June 28, 2013
Contact: Erin Mulvey
Phone Number: (212) 337-3900
Former Governor Of Mexican State Sentenced In Manhattan Federal Court To 131 Months In Prison For Money Laundering In Connection With Narcotics Bribes
Manhattan U.S. Attorney Preet Bharara stated: “Mario Villanueva Madrid was entrusted to serve the public in Mexico, but instead, in return for millions of dollars in bribes, he provided safe passage to a brutal drug cartel allowing it to move massive amounts of cocaine through the state he governed. With his sentence today, Villanueva Madrid completes his descent from elected government official to corrupted official to incarcerated felon. This Office and our law enforcement partners will not relent in our efforts to prosecute and punish corrupt public officials who violate U.S. law, wherever they operate.”
According to Indictments previously returned in this case, and statements made during court proceedings: In the mid- to late-1990s, the Juarez Cartel transported over 200 tons of cocaine into the United States across the Southwest U.S. border. In 1994, the Cartel established operations in the eastern Mexican state of Quintana Roo, where the resort city of Cancun is located.
Villanueva Madrid, who had previously served as mayor of Cancun, was elected governor of Quintana Roo in April 1993. In 1994, he entered into an agreement with the Juarez Cartel that would ensure its cocaine shipments traveled safely through Quintana Roo without interference from law enforcement. Under the agreement, Villanueva Madrid was paid between $400,000 and $500,000 for each shipment of cocaine that the Cartel transported through Quintana Roo.
From 1994 through 1999, the Juarez Cartel paid Villanueva Madrid millions of dollars in narcotics proceeds. By late 1995, in an effort to hide the illicit funds, he began transferring them to bank and brokerage accounts in the United States, Switzerland, the Bahamas, Panama, and Mexico, many of which were held in the names of British Virgin Islands shell corporations. In April 1999, shortly before his term as Governor was to expire and while under investigation by Mexican authorities, Villanueva Madrid fled. He remained a fugitive for over two years.
In connection with his flight, Villanueva Madrid liquidated the millions of dollars in narcotics proceeds he had deposited at Lehman Brothers Inc. (“Lehman”), through a series of wire transfers totaling over $11 million. These transfers were made through an account at the Mexican bank Banamex that had been secretly opened for him in the name of “Lehman Brothers Private Client Services.” A large portion of the illicit proceeds - over $7 million - were then deposited into an account at Lehman that a banker had opened in the names of a non-existent Mexican family.
In May 2001, Villanueva Madrid was arrested and subsequently convicted in Mexico on organized crime and corruption offenses. All of his illicit funds at Lehman and in other U.S. accounts, totaling over $17 million, were seized and later forfeited by U.S. authorities.
Mr. Bharara praised the extraordinary investigative efforts of the U.S. Drug Enforcement Administration’(“DEA”) New York Organized Crime Drug Enforcement Strike (“the Strike Force”) - which is comprised of agents and officers of the DEA, the New York City Police Department, Immigration and Customs Enforcement - Homeland Security (HSI), the New York State Police, the U. S. Internal Revenue Service Criminal Investigation Division, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Secret Service, and the U.S. Marshals Service - as well as the DEA’s Mexico City Country Office and Merida, Mexico, Resident Office, which together led the investigation. The Strike Force is partially funded by the New York/New Jersey High Intensity Drug Trafficking Area, which is a federally funded crime fighting initiative. Mr. Bharara also recognized the DEA’s Offices in Houston and Pittsburgh, as well as the United States Attorney’s Office in Houston, for their invaluable assistance in the investigation. Mr. Bharara also thanked the U.S. Marshals Service and the Department of Justice's Office of International Affairs for their assistance in this matter.This case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant United States Attorneys Glen Kopp and Anna Skotko are in charge of the prosecution.