Blog dedicated to reporting on Mexican drug cartels
on the border line between the US and Mexico

Tuesday, December 28, 2010

Mexican Drug Cartels Diversify

Mexico’s drug cartels have diversified their operations in recent years, branching out into piracy, prostitution, theft of oil and minerals, the sale of adulterated liquor and other illegal activities.

A police and army crackdown by President Felipe Calderon’s administration and competition from rivals have forced the gangs to diversify their businesses, a police spokesman told Efe, adding that the cartels do not hesitate to use violence and coercion to achieve their objectives.

In one recent operation against the nation’s cartels, the arrest of the reputed money manager of the crime syndicate La Familia Michoacana, it was discovered that that organization sold 1.1 million tons of illegally extracted iron ore in China for $42 million.

The theft of minerals in the western state of Michoacan has increased in recent years as that area has come under the control of La Familia, the Mexican Attorney General’s Office said.

A source with the U.N. Economic Commission for Latin America and the Caribbean told Efe that some groups have even sought to take control of mines in Michoacan.

“There have been attempts, above all, to launder money,” the source said. “They’re buying up small- and medium-sized mines to do all types of tricks to justify the income from their operations.”

In addition, threats from cartels “that are trying to (enter) production and operation areas” are increasingly frequent, a spokesman for the First Majestic Silver company told Efe, adding that there has been an increase in robberies of mine workers.

The oil industry has also been affected by the encroachment of organized crime, which has stolen $300 million worth of natural gas liquids from state energy monopoly Petroleos Mexicanos’ facilities over the past four years, according to official figures.

Since 2007, the police has guarded Pemex’s installations to prevent employees from aiding and abetting the theft of fuel by drug traffickers.

Five members of the Los Zetas cartel involved in this crime were arrested in July, while a month earlier five Pemex workers and two employees of a Pemex contractor were kidnapped and are still missing.

Mexican cartels also have become involved in prostitution and sex-trafficking, according to journalist and author Lydia Cacho.

“There’s a link between the mafias dedicated to prostitution and sex-trafficking and most of the drug cartels, with the exception of some like La Familia, since they say their ‘moral’ codes prohibit them from operating in brothels,” Cacho told Efe in an interview coinciding with the release of her new book.

She said many of the cartels run establishments in northern Mexico and in Mexico City that really are brothels in disguise.

Other illicit activities carried out by these groups are less well known, such as piracy, a crime in which Mexico ranks fourth worldwide behind only Russia, China and Italy.

Los Zetas have taken over the piracy business in at least four states – Chiapas, Tabasco, Veracruz and Puebla -, where they offer street merchants protection from police operations and financial incentives for selling pirated versions of films with the “Producciones Zeta” label, the daily Reforma reported Monday.

Sellers of this illegal merchandise, which one stallholder acknowledged was surprisingly cheaper than that provided by other distributors of pirated DVDs and higher in quality, must make a periodic extortion payment that in Mexico is known as “rent.”

Mexican companies lost some $3.07 billion in 2009 as a result of piracy and merchandise theft, according to a report from Grupo Multisistemas de Seguridad Industrial, an electronic security services firm.

That report revealed that 65 percent of the CDs and cassettes sold in the country are pirated copies sold by illegal producers, who make an estimated $220 million in annual revenue from those sales.

Cartels also charge immigrant smugglers tolls and kidnap migrants, either to extort ransom payments from their family members or to threaten these people into working for them.

These organizations also have entered the illegal liquor business. In the northern city of Monterrey, Mexican marines found around 100 boxes of adulterated whiskey and tequila in several houses.

Days later, the municipal alcohol director, Rogelio Angel Gonzalez, was arrested at city hall for allegedly helping Los Zetas distribute the alcohol at bars and nightclubs in Mexico’s industrial capital. EFE


  1. @j

    can you hear me now?...JK
    but seriously this is what I had shared with you...diversification is huge whereas the drug portion is becomming much smaller in the over all bottom line... i promise yuou Zs are huge and organized.

    the fuel thef alone 2B in to years..they have taken over the sale of fuel in 5 states big money. and you can see they list the migrant extortion as well..

    i already posted this link but here it is again...

  2. "The cartels power is dependent on America's drug-addiction"....(insert smiley with eyes rolling)

  3. Are they going to blame the US for their most recent illegal activities. It would be typical.. They are never to blame for their own problems.

  4. This is a good on for public this the speaker from stratfor says drugs are a small portion of biz and singles out Zs as the diversification kings...

  5. I hear you Bulea, but I've known this, the damn 2006 movie 'Miami Vice' made a point of mentioning it. It's now new. It's just new to whoever wrote this story, and a lot of people who don't follow this closely. We'll see what happens with the Zeta's. Running wild in Guatemala doesn't impress upon me the strength, like it does to you, ANY of the larger cartels, and the mid level ones could do the same damn thing. They would just rather corrupt from the inside quietly, rather then war in the streets.

