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Mexican drug-lord ‘El Chapo’ ran his crime empire using Canadian servers, prosecutors say at trial

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A secret Canadian-based communications platform allowed reputed cocaine kingpin Joaquin (El Chapo) Guzman to control hit men, organize global drug trafficking and direct corrupt cops, according to evidence in an ongoing Brooklyn trial.

It was only after Colombian Cristian Rodriguez, Guzman’s in-house computer geek, moved four servers out of Canada that American authorities were able tap into the encrypted messaging system at the heart of his billion-dollar empire, prosecutors argued at trial this week.

Rodriguez is now a co-operating witness for the prosecution.

Guzman faces life in prison on conspiracy charges, as prosecutors contend he used the Canadian-based system to run an empire that trafficked narcotics and weapons and played a central role in Mexican drug wars that have left thousands dead.

Guzman has pleaded not guilty to charges of international drug trafficking and conspiracy to murder rivals.

The central role of communications didn’t surprise a Toronto-based journalist who covered organized crime on the Mexican-U.S. border in the early 2000s, before he was forced to seek asylum in Canada over cartel death threats.

“These guys have resources — both human and economic- to implement advanced networks,” Luis Horacio Najera said in an interview on Thursday. “They also have a new mindset that understands and know how to use technology for criminal purposes, which is remarkable.”

That Star has examined some of the evidence from the ongoing case.

According to the evidence presented by prosecutors, Rodriguez developed the Canadian-based platform for Guzman, trained associates in how to maintain the systems and helped upgrade and repair them from a remote location.

Rodriguez, working for investigators, persuaded Guzman to allow him to move the network’s four secret servers from Canada to the Netherlands in 2011, as it was believed it would be easier there to get a warrant to seize the phone calls as evidence.

Rodriguez told Guzman he was doing a routine upgrade, prosecutors said.

It was after the switch that authorities were able to tap into Guzman’s encrypted messages.

Guzman was extradited to the United States in 2017. Agents recorded his phone calls from Manhattan’s Metropolitan Correctional Center and said they were able to identify traits that made his voice identifiable.

A federal agent told the trial that Guzman’s voice has a “kind of a sing-songy nature to it” with a “nasally undertone” and distinctive high pitch.

The recorded messages show Guzman played a variety of roles, from calming an over-zealous hit man to trying to monitoring the various women in his life.

In one of the recordings, he tells worker Orso Ivan Gastelum Cruz — better known as “Cholo Ivan” — to show a bit of restraint towards beating up police officers, kidnapping and murder.

“Once you have them tied up and such, we’ll check it out to make sure we don’t execute innocent people,” Guzman tells Cholo Ivan.

“Talk to them, you know they are policemen. It’s better not to smack them around,” Chapo urges Cholo Ivan.

“Well, you taught us to be a wolf,” Cholo Ivan replies. “Acting like a wolf, I’m remembering, and that is how I like to do it.”

Authorities got their big break after luring Rodriguez to a Manhattan hotel in 2010, where he was secretly recorded trying to buy equipment that would allow him to evade law enforcement detection.

That conversation was used as leverage to eventually persuade Rodriguez to co-operate with authorities.

Guzman’s trial in Brooklyn has heard several of the calls this week.

The trial has also heard that Guzman used encrypted Canadian-made BlackBerries to spy on his beauty queen wife, Emma Coronel, and a lover, Agustina Cabanillas Acosta.

In court exhibits, Cabanillas is referred to as “Fiera,” Spanish for “Wild Beast.”

Court heard text messages in which Guzman and she discuss setting up a chemical fertilizer business in Germany and citrus firm in Ecuador to export drugs to Canada, Europe, Australia and the United States

They address each other as “Love” in the texts.

However, in a text to a friend also released in court, Cabanillas calls Guzman an “idiot” and disses his Canadian-made cellular phones.

“I don’t trust these BlackBerries, the ones he gives me over here, because the bastard can locate me.”

With files from The Associated Press

Peter Edwards is a Toronto-based reporter primarily covering crime. Reach him by email at pedwards@thestar.ca

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‘Business as usual’ for Dorel Industries after terminating go-private deal

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MONTREAL — Dorel Industries Inc. says it will continue to pursue its business strategy going forward after terminating an agreement to go private after discussions with shareholders.

« Moving ahead. Business as usual, » a spokesman for the company said in an email on Monday.

A group led by Cerberus Capital Management had previously agreed to buy outstanding shares of Dorel for $16 apiece, except for shares owned by the family that controls the company’s multiple-voting shares.

