Former High-Ranking Member of Sinaloa Drug Cartel Sentenced to 15 Years in Prison

A former high-ranking member of the Sinaloa drug cartel in Mexico was sentenced to 15 years in prison for his role in trafficking large amounts of illegal drugs to the Chicago area.

VICENTE ZAMBADA-NIEBLA conspired with other Sinaloa members to import and distribute large quantities of illegal drugs into the United States. From approximately 1996 to 2008, Zambada-Niebla oversaw shipments of narcotics from Central and South America into Mexico and eventually into the U.S. The cartel covertly transported the drugs via private aircraft, submarines, container ships, fishing vessels, buses, tractor-trailers, automobiles, and other methods. Zambada-Niebla also oversaw the corresponding transfer of drug proceeds back to Mexico.

Zambada-Niebla, 44, has been in law enforcement custody since March 2009. He pleaded guilty in 2013 to a drug conspiracy charge and agreed to cooperate with the U.S. government in its efforts to dismantle the Sinaloa Cartel and one of its rivals, the Beltran-Leyva organization, and hold their leaders accountable in U.S. courts.

U.S. District Chief Judge Ruben Castillo imposed the 15-year sentence in federal court in Chicago.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Brian McKnight, Special Agent-in-Charge of the Chicago Field Division of the U.S. Drug Enforcement Administration.  Valuable assistance was provided by the Internal Revenue Service Criminal Investigation Division in Chicago, and the Chicago Police Department.

“Zambada-Niebla played a major role in flooding the streets of Chicago with dangerous narcotics,” said U.S. Attorney Lausch. “Not only has he been brought to justice for his actions, but his extensive cooperation led to charges against dozens of other high-level drug traffickers in courts throughout the United States.”

“The DEA law enforcement team and prosecutorial partnerships continue to thrive and this sentencing is just one result of those great partnerships,” said SAC McKnight. “Members of the Sinaloa Cartel’s leadership have been held accountable for their actions. DEA will continue to focus investigative efforts to arrest the remainder of the Sinaloa Cartel leaders who are operating in Mexico to face justice in the United States.”

Zambada-Niebla is one of more than 20 members of the Sinaloa and Beltran-Leyva cartels to be indicted in federal court in Chicago. The investigation has resulted in seizures of approximately $30.8 million, approximately eleven tons of cocaine, 265 kilograms of methamphetamines, and 78 kilograms of heroin.

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Is Joquin Guzman, AKA "El Chapo" Planning another Prison Escape?

A lawyer for Mexico's most notorious drug kingpin, Joaquin “El Chapo” Guzman, dismissed prosecutors’ arguments that he might try to escape from the Manhattan prison where he awaits sentencing saying he should have access to drinking water, sunlight and fresh air because they “are basic human rights.”

“Mr. Guzman has not had any access to natural sunlight or fresh air for more than 2 years now since he has been extradited to the United States,” Guzman’s attorney Mariel Colon Miro told Fox News on Monday.

“It’s concerning because our country prides itself of being respectful of human rights yet the U.S. government is not doing it for Mr. Guzman.”

Colon Miro said she filed an original motion for Guzman’s conditions of confinement in Manhattan’s Metropolitan Correctional Center on May 9th requesting that her client would be allowed at least 2 hours of outdoor exercise a week, 6 water bottles a week that he would be allowed to purchase from the correctional facility’s commissary as well as access to a general commissary list, and that he would be allowed to access a set of earplugs to help him sleep.

She said on May 23rd the government filed a response asking U.S. District Judge Brian Cogan to deny all 4 of his requests alleging that he should not be allowed to exercise outdoors because of the risk that Guzman, who broke out of Mexican prisons twice, might try to escape again.