  6. J

    Hey who knows? but you are in the deep minority. I don't recall you agreeing when I said drugs were becomming a small prtion of the biz. or anything else for that matter...

    Your words kill me! Zs are NOT running wild...I listen to my friends there...and it is very organized...this is a smart bunch of bastards...

    and if you are going to say you knew that Zs are established in 75% of Guatemala I say bull pucky because I know more about Zs than anyone I know and that part I had no clue...

    scarey...hope you are right though

  7. So now, what was once legitimate business money, has now been stolen, adulterated, expropriated, extorted and flagrantly ripped off from individuals and business concerns to fuel their power struggle. And we thought they were just drug cartels only interested in money. Well we were wrong!

    They are interested in power, plain and simple. They infiltrate the military, police, judicial system, and all levels of government and you don't think they want political power/domination. They steal from and try to expropriate some of the largest industries in Mexico and you dont think they want political power. They want money to fuel their war to be sure. But don't kid yourself. They want power and control and think they are smart enough to get it. Beware.

  8. @ Buela and J, is there a particular forum you guys discuss about the organized crime groups in Mexico???

  9. I meant I knew about the diversifying criminal operations, that's been the case for awhile. I'm not trying to be pompous or a know it all here, but I remember reading articles on that years ago, way before Borderland Beat. I didn't know about Guatemala, until recently, I admit that 100%.

    Do you disagree that Sinaloa, CDG, even La Familia, and Beltran Leyva at their height, (not now) could do the same show of force the Zeta's are now engaging in? They are smart, but not smart enough to know that this whole 'war in the open' will be their demise, American military coming after Zeta's hard is not a good look for them.

  10. 'Mexico’s drug cartels have diversified their operations in recent years, branching out into piracy, prostitution, theft of oil and minerals, the sale of adulterated liquor and other illegal activities.'

    Yeah, well, so??? The precursors to the modern cartels were trafficking in labor, arms, and prostitution way before before anybody ever got into the drugstore trade. Maybe beginning 150 to 200 years ago?

    It was the same thing to in Colombia, where pirates of the Caribbean, Spanish priests, and another well known criminal types founded the whole traffic in illegal and semi-legal goods way back in what??? the 15th Century?

    Hey, anybody ready to celebrate Columbus Day next year? Kill an Indian for Christ and Gold Day? That ol' dog eater... (YES, his merry band of traffickers, torturers, and murderers lived largely off eating the dogs they got from the untold number of dead Natives they slaughtered.)


  11. @ Sahid Marquez...
    Here are links to good infor of drugs/org crime and are two of the academia I use..looks boring but far from...its a GPS to how we got here and what has developed.

    The most comprehensive data that is easy to accesss is:

    UN World Drug & Organized least access 2005 forward...good overview with maps....
    use this link to access all years..

    and anything by the Woodrow Wilson is one link

    I am not sure if this is what you needed...

  12. @ J

    You are a smart guy and I enjoy/read most your thoughtful posts, which is the benefit if one uses a name, it is easily accessed...and you are very interested in if I counter it comes from a good place.

    yes of course diverification has been around since prohibition with can began w/Gulfo whose beginnings were based on liquor traffiking.

    But this is VERY different. Stealing diesel in those amounts then turn around resell at such reduce the rates will effect Mexico deeply, as the land oil is drying up fast. HOWEVER..China is working on an treaty with Mx to provide the exp. equipment that Mx can never afford to drill into the unlimited supply of water ways oil. Damn! why didn't we think of that? Why? Because we will hug tight our trees as the world moves around us and moves past us...MY DOS CENTAVOS...

    also piracy is HUGE, and knock offs. The difference now is the strategy that Zs have to make Drugs far from the end all...puro biz.

    as for the SInaloa...I still agree they are the strongest. and they are capable of anything.. I had predicted months ago that all bets will be off in 2011...Chapo and Zs will pull out all the stops, old alliances and agreements will become shit...and Chapo will began on the pacific end and work inward to control all plazas...Zs will do the same on Gulfo side. I am in the middle, and saw a brief week of violence when chapo came to my city, hung banners promising to rid us of the vermin...killed our police chief, burned buildings, kidnapped people etc...then quiet again. We have a much sought after territory...Chapos will never leave it where it the hands of the Zs....

  13. Summary executions may be a solution. The problem is that eventually it gets out of hand and innocent people is executed too.
    The way to go is to equip the police with good weapons and intel, and control the smuggling of weapons into Mexico. The police needs to be controlled also as corruption is pervasive.
    Easy to say, difficult to implement. Dios salve Mexico.


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