the Institutional Revolutionary Party, or PRI.

The PAN's candidate in 2000, Vicente Fox, was the country's first non-PRI president in more than 70 years, and his successor, current President Felipe Calderón, a fellow PAN member, won the post in 2006 in one of the most closely contested races in Mexico's history.

In a dizzying inconsistency, Fox's government in 2004 issued regulations that essentially ignored Mexico's 1947 law that bans gambling. Even though that law remains in effect, Mexico's Supreme Court allowed the new regulations to go forward.

In the ensuing years, first Fox's administration, and then Calderón's, issued licenses allowing 867 gambling venues, permitting some bingo, sports betting and slot machine parlors to expand into poker, roulette and craps without explicit legalization.

Calderón's office declined to comment on whether the president knows Rojas-Cardona.

Hundreds of full-fledged casinos now dot Mexican cities, and scores, if not hundreds, more operate off the books or under court protection from friendly judges who provide legal relief. Politicians balk at enacting new laws legalizing the current situation for fear that under-the-table payments may dry up and that global gambling companies could move in and dominate.


Rules ignored

Mexican regulators couldn't seem to bend the rules fast enough once they were in place. For example, Mexico's assistant general director of gambling and lotteries, Roberto Correa Méndez, issued permits for 41 new casinos on the day he quit in 2009.

"You visit any of these establishments, and most have games with dealers, card games, baccarat, and this is prohibited," said García Coronado, who's a member of the leftist Democratic Revolutionary Party.

The corruption and favoritism rampant in the Mexican gambling industry served as an incubator for the rise of Rojas-Cardona, 44, a man who spent much of his adolescence and early adulthood in Iowa, where his parents had immigrated from Hidalgo, a state in central Mexico.

From early on, Rojas-Cardona displayed a knack for winning friends. At the University of Iowa, Rojas-Cardona was elected president of the student senate.

After studying economics for five years, Rojas-Cardona left in mid-1990 without getting a degree, the university says. A small cloud followed him. The Iowa state auditor demanded that Rojas-Cardona and other senators return nearly $2,000 in "extravagant" spending on hotels, alcohol, rental of two Cadillacs and double-billing for meals.

Rojas-Cardona, known to one and all as Pepe, ignored the demand.

Rojas-Cardona was charged with a far more serious crime two years later when Border Patrol agents staffing a checkpoint at Orogrande, a remote New Mexico outpost less than an hour from the southern border, saw a white Buick with no license plates approach, then turn south shy of the checkpoint. It was 12:50 a.m., Feb. 11, 1994.

Court records retrieved by McClatchy from a federal records facility in Denver tell what happened next: Agents gave chase and when they stopped the car, they found a "very nervous" Rojas-Cardona. A Border Patrol dog grew excited, and when agents searched the vehicle, they found 17 pounds of marijuana.

Rojas-Cardona signed a plea agreement on the felony trafficking charge in June of that year, but by September he'd skipped bail and vanished.

In late 1998, federal prosecutors asked a judge to quash the arrest warrant and lift the indictment, a practice that sometimes indicates a defendant has become a federal informant. McClatchy could not determine if that was the case with Rojas-Cardona.


Permits granted freely

Rojas-Cardona's criminal past was of no apparent concern to Mexican regulators, who gave enthusiastic endorsements to him and his brother Arturo and their Las Vegas-based partnership, Emex Holdings LLC, one of a web of companies they set up.

Within a few years, Rojas-Cardona and his brother would hold a winning lottery ticket: federal permits to operate 60 casinos and gaming venues.

Just how Rojas-Cardona won the permits is far from clear. But he boasted of friendships with the highest-level politicians and even the primate of Mexico's Roman Catholic Church.

Rojas-Cardona had cast a wide net for foreign investors, sending a Louisiana intermediary to query U.S. Indian tribes if they wanted in on action south of the border.

His trump card: legal Mexican casino permits.

The Lac Vieux Desert Band of Lake Superior Chippewa was a perfect target. While some U.S. tribes had prospered since Indian gambling became legal in the United States, the Lac Vieux were not among them.

