By Chris Joseph
By Chris Joseph
By Deirdra Funcheon
By Chris Joseph
By Chris Joseph
By Chris Joseph
By David Minsky
By Michael E. Miller
On his last day as a free man, in the spring of 2006, Pablo Rayo Montaño probably didn't venture far from his home in São Paulo, Brazil. It was too dangerous, even for a man like Rayo. São Paulo was virtually under siege: Inmates had rioted at 70 prisons across the country while their confederates on the outside, armed with grenades, stormed police stations and torched city buses.
Night fell on May 15 along with a light rain. Paulistanos, the city's residents, heard fewer gunshots than in evenings just past. The city had paused. At a few hours after midnight, seven federal officers assembled at Rayo's door, armed with a search warrant and assault rifles. They let themselves in and found Rayo, known by his nickname "El Tio" ("The Uncle") or simply Don Pablo. He was right where the American agents said he'd be.
The Uncle was charged with drug-trafficking and money-laundering. Fifty-four years old then, he had a baby face that belied his reputation as a kingpin who moved narcotics and laundered money between the Americas.
As they cuffed Rayo and led him away, similar scenes were enacted at 22 spots in several countries. Twelve suspects were taken down in Rayo's native Colombia alone, mostly in Cali and Cartagena. Those coastal cities, Cali on the Pacific, Cartagena on the Atlantic, served as bases from which Rayo's men allegedly oversaw drug shipments; that's why the U.S. Drug Enforcement Administration (DEA) called the Rayo case "Operation Twin Oceans." Police simultaneously busted his accomplices in Panama, in Costa Rica, and in Broward and Miami-Dade counties, where they said Rayo laundered his profits.
The Uncle fit the bill for a drug lord but for one thing: He wasn't infamous. He managed to keep a low profile even as the U.S. Justice Department put him on its ten-most-wanted list of traffickers.
Twin Oceans spanned three years and included 52 tons of cocaine that agents seized. In his prime, Rayo moved 15 tons of coke a month to the United States and Europe, agents estimated. The operation has also led to more than 100 arrests, including 37 people indicted in South Florida's federal court.
The indictments read like a James Bond screenplay: Rayo's workers allegedly ran their coke in go-fast boats — small, souped-up watercraft that can run circles around a typical Coast Guard vessel. From there, they transferred the drugs to oceangoing yachts, fishing boats, and even submarines. A private island is almost a cliché, but Rayo owned three — Las Tres Marias — which sit about 45 miles off the coast of Panama and once were a refuge for real pirates. Agents say the Uncle used the islands as drug-shipping centers; they too were seized.
"The Rayo organization had its own private rogue navy to run a drug business that was nearly as sophisticated as a small nation," DEA Administrator Karen P. Tandy said at a news conference the day after Rayo's arrest.
Twin Oceans nabbed $3 million in cash — drug profits, agents claim. That was peanuts compared to the $100 million in assets that agents say the Uncle used to launder money. Among them is Panama City's largest marina and boat supply center, plus a fashionable São Paulo art gallery and about 50 other properties in five countries. One source familiar with the case guesses that a final tally of all those assets could reach $1 billion.
Yet there are days when the War on Drugs seems even less auspicious than the real war in Iraq. Taking down the Rayo organization didn't cause so much as a hiccup in the global drug trade. As Tandy faced the media in D.C., a gram of coke could still be bought in any American city on the same corner and at the same price as the day before. The DEA took pains to paint Rayo as a supercriminal, but the truth is more prosaic. The Uncle was a capitalist who saw an opportunity, weighed the risks, and grabbed it. When his real estate holdings "went from three islands to one jail cell," as the DEA proudly put it, any number of people stood ready to take his place.
Pablo Rayo Montaño was born in 1952 to a poor family near Buenaventura, the busiest port on Colombia's Pacific coast. Like many in the city of 325,000, the Rayo clan depended on the fishing industry for its livelihood. But Pablo possessed ambition, a quality he shared with a younger boy from the same neighborhood, Freddy Rincon.