But Dorel chief executive Martin Schwartz said the Montreal-based maker of car seats, strollers, bicycles and home furniture pulled the plug on a deal on the eve of Tuesday’s special meeting after reviewing votes from shareholders.

“Independent shareholders have clearly expressed their confidence in Dorel’s future and the greater potential for Dorel as a public entity, » he said in a news release.

Dorel’s board of directors, with Martin Schwartz, Alan Schwartz, Jeffrey Schwartz and Jeff Segel recused, unanimously approved the deal’s termination upon the recommendation of a special committee.

The transaction required approval by two-thirds of the votes cast, and more than 50 per cent of the votes cast by non-family shareholders.

Schwartz said enhancing shareholder value remains a top priority while it stays focused on growing its brands, which include Schwinn and Mongoose bikes, Safety 1st-brand car seats and DHP Furniture.

Dorel said the move to end the go-private deal was mutual, despite the funds’ increased purchase price offer earlier this year.

It said there is no break fee applicable in this case.

Montreal-based investment firm Letko, Brosseau & Associates Inc. and San Diego’s Brandes Investment Partners LP, which together control more than 19 per cent of Dorel’s outstanding class B subordinate shares voiced their opposition to the amended offer, which was increased from the initial Nov. 2 offer of $14.50 per share.

« We believe that several minority shareholders shared our opinion, » said Letko vice-president Stephane Lebrun, during a phone interview.

« We are confident of the long-term potential of the company and we have confidence in the managers in place.”

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Anglais

Pandemic funds helping Montreal businesses build for a better tomorrow

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Many entrepreneurs have had to tap into government loans during the pandemic, at first just to survive, but now some are using the money to better prepare their businesses for the post-COVID future.

One of those businesses is Del Friscos, a popular family restaurant in Dollard-des-Ormeaux that, like many Montreal-area restaurants, has had to adapt from a sit-down establishment to one that takes orders online for takeout or delivery.

“It was hard going from totally in-house seating,” said Del Friscos co-owner Terry Konstas. “We didn’t have an in-house delivery system, which we quickly added. There were so many of our employees that were laid off that wanted to work so we adapted to a delivery system and added platforms like Uber and DoorDash.”

Helping them through the transition were emergency grants and low-interest loans from the federal and provincial governments, some of which are directly administered by PME MTL, a non-profit business-development organization established to assist the island’s small and medium-sized businesses.

Konstas said he had never even heard of PME MTL until a customer told him about them and when he got in touch, he discovered there were many government programs available to help his business get through the downturn and build for the future. “They’ve been very helpful right from day one,” said Konstas.

“We used some of the funds to catch up on our suppliers and our rents, the part that wasn’t covered from the federal side, and we used some of it for our new virtual concepts,” he said, referring to a virtual kitchen model which the restaurant has since adopted.

The virtual kitchen lets them create completely different menu items from the casual American Italian dishes that Del Friscos is known for and market them under different restaurant brand names. Under the Prasinó Soup & Salad banner, they sell healthy Greek options and their Stallone’s Sub Shop brand offers hearty sandwiches, yet the food from both is created in the same Del Friscos kitchen.

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Downtown Montreal office, retail vacancies continue to rise

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Some of downtown Montreal’s key economic indicators are heading in the wrong direction.

Office and retail vacancies in the city’s central core continued to climb in the fourth quarter of 2020, according to a quarterly report released Thursday by the Urban Development Institute of Quebec and the Montréal Centre-Ville merchants association. The report, whose first edition was published in October, aims to paint a socio-economic picture of the downtown area.

The survey also found office space available for sublet had increased during the fourth quarter, which may foreshadow even more vacancies when leases expire. On the residential front, condo sales fell as new listings soared — a sign that the downtown area may be losing some of its appeal to homeowners.

“It’s impossible not to be preoccupied by the rapid increase in office vacancies,” Jean-Marc Fournier, the former Quebec politician who now heads the UDI, said Thursday in an interview.

Still, with COVID-19 vaccinations set to accelerate in the coming months, “the economic picture is bound to improve,” he said. “People will start returning downtown. It’s much too early to say the office market is going to disappear.”

Public health measures implemented since the start of the pandemic almost a year ago — such as caps on office capacity — have deprived downtown Montreal of more than 500,000 workers and students. A mere 4,163 university and CEGEP students attended in-person classes in the second quarter, the most recent period for which figures are available. Border closures and travel restrictions have also brought tourism to a standstill, hurting hotels and thousands of local businesses.

Seventy per cent of downtown workers carried out their professional activities at home more than three days a week during the fourth quarter, the report said, citing an online survey of 1,000 Montreal-area residents conducted last month.

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