Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Leader of transmigrante monopolization and price fixing enterprise sentenced to prison, (Jun 12, 2025)

By Kenneth H. Ryesky, M.B.A., J.D.

Justice Department makes novel application of Sherman Act's criminal provisions to penalize leader and other participants in deadly extortion scheme.

The Department of Justice announced the sentencing of the leader of "a long-running and violent conspiracy to monopolize the transmigrante forwarding agency (TFA) industry" in southern Texas. The leader had been arrested shortly after the December 2022 indictment, and agreed to a plea deal following more than two years of incarceration. The sentence includes 11 years of jail time and a fine of $2 million; there also will be restitution and forfeiture of assets (U.S. v. Martinez, Case No. 4:22-cr-00560 (S.D. Tex. Jun. 11, 2025)).

Background. An industry has developed for the transport of used motor vehicles and other items from the United States, through Mexico, for resale in Central American countries. The individuals who do so are known as transmigrantes. Mexican law requires that the transmigrantes properly acquire customs permits and submit related paperwork for each vehicle transported. Mexican law restricts the processing of the paperwork to individuals who have been duly licensed and authorized by the Mexican government (patentes). The transmigrantes are very frequently assisted by transmigrante forwarding agencies, who, among other things, work with the patente to obtain the necessary customs documents and complete the relevant paperwork. The annual business revenue of the forwarding agencies in southern Texas has been estimated to be worth between $1 million and $7 million.

Corruption and lax law enforcement in Mexico have permitted the Gulf Cartel, a criminal organization that has been operating since the 1930's, to intrude into and exert its extortionate force upon the nominally legal transmigrante vehicle transport enterprise. Among other things, the Cartel had imposed a "tax" (piso) on each vehicle that crossed the Rio Grande into Mexico. Four forwarding agencies entered into a conspiracy to fix prices rather than compete with one another. The approach of those four conspirators in dealing with reality of the Gulf Cartel was to recruit Carlos Favian Martinez (also known as "Cuate"), the son-in-law of former Gulf Cartel head Osiel Cárdenas Guillén, in hopes that he would serve as a buffer between the forwarding agencies and the Cartel. Martinez, however, instituted the Cartel's tactics, and over the years increased the piso rate.

In addition to fixing the prices charged to the transmigrantes and allocating the transmigrante agency services market, Martinez and the other conspirators pressured other forwarding agencies to cooperate in their enterprise and/or extorted payments from them, sometimes making good on the threats of violence (which in some instances proved lethal).

The indictment. The Department of Justice unsealed an 11-count indictment in December 2022 against Martinez and 11 other individuals, alleging two Sherman Act counts; two extortion in commerce counts under the Hobbs Act; and seven money laundering counts. A superseding indictment in October 2024 named ten of those individuals including Martinez, and asserted five counts; two under the Sherman Act, two under the Hobbs Act, and one money laundering count. After being incarcerated for more than two years, Martinez agreed to a plea deal, joining other defendants in entering guilty pleas. Martinez pleaded guilty to all five counts of the superseding indictment. Four co-defendants now await sentencing, and three remain at large as fugitives.

Sentencing. Per the plea agreement, Martinez will serve 11 years in prison; the maximum for conviction on the money laundering count would have been 20 years. Martinez will also be required to pay a fine of $2 million, in addition to which he must pay restitution to the victims of the estimated $9.5 million extortion scheme; a restitution hearing is scheduled for September 2025. The government will also seek forfeiture of some of Martinez's assets, including but not limited to a residence, luxury vehicles, and a boat; Martinez is obligated to cooperate with the government in transferring title of those assets, and to provide complete and accurate financial information.

The case is No. 4:22-cr-00560.

Judge: Hanks, G.

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