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How feds gained an inner look at Mass. drug running

 38COMMENTSPRINTJoaquin "Shorty" Guzman (center) was escorted by soldiers during a presentation at the Navy's airstrip in Mexico City February 22, 2014.


Joaquin "Shorty" Guzman was escorted by soldiers during a presentation at the Navy's airstrip in Mexico City in 2014.

Once again, they sat across a table from one another, the FBI agent and Boston cop on one side and the man they had come to call “The Gentleman” on the other. This time, they were at a Border Cafe in Saugus. The waiter brought fajitas and quesadillas, but no one touched them. They were for show.

“Work with us,” the FBI agent said to the taciturn, dignified man across from him.

The agent couldn’t count the number of times he’d made that proposition. He and the cop had been pursuing The Gentleman for eight months. He was a rare find, a veteran of the higher-levels of international drug smuggling with widespread connections.

If they could get him to agree, he could lead them on one of the biggest busts in the history of the local drug task force. But every time they asked, he said no. The risks were too big and the payoff too small.

“What’s in it for me?” The Gentleman always said.


Still, he kept agreeing to meet. And they kept putting the question to him. Now, the agent sensed a shift; they felt tantalizingly close.

That night at Border Cafe, in the fall of 2008, The Gentleman had a new query: How would such an arrangement work?

Before the dinner was over, The Gentleman had agreed to share his old contacts in the Medellin drug cartels, and his connections with organized crime families in the United States. But more enticingly, he would share information about the Mexican cartel members he had met in prison, the ones who had invited him to join them when he was released.

In exchange, the government would return several parcels of land in the area that he once held but were seized when The Gentleman was convicted two decades earlier of cocaine and marijuana trafficking. That was what was in it for him — getting the land had sentimental meaning, he said.

The agreement sparked two international drug operations over four years — later recounted to the Globe by the agents and described in court records — that brought investigators and The Gentleman, secretly working as an informant, from Boston to Arizona, over the Mexican border, to Spain, and, finally, back to Massachusetts.

The investigations netted nearly 20 arrests and the seizure of hundreds of pounds of cocaine and a thousand pounds of marijuana. It also brought to light the direct connection between the region’s demand for illegal drugs and the largest, most violent drug trafficking organization in the world, the Mexican-based Sinaloa cartel, and its notorious leader, Joaquin Guzman, known as El Chapo.

Law enforcement sources agreed to share the account with the Globe provided that the newspaper keeps The Gentleman’s identity confidential.

The Mexican cartels have long been a concern for law enforcement, but in recent years local investigators have grown increasingly worried about the Sinaloa, which began in the late 2000s to spread its operations to the Northeast — threatening to bring with it the violence that has terrorized Mexico.

“We’re not as far removed from what’s going on down there as people would like to believe,” said FBI Special Agent Stephen J. Kelleher, one of the lead investigators in the case.

‘We’re not asfar re-moved from what’s going on down there.’

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Few among law enforcement at the time would be so naïve to think that any single undercover operation could take down an international drug operation. But federal and state investigators had long been looking for a way to disrupt the cartel’s growth in the Northeast.

Was living crime-free

They needed someone like The Gentleman, who had been living crime-free in the Boston area upon his release from prison in the early 2000s, but who had maintained his reputation in the underworld of drug traffickers. Few knew the business as he did.

Before his conviction he had, for decades, trafficked hundreds of thousands of pounds of cocaine and marijuana along the Eastern Seaboard. He entered the trade at the time of the Colombian drug wars of the 1980s and had connections in organized crime circles. He had dealt personally with the feared Ochoa Vazquez brothers, the violent siblings who helped found the Medellin Cartel.

Jesus Manuel Gutierrez Guzman, the cousin of the Sinaloa drug lord known as El Chapo, handed undercover FBI agents a phone with Chapo on the other line during a meeting in St. Thomas in June 2010.


Jesus Manuel Gutierrez Guzman, the cousin of the Sinaloa drug lord known as El Chapo, handed undercover FBI agents a phone with Chapo on the other line during a meeting in St. Thomas in June 2010.

