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NEW TWIST ON WIRE TRANSFERS
ARIZONA BATTLING LATEST STRATEGY USED BY HUMAN SMUGGLERS TO LAUNDER MONEY
Human smugglers, forever trying to conceal the money in their multimillion-dollar operations, have created a convoluted new system to collect their fees for bringing undocumented immigrants across the border into Arizona.
Rather than having the money wired directly to them, the coyotes now have the cash sent to border cities in northern Mexico and brought to them.
Smugglers adopted the system, known as triangulation, after state investigators began monitoring wire transactions at Western Unions in Arizona, the state Attorney General’s Office says.
The state’s years-long investigation of wire transactions has led to the seizure of huge sums of laundered money and provided data used to attack criminal organizations. It also has led to a court battle with Western Union, which dominates the business of financial wire transfers.
Attorney General Terry Goddard’s office says the company does not report suspicious activity, as it is required to do. The company says it is being given a black eye unfairly by zealous authorities trying to crack down on illegal immigration.
Metropolitan Phoenix is considered the hub for human-smuggling operations. An estimated 3,000 illegal immigrants enter the state daily. Known as pollos (chickens), they are guided across the border, driven to the Valley and held in drophouses until coyote fees are paid.
The money, about $1,600 per border crosser, is usually sent via wire by friends or relatives who already live in the United States. In court papers, state Department of Public Safety investigator Daniel Kelly estimates the annual smuggling revenues in Arizona at $1.7 billion.
Goddard said state agents have intercepted more than 15,000 suspected coyote wire transfers into the state in the past few years, seizing upward of $17 million.
“We have successfully disrupted at least that part of the money exchange,” Goddard said. “They are now morphing into other ways of doing it.”
The state Financial Crimes Task Force released records this year documenting the flow of cash into Arizona. Western Union agents in states with the highest illegal-immigrant populations were sending 36 times as much money into Arizona as they were receiving.
In 2003, for example, wires to Arizona from six key Mexican states totaled $113 million. Wires from Arizona to those states amounted to $3 million. “Western Union has been unable to provide a legitimate commercial explanation for the Arizona phenomenon,” according to documents the state has filed in court.
In an e-mail, Sherry Johnson, director of media relations for the Western Union Co., said Arizona’s allegations are a “grossly unfair and inaccurate representation” of the company and its customers.
“We believe we have a best-in-class compliance program and work with both law enforcement and regulators around the world on a daily basis to ensure that Western Union meets or exceeds its compliance obligations,” she said.
Frozen funds
Several years ago, task force investigators began obtaining warrants to freeze suspicious wire transfers. Recipients cannot get their money unless they demonstrate to police that it is legitimate. Unclaimed funds are forfeited under racketeering statutes and used for law enforcement.
Goddard said wire transactions are screened to avoid interfering with legitimate commerce. However, some advocacy groups for Hispanics and immigrants claim benign transfers are getting snagged.
Juan Salgado, executive director at Chicago-based Instituto Del Progresso Latino, said he is concerned that Western Union customers are being profiled based on their last names. “Once you’ve become a target,” he said, “it’s very difficult to get your money back.”
Joshua Hoyt, executive director with the Illinois Coalition for Immigrant and Refugees Rights, said Goddard is using a “drive-by machine-gun approach” instead of targeting known criminals.
“There are all kinds of problems with the current procedure, and all kinds of innocent people have had their money taken and not been able to get it back,” Hoyt said. “The attorney general set up a program that is hurting people.”
Goddard acknowledged that millions of Mexican immigrants in the United States send money south of the border to help impoverished family members. However, he said those remittances are easily distinguished from smuggling fees.
The Attorney General’s Office said that more than four-fifths of the seizures go unchallenged and that not one person has recovered funds by going to court.
Money trail
With wire-transfers as an entry point, the task force, using undercover operatives and wiretaps, investigated numerous smuggling rings. Scores of coyotes have been imprisoned, along with corrupt business associates. The government also seized Western Union stores, auto dealerships and drophouses.
The crackdown forced smugglers to devise more-complex tactics. Money-laundering specialists started using false IDs and dividing payments into several transactions to avoid detection. One example: A woman in Nogales used 63 spellings of her name in dealings with a Western Union agent.
