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Mexican Cartels: "The asian connection"
Fentanyl-laced counterfeit pills, produced in a clandestine artisanal laboratory in the outskirts of Culiacán. Mixed with Oxycodone, another opioid, these pills are highly addictive (Credit: Forbidden Stories).
- Forbidden Stories got access to the “BlueLeaks”, a massive internal data leak from American law enforcement agencies published last June and cross-checked information from two unreleased DEA report.
- The Sinaloa cartel dominates the fentanyl market in the United States and uses complex networks to smuggle the very powerful fentanyl opioid to the U.S.
- With the help of C4ADS, Forbidden Stories uncovered a potential network of companies supplying drug precursors to the Sinaloa cartel.
- A testing operation coordinated by Forbidden Stories shows that Chinese manufacturers purposefully circumvent to laws to send chemical precursors used to produce fentanyl to Mexico.
- Online investigation and groundwork revealed the operation of a Chinese company that may be supplying drug precursors to Mexican cartels.
By Audrey Travère
Translation Sophie Stuber
December 8 2020
Jorge A. posed proudly in front of the five-star hotel Radisson Blu Hotel Shanghai New World in January 2016. The photo’s caption set the tone for his business trip. “Busy working,” he gloomily wrote on Facebook. Jorge A. works for Corporativo Escomexa, a Mexican import-export company that specializes in the trade of tequila, and agricultural and chemical products. He was thousands of kilometers from his home in Culiacan, Mexico and dressed for a bitter cold winter day. The photo got hundreds of likes. His mother, apparently touched, commented, “Blessings my son…Take care of yourself and succeed in your efforts…I love you! Kisses!!” The whole trip was carefully documented on Facebook—from a badly cropped selfie to an intimate portrait of his crab dinner.
Two associates accompanied Jorge A. on this frenetic Asia business trip and appeared in many of his photos. Over several weeks, this team from Mexico strung together stopovers: after Shanghai followed Hong-Kong, Japan, and finally, India. There, they joined Manu Gupta, an Indian businessman who they had previously met in Hong Kong. Gupta is the director of Mondiale Mercantile Pvt Ltd, a company whose missions are as diverse as they are vague. Aside from its export-import business, Mondiale Mercantile also offers legal advice for customs procedures. The company operates in a variety of sectors: chemical and pharmaceutical industries, agri-food products, sand, and even machinery.
Jorge A. and his Mexican associates posing in front of the Taj Mahal in India in 2016 (Facebook screen capture).
Jorge A. and his Mexican associates posing in front of the Victoria harbor’s skyline in Hong Kong, in January 2016 (Credit: Facebook screen capture).
Two years later, the true nature of Gupta’s business came to light. On September 25, 2018, Indian authorities arrested Gupta, along with a Mexican associate and an Indian chemist. The three partners were caught in a lab in Indore wearing masks and gloves and in possession of fentanyl—a powerful synthetic pain reliever. Fentanyl is a heavily abused drug that causes thousands of overdoses across the world. Gupta and his associates intended to ship the fentanyl to Mexico on a commercial flight, hidden in a suitcase. In a December 2018 internal report from the U.S. Drug Enforcement Agency (DEA) obtained by Forbidden Stories, Manu Gupta—currently imprisoned and awaiting trial along with the two other suspects—is described as “an alleged associate of a known Sinaloa Cartel member, who obtained precursor chemicals used to manufacture illicit drugs in Mexico that are subsequently distributed in the United States.” Forbidden Stories tried to reach out to Manu Gupta but didn’t receive any reaction.
By cross-checking information from “BlueLeaks”, a massive internal data leak from American law enforcement agencies published last June, Forbidden Stories and its 25 international partners were able to investigate this case in India, which sheds light on the strategies employed by Mexican cartels to dominate the lucrative market for fentanyl. As murderous as they are, Mexican cartels use the same strategies as any other business—namely, a quest for profitability, outsourcing, and continuous adaptations to reflect changing international regulations. All of this for a multinational criminal organization.
Fentanyl: the new golden goose
A classified DEA report from October 2019 published in “BlueLeaks” soberly summarizes the situation: “Law enforcement data analyzed from 2018 through the end of February 2019 indicates that the Sinaloa Cartel has established itself as a prominent producer and trafficker of Mexico-based fentanyl into the United States.” Despite the arrest in 2016 of Joaquin Guzman, the infamous cartel leader known as “El Chapo,” the DEA acknowledged that the drug business is still running at full capacity.
