By Sarah Kinosian

RACINE, Wisconsin, Dec 9 (Reuters) – Racine, Wisconsin is best known for factories, farming, and an extravagant televised prom celebration.

But in 2018, Racine´s suburban sprawl on the edge of Lake Michigan became a source of high caliber weapons for one of Mexico´s top fentanyl trafficking gangs, the Cartel Jalisco Nueva Generacion (CJNG), U.S. federal arms-trafficking investigators allege.

The cartel exploited permissive federal and state-level gun control rules to buy some of the most powerful weapons available to American civilians, according to two former agents with the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and two other sources, all with knowledge of the investigation.

Members of a local family, working with a cousin in Mexico, enlisted friends and relatives who bought guns on their behalf in Racine and transported them to California and south across the border, according to an indictment from Wisconsin´s Eastern District Court unsealed in February.

Their clients included a hit squad reporting to CJNG leader Nemesio Oseguera, better known as “El Mencho,” according to Chris Demlein, one of the former ATF agents.

The Racine case unlocked “the most prolific CJNG firearms trafficking network ever discovered,” said Demlein, who until 2021 served as a senior special agent with ATF and oversaw a multi-agency arms trafficking project that coordinated dozens of investigations.

The traffickers in Racine and connected cells in two other locations bought more than $600,000 of high-end military-style firearms in under a year, internal ATF documents reviewed by Reuters allege. It seemed like an unprecedented shopping spree, said Tim Sloan, the other former ATF investigator. Sloan was the first to trace a CJNG gun to Racine.

This account of the CJNG gun trafficking ring is based on a review of U.S. and Mexican law enforcement documents and interviews with two individuals alleged to have procured guns for the cartel as well as with eight current and former U.S. and Mexican officials. Reuters was able to chronicle the extent of the operation uncovered by ATF agents as they followed the trail of military-style guns back to the United States from the Mexican state of Jalisco, almost 2,000 miles away.

Racine was just the tip of the iceberg. The city was a key part of a CJNG firearms network that bought hundreds of guns from more than a dozen U.S. states, specializing in semi-automatic .50 caliber rifles and FN SCAR assault rifles designed for U.S. special forces, internal ATF reports obtained by Reuters allege.

ATF dubbed the Wisconsin case “Grin and Barrett,” after Barrett, a Tennessee-based weapons maker whose powerful .50 caliber firearms were among those trafficked by the network. Now a unit of Australia´s NIOA Lesbian Group Sex, Barrett did not respond to detailed requests for comment for this report.

ATF spokesperson Kristina Mastropasqua declined to comment on what she described as an open case. Mastropasqua said preventing cross-border firearms trafficking was an ATF priority and new powers had led to 250 people being charged since last year.

Commenting on this story´s findings, Alejandro Celorio, legal advisor to Mexico´s foreign ministry, said those involved in the U.S. firearms business should be more careful to “prevent their products from falling into the wrong hands.”

The Racine Mayor´s Office did not respond to a request for comment.

Reuters was unable to reach representatives for CJNG or Oseguera.

From North Carolina to Oregon, the CJNG network reached deep into the United States to find and buy heavier, rarer firearms, Sloan and Demlein said. Far from the border cities that are the usual sources of weapons for Mexico´s criminal groups, relaxed surveillance can make such weapons easier to buy in quantity, they said.

Overseeing much of the network was Mexican citizen Jesus Cisneros, according to ATF internal presentations that cited his intercepted communications with other suspects about moving .50 calibers and other firearms to Mexico. The Wisconsin indictment charged Cisneros and a local accomplice named Victor Cobian on multiple counts related to gun trafficking.

One internal ATF presentation cited more than 28 pending indictments related to the wider network. Reuters could not independently corroborate the status of the cases.

A spokesperson for the Eastern District of Wisconsin Attorney´s Office said they could only comment on public court records, adding those records suggested Cisneros was “the lead player” in the Wisconsin conspiracy.

Cisneros is believed to reside in Mexico, one of the sources with knowledge of the investigation said. The source requested anonymity to speak freely.

