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 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 received payments of between $400,000 and $500,000 for each shipment of cocaine that the Cartel transported through his state.
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, VILLANUEVA MADRID began transferring the money to bank and brokerage accounts in the United States, Switzerland, the Bahamas, Panama and Mexico. Many of the accounts were held in the names of British Virgin Islands shell corporations. In March 1999, after his term as Governor expired, and while he was 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 in a U.S. bank account he held 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 VILLANUEVA MADRID 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 VILLANUEVA MADRID’s illicit funds at Lehman and in other U.S. accounts, totaling over $19 million, were seized and later forfeited by U.S. authorities.
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