Now, he was living in the Boston area and, after much cajoling, was willing to cooperate with the FBI. He could begin his undercover operation anywhere — Colombia, the Mafia — agents sent him to Mexico.

One of his first stops would be Aqua Prieta, to meet the son of a someone he had met in prison: Fidencio Serrano-Esquer, a small, stocky man in his early 30s, who had established his own marijuana- and cocaine-dealing network. They called him Fito, and word was that he had ties to the upper echelons of the Sinaloa.

Fito also apparently had a connection to a drug dealer in Massachusetts, a man he identified to The Gentleman one night during a meeting in Mexico as Kosta, a real estate agent and an author. He showed him a picture of Kosta on his phone.

It was a disclosure that immediately worried and intrigued local authorities — who now realized the Sinaloa already had a foothold here, taking over operations from the Dominicans who had long controlled the market, and they had no idea how large it was. Or how violent.

Because of The Gentleman’s trusted reputation, Fito introduced him to higher-ups within the Sinaloa organization. But The Gentleman needed to convince cartel members that he was there to do business. He needed to show he was a capable partner.

He told his FBI handlers about the cartel’s plans: They wanted to expand to Europe — and wanted his help. The FBI came up with a scheme.

A team of undercover agents from a specialized FBI squad would work with The Gentleman and pose as Italian gangsters. They would meet with cartel members and set up fake fruit distribution companies — one in New Hampshire — that, they would say, could be used to ship hundreds of thousands of pounds of cocaine to Spain, where the Sinaloa was looking to expand. The gangsters would ship the drugs for the cartels in exchange for 20 percent of the product.

Over several meetings that spanned well over a year into spring 2010, the undercover operatives met with cartel members at hotels from New Hampshire to Miami to the US Virgin Islands. They sat with Jesus Manuel Gutierrez Guzman, a cousin of El Chapo, who negotiated on El Chapo’s behalf.

The scheme was taking shape. But El Chapo wanted one final assurance before he would sign off on the deal. He wanted to meet one of his new partners. He wanted to meet The Gentleman.

The FBI undercovers could not accompany The Gentleman, and they could not listen in on the conversations because US eavesdropping warrants would not extend into Mexico.

So he would travel alone. He arrived in Culiacan, Mexico, in April 2010, where he was told to stay in a hotel for several days. Finally, Gutierrez Guzman arrived with another member of the cartel and brought him to a farm where they boarded a small plane on a dirt air strip.

The Gentleman later could not say for sure, but told the FBI he believes they flew east, into the mountains, for an hour. They arrived on a landing strip so remote and rugged that The Gentleman feared they would run off it.

Before the plane had even stopped, several men on ATVs — they were wearing military uniforms, but he couldn’t be sure they were Mexican military — pulled alongside, and escorted them to a compound.

What he saw amazed him: They had created a small village, with houses and dining areas. Guards were stationed nearby. Women were cooking in a kitchen.

“They had a whole little community going on,” The Gentleman later reported to his FBI handlers.

He was told he would have to stay the night. The plane would not leave until the next morning. He would have dinner with El Chapo, a buffet of chicken and rice, sweet bread, tortillas, and hot peppers.

“You’re going to sit right here, next to me,” El Chapo told him. To The Gentleman, he looked just as he did in pictures — that stone-cold stare. He had a mustache, and wore a baseball cap.

At dinner, as the women brought them plates, The Gentleman sensed El Chapo’s eyes on him, and on his hands as he held his fork. Undoubtedly, he was trying to detect whether The Gentleman’s hands were shaking. “I try to hold it together as best as I can, I just keep eating, making small talk,” The Gentleman later recalled.

El Chapo proposed the use of planes to fly cocaine from Bolivia. But the Gentleman maintained that his contacts wanted to use cargo containers on ships. The boss conceded. He would give his blessing.

The next day, after the plane had returned The Gentleman to Culiacan, a cartel member stopped the car at a church on a dirt road outside of town, and lit a candle.

“People go up there, and don’t come back,” he told the Gentleman. But he had. And now the operation was in motion.




