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1 CORPORATE RISK INTERNATIONAL A DIVISION OF ALTEGRITY RISK INTERNATIONAL WORLDWIDE ADVISORY AND INFORMATION SERVICE MEXICO SECURITY REPORT OCTOBER 11 OCTOBER 24, 2010 Significant Marijuana Seizure in Tijuana A joint operation in Tijuana, Baja California state on October 18 th and 19 th led to the seizure of 134 tons of marijuana from several tractor trailers and warehouses throughout the city. Tijuana municipal police reportedly pulled over a suspicious convoy of tractor trailers, discovering the shipment. Authorities then traced the trucks to a warehouse and other locations. The seizure is the largest in the country s history, with a total street value estimated to be in the hundreds of millions of dollars. The marijuana belonged to the Sinaloa cartels El Mochomo faction, which on October 25 th announced over a police radio frequency that it would kill 135 people in retaliation for the seizure. Over the past few years, as drug violence has raged along the border area, Tijuana has seemingly remained insulated from the raging violence nearby, with only isolated instances of extreme drug violence. Authorities attribute this to the dominance of the Sinaloa cartel in the city, noting that the Sinaloa cartel likely made a pact with the remnants of the Arellano Felix cartel, which previously controlled Tijuana s drug routes until it was dismantled by police. Mexican officials say the Sinaloa cartel is moving drugs through the Tijuana corridor unimpeded. However, police predict that the Sinaloa cartel will likely seek to take control of the region by force, in order to end tax payments to the Arellano cartel, bringing increasing violence to the city. Violence against Foreign Nationals on the Rise The U.S. State Department reported on October 16 th that there has been a marked rise in attacks against U.S. nationals, with 48 killed during the first six months of Authorities predict the toll will surpass that from previous years; in 2009, there were 80 murders of U.S. nationals and in 2008 just 57. Only two days later, authorities reported that an Israeli national and his daughter had been found dead inside their Mexico City apartment in a suspected armed robbery. Police suspect that the robbers attacked the father and daughter on the street near the entrance to their apartment building and forced them to enter the apartment, murdering them after a struggle. One of the suspects is the family s driver, who has since disappeared. One day later, on October 19 th, authorities found the body of a California native who had been missing for nearly two months in Santa Maria Coyotepec, Oaxaca state. The victim s body was recovered behind a police station in the town and he had reportedly suffered from multiple machete wounds. In yet another incident, police are investigating the reported killing of a U.S. service member in a drive-by shooting in Ciudad Juarez on October 21 st. The victim was killed while standing on a street corner. As the security environment continues to deteriorate, violence against foreign nationals is expected to continue to rise in the long-term.

2 RECENT INCIDENTS October 11 October 12 October 13 - The decapitated bodies of two men were found hung from a bridge in Tijuana, Baja California state. The victims heads were found in an abandoned car on the bridge. - Eight police officers were killed in an ambush in Navolato, Sinaloa state; authorities say gunmen attacked four police vehicles along a highway in the city. A ninth officer was injured. - Gunmen in vehicles bearing the letter X on their sides executed eight police officers in Angostura, Sinaloa state. - Three people were shot outside a Ciudad Juarez hospital as two of them tried to enter the emergency room, setting off panic among medical personnel and patients. - Two incendiary grenades detonated inside a restaurant in Acapulco, Guerrero state. No injuries were reported. - Police uncovered the bodies of two men and arrested three suspected kidnappers at a safehouse in Culturas de Mexico in Chalco, Mexico state. The two bodies had the message X Rapist marked on their backs. - A Mexican police chief investigating the disappearance of a U.S. man on a lake bordering Mexico was found murdered. Commander Rolando Flores was working on the case of the American tourist, whose wife reported that he had been shot by priests on Falcon Lake. - A high-ranking member of La Familia was arrested by federal police in a money laundering investigation. Three other members of the cartel were also detained with the money manager in the Pacific port city of Lazaro Cardenas. - The U.S. Department of the Treasury said that its Office of Foreign Assets Control (OFAC) has targeted a drug trafficking operation in Colombia and Mexico affiliated

3 October 14 October 15 with the Sinaloa cartel, specifically the members Joaquin Guzman Loera and Ismael Zambada Garcia. - Five gunmen were killed during a clash with Mexican marines on the Monterrey-Saltillo highway in Nuevo Leon state. Authorities say gunmen used trucks and vehicles to block more than 15 thoroughfares in and around Monterrey during the shootout. - Army troops confiscated drugs and an arsenal including rocket-launchers from a house in the western state of Jalisco. Soldiers discovered the weapons after receiving a tip about the presence of armed men at the home in the Agua Blanca neighborhood in the city of Zapopan. The cache included 51 rifles and 49 handguns, two rocket-launchers, 20 grenades and nearly 38,000 rounds of ammunition. Eighteen kilos of methamphetamine were also recovered. - The police chief of Mexticacan, Jalisco state, was killed by hooded gunmen after attending a regional meeting of police chiefs. The victim slowed his vehicle after finding the road blocked by cones and then came under fire; the gunmen quickly fled the scene. The incident is the latest in a series of murders targeting public officials and related to the war on narcotics smuggling. - Educational officials in the northeastern Mexican state of Tamaulipas authorized schools in Tampico to end classes early amid growing gangland violence in the city. The early dismissal policy will apply to at least 30 elementary schools in Tampico, where a score of people have died over the past two weeks in shootouts, chases, and murders-for-hire related to organized crime. - An explosive device was detonated near a police headquarters in Mexico City s Benito Juarez neighborhood. The explosive was thrown from a moving car; no injuries were reported. - The family of kidnapped Mexican politician Diego Fernandez de Cevallos paid his captors a ransom of more than US$20 million. Cevallos will purportedly be released within the next 40 days. The victim disappeared in May 2010 from his ranch near San Clemente, Queretaro state. - An increase in drug violence is undermining economic growth in Monterrey, Nuevo Leon state. Governor Rodrigo Medina says some businesses have been delaying investments in factories exporting to the U.S. Medina has called on Mexican President Felipe Calderon to send more troops to Monterrey and asked that gangs avoid civilian casualties.