The Attorney General’s Office countered with more-detailed computer analyses to identify criminals. “It’s very much a cat-and-mouse quest,” Goddard said. “The money is the key to this whole thing. If you don’t have the money, you aren’t going to have the coyotes.”
Last year, according to Kelly’s affidavit, Western Union wires to Phoenix suddenly plummeted 90 percent, even though Border Patrol statistics indicated no decline in illegal immigration. Suspecting that smugglers had developed a new system to avoid detection, the Attorney General’s Office issued a subpoena for Western Union wires sent to Sonora.
Records from March and April 2005 showed more than $28 million sent from the United States, most of it to select Western Union outlets in border towns such as Agua Prieta, Nogales and Altar, “secondary hubs for smuggling organizations.”
Kelly’s affidavit says the triangulation method works like this:
After a pollo is taken to a Valley drophouse, family members are no longer instructed to send the ransom directly to coyotes in Phoenix. Instead, funds are wired to Sonora, where confederates pick up the cash. A phone call is made to Phoenix, clearing the pollo for release.
Early this year, the Attorney General’s Office demanded more Western Union records involving cash sent to Sonora. In two months, there were 13,549 wires. Much of the money originated from places like Illinois, New York, Georgia and Florida, “corridor states” for illegal immigration. One payee in Caborca received more than $500,000 in 10 weeks. Another in Altar, the staging area for border crossings, took in $68,000. The data show Western Union wires to Sonora increased 25 percent in 12 months.
Big profits
Kelly’s affidavit says that someone who sends $10,500 via Western Union pays a $470 fee, compared with a bank processing charge of about $35 for the same transaction. Twenty percent of the fee is split by agents who send and receive the funds, while Western Union retains the rest.
Noting that banks require far more identification, Kelly concludes: “Trafficking organizations in the past five years caused billions of dollars to be sent through Western Union to receivers in Arizona because it was convenient, rapid and relatively safe.”
A sting operation conducted in 2001-02 serves as an illustration: Undercover agents laundered $350,000 at three Valley wire-transfer outlets. The affidavit says workers at each store took bribes in return for accepting false IDs, filing fraudulent records and helping supposed coyotes avoid financial reporting requirements. At times, the corrupt payoffs totaled $10,000 per day. When the operation ended, four Western Union agents admitted guilt, and the company terminated eight high-volume franchises.
Company lawyers cooperated with Arizona investigators for nearly five years in a bid to prevent criminal transactions. They also launched a special training program to combat criminal wires in Arizona and recently banned wires of more than $450 bound for the state.
The money-laundering probe became public at a delicate time for Western Union, which last month broke away from First Data Corp. to become a separate company, first listed on the New York Stock Exchange on Oct. 2. Stock analysts began asking questions about the company and the role of smuggling transactions in its revenue stream.
Legal battle
When the attorney general sought more data on Sonora business in April, Western Union balked. In court papers, the company argued that Arizona officials have overstepped their authority and are interfering with private business based on “rank speculation” and “salacious but baseless conclusions.” Western Union contends that the state is fishing for crimes and that the company is obliged to protect innocent customers from government intrusion and seizures.
Goddard said his office focused on Western Union only because it is by far the nation’s biggest wire transfer company. MoneyGram, the next-largest operator, does only a fraction of the business and has not challenged warrants from the Attorney General’s Office.
Kelly’s affidavit suggests that some of the money laundering resulted from company failures to report suspicious transactions, as required by law.
Although Arizona investigators began sharing their investigative findings, Kelly wrote, “Western Union’s corporate compliance section has for at least the past three years inadequately reported.”
In court, Western Union asked that Kelly’s affidavit be stricken from the record or ignored because it is “irrelevant, misleading or inaccurate … unfounded, contradictory and inflammatory.”
The legal dispute is being heard in Maricopa County Superior Court. This month, the company won a temporary order blocking the state’s effort to freeze and seize suspected money transfers. A hearing on that issue is scheduled for Monday.
By Yvette Armendariz
April 5,2006
NEW WAYS OF EXPORTING MONEY
LESS AND LESS CASH IS LOST IN TRANSLATION
Every three months, Gabriela Escalante makes a trip to her neighborhood carneceria to wire $200 to $300 to her grandmother in Puebla, Mexico.
