Fugitive arrested over alleged scheme to monopolise cross-border car trade

Along the Texas-Mexico border, it’s known as “the Pool.” And this week, federal authorities say they caught one of the men accused of helping run it.

Every year, drivers known as transmigrantes transport used cars bought in the United States through Mexico to be resold in Central America. Federal prosecutors say a group of South Texas businessmen found a way to monopolize the industry that took those cars across the border — fixing the fees, pooling their revenues and squeezing businesses that refused to comply. 

At the center of the scheme, authorities say, was Carlos Martinez, a Mission, Texas, businessman known as “Cuate” who controlled the transmigrante forwarding agency near the Los Indios border crossing in Texas’ Rio Grande Valley. Prosecutors allege Martinez — the son-in-law of a former notorious Gulf Cartel leader — helped turn a cluster of supposedly competing businesses into a tightly controlled network of fixed prices, shared revenue, cash payments and intimidation. He pleaded guilty to federal charges and was sentenced to prison time.

Working alongside him, prosecutors allege, was Rigoberto Brown, a dual U.S.-Mexican citizen who served in managerial roles on Martinez’s behalf, helping him pull off the alleged scheme. Brown was charged in November 2022 with conspiring to fix prices and divide the market and with conspiring to monopolize the transmigrante forwarding business. Then he disappeared.

For nearly four years, authorities say, Brown lived as a fugitive in Mexico. This week, they caught him near McAllen, Texas. He is set to be arraigned Friday in federal court in Houston. 

An alleged price-fixing “empresa”

For years, much of the traffic moved by transmigrantes was funneled through one place.

Before March 2021, Mexican regulations required commerce to enter Mexico through the Los Indios Port of Entry in South Texas, according to the federal indictment. That created a concentrated industry around the crossing, where forwarding agencies helped drivers handle the customs paperwork and other requirements needed to get their vehicles into Mexico.

Thousands of vehicles moved through the system, generating millions of dollars a year in forwarding agency revenue, according to prosecutors. Federal authorities allege a group of operators found a way to control it.

Beginning as early as 2011, prosecutors say, forwarding agencies agreed on prices instead of competing for customers, choosing to inflate prices and divide the market among themselves.

Participating businesses allegedly collected their revenues centrally and divided the money according to agreed-upon percentages. Prosecutors say the operation was so organized, participants used charts and spreadsheets to keep track of the arrangement and communicated about prices and revenues throughout meetings and in calls, texts and exchanges on social media and messaging applications.

Some participants referred to the collective enterprise as the “empresa” — Spanish for “the company” — according to the indictment. But prosecutors say controlling prices was only one part of the operation.

The “piso”

According to federal prosecutors, alleged conspirators also controlled relationships with licensed Mexican customs brokers whose services were required to process the transmigrante paperwork. The special arrangement allegedly gave them leverage over businesses outside the group.

Agencies without the special broker relationships were allegedly coerced into operating through agencies controlled by members of the conspiracy, according to the indictment, while some outsiders were also pushed into the Pool, forced to follow its prices and revenue-sharing rules.

The term “piso” — Spanish for “floor” — is used in the case to describe an alleged extortion payment imposed on vehicles crossing the Los Indios bridge.

Prosecutors allege one forwarding agency owner was forced to pay more than $80,000 after operating outside the Pool and failing to pay the alleged tax.

Those who resisted faced more than economic pressure, according to the government.

The indictment alleges that threats and intimidation were used to enforce the arrangement — including acts of violence directed against industry participants, their families, employees, associates and businesses.

Prosecutors add that the goal was fear: discouraging businesses already in the market from breaking ranks and dissuading outsiders from posing a challenge to the group.

A fugitive returns

Brown was charged in November 2022 with conspiring to fix prices and allocate the market, which is considered a violation of Section 1 of the Sherman Act, as well as conspiring to monopolize the market in violation of Section 2. The Sherman Antitrust Act was passed in 1890 to give federal authorities a tool to target large corporate monopolies, and the law is primarily used for that purpose today.

After he was indicted more than three years ago, Brown hid out in Mexico, authorities say, until his arrest this week near McAllen. His capture comes after so much of the case has played out in federal court, and eight of Brown’s co-defendants have already been sentenced. 

Martinez, for instance, received the harshest punishment: 11 years in federal prison and a $2 million criminal fine after pleading guilty to conspiring to fix prices and allocate the market, conspiring to monopolize, conspiring to interfere with commerce through extortion and conspiring to launder money.

Other defendants received lesser prison sentences, home detention or time served after pleading guilty to charges stemming from the sweeping investigation.

Two defendants, Miguel Hipolito Caballero Aupart and Diego Ceballos-Soto, remain fugitives, according to the Justice Department. 

Investigators from the Department of Homeland Security’s Homeland Security Investigations (HSI) and the FBI led the law enforcement operation, while the case has been prosecuted by attorneys from the Justice Department’s Antitrust Division, the department’s Violent Crime and Racketeering Section and the U.S. Attorney’s Office for the Southern District of Texas. 

If convicted, Brown faces up to 10 years in prison and a $1 million fine on each Sherman Act charge.

It wasn’t immediately clear if he had an attorney who could speak on his behalf.