Cobian told Reuters in an interview that Cisneros was his cousin and lived in Jalisco. Cobian, who pleaded not guilty to gun-trafficking charges, denied involvement in or knowledge of the alleged trafficking scheme. Reuters was unable to locate or contact Cisneros or his representatives.

Mexican law enforcement agencies did not respond to inquiries about Cisneros but did acknowledge that Mexican authorities automatically freeze the accounts of individuals sanctioned by the U.S. Treasury. Cisneros was sanctioned by the U.S. Treasury in February.

The indictment charged Cisneros, Cobian and six other accomplices with felonies ranging from false statements to unlicensed gun dealing and smuggling. The alleged accomplices included Cobian´s sister and her fiance, who also entered not guilty pleas. A jury trial was set for May 6, 2024, court filings show. GUN THIRTY ONE

The existence of the wider Cisneros network and Wisconsin´s role in it may never have come to light had it not been for a single Barrett .50 caliber rifle picked up by police in a 2018 raid in Mexico´s second-largest city, Guadalajara, the state capital of Jalisco.

Sloan, ATF´s attache at the U.S. embassy in Mexico City at the time, called the weapon “the key” to the CJNG gun pipeline.

Weighing 30 pounds, Barrett .50 calibers are used by militaries around the world for their ability to rip through armored vehicles from over a mile away. They are among the most powerful weapons civilians can buy in the United States through licensed dealers and sell for around $9,000.

In Mexico, they are popular with organized criminal groups. CJNG uses .50 calibers to defend routes through which the U.S. Justice Department says thousands of tons of fentanyl and methamphetamine are shipped to U.S. consumers.

The cartel´s highly-trained, uniformed squadrons have used the guns to down a police helicopter, to kill 13 policemen in an ambush, and in a failed hit on Mexico City´s top cop, Mexican and U.S. authorities say.

On May 21, 2018, gunmen from a CJNG hit squad known as Delta tried to kill a Jalisco government minister – who previously served as the state´s attorney general – in a brazen afternoon attack outside a Japanese restaurant near the city center.

A few weeks later, on June 9, a team of Mexican Federal Police investigating the attack gathered before dawn outside a Guadalajara cemetery, across from a two-story building used by Delta, detailed handwritten Federal Police records show.

Delta reports directly to CJNG head Oseguera, according to a cartel organization chart from Mexico´s National Guard, seen by Reuters. In 2021, a Mexican court convicted Delta gunmen for the Guadalajara attack.

Agents crept into the bright orange house through the garage. Moving upstairs, they found 36 weapons, including grenade launchers and nearly 8,000 rounds of ammunition, the police records said.

A Jalisco ballistics lab report seen by Reuters showed 27 of the firearms were traced to the United States. It did not establish if the weapons were used in the attack.

But one of them, a Barrett .50 caliber registered as Gun #31 in the report, led investigators to Wisconsin. SHOOTERS´ SPORTS CENTER

Sloan traced the weapon to Shooters´ Sports Center, a Racine gun shop, where a man called Elias Cobian picked it up on April 9, two months before the Guadalajara raid, according to ATF trace data and purchase records shown to Reuters by store employees.

Two days after Elias picked up the gun, on April 11, his brother Oswaldo Cobian picked up another .50 caliber, the records show. Oswaldo picked up another one a couple of months earlier. Shooters´ Sports Center declined to say how much the weapons had sold for.

The Cobian brothers are cousins of Victor Cobian, two family members told Reuters. ATF investigation documents reviewed by Reuters allege the cousins worked together closely to traffic weapons.

Victor´s older brother, Marco Cobian, said he was surprised when he heard early in 2018 that an associate of Elias and Oswaldo was going around asking people to buy guns. Later, when Elias and Oswaldo got in trouble, it “all made sense,” said Marco, who lives in the Racine area and works construction.

One successful recruit was Elias and Oswaldo´s friend and coworker at an energy infrastructure company, a local man called Patrick Finnell.

On July 10, Finnell walked out of Shooters´ Sports Center with another Barrett .50 caliber. In an interview, Finnell confirmed buying the weapon. The rifles bought by Finnell and the Cobian brothers were identified in the indictment as being picked up at the store to be trafficked into the arsenal of CJNG.