The cash is a commitment that her family, who immigrated to Arizona when she was 10, makes to ensure abuelita has enough money to pay for utilities, food and clothes. Escalante’s grandmother, in her late 60s, doesn’t earn an income of her own.
Escalante, a bookkeeper for a Phoenix accounting firm, is also aware and pleased that more choices are popping up for sending money back to Mexico.
The latest, introduced Tuesday, is a debit card tied to MasterCard that family members can load with a maximum $2,500 a week or $9,999 a month. Relatives abroad then can use the card at retailers that accept MasterCard.
The options are popping up because of the growth of the remittance market, which has expanded from $8.9 billion in 2001 to $20 billion last year. Mexican financial companies are estimating as much as $22 billion in remittances from expatriates this year.
The added choices have pushed down costs for users to less than $10 per transaction. In some cases, sending money abroad can be free.
“Banks and financial institutions have realized the great market potential of remittances and have done a great deal to attract such business,” said Roberto Coronado, an assistant economist with the Federal Reserve Bank’s Dallas district branch office in El Paso.
Loui Olivas, an Arizona State University professor who studies Hispanic consumers, added, “There are billions to be made!”
Denver-based First Data Corp., parent of Western Union, has seen profits from its wire-transfer services grow to $1.39 billion last year. Increasingly, banks are introducing money-transfer services.
In September, Bank of America rolled out nationally its SafeSend remittance program, which had been a pilot for a few years. Wells Fargo has expanded its longtime InterCuenta Express remittance services to include not only Mexico but also El Salvador, Guatemala, India and the Philippines.
Both offer a free remittance product with certain accounts.
Western Union, however, remains the dominant player. Banks are thought to have less than 10 percent of business, said Daniel Ayala, senior vice president for Global Remittance Services at Wells Fargo.
Olivas, assistant vice president for academic affairs and associate professor of management at ASU’s W.P. Carey School of Business, suspects banks held back on efforts to go after the immigrant market until recently, even though a market has been growing for years, because the idea seemed too cutting edge years ago.
“High profit margins and technology have now made traditional banks hungry for the business,” he said.
Another plus for those sending remittances is an ID card system issued by the Mexican Consulate, known as the matricula consular. Banks have taken to the card as a way to provide identification needed to open an account, which in turn helped banks create customers for their remittance products.
Other companies have taken to “stored value cards” as an introduction to banking for immigrants. The holders can deposit money into them and can be used like a debit card for purchases.
One company, Stored Value Cards Inc. out of California, is taking that concept a step further. The company Tuesday introduced the Futura Maestro Prepaid Debit Card, issued by MetaBank under license from MasterCard International. MetaBank has branches in South Dakota and Iowa.
The card is being introduced in Phoenix and Tucson because of the number of Latino immigrants in the market.
“There’s no product like Futura,” said Chief Executive Officer Al Golden before a Spanish-language news conference.
Stored Value Cards was incorporated last fall, but the company’s history with financial products began about three years ago when WMO Global Inc. formed. That company then merged into Stored Value, Golden said.
Futura comes with the option of one or two cards. One card is kept by the user in the United States. The optional second card can be sent to someone abroad.
The focus Tuesday was sending money to Mexico, but local distributor Diego Padilla Ramos said the card could be used anywhere globally.
The card allows users to have paychecks or other money deposited into the debit card for a $9.95 monthly fee. The card can be used to transfer funds to a second card, which costs $2.95 a month, plus a 50-cent fee for PIN purchases.
The product is touted as safer than money transfers because the receiver isn’t leaving a store or bank with a large amount of cash, making them a target for theft. The PIN helps protect the money from unauthorized use.
Right now, cards can be picked up at Dos Hermanos at 29th Avenue and Van Buren Street in Phoenix, but efforts are under way to add the cards at other retailers, including grocery stores, convenience stores, carnecerias and other businesses that cater to Latinos, Padilla Ramos said.
Escalante said she’s unlikely to use the Futura card because her grandmother prefers having cash in hand.
“With older people, the mentality is cash only,” she said.
Sending money
An electronic money transfer is more expensive than a bank-to-bank transfer but doesn’t require an ID.
