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$2 billion-a-year profit drives Arizona ‘coyotes’

By The Arizona Republic
PHOENIX, Ariz. — In the world of human smuggling, Phoenix has emerged as an enormous staging area where illegal immigrants are held hostage in apartments, motel rooms or rental homes until relatives pay their fees.

State investigators say it is a $2 billion-a-year, black-market business that drives illegal immigration, spreading corruption and violence through the valley.

On any given day in the valley, agents say, thousands of undocumented immigrants are stuffed into drop houses as “coyotes” collect the cash, arrange for transportation and fend off other smugglers who would steal migrant clients for ransom.

There are so many coyotes, estimated at more than 1,000, so many immigrants secreted in drop- houses, that money-transfer stores handle hundreds of millions of dollars a year in smuggling transactions. Friends or family already established in other states wire the payments to Phoenix.

The city is ideal for drop houses because it’s close to the Mexican line yet far enough so there is virtually no Border Patrol enforcement. Valley freeways provide nationwide access. And large Hispanic neighborhoods offer cover for immigrants and smugglers.

“We are supporting an army of coyotes — an army of greedy, amoral, young, Mexican males,” said Cameron “Kip” Holmes, chief counsel with the Arizona Attorney General’s Financial Remedies Section. “They’ve become a subculture unto themselves: extremely violent, extremely dangerous, all manner of bad behavior.”

Even immigrant rights advocates despise coyotes as pariahs who victimize countrymen and infect Latino neighborhoods with violence and graft.

“They are the most vicious criminal element; corruption at its lowest level,” said Elias Bermudez, chief executive with Inmigrantes Sin Fronteras (Immigrants Without Borders).

Until the past decade, crossing the border was so easy that smugglers were hardly necessary. Fellow immigrants helped one another through the gauntlet for, at most, a few hundred bucks.

Then federal authorities began cracking down. Hard-core criminals entered the business as prices climbed and smuggling became more lucrative. Smuggling rings started using sophisticated surveillance and communications. Fees have doubled in just a few years.

The typical pollo, or chicken, as the immigrants are called, now pays $1,200 to $2,500 to be guided across the border, driven to Phoenix and shipped to a destination in the United States.

The multimillion-dollar industry supports an array of small-time smuggling rings and sophisticated organizations with scores of members. Virtually all of the smugglers are Mexican nationals without legal residency, rather than U.S. citizens or immigrants with visas.

Each ring member takes on specific duties. There are

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recruiters, guides, drivers, drophouse managers, cooks, guards, document specialists and money collectors. The coyotes typically operate in family networks, directed by a boss south of the border, which is where most of the money goes.

In short, they are organized-crime syndicates.

“It’s an illegal enterprise, a scheme,” says Tim Mason, an Arizona Department of Public Safety detective who has worked more than 200 coyote investigations. “It’s not your poor immigrant being smuggled by another poor immigrant. It’s an organization with significant structure and assets.”

The entire operation hinges on a payment system, a way to get smuggling fees to the coyotes from pollos’ relatives or friends.

Since early 2001, Western Union and MoneyGram stores have been required to provide the state Attorney General’s Office with transaction data on money senders and receivers. Investigators were stunned to discover Arizona had become a magnet for cash wired from popular destinations for illegal immigrants.

In 2005, for example, customers in Delaware sent 60 times as much money to Arizona than vice versa. South Carolina wired 38 times as much cash this way. New Jersey clients sent 31 times as much as they received.

In January of this year, wire transfers to Arizona from a dozen key states totaled $50.2 million, compared with $1.5 million sent from Arizona to those states. Holmes said the lion’s share of that money is for smuggling fees.

Agents use data analysis to identify smuggling organizations and block suspicious fund transfers. During a one-year period ending in March, they froze 12,417 transactions, seizing $23 million. The Attorney General’s Office also seized a dozen wire-transfer businesses for criminal complicity.

Western Union has rigid standards and a team of specialists who do nothing but train, monitor and review compliance by agents, said Sherry Johnson, media relations manager. Nevertheless, the Attorney General’s Office says 95 percent of coyote business is done in wire-transfer stores.

The new big business of human smuggling, with millions of dollars at stake and law enforcement circling, sets up more corruption.

n Landlords charge double or triple the normal rent to human smugglers, accepting false identification and keeping records off the books.

n Department of Motor Vehicle workers supply fraudulent IDs.

n Businesses launder cash.

n Auto dealers and travel agents help with transportation.

n Border inspectors are paid to look away.

“Arizona is on the brink,” Holmes said. “We are in a very perilous situation because of the importation of bribery tolerance from everywhere south of our line ... Bribery is rampant. It’s a cultural thing.”

In one probe, travel agents were taking extra cash to supply airline tickets for pollos flying out of McCarran International Airport in Las Vegas, where the Border Patrol has had no presence.

But most immigrants are hauled to Phoenix and across the country in cars, trucks and vans. The “load vehicles” represent another side industry. Holmes said monthly sales for a single auto dealership jumped almost $450,000 soon after the owner began selling vans to smugglers.

“It’s unbelievable the amount of money you can make if you get popular with coyotes,” he said.