drug wars

special reports
in the shadow of california's dot-com economy by Robert B. Gunnison


Gunnison is director of school affairs at the Graduate School of Journalism at the University of California at Berkeley, and a former Sacramento bureau chief for the San Francisco Chronicle.
In Redwood City, California--only a few blocks from the shiny dot-com giants like Fogdog and Excite--signs on the chain-link fence outside Hoover School read: "ZONA LIBRE DE DROGAS."

Across the street are tidy, one-story houses that blend in innocuous suburban conformity, even in this poor neighborhood of Mexican immigrants called North Fair Oaks.

But one house stands out in North Fair Oaks. The lawn is bounded by a brick wall, and a wrought iron fence. The gated driveway is enveloped in a large canvas awning that blocks the house from clear view.

This is the residence of Marcial Gonzales-Farias. In February 1999, Farias, known as "Chi Chi," was arrested a few blocks away after dropping a plastic bag holding two kilos of cocaine into a pickup truck. A total of 16 arrests eventually were made in the case; Farias and two other major figures have pleaded guilty and await sentencing.

The two-year FBI investigation was the latest in a long history of drug cases--going back to the early 1990s--in North Fair Oaks. This particular case was further evidence that this quiet immigrant community on the edge of Silicon Valley had become a major destination for drug distribution and money shipments to and from Southern California, Mexico.and Colombia.

To the thousands of Bay Area commuters who inch along U.S. Highway 101 each day, North Fair Oaks is easy to miss. It is a one square-mile unincorporated wedge of poverty squeezed between Redwood City and Atherton in San Mateo County, one of the wealthiest counties in the nation. Day laborers often await their illicit employment opportunities on the main drag of Middlefield Road.

Even FBI agents approached North Fair Oaks cautiously. "The area bounded by Fifth Street to the south, Woodside Road to the north, Middlefield road to the west and Highway 101 to the east is considered a violent area for surveillance,'' said an FBI affidavit filed in federal court in San Francisco

In the months of investigation before the arrests, agents detailed the day-to-day workings of drug dealing and money laundering, including a brutal initiation for new FBI colleagues.

Two of the suspected drug dealers took an FBI informant to the El Jilguero Bar. One took the informant's right hand and bit his small finger until he screamed. The other then bit his right thumb in the same way. The informant "interpreted this as a game of mind control and intimidation," the FBI affidavit noted dryly.

Much of the FBI investigation focused on Vicente Mendoza Prado, nicknamed "El Morro." Identified by agents as a major cocaine distributor and money launderer for nearly a decade, he had served time in a Mexican prison.

Mendoza Prado was arrested with Farias and has also pleaded guilty in U.S. District Court in San Francisco and, as of October 2000, also awaits sentencing.

Mendoza Prado had a ranch in the Mexican state of Michoacan, where he spent much of his time, and smuggled cocaine, as much as 500 kilograms at a time, to the United States.

During encounters with Mendoza Prado during May, 1997, an FBI informant said he described cocaine prices, how the drug was smuggled by boats from Colombia to the Nicaraguan mainland, and told of his knowledge of Miami cocaine dealers.

"One has to be careful when in the drug business to not appear too flashy and that one must have job and keep a low profile because the flashy ones get caught," the informant quoted Mendoza Prado as saying.

Another FBI informant said he traveled to the San Francisco Bay Area "on numerous occasions" to meet Mendoza Prado to pick up between $200,000 and $1 million in cash for delivery to a trucker in Los Angeles.

Such operations are critical to successful drug rings. Without converting dollars into pesos, drug dealers cannot make payments in their home country to support their operations.

Seizures of cash on American highways have been growing annually, with $77 million confiscated in 1998, according to the Drug Enforcement Agency.

Mendoza Prado, the agents were told, counted his drug earnings on an electronic machine known as "the vacuum," - one of the many code words dealers used in an effort to deceive FBI wiretaps. When federal agents raided a storage shed rented by Mendoza Prado, they found a currency counting machine, a counterfeit detection device and supplies for packaging currency.

Not all the money made it to Prado's machine, however. One drug dealer who owed Farias and Mendoza Prado $150,000, put the cash into a storm drain in September, 1994, when he suspected correctly he was being followed by the FBI in St. Louis.

"This money was subsequently lost when a rainstorm washed the money into the Mississippi River," the affidavit said.

Mendoza Prado also kept himself well armed. A search of a second shed found three AK-47 assault rifles, 10 semiautomatic rifles, three 12-gauge shotguns, two .22-caliber rifles, magazines and ammunition.

The heavy weaponry might seem out of character for a dealer who worked hard at keeping a low profile. But in September, 1997, Mendoza Prado's brother, Francisco, also told an informant that his brother ordered murders and kept two people in the Bay Area as hit men.

As for Gonzales-Farias, FBI informants say he led a quiet double life in the community that has been home to Michoacan immigrants for nearly half a century. He owned Plaza Jewelers on the main street of North Fair Oaks, and the Hide-Away Restaurant, a rambling two-story building.

The end came for Mendoza Prado and Farias in February, 1999, after a federal judge authorized a wiretap of Farias' cellular phone. According to an FBI affidavit, Farias called Mendoza Prado at 9:45 a.m. speaking in coded language about a meeting at 2 p.m. "Twelve persons were going," Farias said. FBI translation: 12 kilograms were to be delivered.

Mendoza Prado instructed Farias to "make sure they are the big pieces and not the little ones." FBI translation: Bring additional samples.

According to FBI affadavits, agents started surveillance at 2 p.m. near Farias' house, near the school. Farais drove to a meeting at a pre-arranged spot with Juan Garcia Landa. They drove together, followed by a second car, a gray compact, to another house in a neighborhood, tucked against the western side of the U.S. Highway 101 corridor.

Agents said the gray car drove through a back alley and pulled up to a storage shed in the backyard. A short time later, Landa and Farias left. The next day, with a search warrant, agents discovered 10 kilos of cocaine in the shed.

Shortly before, however, Farias had left the house with the plastic bag that agents said contained two kilos. Farias was detained for a traffic stop, and arrested.


The FBI says this case is significant because Mendoza Prado is considered a major drug trafficker with ties to indicted fugitive drug kingpin Armando Valencia. One part of what linked the two men was a business card bearing Valencia's name, found by FBI agents during a search following the arrests of Mendoza Prado and Farias.

Valencia, who like Mendoza Prado and Farias is from Michoacan, was indicted a year ago by a federal grand jury in Miami as part of "Operation Millennium" in which 31 drug traffickers and money launderers in Colombia and Mexico were arrested as part of a coordinated U.S./Colombian investigation.

According to the U.S. Justice Department, Valencia rose in the Juarez Cartel after Mexican drug kingpin Amado Carrillo Fuentes died in July 1997. Valencia is considered a major transporter of drugs into the United States and the U.S. has sought the assistance of Mexican authorities for his arrest.

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