Prosecutors also cited an unsuccessful 1981 escape attempt at the same jail, in which a prisoner’s accomplices hijacked a sightseeing helicopter and tried to cut through the wire screening surrounding the recreation area. When that didn’t work, prosecutors said, they rammed the helicopter into the screen and then dropped a pistol to one of the inmates on the roof. The incident, even though it was foiled, “resulted in a standoff between two armed inmates and more than 100 armed, flak-jacketed police officers and prison guards in a population dense, urban area,” the government response stated.

The response said “any outdoor exercise would be particularly problematic for this defendant” who “successfully planned and executed elaborate escapes from two high-security penal institutions.”

This Sunday, Colon Miro said she filed a reply to the government’s response asking the Brooklyn federal judge to grant Guzman’s requests explaining that an attempted escape was “completely different” from the example supplied in the government response. She said Guzman should be granted outdoor access especially because he is not allowed to communicate with anyone but his lawyers and, therefore, is in no position to try a similar escape.

Judge Cogan sided with the government and denied all the requests in an order filed Monday saying the “defendant’s conditions of confinement are tailored to his specific history, including two prior prison escapes, and his specific crimes, including previously running the Sinaloa Cartel from prison and engaging in multiple murder conspiracies to kill his enemies, which were proven beyond a reasonable doubt at trial.”

Cogan also said the Government’s example of the prison escape attempt is relevant given Guzman’s history saying it would be “plausible that defendant could try to recreate such an escape attempt if the opportunity presented itself.”

The judge denied access to the general population commissary citing “security reasons” since many items on that list can be “weaponized.”

He also said that Guzman’s motion to purchase 6 water bottles a week is “denied as moot” since prison records show he has been receiving 6 water bottles a week since April 2019.

Cogan also denied Guzman’s request for earplugs saying the Metropolitan Correctional Center does not allow any inmate to use earplugs “due to legitimate safety concerns that the inmates would not hear guards in an emergency or would use them to ignore the guards.”

“I am shocked because the thing that we were requesting touched constitutional concerns and they were basic human needs,” said Colon Miro in response to Judge Cogan’s decision.

Michael Lambert, another attorney representing Guzman, told Fox News, “We’re distressed by the courts sacrificing security above all else in spite of valid humanitarian concerns.”

“We’re contemplating next moves,” Lambert said. “We are dismayed by this step back but we have no intention of abandoning this issue,” he added.

Colon Miro said one option is to petition the United Nations Office for the Coordination of Humanitarian Affairs. Another option she said she is considering is to petition to the Inter-American Court of Human Rights. “What Mr. Guzman is going through right now is plain cruel,” Colon Miro said.

John Marzulli, a spokesman for the office of U.S. Attorney Richard Donoghue, which prosecuted Guzman, told Fox News he has no additional comment.

Guzman, 62, will spend the rest of his life behind bars after being found guilty in February of trafficking tons of cocaine and other drugs into the U.S. as the leader of the Sinaloa Cartel. The three-month trial detailed grisly killings, a bizarre escape and drugs hidden in jalapeno cans.

Guzman escaped from jail in 2001 by hiding in a laundry bin and managed to evade authorities by stowing away in one of his mountainside hideaways. He was recaptured in 2014 but escaped a year later through a mile-long lighted tunnel. Guzman was captured again nearly six months later. He is scheduled to be sentenced on June 25.

Thanks to Talia Kaplan.

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High-Level Member of Four Corner Hustlers Street Gang Arrested on Federal Drug Charges

A high-level member of the Four Corner Hustlers street gang has been arrested on federal drug charges for allegedly selling wholesale quantities of heroin on the West Side of Chicago.

RAYMOND BETTS, 52, of Riverdale, is charged with conspiracy to possess a controlled substance with the intent to distribute. A criminal complaint filed in federal court in Chicago accuses Betts of selling or directing sales of heroin on eight occasions from December 2018 to March 2019. Seven of the alleged sales occurred in the Austin neighborhood of Chicago, while one deal was allegedly conducted in south suburban Riverdale.

