Courts

Owner of La Victoria Supermercado charged with trafficking cocaine supplied by violent cartel

SACRAMENTO, Calif. — The owner of a small Mexican grocery store and his alleged sub-dealer were indicted late last month on federal drug charges for allegedly trafficking cocaine supplied from Mexico by Jalisco New Generation, a violent cartel known for sometimes cannibalizing their victims.

The owner of La Victoria Supermercado on Del Paso Blvd, 54-year-old Jose Manuel Chavez Zepeda, is charged with conspiracy to distribute cocaine and distribution of cocaine alongside another man, 37-year-old Denis Ponce Castillo.

Court documents unsealed with the grand jury indictment lay out a six-year investigation into the men that revealed they allegedly sell cocaine for $30k a kilo and use the supermarket as a base of operations and a front for their drug ring.

“CHAVEZ is believed to be laundering narcotics sale proceeds (through money remitters, bulk cash deposits, and business proceeds) to affiliates in Mexico,” one page reads.

The investigation into both men began after an individual who had previously delivered cocaine to sub-dealers for Chavez in the Sacramento area began to cooperate with the FBI. He agreed to work for the feds as a confidential human source in exchange for assistance with his immigration status.

While the men are accused of running the trafficking ring for years, only one transaction is detailed in papers declaring probable cause for the duo’s arrest. Investigators say the men were filmed by hidden cameras and recorded by audio devices.

Chavez was allegedly supplied cocaine by an individual from Mexico known as Compadre, who is directly affiliated with Jalisco New Generation. The cocaine was first smuggled across the border and transported to Los Angeles, where it was loaded into Nissan trucks and driven to Mario Gonzalez, known as Joto, who stored the product for Chavez in Ceres and delivered proceeds back to the cartel supplier. Chavez and Gonzalez allegedly bundled their orders and payments together.

The CHS, on several occasions, said he delivered hundreds of thousands of dollars in cash from Chavez to Gonzalez, who stored it in his garage until he was ready to take it to Mexico. When someone in Sacramento needed cocaine, the CHS would pick it up from Gonzalez and move it around Sacramento with the help of several sub-dealers.

One of these sub-dealers was Castillo, a local mechanic known as “El Ciego” who would pick up cocaine from the CHS at his body shop. Chavez later introduced him to the CHS as the manager of his “stash pad” during a deal for a quarter kilogram of cocaine at the La Victoria store.

In that deal, according to court documents, the CHS conducted a “controlled purchase” of over 500 grams of cocaine from Chavez and Castillo in June of 2021, with undercover agents trailing Castillo, who left his condominium and arrived at a home on Scranton Circle said to be owned by Chavez.

After leaving Chavez’ home with a brown bag, the CHS gave him a call, which he immediately picked up.

“I am now ready,” Castillo allegedly said.

Castillo sold the CHS, who was wearing a wire, the bag of cocaine for $7,000 in the parking lot of La Victoria. Castillo and the CHS agreed that he would pay part of the remaining debt to Chavez the next month.

That payment was allegedly made in the back office of the La Victoria store while Chavez bragged about the “beauty” and “purity” of his cocaine, encouraging the CHS to purchase more from him. As the CHS sat in the office, court documents say, Castillo unexpectedly walked in and made an informal arrangement with Chavez to pick up two more kilograms of cocaine “as soon as possible.”

The cocaine was allegedly picked up by Castillo the next day from Gonzalez’ home in Ceres. Three days later, the CHS paid the final $3,000 debt from his 500-gram purchase in June.

Later, Sheriff’s Deputies pulled Gonzalez over and found several bundles of cash hidden in his car’s upholstery after a canine positively alerted on his car.

Prosecutors say he first denied knowing where the cash came from, but later told deputies that he and his wife were money couriers working between Sacramento and Modesto. The bundles of cash, which totaled $79,470, were seized and Gonzalez was released.

Both Chavez and Castillo have pleaded not guilty, with the former posting a $500,000 appearance bond. Lawyers for Castillo have filed a motion for bail review and will argue for his release Thursday.

Ethan Biando
Ethan Biando is a freelance journalist from Sacramento. His writing focuses on crime, courts, and policing. Find him on Twitter @ethanb822

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