Rincon applied his will to soccer. He'd become a star on Colombia's national team, where he'd prove himself one of the world's elite defensive midfielders, a player with a knack for clutch goal-scoring. For Rayo and his brothers, ambition took longer to bloom. They chose not to follow their father into the commercial fishing business; instead, according to the Panamanian paper La Nacion, Pablo started working at 16 for a customs office in Buenaventura. A few years later, he co-founded a pharmacy in Cali. As he opened more drug stores, one of his brothers, Roberto, came aboard. Then Pablo, the fledgling Uncle, somehow won the Colombian lottery and invested his prize, roughly $50,000, in the currency-exchange house Rapicambio. It's not clear when the brothers allegedly went into the drug trade, but the first indication of that seems to come in 1988, when Roberto was kidnapped, allegedly by leftist guerillas who later killed him.
La Nacion has also recounted the exploits of Pablo's brother William, who at one point shipped cocaine by hiding it in cases of sealed beer cans; when the cans were opened, the liquid inside evaporated, the paper explained, leaving just the coke. William's ingenuity led to his arrest in Colombia in 1996; he was subsequently killed as he was being transferred from one prison to another.
By then, Pablo had relocated to Panama (although his operations were still based in Colombia, in Buenaventura). He first appeared on the DEA's radar in the early 1990s, when he allegedly began collaborating with Colombia's infamous Cali Cartel. This was a period of transition for Colombian drug traffickers. In the mid-1980s, Pablo Escobar's Medellin Cartel controlled four-fifths of the trade, which saw 400 tons of cocaine shipped annually to the United States and Europe. When Colombian police killed Escobar in 1993, the cartel collapsed. As nature abhors a vacuum, however, the Cali Cartel arose partly in the Medellin Cartel's place, controlling the shipment of about 800 tons of cocaine a year to the U.S. and Europe. The 1995 arrests of the Rodriguez Orejuela brothers destroyed the Cali Cartel. That's when the Uncle allegedly made his move onto former Cali turf.
During this time, the U.S. government used the carrot of foreign aid to persuade Colombians to track down and cripple major drug traffickers, leading to less corruption in that nation's law enforcement agencies. The large syndicates became riskier, and Mexicans moved in on a trade that had always been dominated by Colombians. The Mexicans had composed a vital link in the shipping chain before, moving coke across the U.S. border. Now, rather than working for the Colombians, they pushed their way to the top. The street price of cocaine rose in the mid-1990s as Colombian cartels collapsed, but by the end of the decade, the price had come back down as Mexican involvement rose. By 2003, according to the DEA, Mexican cartels controlled 77 percent of the coke that came to the United States. Today, the Colombian cartels "are midgets compared to the Mexicans," says Adam Isacson of the Center for International Policy, a Washington, D.C.,-based foreign policy think tank.
Colombia remains a key player in the drug trade, however, if for no other reason than geography: Its climate is ideal for harvesting the coca plant. This in turn has played into the hands of Colombia's leftist insurgencies, such as the Revolutionary Armed Forces of Colombia, or FARC, which is traditionally strong in the same rural parts of the country where the drug is grown. FARC shields coca farmers from the Colombian government and taxes them. As the rebels have built an increasingly modern army by skimming drug profits, the government has been stymied. This in turn has led to the formation of right-wing paramilitaries such as the United Self-Defense Forces of Colombia, or AUC, also funded by the drug trade. Today, the Colombian end of the coke trade is dominated by these armies of the left and right. They are joined in Colombia by a growing number of bit players who specialize in services such as working with chemicals or laundering profits. "Before, a big organization would do all those things," Isacson says. "Now it's a boutique model."
The growers need a way to get their product from a muddy Colombian field to a street corner in Baltimore or a school playground in Beverly Hills. Enter the Uncle.
The wealthy are always welcome in Panama, especially the wealthy and generous, like Pablo Rayo, a man known for treating the locals right. Such locals could conceivably include staffers in the Panamanian immigration office where Rayo's application for a visa was processed and approved even though his file was later found to lack required documents.
As a legal resident, Rayo opened nearly 100 bank accounts and formed about 60 corporations in Panama. In addition to the Tres Marias islands, he purchased about 30 Panamanian properties, many of them oceanfront, according to the Panamanian newspaper Panamá América, as well as eight boats and 24 vehicles.
Nautipesca, a marina in Panama City that houses the nation's biggest boat and fishing supply store, was a venture of particular importance for Rayo. Some of its employees were among the scores arrested in the 2006 raids that also netted Rayo in São Paulo. In the weeks to follow, Panamanian law enforcement sources alleged that Nautipesca's ostensible customers actually paid only a fraction of the value of its merchandise; this let managers augment Nautipesca's accounts with drug money, thereby laundering it.