Two other alleged members of the gang are also charged in the conspiracy: ANGELA BELL, 48, of Chicago, and MAURICE WILLIAMS, 50, of Riverdale. All three defendants were arrested. Bell appeared for a detention hearing on Friday at 1:30 p.m. before U.S. Magistrate Judge Sunil R. Harjani in Chicago. Judge Harjani scheduled detention hearings for Williams and Betts for today at 2:45 p.m.

The charges and arrests were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Timothy Jones, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives; Brian McKnight, Special Agent-in-Charge of the Chicago Field Division of the U.S. Drug Enforcement Administration; Thomas J. Dart, Cook County Sheriff; and Eddie Johnson, Superintendent of the Chicago Police Department.  Assistant U.S. Attorneys Katie M. Durick and Kalia Coleman represent the government.

The multi-year investigation was conducted with the Organized Crime Drug Enforcement Task Force (OCDETF) and the High Intensity Drug Trafficking Area Task Force (HIDTA). The mission of the task forces, which are comprised of agents and officers from numerous federal, state and local law enforcement agencies, is to identify, disrupt, and dismantle the most serious drug trafficking organizations.

According to the complaint, Betts operates a drug trafficking organization comprised of members or associates of the Four Corner Hustlers. Betts is a high-ranking member of the gang and the only one to hold the title of “Prince,” according to the complaint. Betts is also the founder and leader of an enforcement or security faction of the Four Corner Hustlers known as the “Body Snatchers,” the complaint states.

The complaint describes eight transactions for a total of approximately 136 grams of heroin. The seven deals in Chicago allegedly occurred in the 5300 block of West Washington Boulevard, while the Riverdale transaction occurred in an alley near the 13800 block of South Edbrooke Avenue in the south suburb, according to the complaint. Unbeknownst to the defendants, the buyer was confidentially working on behalf of law enforcement, the complaint states.

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Will the @SenSanders and @AOC Loan Shark Prevention Act Actually Create a Booming Market for Mafia Loan Sharks?

Last month, Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez debuted the Loan Shark Prevention Act, whose chief provision amounts to a national interest rate ceiling of 15%. In a video accompanying the announcement, Sanders invoked Hollywood’s version of loan sharks to illustrate his point: “You’ve got all these guys in their three-piece suits who are now the new loan shark hoodlums that we used to see in the movies. You know, in the movies, they say, ‘I’ll break your kneecaps if you don’t pay back.’ Well, I don’t know that they break kneecaps …”

Sanders’s invocation of yesterday’s leg-breakers is obviously intended to conjure the colorful figures of American imagination, from Don Corleone to Tony Soprano. But the terror that real loan sharks inflicted on immigrant and working-class families is not merely the stuff of Hollywood; it was a brutal reality for much of American history. And the ubiquity of loan sharks in American history is directly attributable to forerunners of the interest-rate ceilings proposed by Sanders and Ocasio-Cortez.

“Usury ceilings,” as interest-rate price controls were traditionally labeled, began as a paternalistic effort to protect low-income and supposedly vulnerable consumers from exploitation by greedy bankers. Yet, as well-intentioned regulations so often do, usury ceilings backfired spectacularly, primarily harming those they were intended to help. And far from shutting down loan sharks, history shows that usury ceilings have been the primary catalyst for the loan sharks that have preyed on low-income and vulnerable Americans throughout history.

The advent of industrialization saw thousands of prewar immigrants and farmers flood into American cities in search of work. The challenges of city living created unprecedented demand for small-dollar, short-term loans. Yet making small loans to wage earners was an expensive business. First, it was risky — the same factors that necessitated borrowing in the first place (low wages, periodic unemployment, and unexpected expenses such as medical bills and home repairs) translated into high loss rates. Second, the costs of small loans is high relative to the amount borrowed —operating expenses such as rent, employee wages, and utilities are very similar regardless of whether the customer borrows $50, $500, or $5,000. In order to cover losses and those operating expenses, therefore, the effective interest rate on a small loan will have to be higher.