How it works:
Senders take money to an agent affiliated with Western Union or another network. There, an agent takes the cash and deducts fees based on the amount, the exchange rate and the speed of service. The recipient in another country then can pick up the cash (minus the fees) at any agent’s office there.
How it makes money:
Western Union and its competitors make money from three sources: the transfer fee, a surcharge for exchanging the money from one currency to another, and by earning bank interest during the hours or days that it takes the recipient to pick up the money. The transfer fee is split with the two agents involved in the transaction.
How much it costs:
The cost to send $300 from Los Angeles to Mexico on March 27:
* Western Union (instant transfer), $17.50.
* Western Union (next day), $12.50.
* Ria Envia, $14.09.
* Order Express, $9.40.
* MoneyGram, $9.15.
Source: PROFECO, Mexico’s consumer protection agency, which tracks the costs
Reach the reporter at yvette.armendariz@arizonarepublic.com or (602) 444-4842.
By Chris Hawley
March 19, 2006
WIRE FIRM A FORCE IN DEBATE OVER IMMIGRATION
WESTERN UNION BUILDS TIES WITH DONATIONS, PUBLICATIONS
Every two weeks, Nayeli Toxqui pushes her baby stroller down Insurgentes Avenue, past the whizzing taxis and the wheezing buses, and joins a line of people near a yellow-and-black Western Union sign.
“I’m picking up money from my husband in Chicago,” she said one recent morning, peering at the cashier’s booth dispensing money at the back of the Elektra appliance store. “I don’t work, so you could say I depend on la Western.”
So do millions of other families and their migrant relatives. And in turn, Western Union depends on them, as it rides a 10-year wave of immigration to record-high profits.
So perhaps it is no surprise that the world’s biggest money-transfer company and its parent firm, First Data Corp., are quietly becoming a force in the debate over illegal immigration and border security.
In recent years, Denver-based First Data has openly campaigned for immigration reform, which could legalize millions of undocumented workers, and has created a $10 million “Empowerment Fund” for the same purpose.
It has held seminars on migration law, published how-to guides for migrants, sponsored English classes, given money to a charity that helps Mexican women whose husbands are in the United States, and showered immigrant-sending communities with aid.
First Data has stepped up its political donations in recent years. It also “directly, actively” fought against Arizona’s Proposition 200, a First Data official told the Mexican Senate in 2004.
Critics accuse the company of encouraging immigrants, both legal and illegal. Supporters say the company is just trying to connect with customers, and that First Data’s actions have little effect on migration.
“The economic forces that are driving immigration were not created by First Data,” said David Landsman, executive director of the National Money Transmitters Association, which represents wire-transfer companies.
Either way, both sides admit Western Union’s fate is intimately tied to immigrants and likely will become more so after First Data spins off Western Union into an independent company later this year. First Data currently makes about half of its profits from money transfers, with the rest coming from its other financial services: credit-card processing, ATM networks, and moving money between banks.
But an independent Western Union will be entirely dependent on money transfers, and on the migrants who send them.
“As these individuals move, and they continue to move around the globe, Western Union will continue to benefit,” First Data chief executive Ric Duques told analysts in a conference call in January, according to Bloomberg News.
First Data declined to comment for this article, but in news releases, company Web sites and speeches, its officials have touted the company’s recent activism.
Other wire-transfer companies have ramped up their migrant outreach efforts, too. But none has invested as much money and energy as First Data, or taken as direct a role in the immigration debate.
“They do support immigration reform for instrumental reasons — or you can use a more crude word, for opportunistic reasons,” said Manuel Orozco, an expert on remittances at the Inter-American Dialogue, a think tank.
“But there is also a genuine reality: the money-transfer companies work face to face with migrants, and they understand their needs. (First Data feels) that they have to have a position on this, and it would be hypocritical to stay quiet and let things happen.”
Booming business
When First Data acquired Western Union through a merger 11 years ago, the telegram company founded in 1851 was nearly bankrupt. Its fortunes were about to change.
The United States was on the verge of an immigration explosion. The Mexican economy was collapsing, even as U.S. businesses were booming and needed labor.
Soon Mexicans were flooding across the border. While the number of legal immigrants to the United States remained flat at about 650,000, the number of illegal border-crossers soared, from 450,000 annually before 1994 to 750,000 a year during the late 1990s.