When Rojas-Cardona's U.S. agent came calling in early 2006, the tribe's leaders liked what they heard and saw a chance to take a ride on a gambling juggernaut.

Moreover, the Rojas-Cardona brothers insinuated that they had backing from the highest politicians in Mexico.

Claims of bulletproof political connections were stock in trade for Rojas-Cardona. William A. Graven, an Arizona investor, said in an interview in Phoenix that Rojas-Cardona claimed to need foreign funds because he was using his own profits to fill the campaign coffers of powerful politicians in national elections in 2006.

While some foreign investors claimed they were getting stiffed, Rojas-Cardona larded politicians, giving a small helicopter in 2007 to the mayor of San Nicolas, site of his first gambling club, Bella Vista. To angry investors, Rojas-Cardona pointed to his high-level political connections and told them to forget about their money.

"He gave the impression that he was Teflon," said Richard J. Verri, an attorney from a Chandler, Ariz., law firm representing the Lac Vieux Desert Band in a lawsuit against the Rojas-Cardona brothers.

Today, the Rojas-Cardonas operate 22 casinos under the Palmas brand and an untold number of others, making them among Mexico's biggest operators.

Angry investors such as the Michigan Indian tribe say they are frightened to come to Mexico to file a criminal complaint. The Rojas-Cardona brothers are "powerful, dangerous men, connected to the highest levels of the Mexican political establishment," Verri, their attorney, wrote in an email.

James Williams Jr., the former tribal leader, still ponders what went wrong, and why both the Mexican and U.S. governments refuse to take action against Rojas-Cardona.

U.S. federal law treats stealing from Indians harshly, requiring that non-Indians guilty of the theft repay twice the value of what was taken.

"What do we do? Do we just say, well, it's over? I can't accept that, especially when you've taken from 600 tribal members," Williams said.

Casino Royale Fire Stirs Scandal

Casino Arrests Stir Scandal in Mexico
Accused Plotter of Deadly Blaze Nabbed, As Alleged Corruption Hits Ruling Party.
By DAVID LUHNOW And JOSé DE CóRDOBA

MONTERREY, Mexico—A mounting corruption scandal related to illegal casinos is damaging President Felipe Calderón's conservative party, whose fight against organized crime has long been a central aim.

The scandal stems from an attack on a Monterrey casino in late August by alleged members of the Zetas drug cartel, who set a gasoline-fueled fire that killed 52 casino visitors, including a pregnant woman.

On Thursday, Mexico's army said it had captured the alleged mastermind of the attack, Carlos Alberto Oliva, nicknamed "The Frog." Mr. Oliva is seen as the No. 3 leader of the Zetas, who have terrorized much of Mexico through murder, extortions and kidnappings.

"This is a very important blow against the Zetas," Nuevo Leon Lt. Gov. Javier Treviño said in an interview. In the last two years, Nuevo Leon and its capital Monterrey have become a battleground between the Zetas and their former employers, the Gulf Cartel.

During Mr. Calderón's term, some 43,000 people have died in violence between drug cartels. But even as Mr. Calderón has sent in the army to fight the gangs, his administration—of the National Action Party (PAN)—let illegal casinos flourish, where the cartels can launder illicit money, according to both industry players and U.S. officials.

Mexico's army and police say they have now arrested virtually all the main suspects in connection with the deadly fire. But what smolders on is the scandal sparked by the fire.

Mexican officials believe the Zetas set fire to the casino to pressure the owners into paying extortion money. The Casino Royale, officials say, was a target because the casino lacked the proper city and federal permits to operate. In exchange for money, the Zetas would presumably offer the casino "protection" from city and federal inspections.

Days after the Casino Royale fire, Monterrey's leading newspaper published a video showing the brother of the PAN mayor of Monterrey, Fernando Larrazabal, receiving wads of money at one Monterrey casino. The paper suggested that many of the city's casinos, which lack legal permits, were paying off city officials—and drug gangs—to stay open.

The mayor has denied wrongdoing. His brother, Jonas Larrazabal, says the money was payment for selling cheese to the casinos. The comment was seen as laughable across Mexico, where selling "cheese" to make a fortune has become a national joke. Newspapers call the scandal "Queso-gate," or "Cheese-gate."