As a result, prohibitively low usury ceilings made it impossible for working families to borrow the money they needed from legitimate lenders. Illegal loan sharks filled the void, creating a reign of terror in American cities.

In New York, future Republican presidential candidate Thomas Dewey first came to fame through his 1935 bust of the city’s loan shark racket. With 1,040% interest rates and brutal means of enforcement — including, according to the front page of the New York Times, “Beatings and Death Threats” — the operation had netted the syndicate a cool $5 million. Former Federal Reserve Chairman Alan Greenspan referred to it as an era of “virtual serfdom” for urban families trying to make ends meet.

In response to the ubiquitous problem of loan sharks, consumer advocate groups led a nationwide crusade to loosen interest rate restrictions to permit legitimate lenders to compete with the loan sharks. The reform effort culminated in the drafting of the Uniform Small Loan Law, which proposed dramatic increases in state usury ceilings. Although the proposal to raise usury ceilings was controversial at first, by mid-century the loan shark problem had largely dissipated in states that adopted the law, replaced by personal finance companies and small-loan companies operating legally.

Yet the lull in regulation, and crime, would prove short-lived. Acting under the theory that excessive access to consumer credit by working families was a primary cause of the Great Depression, many states rolled back their liberalization of interest rate ceilings. The results were predictable — and devastating to America’s working families. According to a Senate investigation, by 1968 loan sharking was the second largest revenue source of organized crime. That same year, Republican presidential candidate Richard Nixon pledged to appoint an attorney general that would “be an active belligerent against loan sharks and the numbers racketeers that rob the urban poor in our cities.” A 1969 book by a former police officer estimated the size of the illegal loan shark industry to be $10 billion per year — the equivalent of $69 billion in today’s dollars and about twice the size of the estimated $32 billion payday loan market (storefront and online combined) today in the United States.

Unfortunate borrowers were often lucky to get off with “only” a broken leg. In one 1978 criminal trial, prosecutors played a tape recording in which Louis “Blind Louie” Cavallaro of the Chicago syndicate threatened to “cut out the eyes and tongue of a man who owed him $18,000” and expressed his desire to wear the victim’s teeth “around [his] neck.” Threats involving the forcible amputation and public display of body parts usually kept private seem to have been especially popular. Usually threats, in connection with the loan shark’s menacing physique and reputation for violence, were enough to ensure timely payment, but not always. One mob enforcer confessed that when one borrower didn’t pay up, he “clipped off” a portion of the borrower’s ear and then explained that if “you pay me you can keep the rest of your ear.” If not, he would take the remainder. “Then the next day I’ll take your other ear. Then we’ll start on your fingers.” Still other delinquent customers were enlisted by the shark into criminal activity to pay off their debts.

Liberal politicians and consumer advocates were finally forced to admit that usury ceilings ended up hurting those they intended to help. In 1964, the New York state legislature opened an inquiry into the state’s billion-dollar loan-sharking racket. Sen.-elect Robert F. Kennedy, in a statement filed with the committee, recommended “altering the state laws on usury so an insolvent person who needs money for legitimate purposes might borrow it at rates that were not exorbitant.”

Kennedy’s sentiment echoed the economic and sociological consensus of the time. A year before becoming the first American to win the Nobel Prize in Economics, Paul Samuelson had appeared before the Massachusetts legislature to testify that “[f]or 50 years” research demonstrated that “setting too low ceilings on small loan interest rates will result in drying up legitimate funds to the poor who need it most and will send them into the hands of the illegal loan sharks.” He continued, “History is replete with cases where loan sharks have lobbied in legislatures for unrealistic minimum rates, knowing such meaningless ceilings would permit them to charge much higher rates.” A decade later, a Cornell study prepared for the United States Department of Justice concluded, “[T]here can be little doubt that [usury laws], at least in part, have created a black market for credit dominated by organized crime.”