Panama has been a kind of vast way station in the coke trade, a refueling or transfer stop for traffickers coming from the Colombian cities of Buenaventura or Cartagena, say sources with knowledge of the Rayo case. From Panama, the drugs allegedly handled by Rayo's people were sent by boat and truck to Mexico, where they were delivered to the Sinaloa Cartel, the Mexican outfit that controls smuggling along the central and western parts of Mexico's border with the United States.
It's a misconception that drugs are moved "underground," says a source familiar with the Rayo case. "The drugs don't go underground. If [traffickers] are driving on the ground, it means they control the ground. If they are going by sea, it means they control the sea."
Along the lengthy route as coke makes its way north, bumping over roads and waterways, there are watchful eyes that must be controlled by threats of retaliation or handsome rewards. As the South American drug cartels rose to prominence in the 1980s, they began to bribe and threaten Colombian cops and judges. So the United States learned to check their power from the top down, using foreign aid to buy the loyalty of the Colombian government; since 2000, the U.S. has allocated about $5 billion to Colombia, hoping, among other things, to smooth the way to extradite Colombian drug suspects to the U.S. Rayo is "a multi-multi-millionaire," says a source familiar with his case. "He can buy any judge in Colombia. But he can't buy a federal judge in America."
By the early 2000s, Rayo had had a number of close calls. Drug shipments were seized and associates were arrested and extradited despite having the same advantages in Panama as Rayo. In 2003, Rayo moved again, to São Paulo. There, he opened his wallet and made new friends, buying diamonds and rare antiques, investing in a casino, and collecting artwork that he exhibited in his private gallery. He also made a hobby of racehorses, buying six of them including his namesake, Rayo (Spanish for lightning), which just raced in December at Gulfstream Park.
Then international investigators got a break. A Nautipesca employee was arrested in Panama. The man already had a long rap sheet and was facing a prison term, says Samuel Logan, an independent journalist who pursued the matter with his DEA sources. Police squeezed the Nautipesca employee to get to Rayo, Logan says. "Panamanian police flipped this guy."
Police in Panama, Colombia, and Brazil monitored the phone calls of Rayo and his associates, then turned their findings over to U.S. law enforcement agencies. Those agencies also conducted their own surveillance in South Florida, where several of Rayo's associates lived, and they built a federal case against him.
The portrait of Rayo that emerged was of "a businessman, not a thug," says Logan, whose sources gave him an inside view of the investigation.
It would seem peculiar, for instance, that Rayo's network transported drugs for each part of Colombia's drug-production triumvirate: the FARC, the AUC, and the Norte del Valle Cartel, which is based in Buenaventura. Those groups are bitter enemies that regularly kill one another's soldiers in a constant battle to control key ports and mountain passes. But each of the groups has a history of violence and bribery, which saves Rayo's organization from having to perform those tasks themselves in Colombia. They may hate one another, but they could at least agree that it helped to have someone around like Rayo, whose organization allegedly moved drugs north and reliably returned laundered money south, offering the convenience of one-stop shopping. For the drug producers, Rayo's organization, Logan says, was "like UPS."
Jose Arango Jaramillo sounded nervous. It was April 2006. The 42-year-old Colombian, who had been living in Coconut Grove, had recently sold a four-bedroom, 10,000-square-foot house on Justison Court, near Ingraham Highway in south Miami. He'd bought the house with drug money, proceeds from a shipment that came through Pablo Rayo's network. It sold for $2.6 million, according to the Miami-Dade County appraiser.
Next, Arango was supposed to get on a jet for Brazil and give his boss the cash.
But Brazilian police were listening to Arango, federal prosecutor Andrea Hoffman would reveal months later in a Miami courtroom.
"Arango declined to travel, telling Rayo he was afraid he was under law enforcement surveillance," Hoffman explained — summarizing what Brazilian police learned from that surveillance.
Arango was right, of course, but by then, it was too late to lower his profile. The feds had already built their case. Arango was one of Rayo's principal money launderers. He'd typically deposit cash in several South Florida banks, then invest the money in ventures such as a flower shop and a condo in Weston.
Still more money was spread around among Rayo's family and close friends in South Florida. DEA agents watched as Arango delivered cash to Sandra Orozco Gil, the mother of three of Rayo's children who has lived in Broward County since 1999. Investigators say Arango paid Orozco $5,000 a month and also paid her leases on a 2003 Jaguar and Lexus.