4 October 17 October 18 - Two men were killed during a confrontation with Mexican marines in Tamaulipas state. The marines had reportedly stopped their vehicle on a Tamaulipas highway to check on a punctured tire when they were shot at from a car traveling toward them. The marines returned fire, killing the two men. October 19 October 20 - Three young men were found tied up and executed with gunshots in Juan Jose Rios, Sinaloa state. - A grenade was launched into a municipal police substation in Nuevo Laredo, Tamaulipas state. Authorities say the attack occurred less than a block from city hall. No injuries were reported but a police cruiser suffered heavy damages. - Gunmen stormed an elementary school in Chihuahua City, Chihuahua state and abducted the building s custodian. The two assailants entered the school just minutes after classes began. The incident prompted administrators to close the school and send students home. - A municipal police officer was found dead in San Ignacio, Sinaloa state. The officer was found with his hands and feet bound and next to his personal vehicle. - Gunmen attacked a group of police officers in Gomez Palacio, Durango state triggering a gunfight that ended in Torreon, Coahuila state. One police officer was killed and five injured. - Authorities in Colima state say increasing violence over the past several months is linked to an ongoing dispute between Los Zetas and La Familia, both of which are seeking control of drug routes formerly controlled by Ignacio Coronel. - A young woman was found decapitated in Ciudad Juarez s Colonia Granjero district; the second time this year a woman was found headless in the city. Police suspect the woman was linked to organized crime.

5 October 21 October 22 October 23 October 24 - The mayor-elect of Cruillas, Tamaulipas state, was reported missing and presumed kidnapped by drug gangs. The elected official, a member of the Institutional Revolutionary Party, won July elections and was scheduled to take office on January 1 st. - Mexican soldiers in Nuevo Laredo and Reynosa engaged in running gun battles with drug traffickers. Gang members set up roadblocks that caused traffic jams in both cities. - Five people were found dead on the outskirts of Acapulco, Guerrero state. The victims were gagged and their bodies bore signs of torture as well as gunshot wounds. The bodies were left with a message accusing the victims of support for a certain drug kingpin. - Mexican soldier arrested the Monterrey chief of Los Zetas, who allegedly ordered the kidnapping of five soldiers and the assassination of the public security chief of Garcia, Nuevo Leon state. - Mexican authorities discovered explosive devices at Puente Broncos, a bridge in Reynosa, Tamaulipas state, on two consecutive days. One explosive device was left under the bridge around 2:12 local time and the second around 1:20 local time the following day. Another device reported exploded near the bridge at Gayosso Funeral Home. - A group of gunmen stormed a party and shot dead 15 people, including children in Ciudad Juarez, Chihuahua state. Eight others were injured. Authorities say gunmen in two vehicles pulled up to the house where some four dozen guests were celebrating a 15- year-old boy s birthday. Witnesses say the majority of the victims were high school students. - Federal police arrested two suspected members of Los Zetas in Cardenas, Tabasco state, seizing an arsenal containing 73 high-powered rifles, two handguns, and 12 grenades. Police also confiscated 2,275 rounds of ammunition and two kilos of cocaine. - A mother and her two teenage children were killed in Torreon, Coahuila state when they were caught as bystanders during a car-to-car shootout between police and gunmen.

6 - A gang of armed men stormed a drug rehab center in Tijuana, Baja California state and killed 13 people. The gunmen reportedly forced the victims to lie on the floor before opening fire on them. While attacks on rehab centers are common in Mexico, this is the first such attack in Tijuana and is thought to be linked to the recent seizure of marijuana in the city. - Police say the 20 individuals kidnapped in Acapulco, Guerrero state were not tourists, but had involvement in La Familia. According to informants, those linked with La Familia were given instructions to attack local schools and execute the mayors of Acapulco and San Marcos. - A soldier and a police officer were killed and four other officers injured during a gunfight with gunmen in Monterrey s Cortijo de Rio neighborhood. The incident occurred when the drivers of two SUVs took off after being ordered to pull over by soldiers. During the subsequent police chase, gunmen hurled a grenade and opened fire on troops. Copyright 2010 Altegrity Risk International, All Rights Reserved.

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