Personal assets totaling $1 million, a robust $400,000 education fund and a wiretap conversation focusing on a leak of a Starr County drug trafficking organization have become points of contention during a month-long debate about whether to release a defendant. The latest efforts were made Friday before U.S. District Judge Randy Crane.
Efforts to secure the release of Jose Diaz, 43, started Oct. 21 after his arrest. Diaz, also known as “Lupillo,” was the 16th defendant accused of working with a large smuggling network that included a justice of the peace.
Diaz was charged with the overall drug conspiracy and for his participation in an event dated Feb. 9, when 6 kilograms of cocaine were seized near Falfurrias. He was accused of waiting to receive the drugs before facilitating their arrival to their final destination, according to the government prosecutors.
Diaz pleaded not guilty on Oct. 28.
Since then, Diaz’s personal and financial history as well as his private conversation with co-defendant Ignacio ‘Nacho’ Garza, one of the three top leaders of the drug trafficking organization, have surfaced in court orders, appeals and responses.
Diaz was nearly released on Nov. 9 when bond was set for $250,000 requiring a $100,000 deposit, in spite of significant ties to Mexico and substantial financial assets. The government filed an appeal and Diaz’s attorney filed a response that same day.
Diaz was born in Matamoros and lived the first 18 years of his life in Monterrey before moving to Austin where he lived for 25 years. He became a naturalized U.S. citizen in 2007. His mother, sister and grandmother live in Mexico, while his wife lives in the U.S. under the Deferred Action for Childhood Arrivals program, or DACA.
A report of Diaz’s earnings estimated his assets in the United States at about $1 million with an annual gross income from his business of $200,000 for the last three years.
“After his arrest,” the order on bond stated, “the defendant, with the assistance of his wife, transferred about $479,000 into the account for his children for educational purposes. The timing and the amount of this transaction is arguably suspicious and concerning.”
Assistant U.S. Attorney Patricia Profit questioned Diaz’s diesel mechanic and construction businesses calling them “somewhat sketchy” and said the “so-called education fund” set up in an account under the defendant’s name was of particular concern to the government.
Reynaldo M. Merino, Diaz’s attorney, said the funds were transferred into an open and accessible account and were not “deposited under a straw man’s name, or otherwise secreted away,” a response filed Nov. 9 read.
He also said the education fund and the source of the money used to purchase Diaz’s land were “documented proceeds from the sale of his business and business assets.”
Another factor that could determine the defendant’s release is his role in the organization.
The government released a wiretap conversation between Garza and Diaz and called a witness, a DEA agent, to discuss its contents on Friday before U.S. District Judge Randy Crane.
Patrick Zaruba, a DEA agent involved in the investigation, said they had been conducting surveillance, executing search warrants, and collecting wiretap conversations. Investigators listening in to a call placed by Ignacio ‘Nacho’ Garza encountered the discussion with Diaz.
A day before the Feb. 9 seizure, Garza was heard telling Diaz of the incoming load driven in a white GMC truck by co-defendant, Jose Ortiz, and that it would arrive by morning. The drugs were intercepted by federal agents. The following day, Garza called to notify Diaz of the seizure while trying to ferret out a leak in the drug trafficking organization.
Garza updated Diaz saying, “It got stopped, it got stopped in Falfurrias. No man, outside, dude. I don’t know anything right now,” the transcript translated from Spanish read.
The two went over the details of the seizure including that the drugs passed through the Border Patrol checkpoint in a hidden compartment but the drivers stopped at a store after making it past that point.
“I don’t know why they stop, buddy, when they’re working,” Diaz told Garza.
“No, no, no what I’m saying is, they only go all the way to Alice, dude. From there they go over there, dude,” Garza explained to Diaz. “No, no .. not even my buddy, no one knew about this s—, dude.” Garza sounded confused by the stop which he believed, up until the day of the drug seizure, had been kept secret. “I had, I had just bought them, dude. No man, this is all f—-d up, dude.”
Later on, Garza insisted that two people, Casi and someone called “Ranchero” may have talked to his detriment. “Someone had to f— everything up,” Garza said. “That was a snitch, him, it was him, dude.”
DEA agent Zaruba also testified Friday that information they received from informants and cellphone downloads indicated Diaz coordinated loads of cocaine and marijuana from McAllen to Austin, distributed drugs in Austin and stored drugs at a mechanic shop in the same city.
“I believe he has his own network,” Zaruba told Crane on Friday, suggesting Diaz had buyers to whom he would distribute drugs brought from the south.
Profit detailed a separate incident Feb. 23 when Brooks County Sheriff’s Office deputies stopped Diaz for transporting 272 kilograms of marijuana from Houston to Austin. State charges were pressed but later dropped after Diaz was arrested on the federal charges in October.
Merino called the government’s charges that Diaz negotiated to receive the marijuana from South Texas “conjecture” and informed Crane his client, Diaz, allowed himself to be arrested without incident, rather than attempting to flee.
Profit contends the government believes no conditions or combination of conditions would ensure Diaz’s appearance at a trial.
“I feel like I have a better understanding of Mr. Diaz, now,” Crane said. “Primarily a broker, I guess, of narcotics, that’s the allegation.” Although, he questioned the credibility of some of the DEA informants.
The judge said he was concerned with Diaz’ “vast resources” and ties to Mexico. Diaz is facing a mandatory minimum of 10 years in prison, and given his young family and resources, the judge noted, a defendant might consider avoiding showing up to trial.
“I’m not inclined to,” Crane said, before he was interrupted by Merino who asked him to consider delaying a response until after the holidays.
Crane agreed and said he would likely have a response after Thanksgiving.