Now there are 37 million foreign-born people in the United States, including at least 11.5 million unauthorized migrants, most of them Mexican, according to the Pew Hispanic Center.
Those migrants send a torrent of money to their families. Mexicans in the United States alone sent home some $20 billion in 2005, up from $6.6 billion just five years ago.
The increase has been a windfall for wire-transfer companies. Western Union, which also owns the Vigo and Orlandi Valuta chains, saw its revenue nearly double from $2.3 billion in 2000 to $4.2 billion in 2005. It made $1.3 billion in profit last year.
“Their real key to success is the immigration from Third World to Second World and First World countries. That is the ultimate secret sauce,” said Kartik Mehta, an analyst with FTN Midwest Securities.
However, new competitors are moving in. Citigroup and Wells Fargo are trying to get into the remittance business by persuading migrants to open bank accounts, and a raft of smaller companies are offering cheaper service.
With competition heating up, wire-transfer companies are jealously guarding their client base.
Reaching out
To win points with customers, First Data has launched programs to help migrants and their families back home.
The efforts include a series of immigration-law seminars called “Western Union La Ley,” and a directory of immigrant resources called “Pasaporte a los Estados Unidos” (Passport to the United States).
The company also sponsored the printing of 300,000 guides telling Salvadorans how to apply for the U.S. Temporary Protected Status program. The program gave legal residency to 248,000 migrants following two earthquakes in El Salvador in 2001.
In 2000 the company formed the First Data Western Union Foundation, which is funded by First Data, its employees and its agents in other countries.
The foundation has given out more than $16 million, funding everything from seminars on home buying for migrants in Broward County, Fla. to English classes at the Chicago and San Antonio campuses of the National Autonomous University of Mexico.
It gives money to a legal aid groups and organizations like the Massachusetts-based Immigrant Learning Center, which along with running English classes, produces studies “promoting immigrants as assets to America,” according to one of its reports.
Some critics say the foundation’s work is window-dressing designed to distract customers from Western Union’s high rates. The company’s fees are consistently higher than its competitors, according to Mexico’s consumer protection agency.
“The company is washing its face,” journalist Alberto Najar wrote in Mexico’s La Jornada newspaper. “Fine. But who do you think charges the most to send money from Chicago, Houston, Indianapolis, Los Angeles and New York? That’s right, Western Union.”
Furthermore, some of the foundation’s programs almost seem to reward migration, say some border-control advocates.
Helping out
In the Mexican state of Oaxaca, the foundation gave $250,000 “to provide assistance to women living alone because their husbands are working in the United States,” according to a foundation news release.The money helped women build small gardens in their back yards to raise extra money, said Narcedalia Ramirez Pineda, the vice president of the AYU Foundation, which operated the program. Women were taught how to install drip-irrigation systems and raise poultry, and some of the money went toward building a greenhouse.
“First Data was a great help,” Ramirez said. “We’re very satisfied with the solidarity they have shown us.”
It also has pledged $1.25 million to the Mexican government’s 4×1 Program in Zacatecas state. The program provides matching funds for each peso that migrants invest in small businesses in their hometowns.
That money, presumably, comes through wire transfers.
Another foundation-funded program helps Mexican migrants go to U.S. universities “because they don’t have the documents necessary to go to a college and pay tuition as international students,” First Data’s public relations director Mario Hernandez said during a forum in the Mexican Senate on Nov. 10, 2004.
The foundation made headlines by funding a 56-page booklet for migrants called “A Survival Guide for Newcomers to Colorado.”
The guide included legal tips such as, “It’s not the job of the police to report you to Immigration,” and listed banks where migrants could open accounts with only an ID card issued by the Mexican consulate.
The guide infuriated border-control advocates. In a broadcast last year, CNN newsman Lou Dobbs called the guide a “how-to guide for illegal aliens.”
Soon afterward, the Colorado state government yanked the guide from one of its Web sites and replaced it with an edited version.
Border-control groups say First Data is encouraging immigration to fatten their profits.
“They’re promoting whatever is going to enhance their bottom line, and if that means encouraging mass immigration, that’s what they’re going to do,” said Mike McGarry, acting director of the Colorado Alliance for Immigration Reform, which has opposed First Data’s advocacy efforts in its home state.