Chapel of Jesús Malverde in Cuilacán, Sinaloa (Credit: Amrai Coen/Die Zeit).
Across the border in the US, the drug has claimed thousands of lives. In 2018, fentanyl and similar synthetic drugs accounted for nearly half of the 67,367 drug overdose deaths in the United States. This marks a 10% increase from 2017—an epidemic equivalent to the heroin crisis from 2000-2010. Back then, heroin (made by extracting morphine from the poppy plant) was wreaking havoc in North America. And Mexican cartels were reaping the benefits. In 2016, 90% of heroin sold in the United States originated in Mexico.
Now, the cartels are looking forward. And the future is synthetic. Northern Mexico, known as the “golden triangle” because of its marijuana and opioid cultivation, is transforming under the influence of the Sinaloa cartel. In the mountainous terrain around Culiacan, poppy fields are being replaced by laboratories. “Due to government restrictions, [the Mexican army destroyed poppy crops] we began the transition to synthetic opiates, which were cheaper,” a chemist hired by the Sinaloa cartel told Forbidden Stories.
In a clandestine fentanyl lab in the mountains surrounding Culiacán, Sinaloa, a chemist mixes the precursors in a dish (Credit: Forbidden Stories).
Fentanyl’s profitability is extraordinary. Manufacturing this highly powerful drug requires only a minimal workforce and infrastructure. In a 2019 report, the DEA estimated that a fentanyl pill costs only $1 to produce. Each pill is then resold in the US for $10 or more. It’s a jackpot for Mexican cartels, with the Sinaloa cartel leading the charge.
The man on the right is officially an engineer; but at night, he manages 10 clandestine labs like this one on behalf of the Sinaloa Cartel. In total, they produce 6,000 pills a day (Credit: Forbidden Stories).
A well-oiled machine
Until very recently, China exported a vast part of the fentanyl sold in the US. “You had individuals importing fentanyl from China, pressing the tablets in their basement and then putting those online for retail, on the darknet, or connecting up with a local distributor to sell those on the street,” explained Bryce Pardo, a Policy Researcher at RAND and expert in drug policy.
But stricter regulations imposed internationally and in China, in 2017 and 2019, changed the game. Shipping fentanyl directly became riskier. Cartels saw their opportunity to enter into the market as intermediaries. “The profit margins they get out of it is by synthesizing plus refining the product, as it were, into its consumable form,” explained Falko Ernst, senior Mexico analyst at International Crisis Group in Mexico.
With its well-established network, the Sinaloa cartel already had a solid infrastructure to expand into synthetic drugs. One of the DEA memos released through “BlueLeaks” described a highly organized circuit that included warehouses at the border and distributors across the United States. Further down, the memo detailed one of the cartel’s techniques for sourcing precursors, mentioning the involvement of “an individual based in Culiacan, Sinaloa, Mexico,” who served as an independent seller. His mission was to buy “purchase additional large quantities of fentanyl precursor chemicals directly from China” on behalf of the cartel.
But who is the man that the DEA is referring to? When Forbidden Stories asked the American agency, they declined to answer. “Generally speaking, we do not confirm or deny [whether] persons or entities were or are targets of our investigations.” Forbidden Stories has found many troubling coincidences about Jorge A., the Mexican businessman based in Culiacan, Sinaloa, who posed alongside Manu Gupta and his Mexican associates in 2016. An intelligence source in India told one of Forbidden Stories’ partners that Jorge A. is believed to be under investigation by U.S. authorities. And some of the import-export company’s activities that he works for raise questions. With the help of C4ADS, an NGO specializing in data analysis, Forbidden Stories drew on open-source information that revealed a network of entities connected to this company. The complexity of these networks is difficult to unravel.
Culiacán, Sinaloa (Credit: Amrai Coen/Die Zeit).
Companies with suspicious activities
Online, Corporativo Escomexa, the company of which Jorge A. is the official auditor – and its “innovation manager” on LinkedIn – has highlighted products that can be used in the manufacture of methamphetamine . You can find a trace of it on its website but also on different B2B platforms.
