I read recently of smugglers busted with $18 million worth of meth hidden in a vegetable shipment. It was around 16 tons. For the smugglers, Aside from of going to prison, are the smugglers indebted to the cartel or do the cartels see it as a cost of doing business?
In: Economics
People are terrified of cartels, and it’s not because they forgive a lot of debts. That being said, in many cases the cartels were paid in full for the meth by the smugglers, so it’s the smugglers that assume the financial and legal risk when they try to bring it across the border.
Any good business operation accounts for breakage in their accounting.
Not all of the product you manufacture/purchase for distribution are going to make it to market, so you build that loss into the pricing.
The smugglers figure out what percentage they can successfully smuggle and what percentage gets confiscated… and it’s all handled in the accounting.
Recently covered in a Jordan Harbinger pod with Robert Mazur (DEA money laundering undercover agent):
Interviewer: “What happens if you lose money that you’re supposed to launder or move for the cartel? Because the obvious answer is, oh, they just kill you. But what if it’s not your fault? I mean, do they care at all? ’cause look, yes. These are like heartless sociopaths that lack compassion, but they still theoretically wanna find out where the real problem is in their business and organization as opposed to just like killing the last guy who touched the money. Or am I giving ’em too much credit?”
Mazur: “No, you’re spot on. It was extraordinarily important for the cartel to demand from whoever had the money last for them to get documents that proved that in fact the money had been lawfully seized, that there was a seizure warrant, maybe there was an affidavit, and they wanted to look at the affidavit for the search warrant. If it was public, most times it was to be able to see who’s responsible. They would immediately say to anybody who was likely to be responsible, get your butt down here to Columbia and answer questions.
“[…] Now if You can prove that it was not your fault, but you were in the mix, you would be expected to participate in paying back. Sometimes what they would allow you to do would be work for free. You’re not gonna get your cut and you’re gonna continue to do this until your portion of this is repaid. And. if you didn’t do that pay, like one of the Colombian money launderers that I dealt with, he had horses. He was a big horse fan. Bottom line is they were expensive horses. And what they did is they poisoned his horse, one of his horses. His favorite horse.”
later:
Mazur: “And so as far as product goes, that doesn’t really bother them. When I was in the game, it cost about 250 bucks to make a kilo of Coke and it cost maybe $2,500 prorated to transport that kilo to the United States. So a $3,000 investment, most of the transportation was done by giving a portion of the load to the transporter. Mm. So if the load got seized right, you didn’t pay, they lost $500 a kilo. Right? And that’s it. So, hey, no big deal. They’ve got loads coming constantly in semi-submersible submarines in containers and you name it.”
(context of that last part was obviously high level smugglers moving weight – street level doesn’t get to lose product)
The drugs on the US side of the border are worth at least triple what they are worth on the Mexican side of the border. Anyone smuggling drugs has the chance of loss baked into their business model, the smugglers that are running drugs on credit don’t last long. The police and journalists also find the highest price they can to price the drugs at. The smugglers probably bought the drugs for less than a million from a cartel, and they are probably getting most of their shipments through.
They don’t. It’s chalked up as a loss. Their repayment to their employer is keeping their mouth shut.
You know those flowers you buy on the side of the road?
The people caught are transporters. They don’t own the product or even know what it is most of the time. It get’s charged to the game. Transporters get paid handsomely for transporting. They get popped, it’s on them.
They take a loss, and continue business. If they are real good smugglers, they may go to jail, when they get out they ask for them to do it again or help other smugglers do it.
Cost of doing business.
Most of these busts are caused by informers.
Better smugglers find out the informers by calculating who would have ratted them out to neutralize them.
Cartels and smugglers (not the individual ones-usually they are sub or sub-sub contracted and thus driving up the prices) usually have profit-risk sharing pacts depending on smugglers efficiency.
Drugs are insanely overpriced. Produced in impoverished countries and communities in bulk for pennies and sold for hundreds or thousands for a few grams, these mark ups cover all costs and then some, including “lost” revenue from busted shipments. Also the cartel producing the drugs is not necessarily responsible for the entire supply chain. In many cases they just sell in bulk to a distributor and now it’s his problem as to where it will go, how it will go and if it gets busted. But other times they do indeed manage transportation across borders. The smugglers are more often than not, people forced into the job. That means regular every day people struggling with poverty who have been threatened with violence to smuggle drugs, or they do it out of desperation. They don’t get paid much and they assume a lot of risk because if caught, they’re essentially doomed to rot in prison. There’s no point holding a person in that position responsible at that point. They’ve served their purpose of either transporting the drugs or getting caught and taking the fall for them. Inevitably some will be caught but those who aren’t make it all worth it. What point is there holding the smuggler responsible for the lost drugs when you know there is no way they can pay you back
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