Political power
On March 3, 2004, First Data leaped into the debate over immigration reform.
During a panel discussion organized by the company at the National Press Club in Washington, D.C., First Data’s then-chief executive, Charlie Fote, announced the creation of a $10 million “Empowerment Fund” to push for an overhaul of U.S. immigration laws, though he gave few details of how the money would be used.
“This is a critical issue for our country and our consumers,” Fote said, according to a company statement.
The company stopped short of calling for the legalization of undocumented migrants who already are in the United States. But it said the new policies should not be “overly burdensome to businesses or individuals,” and said the educational needs of immigrant children need to be respected.
“A new immigration policy must recognize that immigrants strengthen the U.S. economy and diversify the social fabric of our society,” the company’s statement said.
Since then, First Data has held panel discussions around the country to campaign for immigration reform. The company also said it used its money to fight Arizona’s Proposition 200, a measure passed in 2004 that bars illegal immigrants from receiving some state services.
“Our company directly, actively and with financial support, supported the business, political and community groups that opposed this proposition,” Hernandez, the public relations director, told lawmakers during the 2004 forum at the Mexican Senate.
First Data did not respond to a Republic request for more information about the effort.
First Data also has stepped up its campaign donations. The company has spent $247,000 on federal elections since 2001, compared to $145,000 in the five years before that, according to the Center for Responsive Politics.
A political action committee, First Data Employees for Responsible Government, has donated $128,000 since it was formed in 2000. And that’s not counting hefty donations by individual executives. Fote and his wife, for example, gave $46,800 to 32 federal candidates between the beginning of 2000 and Fote’s retirement in November.
Most of First Data’s beneficiaries are members of the Senate and House committees on banking and financial services. Much of the money also has gone directly to the Republican and Democratic parties in the form of “soft money” donations.
Left out of the largesse: Republican Rep. Tom Tancredo, one of the most vocal immigration-control activists, who also happens to be First Data’s hometown congressman. First Data, its PAC and many of its executives gave money to Joanna Conti, his Democratic opponent, in the 2004 election.
It is unclear if the $10 million Empowerment Fund has gone into campaign donations. First Data would not give The Republic details on how that money is being spent.
Attractive cash
Western Union will become even more dependent on immigrants after First Data completes a planned spin off of the company this year. The spin off comes at a critical time, as state governments are beginning to take notice of the billions of dollars flowing through the wires of money-transfer companies.
Last month, the Georgia House of Representatives passed a bill putting a 5 percent tax on wire transfers placed by undocumented immigrants. The measure would require wire-transfer clerks to check the IDs and visas of senders.
Meanwhile, a bill in the Arizona Legislature asks voters to approve construction of a border wall funded by an 8 percent tax on wire transfers to foreign countries.
As other states consider taxing migrants’ wire transfers, other money-transfer companies could find themselves increasingly drawn into the immigration debate, Orozco said.
“That doesn’t mean to say that they are pro-illegal immigration,” Orozco said. “But their position is, ‘There is a double standard here, let’s not be hypocritical and put the burden only on the individual (migrant) who comes in here.’ ”
Sending money
Electronic money transfers more expensive than bank-to-bank transfers, but don’t require an ID.
How it works:
Senders take money to an agent affiliated with Western Union or another network. There, an agent takes the cash, deducts fees based on the amount, the exchange rate and the speed of service. The recipient in another country can then pick up the cash (minus the fees) at any agent’s office there.
How it makes money:
Western Union and its competitors make money from three sources: the transfer fee, a surcharge for exchanging the money from one currency to another, and by earning bank interest during the hours or days that it takes the recipient to pick up the money. The transfer fee is split with the two agents involved in the transaction.
How much it costs:
The cost to send $300 from Los Angeles to Mexico on Jan. 30:
* Western Union (instant transfer) $20.30
* Western Union (next day) $15.30
* Ria Envia $16.67
* Order Express $13.02
* MoneyGram $12.99
Source: PROFECO, Mexico’s consumer protection agency, which tracks the costs.
Reach the reporter at chris.hawley@arizonarepublic.com.