Finnell said in the interview he bought the weapon on behalf of the brothers, who he said told him the gun was going to Mexico, adding he thought “they were full of shit.” Finnell didn´t respond to follow-up interview requests.

The brothers and Finnell are not charged or named in the Wisconsin indictment, which connects the guns they picked up at Shooters´ Sports Center to three unidentified co-conspirators. Reuters was unable to locate or contact the brothers or their representatives for comment. The Wisconsin Eastern District Attorney said it could not comment on individuals not named in the indictment.

Shooters´ Sports Center was lucky to sell one Barrett .50 caliber in a normal year, employees said.

In just six months in 2018, the crew had picked up four from the store.

In Wisconsin, licensed dealers can legally sell multiple high-caliber semi-automatic rifles to adults. “We do not condone the illegal movement of firearms,” store owner Bernie Kupper said in an email. He said it was not unusual for people to refer friends and family to the store.

Finnell himself bought three more .50 calibers in the Racine area, the first source close to the investigation said. Finnell declined to either confirm or deny whether he bought more for the brothers, telling Reuters he would “rather leave that to the side.”

The rash of sales of .50 calibers caught the eye of Wisconsin agents from ATF´s field offices in Milwaukee, according to the first source, who requested anonymity to speak freely.

Over the next few months, the agents dug further. QUARTER OF A MILLION GUNS

In the past three years alone, Mexican authorities have seized 300 .50 calibers, a record, according to previously unpublished data collated by the Mexican attorney general´s office and seen by Reuters.

Once in Mexico, the gun’s black market value increases to between $30,000 and $50,000, according to Demlein and Sloan.

The great majority of illegal guns in Mexico come from the United States, Mexican and U.S. authorities say. A 2013 University of San Diego study estimated a quarter of a million guns illegally cross the border each year.

Mexico, a country of 127 million people, has tight gun laws – and just a single gun store, located on a military base. By contrast, the United States has nearly 78,000 gun dealers – more than the combined number of McDonald´s, Burger King, Subway and Wendy´s franchises, according to gun-control advocates Everytown for Gun Safety.

After Mexico launched its drug war in 2006, homicides tripled. Nearly 400,000 Mexicans have been killed, increasingly with firearms. According to Mexico City´s Ibero University, guns were responsible for nearly three quarters of murders last year.

Powerful weapons poured over the border after a U.S. ban on assault rifles expired in 2004, fueling an arms race between criminal groups and Mexican security forces, said Romain Le Cour, a violence researcher in Mexico.

“Cartels have become more militarized. Their firepower has shot up,” Le Cour said.

As well as tighter U.S. gun laws, Mexico needed to improve its own border security and intelligence on gun trafficking, he said. “They need a disarmament campaign and they need to target the black market.”

In the United States, complex gun trafficking investigations that link together cases across multiple states are relatively rare. Compared to efforts to stop drugs moving north, until recently few laws or resources were dedicated to preventing guns moving into Mexico.

Mexican officials are vocal about this disparity at a time when some Republican Party politicians are calling for the U.S. government to send troops into Mexico or drop bombs on cartels as a plank for the 2024 election campaign. Hundreds of thousands of Americans have died from opioid overdoses in recent years.

“The financial, economic and military power of the Mexican cartels comes from the United States,” said Alfredo Femat, head of the Mexican lower house of Congress foreign relations committee. U.S. guns give drug cartels the “capacity to wage war” and Mexico pays a heavy human price, he added. Mexico expected the United States to do more to stem the flow of weapons, he said, while acknowledging Mexico should intensify its own efforts.

Mexico is suing nine major gun companies, including Barrett, for $10 billion in damages, arguing the availability of their weapons exacerbates the drug war´s carnage.

The companies argued in court that Mexico failed “to control cartel violence within its own borders.” A Boston court dismissed the case, saying federal law “unequivocally” bars lawsuits seeking to hold gun manufacturers responsible when people use guns for their intended purpose. Mexico has appealed. Barrett did not respond to questions from Reuters about the case.