Orozco, 42, had been rearing her children in a Margate subdivision composed of two-story stucco homes that all look alike. Her front lawn is marked by a sign announcing that the house that Rayo bought is for sale again. The driveway is littered with copies of the Sun-Sentinel still in their delivery bags. There's a sticker on the front door for radio Voz Mundial, a Spanish-language AM radio program for evangelical Christians.
Orozco is the first defendant who has pleaded guilty in the case surrounding Rayo. That leap of faith was rewarded with a three-year prison term. This may be the shortest sentence that any of the defendants can hope for. She could not be reached for comment.
Pablo Rayo's nephew Victor Hugo Serna Rayo worked as a manager at a Crystal Liquor franchise in Pembroke Pines but lived with his mother in a gated community in Weston, spending his uncle's money. Federal investigators seized a half-million-dollar trust fund Rayo had opened for his nephew. Serna has pleaded guilty to money-laundering. He was sentenced to a three-year-and-ten-month prison stretch. (His mother, reached at their Weston home, declined to comment on his travails.)
Serna, like Arango, did not respond to a letter from New Times requesting an interview.
Hector Eduardo Aguilar lived in Kendall, between South Dixie Highway and the Don Shula Expressway, in a three-bedroom townhouse that he owned jointly with Rayo. The feds charged Aguilar with laundering drug money and with modifying yachts owned by Rayo's network to conceal drugs or money. At his sentencing hearing, Aguilar, 67, listened as Hoffman described the way he cared for three yachts that were moored in Coconut Grove, the 65-foot Hatteras and two 35-footers, the Albin and the Mirage, and controlled several bank accounts, all to serve Rayo's drug-trafficking business. "Wire intercepts established that Mr. Aguilar managed money for Mr. Rayo," Hoffman explained, "and that Mr. Rayo and Mr. Aguilar had several communications about Rayo depositing money into Aguilar's various shell accounts in order to pay for expenses associated with the management of these yachts, as well as communications about the general movement of Rayo's narcotics proceeds."
Monica Ruiz Matorel, a 34-year-old Colombian, pleaded guilty to laundering up to $7 million through Rayo's business. Trained as a dentist in Colombia, Ruiz, who was known within the organization as La Doctora, became involved with Rayo through a romance with a man named Mars Micolta Hurtado. Micolta was a key manager of Rayo's day-to-day drug-trafficking, the government contends.
"I made an innocent sin because I did what Mr. Micolta told me to do," Ruiz told the court at her February 2007 in Miami, "since I had a relationship with him and he is 23 years my senior. And I never thought that he would harm me."
Ruiz, who has a 12-year-old daughter, was arrested in Indiana, where her husband of four years lives. She asked if she could serve her seven-year prison sentence in the Midwest to be close to them. She remains in the Miami Federal Detention Center.
Micolta, 54, was arrested in Cartagena, the Colombian port that Rayo is alleged to have used as a base for his drug shipments. His brother, 42-year-old Domingo Micolta Hurtado, was arrested in Panama City, close by the Atlantic and Pacific oceans. Sandra Orozco Gil's brother, 47-year-old Jackson Orozco Gil, an uncle of Rayo's children, was arrested in Cali, the Colombian city from which he could oversee oceanbound shipments departing from the Buenaventura river delta. All three were charged with abetting Rayo's drug network. Attorneys for Mars Micolta and Jackson Orozco deny that their clients were leaders in Rayo's organization. Domingo Micolta pleaded guilty to the charges this month and was sentenced to 11 years in prison, the longest sentence so far for any of the people charged in the case.
Mars and Domingo Micolta and Jackson Orozco had a slew of businesses in their names, many of which purported to be for fishing or legitimate importing and exporting. The employees of those companies have probably had their phones tapped or their photos surreptitiously snapped by investigators. "Any type of case like this, you throw a net out there and see what you catch," says an attorney familiar with the evidence marshaled against Rayo and his businesses.
With a big fish such as Rayo, that means you also end up with a lot of little fish, like the two Panamanians who worked for Nautipesca. They were indicted in the case against Rayo and now have been extradited to the United States to stand trial in Miami. Or Colombian Jair Chantre Moreno, who ran shopping errands for a Rayo associate, spending the Rayo organization's money, a money-laundering offense. Or Fidel Sandoval Rosero, a mechanic who was paid to service boats in the Rayo organization allegedly used to transport drugs, leading Sandoval to plead guilty. Or Ruben Menaca, a 47-year-old Colombian, also a mechanic, who pleaded guilty to having a role in importing about nine tons of cocaine in two shipments and was sent to prison for just under six years.