By Daniel Gonzalez
September, 20, 2004
GIVING BACK
IMMIGRANTS IN U.S. REVITALIZE HOMETOWNS WITH BILLIONS THEY SEND BACK TO MEXICO
Driving through the cobblestone streets of his hometown in a shiny new pickup, Alfredo Chalico passes adobe homes being torn down and rebuilt with red bricks.
Further along, the Phoenix businessman who is home for a visit drives by boys hawking milk from the backs of burros and men with sticks herding goats. While burros and goats are still common sights in this farming village in the central state of Guanajuato, so are pickup trucks and color televisions hooked up to new DVD players showing the latest movies.
The growing economic prosperity in this small rancho, or farming village, is the direct result of an infusion of American dollars sent home by hundreds of local residents like Chalico, who left behind poverty to find work in the United States. Community leaders estimate that one-third of the town’s 5,000 residents, and 70 percent of its men, live in the United States.
The amount of money Mexican immigrants and Mexican-Americans send to Mexico this year will easily exceed the record-setting $13.3 billion sent last year, experts say, and is now the second-highest source of foreign income after oil exports.
Chalico, however, is an extraordinary case, a former undocumented immigrant who gained U.S. citizenship, built a successful tire business, and now helps boost his hometown’s economy in ways that go far beyond the typical immigrant.
The average immigrant toiling in construction or restaurant jobs manages to send home a few hundred dollars a month. Chalico, who lives two out of three months a year in Phoenix, sometimes sends home as much as $4,000 to his wife, Lorenza, and their two children, Alfred, 4, and Eladio, 19 months. His wife and children moved back to Mexico this year and live in a $200,000 ranch house with a large sloping lawn in an exclusive country-club neighborhood in Irapuato, a city of 350,000 people about 30 miles from Chalico’s hometown.
With profits from Llantera del Valle, his $500,000-a-year tire business at 69th Avenue and Van Buren Street in Phoenix, Chalico also has been buying property, opening businesses and employing workers in Mexico who otherwise might head to the United States.
He also pools his money with other immigrants from the same hometown to finance bigger projects. For the first time ever, San José de Mendoza’s health clinic is equipped with an ambulance. The town’s crumbling church is undergoing major reconstruction. And when school opened in August, 84 preschool and kindergarten students returned to freshly painted classrooms, upgraded light fixtures and new learning materials paid for with money earned by immigrants working in the United States and matched by the Mexican government.
Helping back home
Using a key he borrowed from a woman who lives across the street, Chalico walked across crumbling tiles and unlocked the old Catholic church. It has cracked wooden doors with huge iron bolts and sits at the mouth of the town. Not even Father Ignacio Ramblas González, the priest who hands out communion there every morning, knew for sure when the church was built. Some parishioners guessed the building is 200 or perhaps 300 years old.
All of the pews had been moved to a hall across the street where daily Mass is held while the building undergoes a $120,000 reconstruction. The money to finance the reconstruction comes from two sources, immigrant families living in the United States and the Mexican government.
So far $25,000 has been spent reconstructing the roof, which leaked, and the bell tower, which was crumbling.
About 410 immigrant families from San José de Mendoza have raised another $35,000 and are waiting for the Mexican government to chip in the rest to complete the project, Chalico said. The immigrant families, 60 from Phoenix, 150 from Salt Lake City and 250 from Southern California’s San Fernando Valley, have formed three groups to finance projects in San José de Mendoza under a government economic-development program created in 2000, according to Susana Guerra, director of the Office of Social and Human Development for the state of Guanajuato.
The program’s ultimate goal? To create better economic conditions in Guanajuato so fewer people head to the United States, Guerra said.
About 1.5.million people from Guanajuato live in the United States, fourth in total number behind the states of Michoacan, Jalisco and Zacatecas.
Last year, immigrants sent $1.2.billion in remittances to relatives in Guanajuato, the third highest amount behind Jalisco, $1.3.billion, and Michoacan, $1.7.billion, according to the Bank of Mexico.
For each dollar contributed by immigrants in the new program, the municipality, the state and the federal government each chip in as much as an additional dollar, multiplying each dollar made in the United States by three, and thus the program’s name, Tres por Uno, Three for One.
Last year, the government financed 92 projects totaling $3.7 million in 32 towns in Guanajuato including the church in San José de Mendoza. Of that, $1.1.million came from immigrants in the United States.