The high inflation rates of the 1970s tolled the intellectual death knell for restrictive interest rate ceilings and the Supreme Court’s 1978 decision in the Marquette National Bank case effectively deregulated credit card interest rates by holding that the applicable interest rate on a credit card would be the issuing bank’s state ceiling, not the consumer’s state. The results transformed the American economy: Between 1970 and 2000, the percentage of American households with general purpose credit cards rose from 15% to 70%. And loan sharking became the thing of movies, cable television programs — and now, ill-conceived legislative proposals.

Comparing today’s financial markets to Hollywood villains diminishes the real terror that loan sharks inflicted on generations of immigrant and working-class families and ignores the pivotal role of usury ceilings in creating the conditions for loan sharks to operate. The story of the relationship between usury ceilings and loan sharking is one that’s had numerous remakes and sequels. It always ended the same way — with desperate borrowers turning to illegal lenders to get money in a pinch. Congress can pass all the laws it wants, but it can’t repeal the law of supply and demand — or the law of unintended consequences.

Thanks to Todd J. Zywicki.

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Details of Alderman Ed Burke Indictment on Federal Racketeering and Bribery Charges in Connection with Alleged Corruption Schemes

A federal grand jury charged in a detailed 59-page indictment City of Chicago Alderman Edward M. Burke on racketeering and bribery charges for allegedly abusing his position to solicit and extort private legal work and other benefits from companies and individuals with business before the city.

The 19-count indictment accuses Burke of corruptly soliciting work for his private law firm from companies involved in redevelopment projects at the Old Main Post Office in downtown Chicago and a fast food restaurant in Burke’s ward on the Southwest Side. It also alleges that he corruptly attempted to assist a business owner with a development on the Northwest Side shortly after the business owner told Burke that he would engage Burke’s law firm. The firm, Klafter & Burke, specialized in seeking property tax reductions for corporate clients.

The charges also allege that Burke threatened to oppose an admission fee increase at the Field Museum of Natural History, because the museum failed to respond to Burke’s inquiry about an internship at the museum for the daughter of former Alderman Terry Gabinski, a friend of Burke's.

The indictment was returned in U.S. District Court in Chicago. It charges Burke, 75, of Chicago, with one count of racketeering, two counts of federal program bribery, two counts of attempted extortion, one count of conspiracy to commit extortion, and eight counts of using interstate commerce to facilitate an unlawful activity.

The indictment also charges two other individuals: Peter J. Andrews, an employee in Burke’s 14th Ward office; and Charles Cui, a Chicago real estate developer. Andrews is accused of conspiring with Burke to extort the operator of the fast food restaurant, while Cui allegedly steered private legal work to Burke in an effort to influence and reward the alderman in connection with permitting and tax increment financing for the Northwest Side development.  Andrews, 69, of Chicago, is charged with one count of attempted extortion, one count of conspiracy to commit extortion, two counts of using interstate commerce to facilitate an unlawful activity, and one count of making a false statement to the FBI. Cui, 48, of Lake Forest, is charged with one count of federal program bribery, three counts of using interstate commerce to facilitate an unlawful activity, and one count of making a false statement to the FBI.

Arraignments for Burke and Andrews are scheduled for June 4, 2019, at 10:00 a.m., before U.S. Magistrate Judge Jeffrey Cole. Arraignment for Cui has not yet been scheduled.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  The City of Chicago Inspector General’s Office and the Amtrak Office of Inspector General provided valuable assistance. The government is represented by Assistant U.S. Attorneys Amarjeet Bhachu, Diane MacArthur, Matthew Kutcher, Sarah Streicker and Timothy Chapman.

The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Racketeering, attempted extortion, and conspiracy to commit extortion are each punishable by up to 20 years in prison.  Federal program bribery is punishable by up to ten years.  Using interstate commerce to promote unlawful activity and making a false statement to the FBI are each punishable by up to five years.  If convicted, the Court must impose reasonable sentences under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.

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