Saturday, December 24, 2011
DEA says the dreaded "derecho de piso" has arrived in the United States
Derecho de piso means "floor charge" or rent, but it's just another name for extortion. It's Mexico's hidden occupational tax, and it has the power to affect tens of thousands of business far more profoundly than all other market and economic vagaries combined.
An extortionist drops by and has a friendly chat with a business owner, often a small proprietor. He explains that the two are now in business together. Once a week, or on some other regular basis, a collector arrives to pick up the designated rent from the owner. A failure or refusal to pay may be followed by disastrous consequences.
There has long been a presumption that extortion is just a side business of the powerful drug cartels, to help cover daily operational costs. While that's still true, there's increasing evidence in Mexico that extortion has become an independent business in its own right, in which many thousands are participating to the detriment of their hard working neighbors. Sometimes large enterprises are hit -- pharmacies are an example -- and in Acapulco last August thousands of school teachers walked off their jobs for six weeks, after some had received demands from shadowy extortionists seeking 50% of their paychecks.
The U.S. Drug Enforcement Administration (DEA) says that Mexican-owned businesses in the United States are now being hit up by cartel operatives (and their associates on the U.S. side of the border) to pay the same derecho de piso. Restaurants are frequent targets (especially those located near the border), since they're often cash intensive businesses. A common threat is to burn down the establishment if the owner doesn't pay.
Moreover, says the DEA, the cartels are demanding that the same legitimate businesses launder drug money, by depositing cartel profits right alongside daily business receipts. Since banks are already accustomed to large cash deposits from the honest retailers, it's easy for them to include the drug money as well. Once deposited, the proprietor then returns the money to the cartels by wire transfer or with a check disguised to look like a legitimate payment for goods or services.
A profile of the typical cartel extortion victim in the U.S., according to the DEA, is an established Mexican business which has been around for years, enjoys a loyal customer following, diligently pays its federal, state and local taxes, regularly makes large bank deposits and has a substantial Latin work force, many of whom are undocumented. DEA says that the proprietors of such establishments are easy to intimidate, since they may regard an extortion payoff as just another form of "tax" necessary to stay in business and avoid the threat of increasingly severe immigration penalties in some U.S. states.
After washing their drug profits, cartels increasingly invest them in U.S.-based businesses, says the DEA. Restaurants, auto repair shops, tire stores and other retail operations are popular choices, according to the federal agency.
Apr. 1, 2013 - Death toll in Guadalajara bar attacks rises to seven
Read about recent extortion attempts against school teachers in Acapulco: http://mexicogulfreporter-supplement.blogspot.com/2011/11/schools-close-in-acapulco-over-narco.html.
Read about extortion against retail pharmacies: http://mexicogulfreporter.blogspot.com/2011/10/even-pharmacies-get-extorted-in-mexico.html.
What can happen when a business owner doesn't pay: http://mexicogulfreporter.blogspot.com/2011/09/extortion-in-mexico-one-way-its-done.html.
Read about the first life sentences for extortion recently imposed in Mexico: http://mexicogulfreporter-supplement.blogspot.com/2011/11/life-sentence-for-mexican-extortionists.html.
at 5:42 PM