Hunting El Chapo: Taking down the world’s most-wanted drug-lord. Douglas Century

EL CANAL

      PANAMA CITY, PANAMA

       June 14, 2009

      THE ROOFTOP HOT TUB was kidney-shaped, and the Panamanian beer was Balboa—named after the conquistador. The palms and mirrored skyline view seemed to have been laid on in thick streaks of tropical paint. Panama City gleamed like a Caribbean Dubai.

      “Salud!” Diego said, hoisting a silhouette glass of Balboa. “A la Nueva Generación!”

      “Salud!” I said, raising my own glass.

      The New Generation had finally stepped onto the international stage.

      We’d taken down Bugsy’s crew that night in San Diego and Phoenix—collapsing his entire organization, seizing another thousand pounds of marijuana and more than $450,000 in assets, including Bugsy’s personal yacht, a string of Mercedes-Benzes, jewelry, and bulk cash.

      But with a takedown of that scope, there were bound to be key evidentiary remnants—wide-ranging paper trails and criminal tentacles still left unexploited.

      One of those loose ends happened to be in the form of Tweety’s father, Gerardo, who over the past year had been selling pounds of Mexican methamphetamine to our confidential source.

      Gerardo was well connected in Nogales, Mexico, and casually mentioned that he had a friend who needed some money moved. She was middle-aged, with porcelain skin, and her black curly hair was always pulled back tight in a ponytail. Aside from smuggling loads of meth and cocaine across the border from Nogales in her Toyota RAV4, Doña Guadalupe, as everyone called her, put out the word, through Gerardo, that she was actively seeking someone who could transport money. Not just a couple hundred thousand dollars, but tens of millions.

      As an undercover, Diego had played dozens of roles over the years and could slip effortlessly into many personas, but he’d never posed as a money launderer before.

      “This is our chance to follow some serious cash,” I told him over lunch at our favorite Chinese joint in Mesa.

      “Think we can pull it off?” I asked him.

      I could see the wheels turning in Diego’s head, contemplating ways we could win the contract from Doña Guadalupe and begin moving the numbers to which she claimed to have access.

      Within the week, Diego had finagled an introduction to Doña Guadalupe, and he immediately sold her on the services of his “company.” Diego seemed to be exactly the man she was looking for, but it turned out Doña Guadalupe was just a glorified gobetween, a buffering layer—the first of many, as we’d soon come to find out.

      And that’s how we found ourselves soaking in a hot tub on the roof of a Panamanian hotel, our first time traveling abroad—so that Diego could be introduced to Doña Guadalupe’s people face-to-face.

      JUST A FEW HOURS before our first undercover meeting, Diego was acting as if he didn’t have a care in the world. Like any good actor, he was supremely confident in his ability to negotiate his way through any business deal. But his confidence also came from meticulous preparation. We’d spent months creating our undercover legend: Diego would be playing the role of a senior executive, the director of operations for a US-based company—supposedly a covert criminal network—operating a ton-quantity drug-and-money transportation organization. Doña Guadalupe had already sold Diego to her people, including the head of a sophisticated money-brokerage-and-laundering cell led by Mercedes Chávez Villalobos and several of her associates, based in Mexico City, Guadalajara, and Bogotá, Colombia.

      When Diego spoke with Mercedes, she had been aggressive, fast-talking, and extremely demanding. Diego told me she was a tough chilanga from Mexico City.

      After doing a quick international work-up on her, I discovered that there was a warrant out for Mercedes in Amsterdam, for laundering money back in 2008. And she had connections all around the world, country-hopping almost weekly. She was always looking for a better deal, for someone trustworthy who could move hundreds of millions of dollars quickly—and strictly on a handshake.

      “Do you really believe she’s sitting on all this money?” The night before the sit-down, I was staring at streams of data on my MacBook, and the dollar amounts were staggering. “She’s supposedly got a hundred million in Spain. Fifty mil in Canada. Ten mil in Australia. And some two hundred million in Mexico City?”

      “Look, I’m skeptical, too,” Diego said, “but what other options do we have? We need to play her out to see if she can deliver.”

      “What we need to know,” I said, “is who all of this money really belongs to.”

      “Agreed.”

      OUT ON THE HOTEL BALCONY, I gazed over the thin glass wall down at the city below. Mercedes was staying at one of the few luxury hotels in town that had been completely finished. So much of the Panama City skyline remained half-constructed: cranes and scaffolding and exposed girders. Brand-new buildings had been abandoned half-complete, while many of the finished ones were empty.

      Panama City was the money-laundering capital of the Western Hemisphere. Banks had sprouted up on every corner like cactus along the sidewalks of Phoenix. Citibank, Chase, RBC, Bank of Montreal . . . but also lesser-known Latin American ones: Balboa Bank & Trust, Banco General, Mercantil Bank, and Centro Comercial de Los Andes . . . There was plenty of legitimate banking business, but some, like HSBC, faced criminal prosecution for “willfully failing to maintain an effective anti-money laundering program” in connection with hundreds of millions of dollars of dirty drug money belonging to Mexican cartel bosses.⁴

      Over the months of phone-wooing, Mercedes had suggested meeting Diego face-to-face in Mexico City, but the DEA brass considered it too dangerous, and our Mexican police counterparts would never allow it. “El Canal” was perfect: Panama was known as a neutral zone for drug traffickers from all around the world to meet without threats of territorial disputes or violence. It was also geographically convenient if you wanted to meet Colombian or Mexican contacts. Many in the narco world felt at ease in this glitzy isthmus.

      Eventually we wandered back to our hotel rooms. I had at least an hour of writing ahead, typing up the sixes, without which this entire Panama City operation would have no evidentiary value.⁵

      As I slogged away on the reports, Diego sat on the edge of the bed, filling me in on the details from his recent phone conversations with Mercedes. But as the UC, Diego had to get his mind right—mingling with the locals, feeling the vibe of the city—so once he’d finished briefing me, he went down to the third-floor casino for another round of drinks. I sipped a fresh Balboa and continued banging away on the sixes. Fifteen minutes later, the hotel door opened.

      “It’s looking really good down there,” Diego said.

      “Meaning?”

      “Lot of hotties.” Diego smiled. “A few of them were checking me out—for real. One of them was eye-fucking me hard, brother.”

      “C’mon, dude, I gotta finish up this fuckin’ six,” I said, laughing, then Diego slid another Balboa across the desk. I took a deep breath and slapped my MacBook closed, and the two of us headed down to the third floor. Diego wasn’t exaggerating. As those elevator doors opened, the casino bar was swarming with some of the most beautiful women I’d ever seen—some in slit miniskirts, tube tops, stiletto heels, and tight jeans showcasing the work of some of the top Colombian plastic surgeons.

      It took a few minutes of Spanish small talk before I realized these women were all high-dollar Colombian prostitutes on “work visas” from Medellín, Cali, and Bogotá. Diego shrugged, and we decided to hang out with the girls anyway, dancing as a live band played, even though I had no idea what I was doing—the merengue steps were easy enough to fake, but with the sophisticated swirling salsa moves, I had to let my colombiana lead. Then we all hopped in a cab and headed out to one of the city’s hottest nightclubs. A few more drinks, a little more dancing. Then another