Since the Casino Royale fire, Mexican officials have admitted that many of the country's casinos lack the proper licenses or disregard gambling regulations, paying off local and federal officials to look the other way.

The owner of Casino Royale, Raúl Rocha, has told Mexican authorities he paid out some $140,000 each month in extortion money, although he declined to say to whom, citing fears for his safety, according to Mexican prosecutors. Mr. Rocha is now in Miami, people familiar with the situation said, and didn't respond to requests for comment.

The Interior Ministry last month filed criminal charges of abuse of authority against the former top official in charge of regulating casinos at the ministry, Roberto Correa, as well as Manuel Fierro, another top-ranking former official, according to ministry officials.

Both men, whose current whereabouts are unknown, are charged with allegedly giving out illegal licenses to casinos, ministry officials say. The charges carry a maximum jail sentence of 12 years.

"We found a real mess here," said deputy interior minister Juan Marcos Gutierrez in an interview. "But we are cleaning it up." Mr. Gutierrez said the ministry is carrying out a review of all casino licenses and will close down those that don't comply with regulations.

For Mr. Calderón's PAN, the scandal threatens the party's reputation for probity. While the party is largely seen as ineffective, it is also seen as more upright than its rivals, particularly the former ruling Institutional Revolutionary Party, the favorite to win back power next year.

"How can we criticize the PRI when we have our own rot," said Fernando Canales Stelzer, a prominent Monterrey PAN party member.

The issue has concerned U.S. officials for several years.

"The traffickers, the casino operators and corrupt politicians form a self-protective triangle which makes it difficult for honest law enforcement officers to get at organized crime," said a 2009 U.S. diplomatic cable released by document-leaking website WikiLeaks, signed by Bruce Williamson, then the U.S. consul in Monterrey. "One way for the Mexican government to strike back at cartels would be to take a fresh look at its policy on casino licenses."

The Interior Ministry said it was taking steps to root out casino-related corruption even before the fire. In June, the ministry fired the head of the gambling commission who replaced Mr. Correa, a former PAN legislator named Guadalupe López Mares, and her four top subordinates. Ms. López Mares hasn't been accused of any wrongdoing.

Since 2008, however, the industry's biggest legal players, like media giant Grupo Televisa SAB, have warned regulators that scores of illegal casinos were opening up, eating into the profits of the legally established players who stuck to the rules, paid taxes, and complied with anti-smoking and local fire laws.

"The casino industry is out of control thanks to corruption within the government and the judicial system," said Alfonso Perez Lizaur, the head of the country's main gambling industry association. "It's sad that 52 people had to die for the government to take this issue seriously."

Starting in 2008, the casino industry association, led by Mr. Perez, filed dozens of complaints with the Interior Ministry, according to copies of the complaints reviewed by The Wall Street Journal.

One case involved a former Monterrey city official, Sergio Gil, to whom Mr. Perez said the government illegally granted a casino permit in 2008. Mr. Gil couldn't be reached for comment.

Mr. Perez said he made repeated inquiries over the case to the Interior Ministry, but said he got no answer. He then sought help at the government's anti-corruption watchdog, and said he again received no help. Finally, he filed criminal charges at the Attorney General's office against several top watchdog agency officials for failing to investigate alleged negligence of top Interior Ministry officials, including Deputy Minister Abraham González.

Mr. Gonzalez is seen as close to Mr. Calderón. It was on Mr. Gonzalez's ranch in Jalisco that Mr. Calderón first announced he was running for president in 2005. Mr. Gonzalez denied any wrongdoing.

Some of Mr. González's closest aides, however, have come under scrutiny. Ivan Peña, Mr. González's former chief of staff at the ministry, worked for two casino groups after leaving his post in 2007, by his own account.

Mr. González to do with the casino industry since leaving the ministry in 2009.

Underscoring the revolving door nature of the casino industry and the interior ministry, another former top official, Miguel Angel Ochoa, currently works for a casino industry association that represents some casinos that obtained their permit through judicial fiat and which are not allowed to join the main industry association. His office didn't respond to a request for comment.