Finding deals
During a three-week visit in August, Chalico vacationed in Acapulco with his family, then spent the rest of the time tending to his properties and businesses.
One day included a visit to the Alden Salamanca Ford dealership in the nearby industrial city of Salamanca to sign the papers on a new, fully loaded Ford 4×4 pickup painted school-bus yellow for his tire business in Phoenix. Few people here can afford a $33,000 pickup.
“I saved $5,000 by buying it here,” Chalico revealed.
Making it in the States
Chalico was 15 when he struck out for the United States nearly 20 years ago. His father, Eladio, 91, owned a small ranch but had a difficult time supporting his 11 children.
Chalico hitched a ride to Irapuato, a large agricultural center, and then hopped a bus to the border. He crossed illegally through the desert near Yuma.
Chalico didn’t tell anyone he was going, not even his parents. They remember being worried sick when he didn’t return home from school.
“We looked all over for him. I was crying and my husband was real mad,” Chalico’s 78-year-old mother, Amada, recalled while washing clothes in a concrete basin in the courtyard of the adobe house where Chalico grew up.
Chalico didn’t have any family in the United States. At the border Chalico encountered three men from his hometown. also planning to cross. They agreed to help him get a job picking cauliflower and watermelons on a farm in Marana on one condition: If Chalico couldn’t handle the work he would return to Mexico.
He toiled in the dusty fields as long as 16 hours a day, six days a week.
He worked 10 months on the farm in Marana and another farm in Scottsdale. After that he got a job cleaning stalls on a horse farm in Buckeye, and then fixing flats at Villa Tire, a tire shop on 35th and Lincoln avenues in southwest Phoenix.
In 1993, when the owner wanted to retire, Chalico bought the tire business, changed the name to Llantera del Valle and moved the business to 69th Avenue and Van Buren Street. He employs six full-time and three part-time workers. The shop sells new and used tires. Every day, Chalico and his employees drive trucks to car dealerships throughout the Valley to collect used tires, which they resell at Llantera del Valle. His mostly Mexican-immigrant customers can’t afford new tires. The shop sells about 35,000 used tires a year.
The time Chalico spent as a farm worker made him eligible for legal residency under the 1986 amnesty. In 1987 Chalico got his green card. He became a naturalized U.S. citizen in 1998. He took English classes and earned his high school graduation equivalency diploma at Metro Tech High School.
Reinvesting in his town
At first, Chalico sent home about $300 a month. As Chalico’s fortunes increased, so did the amount he sent.
A receipt from July 12 shows he wired $4,000 to his wife in Mexico, $700 to pay the bills and the rest to buy property. He continues to send his parents $300 every month.
For at least 10 years Chalico has been buying farmland in San José de Mendoza. He now owns more than 65 acres. In August, he showed off the fields of sorghum and corn.
“I made this property from the U.S.,” Chalico boasted as he waded through a field of thigh-high sorghum.
Chalico employs two workers full time and up to 10 workers part time to help him farm. He employs another to run a little convenience store he opened off the main road leading into town.
He employs three more full-time workers at a Salamanca tire shop Chalico opened in 1997 with profits from his Phoenix tire business. Has plans to open another shop in Irapuato. Every six months he ships used tires from Phoenix to his shop in Mexico.
Chalico’s tire shop manager in Mexico is his nephew, Juan Carlos Alcocer, a lanky 27-year-old with a wife and two children.
Over the past five years, Alcocer crossed the border illegally three times, most recently last summer, when he paid a smuggler $1,200. He worked at several tire shops in south Phoenix. But earlier this year Chalico offered his nephew the manager’s job in Mexico. Alcocer has no plans to return to the United States.
“He can stay here with his family and make about the same amount of money as over there,” Chalico said. “That way he doesn’t have to endanger himself crossing the desert.”
Reach the reporter at daniel.gonzalez@arizonarepublic.com or (602) 444-8312.
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Do you recognize this guy? His name is Ryan Phillipe. He is the soon to be divorced husband of Reese Witherspoon. He is indeed a great actor in his own right. He was most recently in “Crash” playing a cop opposite Matt Dillon. He has been in quite a few movies and is a considered a pretty big talent in Hollywood. 
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