Agents see opportunity

Fito, The Gentleman’s original contact with the Sinaloa cartel, told The Gentleman he would be making a cross-continent trip to Boston in the fall of 2010.

Federal agents immediately saw this as an opportunity to identify his Massachusetts connection, the mysterious “Kosta.” A federal judge in Massachusetts approved a warrant to track Fito’s cellphone.

They tracked Fito leaving Tucson, to the Mohegan Sun casino in Connecticut. A day later, he was at a Marriott hotel in the Woburn area. Hours later, at the Burlington Mall, according to the GPS data.

Authorities quickly set up surveillance at the mall, and watched as a rented Chevrolet Suburban pulled into a parking lot. Later, a Mercedes-Benz with Arizona plates parked nearby. Then another car. Each had bike racks with bikes on them, an obvious attempt at camouflage.

In the shadows of a mall eatery, the Cheesecake Factory, agents watched as several men jumped out of each car and began loading duffel bags into the rear of the Suburban. One man reached into his pocket, pulled out a wad of cash that looked to be several thousand dollars, and stuffed it into a duffel bag.

One of the undercover agents watched as a woman passed by with a baby in a stroller, oblivious to what was happening.

This confirmed for the agents that there was indeed a Massachusetts player in the drug organization, but they still needed to figure out who it was.

One of the lines that Fito’s phone had called belonged to the parents of a man named Mihalakakis Costa. They learned, however, that he had changed his name to John Kosta while he was in state prison years earlier for marijuana dealing. He had houses in Phillipston and Arizona. And, he had been reporting on income forms that he was an author and a real estate agent.

The agents showed Kosta’s driver’s license photo to The Gentleman. He recognized him. It was the same man in the photo that Fito had shown him a year earlier in Mexico.

“This is my guy in Boston,” The Gentleman recalled Fito saying. “He called him Kosta. He was an author and a real estate agent.”

“That’s the guy,” he told the agents.

Shaped by prison term

Kosta, 40 years old at the time, was a bullish figure, an intimidating presence whose time in state prison had shaped him. He built a boxing gym in Fitchburg to train his children to fight. And his Phillipston compound was stocked with an arsenal of guns.

At dawn on Aug. 7, 2012, a swarm of FBI agents and other law enforcement officials crept up the side roads of Phillipston toward his compound, but he simply walked out the front door, surrendering. He had seen them coming on his personal surveillance cameras.

But he had also known they would be coming for some time.

Seven months earlier, while Kosta and several cohorts were making a cross-country delivery of marijuana, police in South Dakota stopped one of the vehicles that was traveling in the convoy for speeding.

Inside the white pickup truck, authorities found 980 pounds of marijuana — an estimated $3.9 million in street value, the largest seizure in that state’s history. The driver, one of Kosta’s muscle men from Ipswich, was arrested.

South Dakota Highway Patrol in January 2012 intercepted 980 pounds of Mexican cartel marijuana that John Kosta, of Phillipston, shipped from Arizona to Massachusetts.


South Dakota Highway Patrol in January 2012 intercepted 980 pounds of Mexican cartel marijuana that John Kosta, of Phillipston, shipped from Arizona to Massachusetts.


Authorities waited to arrest Kosta and other defendants, however, because the original source of their case — The Gentleman — was still working another investigation, this one in Spain.

Finally, the morning of Aug. 7, 2012, the same morning Kosta was arrested in Massachusetts, authorities in Spain opened one of the cargo containers that had made its way from South America. Inside, they found about 760 pounds of cocaine. Several of the Sinaloa cartel members who were in Spain at the time, including El Chapo’s cousin, were arrested. A warrant is out for El Chapo’s arrest.

Two separate busts, four thousand miles apart, all stemming from a Mexican dinner in Saugus four years earlier.

Last month, the last person in custody to appear in court, Rafael Humberto Celaya Valenzuela, was sentenced by a judge in New Hampshire to 17 years in federal prison.

The Gentleman is now living under an alias. His family property has been returned.


Milton Valencia can be reached at Milton.Valencia@Globe.com or Twitter@miltonvalencia.
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