An analysis of Corporativo Escomexa’s trades revealed multiple suspect transactions from September to October 2016. Over the course of one month, the company received a collection of pharmaceutical equipment from India—notably a pill press machine. They also obtained 676kg of lactose monohydrate powder, microcrystalline cellulose, and copovidone, all of which are used to make narcotic substances, including fentanyl.
Although Corporativo Escomexa’s most recent activities on the trade platform Panjiva were recorded in October 2016, C4ADS was able to identify a large network of businesses still active today that are connected to the Mexican company in various capacities. “This network appears to be quite extensive and may include dozens of companies operating in both Mexico and the United States. Some of these companies also only have trade data for short periods of time before a new or different company within the network picks up primary shipping responsibility.” explained Michael Lohmuller, senior analyst at C4ADS. One such company, Corporativo y Enlace Ram, appears to share an address, an agent, and import similar pharmaceutical products.The two companies share suppliers as well. According to available online data, Corporativo y Enlace Ram received a shipment in June 2016 from Mondiale Mercantile—the company owned by Manu Gupta, the Indian businessman arrested for trafficking fentanyl to Mexico and the same man seen with Jorge A. during his business trip. In addition, there are pictures of one of the managers in charge of Enlace Ram next to Jorge A and one of his associates, also present during the Asian trip.
Jorge A. posing with other Mexican associates in front of Escomexa’s retail location in Mazatlán, Sinaloa. One of the managers of Enlace Ram appears in this photo, alongside one of Jorge A’s associates, present during the 2016 trip to Asia (Credit: Facebook screen capture).
“While no overt indications of criminal activity were uncovered, the existence of import-export ties and domestic commercial relationships maintained by Corporativo Escomexa SA de CV and its linked entities may warrant further inquiry or offer indications of the modus operandi of trans-Pacific fentanyl or methamphetamine trafficking networks,” told Lohmuller. When asked about this information by Forbidden Stories, Jose R., one of the two managers of Corporativo y Enlace Ram, answered that he did not know Jorge A., Escomexa or “this Indian supplier”. As for Jorge A., whom we wished to ask questions, the businessman never responded to our requests for an interview.
“That’s one of the main myths…the popular image of a cartel as this perfectly integrated organization,” Falko Ernst noted. But outsourcing to independent networks that specialize in logistics or money laundering is a common practice for cartels, including Sinaloa. “They’re the actual sort of backbone of this whole business,” Ernst explained. “Cartels’ brand names fade away eventually. All of those networks stay in place because they’re much less visible. They’re much more clandestine in their operations. They don’t go public and they’re much more shielded from this sort of thing in short term/medium term overhauls and volatility of the market.”
In a business plagued by corruption, Mexican cartels readily exploit the gray zones. “If you look at impunity rates in Mexico, there are about 90 percent. So chances are you get away with things…and you can invest through impunity. So a lot of legal firms, a lot of actors use legal facades…[they] use the impunity or the incentives…and just make a lot of money by getting involved in criminal markets,” Falko Ernst explained. In October 2019, 15 customs agents were dismissed from their jobs. Of those, six were said to have colluded with organized crime groups. This is just one example of the widespread corruption.
On the other side of the globe, Chinese producers of precursors adopted similar strategies to avoid getting caught—balancing on the edge of the law, always one step ahead of authorities.
Forbidden Stories’ partner posing as a fake buyer from a Chinese company offering fentanyl precursors online. Paris, October 9, 2020. (Credit: Forbidden Stories)
Always one step ahead
Because of the potential for abuse, sales of precursors are highly regulated. The International Narcotics Control Board (INCB) has a “Red List” of substances under international control. For fentanyl, the two substances are “NPP” and “ANPP.”
Unfortunately, there are almost endless possibilities to circumvent these controls by creating other nonregulated precursors. The final substance is slightly altered, but its effect is the same. “I’ve heard a chemist once say the precursor game with fentanyl is very tricky. Eventually, if you really want it to solve this, we’re going to have to ban carbon. And clearly, we can’t ban carbon!” said Bryce Pardo. This is known as the “rebound effect.” Less-controlled precursor chemicals similar to NPP and ANPP are synthesized in China, ready to be shipped and exploited. “China has the human capacity. You’re talking about chemists that have PhDs, synthetic chemistry and organic chemistry that know how to manufacture these things very easily.”
