US Seeks $15 Billion From Drug Lord El Mayo-But Recovery Looks Difficult

(MENAFN- Live Mint) (Bloomberg) -- When US prosecutors trumpeted a guilty plea from a Mexican drug kingpin this week, they painted his life sentence as justice for thousands of deaths caused by his addictive products and untold violence at the hands of his enforcers.

But another aspect of the deal with Ismael Zambada Garcia, the Sinaloa Cartel co-founder known as“El Mayo,” raised eyebrows: The US said he had agreed to forfeit a staggering $15 billion that the government calculated he reaped from the drug trade since the 1980s.

It's unlikely the US will recover more than a fraction of what it's seeking.

US courts routinely require those convicted of crimes to forfeit any proceeds connected to illegal activity, and the money often goes directly to the government. Funds can also be returned to victims. In the cases of sophisticated drug-trafficking rings and financial fraudsters, the amounts can be huge. But often, the money is long gone and impossible to recover.

Touting the forfeiture order gives US prosecutors a chance to show their tough-on-crime bona fides as President Donald Trump seeks to crack down on drug cartels. His administration has targeted Mexican banks accused of aiding money laundering and threatened military force against the traffickers.

“Following the money is how we solve these cases,” Attorney General Pam Bondi told reporters Monday.“This guy, El Mayo, was living like a king and now he's living like a criminal for the rest of his life. He was living in a palace.”

Seizing that palace or any other riches is likely to be difficult, according to experts in asset forfeiture. High-level criminal enterprises often employ sophisticated methods to store their wealth, using everything from lavish real estate scattered across the world to cryptocurrency and even stakes in legitimate businesses to hide their fortunes. In one case, the US said it had traced Sinaloa Cartel drug money to the purchase of aircraft, engines and a Volvo tractor-trailer.

“The money is not in piles of cash, it's in an extremely diversified set of assets,” said Edmundo Sandoval, an associate director of global risk analysis at the consulting firm Control Risks in Mexico City.“What portion of it will be handed over? I wouldn't dare give you an estimate, but it'll be symbolic.” Going after the full amount, he said, would be“absurd.”

The $15 billion figure was calculated based on an assessment of estimates for the cartel's profits from an earlier trial of“El Chapo” Guzman, Zambada's co-leader of the Sinaloa Cartel, and then considering the additional time that Zambada ran the organization after Guzman's arrest, according to a person familiar with the case who asked not to be identified discussing internal policy.

The US Attorney's office declined to comment on the likelihood of seizing the assets. Frank Perez, Zambada's defense lawyer, declined to comment. A lawyer for Guzman didn't immediately return a call seeking comment.

Payouts in other headline-making cases over the years haven't materialized.

Bernard Madoff, who admitted to orchestrating a decades-long Ponzi scheme, was ordered to forfeit $170 billion in addition to a 150-year prison term. He paid only a small fraction of the amount before dying in prison in 2021.

Sam Bankman-Fried, co-founder of the FTX cryptocurrency exchange, was ordered to forfeit $11 billion and serve 25 years in prison for his fraud conviction. Bill Hwang, convicted last year of fraud and market manipulation, was ordered to forfeit $12 billion and spend 18 years behind bars. Both are appealing their cases.

El Chapo Guzman was sentenced to life in prison plus 30 years and ordered to forfeit $12.6 billion in illicit profits by the same judge who is presiding over Zambada's case. While trial testimony showed Guzman once owned a zoo, apartments and multiple homes, a spokesman for Brooklyn US Attorney Joseph Nocella declined comment on how much the government has recovered to date.

Other attempts to seize funds have recovered a greater portion of what was sought. After the US launched an effort in 2016 to recover at least $4.5 billion looted from Malaysian fund 1MDB as part of criminal prosecutions, the Justice Department said in January that it has recovered $1.7 billion in stolen assets tied to those criminal cases.

Dramatic Undoing

Zambada said in his plea deal that he got his start in the industry by selling marijuana as a teen, before eventually leading a violent cartel with international reach. He admitted to paying bribes to politicians, the military and police.

His undoing came in dramatic fashion, according to his own lawyer and US law enforcement. He was arrested in July 2024 after allegedly being lured to a meeting by Joaquin Guzman Lopez, a son of El Chapo, in Culiacan, Mexico. Once there, he was ambushed, tied up and forced onto a private plane.

The plane carried Guzman Lopez and Zambada across the border, where US authorities detained them in El Paso, Texas.

As US officials look to collect the money Zambada agreed to forfeit, the drug kingpin is under no obligation to help with the search, according to Steven L. Kessler, an asset forfeiture expert based in New York who runs his own law office.

“The figures are clearly for press-release purposes,” Kessler said.“Does the government collect on the money? They try, but after a certain point, they're onto the next case.”

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