None of these names likely rang a bell for anyone who may have seen them in Latin American news accounts of Rayo organization busts, not even Rayo's — with one exception: Everyone knew Rayo's childhood buddy, Freddy Rincon, the star soccer player.
Retired from the game, Rincon invested $200,000 in Nautipesca, the Panamanian fishing and boating store — "the worst investment I have ever made," he said after he was arrested in Brazil. He knew nothing of Rayo's links to drugs, he said. Out on bond, he is now awaiting trial in Panama.
If there were more than 330 pounds of coke on the same boat as fisherman Yohibel Jose Dunn Aguilera, he should have known. Dunn pleaded guilty to his role in the Rayo organization and was sent to a federal prison in Pine Prairie, Louisiana. His case perhaps best illustrates the harrowing experiences of the Rayo defendants.
A native of Venezuela, Dunn had been working for Costa Rica-based company Agencia Maritima, owned by Mars Micolta. His crew, full of fellow Venezuelans, cruised the Caribbean Sea and Atlantic Ocean trawling for tuna, grouper, and shark.
Like Rayo, Dunn was arrested in the hours before dawn on May 16, 2006. After a year in a Central American jail, in what he called "subhuman conditions," he was extradited to the United States and arraigned in Miami. Posting bond here was out of the question; Dunn has nowhere to stay in the U.S. even if he were released, which makes him a flight risk. Even if he were allowed to post bond, he probably couldn't raise enough money, not from what's left of the $700 he made from fishing in a good month.
Part of the government's case against him is that he was on a vessel in the Caribbean not far from another vessel that had cocaine aboard. Investigators said the two vessels were going to exchange cargo before they were stopped. Prosecutors also told Dunn, through his court-appointed attorney, that they had incriminating photographs of him. If it's a bluff, Dunn can't afford to call it. "When you don't have enough money to afford a lawyer to defend your rights, you are left to the mercy of the government," he says.
Dunn could have ordered his attorney to take his case to trial, but based on federal sentencing guidelines, a jury conviction could land him a ten-year sentence on each count in his indictment. Federal prosecutors offered a deal: He could plead guilty, and they'd recommend a sentence of five years and eight months. Dunn took it.
"The system is set up for them to win," Dunn wrote to New Times, "and if you fight the government, you become its No. 1 enemy and it can destroy you completely."
One defense attorney whose client had a minor role in Rayo's network, like Dunn's, says he hopes his client develops the "intestinal fortitude" to press for a trial rather than take the plea deal the government has offered.
Meantime, it will soon be two years since Pablo Rayo was arrested, and Rayo still has yet to leave Brazil. The country's extradition treaty allows it to send drug smugglers to the United States, but only after they've been tried in Brazil.
It's difficult to gauge how successful the Rayo case will be in the context of the government's global mission to minimize the amount of drugs that come to America. The premise of investigations like this one, says DEA spokesman Steve Robertson, is "to cut off one of the major means of transportation for cocaine producers."
Producers can be expected to forge a new path to the U.S., but that may be an expensive, time-consuming endeavor that could crimp the supply of cocaine, which would then drive up the price, making it less readily available. That's the theory, anyway.
Still, it took almost a year after the Twin Oceans bust for the street price of cocaine in America to rise, from about $92 per gram up to about $100. And when the price made a big leap a year ago, up to $120, and now to nearly $140, a DEA analysis attributed that trend not to the Twin Oceans bust or those of other high-ranking cartel leaders or paramilitary figures but rather to efforts by Mexico's Calderon administration to seize cocaine before it comes across the Texas border.
The DEA, which has been chastised in the media for heralding a kingpin bust only to concede that it led to the emergence of a new kingpin, has moderated its language in recent years.
There is no eradicating America's drug problem, but the agency can at least make an example of those who profit from it.
"These drug-trafficking organizations make so much money, they are so arrogant and cause so much violence, in Colombia and now in Mexico... they think they're above the law," Robertson says.
"These are criminals with no respect for fellow human beings, and after they get punished, maybe it leads the next guy to ask himself whether he really wants to get into this line of work."