To combat this phenomenon, the INCB placed a number of substances on a list, named ISSL, of products “to monitor.” This list identifies products that are not necessarily controlled substances but are frequently used illegally. In theory, the INCB—a nonbinding entity—can rely on companies’ goodwill and inspections by authorities. In reality, the extent of the problem is revealed with a simple Google search.
By entering keywords for the precursors used in fentanyl, the social network Pinterest comes up in just a few clicks. Nestled between users’ wedding mood boards and decoration inspiration are posts from Chinese companies offering fentanyl precursors for export—many directed towards Mexico. At the top of the page is “4-AP,” a substance on the ISSL list that recently became controlled in the US. According to the DEA, 4-AP only has one purpose: to produce fentanyl. Under the cover of a false Mexican identity, Forbidden Stories contacted three companies, all of which offered us substances known to be used in the opioid synthesis. These offers all came without having to disclose our identity or provide a company name.
Screen capture of Pinterest showing offers for the fentanyl precursor 4-AP, now a controlled substance in the US. March 3, 2020 (Credit: Pinterest screen capture)
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One of the sellers was particularly quick to help us, offering multiple substances similar to 4-AP that were still available for sale. The seller proposed using a “special line” to Mexico. After sending us a series of photos and videos with closeups of the precursor, a crushed white powder, the seller told us more about this famous “special line.” She wrote, “We bought off some people at the Mexican customs, we trusted them very much, and they helped with all our shipments to Mexico. So you don’t have to worry about customs.” In another conversation, the seller explained that one of their “big” clients in Mexico had his own line and used cargo planes to deliver precursors. “When the goods arrived in Mexico, he would use his own connections to pick up the goods.” In her own words: “What are some things in this world that money cannot do?”
Bryce Pardo sums it up: “Our drug control laws are based on a very old system where everything is based on the UN single convention from 1961. These were really focused on three plants: cannabis, coca and poppy. Things have just changed so dramatically in the last ten, fifteen years, ever since China really got online with its pharmaceutical sector to the point where we just cannot keep up with the scheduling.”
To evade tightening regulations in China, some Chinese nationals are capitalizing on the opportunity to relocate parts of their business to countries with less strict monitoring, notably India. In another internal report from the DEA, which goes into detail about Manu Gupta’s arrest, the agency wrote that Gupta’s company was working with an individual based in China. In 2019, the DEA reported, “It is believed this Chinese national continues to send precursor chemicals to Mexican cartels for the manufacture of methamphetamine, fentanyl analogues, and its derivatives, as well as finished fentanyl.” When asked about this information, a DEA spokesperson told Forbidden Stories that he did not know nor had he seen the report in question.
Photo sent by a Chinese seller of a fentanyl precursor. She presented the product as an uncontrolled derivative of 4-AP (Credit: Forbidden Stories)
Richest Group, “almost” respectable
“There is a force that can promote the development of history. There is a power that can change the world. Richest Group changes the world with its products and services.” In a clip that feels more like a Hollywood movie trailer than a corporate video, Richest Group—a Chinese import-export company for chemical products and food additives—unveils itself with an epic music backdrop. At first glance, the company run by Kevin Dai appears impeccable. Its main subsidiary, Shanghai Ruizheng, is verified on the Chinese site Alibaba and rated four out of six diamonds. The company prides itself in exporting all over the world, highlighting prestigious partners, including Samsung, LG, and Canon.
Alia Yang’s post on Facebook in May 2019 offering two fentanyl precursors. The first is identified as a “masked” precursor. The second is 4-AP, recently controlled in the US (Credit : Facebook screen capture)
A deeper Internet search reveals part of the company’s real business. Listed on Shanghai Ruizheng’s Alibaba boutique in October 2019 were several known uncontrolled precursors for fentanyl. One of its sites offered until recently 4-AP, the fentanyl precursor now a controlled substance in the United States. Forbidden Stories even found the Facebook profile of one seller, Alia Yang. She openly listed her affiliation to the group and offered the same precursors for fentanyl. To boost visibility to Facebook users in Mexico, the seller geotagged several promotional posts with Mexico locations. “New batch, enough stock, don’t miss it,” she wrote in one of her posts from May 2019.
