Lomas Mansion Auction Is Acid Test for New Mexican Law

The seized home of Chinese-Mexican entrepreneur Zhenli Ye Gon. Photo: pasala.com.mx


This article is about Mexico’s new (literally from the Spanish) Law of Dominium Extinction or Expired Ownership Domain, approved last July 24 by the Mexican Senate and similar in some ways to the one known as Eminent Domain in the United States.

The law is being questioned by a number of deputies such as Tatiana Clouthier (Morena) and Abril Alcalá (PRD) for having horrendous loopholes that will only enhance what it is supposed to be against, opening the door to potential government official corruption to monies and properties confiscated from criminals while awarding property to the state.

The new law exists because, in the past, what was illegally obtained by organized criminals, allegedly ended up in the hands of high-brow politicians, with no questions being asked. Also, because there were clear cases of power abuse committed by government officials. So in an age of an administration that is adamantly anti-corruption, it makes sense to have the law, but without the alleged flaws it has according to the contending deputies.

But before I get into this still-ongoing legal debate, let me describe the possible first real case in which the new law may be applied.

A wise old Mexican adage says that “from the bowl to the mouth, the soup may fall off the spoon,” to be interpreted as “don’t take anything for granted.”

Well, that is exactly what may be happening to Mexican President Andrés Manuel López Obrador (AMLO), who on Tuesday, Aug. 6, announced that a gorgeous classical architecture mansion that once belonged former Mexico City Mayor General Alfonso Corona del Rosal was sold to accused pharmaceutical entrepreneur-turned-drug trafficker Zhenli Ye Gon in Mexico City’s upscale Colonia Lomas de Chapultepec would be auctioned next Sunday, Aug. 11. The profits from the sale would be used for scholarships for Mexican athletes who competed in the still on-going Pan American Games in Peru.

Several embassies have registered for the bidding, which starts at 95 million pesos, but also owners of other mansions in the surrounding neighborhood will participate, should the auction be held.

It just so happens that Zhenli Ye Gon, now a prisoner at a State of Mexico high-security penitentiary, has sued to prevent the sale of his mansion. Zhenli Ye Gon claims is his rightful property. To prove it, in a U.S. trial, the Chinese-born Mexican citizen was found not guilty and released, but he was later extradited to Mexico, where he was wanted on charges of distributing pharmaceuticals (pseudoephedrine to make crystal) to criminal organizations, as well as money laundering.

As of this writing, Tuesday, Aug. 6, a judge had not admitted or rejected Zhenli Ye Gon’s lawyer’s suit, but still, whatever went on since 2007, when the house was impounded – police found $207 million in cash, 200,000 Euros and about 17 million pesos in it (all of which had dubious origins) — surely, the case comes under the umbrella of the brand new Law of Expired Ownership.

The gist of the domain extinction law is to prevent criminals from enjoying ill-gotten monies or properties, the result of their derelict behavior. The objective is to transfer ownership of properties to the state, to be used in deeds of interest or for the wellbeing of the common good.

In the case of the new Mexican law, suspicion arose immediately because some Mexico City authorities wanted to implement it on construction companies that violated building erection regulations and had their works officially stopped. Many of those lawbreakers – as it’s been customary in Mexico’s bribe-ridden construction trade – tear down closure tapes banning entrance to the facilities. In recent cases, some of the newly implemented Mexico City municipalities have tried to strip rightful owners from their property on law-breaking charges, even if they are not criminals nor have attempted to bribe authorities.

The law allows the district attorneys to solicit an embargo of a property, even if — and here’s a big loophole of one of the laws (Article 14) — the accused person has not been tried. The Mexican Constitution upholds that any accused person is presumed innocent until proven guilty.

Also, the law allows for the anticipated sale of properties without requiring a definite sentencing from a judge.

As Deputy Alcalá put it: “In other words, a Mexican can be dispossessed of his  house, his farming plot, his company, etcetera and (have it sold off by the state) without a guilty conviction. This is an aberration.”

Even worse,  Alcalá said: “If properties of the accused are sold before he’s judged and found innocent, the sales value of the property will be returned to the accused in cash. I don’t know about you, but it seems to me that a property or asset does not merely have an economic value, but also affects the reputation of the owner and may even  have an emotional value, something impossible to compensate for.”

Deputy Alcalá accused the Senate of carelessness since “they had plenty of time to analyze the final document ,but they opted to pass it without changing a comma.” The law was approved by 291 in favor, 114 against and five abstentions. The Chamber of Deputies has 500 members.

Clearly, deputies like Alcalá and Clouthier will challenge the approved law, but they may or may not manage to get the debate back to the floors of the Senate, where it was approved 109 to nothing, with no abstentions, and the Chamber of Deputies.

Alcalá warned that she would continue her challenge “until the Law of Domain Extinction punishes only criminals, and not the citizenry. This story will go on.”

As a final comment, last week López Obrador praised the law as it was approved, but now with the legislative controversy off the leash.

The Mexican curiosity of the week, of course, is how will Zhenli Ye Gon’s suit affect the first application by a president of the Law of Dominium Extinction with the sale of the Las Lomas mansion?

My guess is that AMLO will postpone the auction, but, what if he doesn’t?




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