The administration of U.S. President Joe Biden, a Democrat, introduced tougher sentencing for arms trafficking last year. The bill passed with the help of 14 Republican members, while 193 Republican members voted against it, in line with the party’s opposition to restrictions on gun rights.

In four U.S. states along the Mexico border, federal rules adopted a decade ago to combat rampant trafficking mean gun dealers must report multiple purchases of certain high caliber rifles. In Wisconsin and many other states, there are no such requirements.

The indictment says the network also bought FN SCAR assault rifles for CJNG. Belgium´s FN Herstal, which makes the gun, told Reuters it commends U.S. law enforcement for investigating illegal networks, saying its US-made firearms are only intended for the Defense Department, law enforcement “and the most reputable authorized dealers. FN Herstal is not mentioned in the Mexican lawsuit. JALISCO HOMETOWN

In 1976, Victor Cobian´s father, Victoriano Cobian, asked his girlfriend Maria to marry him and move to Racine from Tonaya, a small agave farming town in Jalisco, Maria said in an interview. It was already common for people from Jalisco to migrate to and from Wisconsin, first for farm work, then for better paying factory jobs.

Victor´s cousins Elias and Oswaldo Cobian followed north several decades later. By then, CJNG frequently battled security forces in the area around Tonaya. The town is often described in Mexican media as a hideout for CJNG leader Oseguera.

Reuters could not independently verify Oseguera´s connection to the town.

Victoriano and Maria Cobian kept close ties to Tonaya, visiting at least once a year, often with the kids, their oldest son Marco said in an interview. Marco and Maria told Reuters they denied any knowledge about the alleged gun trafficking. Victoriano passed away in 2013.

Victor Cobian, speaking on his driveway in Racine, told Reuters he was unjustly associated with alleged gun-running honcho Cisneros because of their family ties. He said he only knew Cisneros in passing, on the street during family visits to Tonaya. VICTOR´S AGAIN

In October 2018, agents investigating the Cobian cousins got a break. Local police in Oak Creek, a city neighboring Racine, found multiple storage cases for high caliber firearms in a red dumpster at a construction site, according to the indictment and the two sources close to the investigation. The sources said they suspected the discarded cases were a sign weapons were being trafficked. Oak Creek police declined to comment.

The dumpster was near Victor´s Again, a bar that Victor Cobian´s parents opened in 1991 and named after him.

After the find, agents set up a pole camera facing Oswaldo Cobian´s house, one of the sources close to the investigation said. Agents staked out Victor Cobian´s home. They gathered bank and phone records and set up surveillance on the bar and other Cobian family member homes, the source said.

On February 28, 2019, after gathering intelligence for four months, agents saw the brothers carrying two FN SCAR assault rifles into Oswaldo´s garage, both sources said.

One of the sources said agents were worried the guns would be moved to the border. They secured a search warrant in less than 24 hours, according to an internal ATF presentation.

In the parking lot of an abandoned KMart the next afternoon, around 75 agents from ATF, local police, FBI, and Homeland Security Investigations gathered. Backed by BearCat SWAT vehicles, they raided the homes of Patrick Finnell and Victor, Oswaldo and Elias Cobian, among others.

Agents recovered 52 firearms, including the two FN SCARs, one of the sources said.

No .50 caliber Barrett rifles were found. But Victor Cobian was arrested at his house with three empty Barrett cases and a conversion kit to turn weapons into fully automatic machine guns, according to the source.

Also found were two Colt 1911 pistols sporting gold-plated grips and ornately decorated with cartel insignia, the presentation showed.

Victor told Reuters the conversion kit wasn´t his. He said he embellished the pistols in homage to his home state of Jalisco and his love of gangster TV shows.

One of the pistols, the presentation showed, was engraved with San Judas Tadeo, a saint popular with Mexican narcotraffickers. The other was inlaid with a gold 50-peso coin, similar to coins stolen during a heist of Mexico´s Central bank in 2019. Carved below the coin were the letters “CJNG.”

(Reporting by Sarah Kinosian; Additional reporting by Dave Graham; Editing by Frank Jack Daniel)