On Richest Group’s website was a graphic of the company’s organizational structure, until a few weeks ago. At the center, nestled between two Chinese subsidiaries, was Mondiale Mercantile Pvt Ltd, Manu Gupta’s company. Again, the Indian businessman accused of working with the Sinaloa cartel and who the DEA suspects collaborates with a Chinese associate. The US DEA never answered our questions about Richest Group.
Richest Group’s former organizational chart. Mondial Mercantile, Manu Gupta’s company, is in the center. This chart was modified a few hours after Forbidden Stories confronted their CEO about it (Credit: Richest Group official website).
When contacted by a partner of Forbidden Stories, the head of Richest Group, Kevin Dai, denied any activity related to fentanyl production. “Our company has not and will not produce fentanyl or any substances related to it because we follow regulations.” He said we should ignore Alia Yang’s Facebook posts. According to Dai, Yang left the company several months before this November 10 phone call. Dai added that he has never done business with Manu Gupta’s company, Mondiale Mercantile Pvt Ltd, despite placing the Indian company at the center of his group’s organizational chart. According to Dai, the collaboration was never successful. “They said they could help us expand into the Indian market and asked whether we’d like to work with them…so we put the photos on our website to make it look like we are a big company,” Mere hours after this exchange, Manu Gupta’s company disappeared from Richest Group’s organization chart. On her side, Alia Yang completely wiped her Facebook profile, even changing her name. The promotional publications are no longer visible. On November 17, Richest Group officially deregistered the branch of the group that operated in the offices that Forbidden Stories had visited a few weeks earlier.
In the face of organized crime: perpetual defeat
Faced with the trafficking of precursors, China seems to be accumulating problems and struggling to effectively control the country’s massive pharmaceutical industry. “Up until a couple of years ago, they had something like eight different authorities that were involved in the design of regulations over the pharmaceutical and chemical industries. It was sometimes unclear who had regulatory oversight,” explained Pardo. Efforts have been made these last few years to better control the market, with new regulations. In the particular case of Richest Group, the China National Narcotics Commission (CNNC) told Forbidden Stories that they reminded the company to be careful about the chemicals they sell, that some of them could be used by foreign drug gangs to produce narcotics. But despite these recent changes, some of the rules seem to be inadequate for the magnitude of the problem. For example, according to Pardo’s information, when performing a “surprise inspection,” inspectors must give 72 hours of warning. “If you’re manufacturing fentanyl, you’re going to clean up your act and switch everything so that it looks like you’re manufacturing baby formula or ibuprofen,” Pardo added.
It’s just one step from manufacturing fentanyl to new psychoactive substances. According to Bryce Pardo, all it takes is a simple Google search. “Now, with everything being online, it’s very easy for a chemist in China to go on to the United States Patent Office website or Google search and to just find new new drugs that were explored for medical purposes.” This trend was confirmed in the latest UNODC report on the subject: “More recently, there seems to be a shift in the synthetic opioid market towards newer and more varied chemical classes of substances.” According to the report, this is organized crime groups’ response to tightening regulations.
Several months before this investigation was published, Forbidden Stories contacted a phone number listed online as belonging to Alia Yang. At the time, Yang was no longer working for Kevin Dai, but for a similar company: Shanghai Talent Chemical—founded by a former Richest Group employee. A certain “Lucky” responded to us, but the WhatsApp avatar was a photo of Yang, and her name was listed. In an earlier conversation with Forbidden Stories, Yang had confirmed that the number belonged to her. But this time, “Lucky” wasn’t selling a precursor for fentanyl. Instead, she had a new product, Xylazine, a horse tranquilizer. This powerful drug is not a controlled substance. It is sometimes mixed with fentanyl and traces of this tranquilizer has been found in an increasing number of overdoses in the US.
Nothing bothered the saleswoman. When we told her that we were worried about arousing suspicion, she offered alternative names for the veterinary tranquilizers. “Some clients like to ask to use Creatine. Or potassium cinnamate. Or white pigment. It is up to clients.”
Presentation on the synthetic drugs lead at “The Cartel Project” launch meeting. Paris, March 9-10, 2020 (Credit: Forbidden Stories).
François Ruchti (RTS), Sandhya Ravishankar (The Lede), Michael Standaert (South China Morning Post) and Michael Lohmuller (C4ADS) contributed to this article.
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