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Luxury villas, designer labels: jailed Mexico union boss' U.S. oasis

The San Diego home of Elba Esther Gordillo, the head of Mexico's main teachers' union, is pictured in Coronado, California February 27, 2013
The San Diego home of Elba Esther Gordillo, the head of Mexico's main teachers' union, is pictured in Coronado, California February 27, 2013

By Marty Graham

CORONADO, California (Reuters) - Boasting two properties in an exclusive enclave just outside San Diego and an enviable designer wardrobe, the jailed boss of Mexico's teachers' union was just another multi-millionaire to her neighbors.

As Elba Esther Gordillo, once widely regarded as the most powerful woman in Mexico, languishes in a Mexico City jail on charges she embezzled around $200 million in union funds, her six bedroom, three-floor luxury villa on the Coronado Cays stands empty.

Gordillo, 68, has previously denied allegations of corruption. Her lawyer could not be reached for comment.

"All I knew was she was Mexican, and somebody said she was very influential, and I knew nothing more," said Karin Hoad, who owns the property next door to Gordillo's.

"Coronado Cays is very private. If you go there you'd think it's a movie set. You don't hear anything, you don't see anything," Hoad said by telephone from Costa Rica, where she runs a sanctuary for stray dogs.

Gordillo's home has a mooring dock outside the patio with access to San Diego Bay, and she owns another nearby plot in the same development. She was known to have a residence in the United States, though the value of her assets in San Diego came as a surprise to many in Mexico.

Her arrest on Tuesday comes after new President Enrique Pena Nieto has pledged to put an end to the corruption that has long plagued public life and the reputation of his ruling Institutional Revolutionary Party, or PRI.

Political analysts say Gordillo's detention serves as a warning shot to any politicians or union bosses involved in corruption, but has raised fears the PRI could be returning to a past trait of cracking down on dissent.

The fraud case against Gordillo, herself a former PRI stalwart, hinges in substantial part on the fact that she managed to purchase such expensive properties.

Her two Coronado properties are worth nearly $9 million between them, according to San Diego County's tax assessor, a far cry from Gordillo's humble beginnings in southern Mexico.

Gordillo has publicly denied the allegations of corruption leveled against her over the years in interviews, and said in 2002 her wealth came from an inheritance from a grandfather. Gordillo said last month she made her money through the "sweat" of her brow.

Gordillo's lawyers, family and supporters have kept a low profile since her arrest.

"I'm not going to speak to you because I have instructions from the relatives not to give any interviews until her legal situation is resolved, in order not to get in the way," her lawyer, Arturo German Rangel, previously told reporters in Mexico City.

Politicians close to Gordillo have declined to comment on her arrest. The New Alliance Party she helped found said in a statement it would not issue opinions on the judicial process. Gordillo's daughter has said she does not want to talk about it.

Mexico's Attorney General Jesus Murillo says Gordillo spent more than $3 million at a Neiman Marcus department store between 2008 and 2011 alone, citing evidence harvested by the government.

"She must have bought a lot of things, or very expensive things," Murillo said in a television interview. The upscale Neiman Marcus sells jewelry, designer clothes and fashion accessories.

A spokeswoman for Neiman Marcus declined to comment on any customer's buying habits but said the company was cooperating fully with the investigation.

Gordillo's spending far exceeded her salary as union head. She had a declared income of 1.3 million pesos ($102,000) a year between 2009 and 2012, according to Mexico's attorney general. That was a fraction of the sum prosecutors said she spent and deposited in banks during the period.

Prosecutors are focusing on funds they say were diverted from union accounts, and on how Gordillo managed to amass millions of dollars worth of property.

Two of Gordillo's Coronado Cays neighbors, who asked not to be named to keep a low profile given the scandal, said she was often seen with a security detail. This caused alarm.

"She shows up with her bodyguards in bulletproof vests and displaying semi-automatic weapons, you know that's a very real consideration," said one of three full-time residents in the cul-de-sac. "She has a driver, a maid, a chef, a personal assistant and her cleaning staff, and three or four bodyguards - they all show up and there's no more parking."

Hoad said she personally never saw any guns.

PROPERTY PORTFOLIO

Gordillo's Coronado Cays properties are at the most expensive end of the island of Coronado, in an area where local housing association officials and building inspectors say more than half the homes are owned by foreign nationals including Mexicans.

She also owns several upscale apartments in Mexico City, the attorney general says.

Deeds reviewed by Reuters show Gordillo's two Coronado properties are registered to Comercializadora TTS, a company Murillo says was owned by her late mother. Gordillo's neighbor Hoad said the woman nicknamed "The Teacher" in Mexico had once offered to buy her home too.

"She apparently has children and grandchildren, and so her idea was to buy a couple of homes, so that the whole family could get together once or twice a year," Hoad said, adding that she only met Gordillo once.

Workers at the nearby Loew's Coronado Resort Sea Spa said Gordillo, a self-confessed fan of designer clothes with a vast handbag collection by the likes of Louis Vuitton and Hermes and a penchant for fine dining and artwork, was a good customer and tipped well.

The Coronado Cays, as locals call it, is a breezy enclave of about 1,500 luxury homes on a sliver of land called the Silver Strand that separates the Pacific Ocean from San Diego Bay.

Many of the properties in the gated, guarded community are second homes for jet-setters, residents say.

Having long complained of poor health, Gordillo was moved to a hospital in an another prison in Mexico's capital on Friday.

She faces up to 30 years in jail if convicted although she could move to house arrest when she turns 70.

CHANGING HER MIND

The Cays is broken into 10 'villages' named for places in the West Indies, including Kingston and Trinidad Cay, where day laborers, landscapers and construction workers park their trucks next to Mercedes Benz, Range Rovers and Rolls Royces.

Gordillo herself had a black chauffeur-driven Hummer, her neighbors said. At times, friends of Gordillo would descend in a swarm of Hummers and take up all the parking, they said. There was no way to independently confirm this.

In Coronado, it is common for buyers to tear down the home they buy and build another, much larger one, from scratch, locals said. Gordillo has been doing just that with her second plot there.

The house Gordillo's corporation bought in 2010 for $4.08 million is under construction, with outside siding panels in place but the interior raw. At the rear, a swimming pool next to the bay sits empty with construction gear around it.

Right after the purchase, contractors tore down the 5,328 square foot house there and filed plans to build a 7,168 sq ft house with a 642 sq ft garage, 935 sq ft decks, an elevator and four fireplaces, according to the planning documents.

By the following January, builders had poured the footings, but Gordillo then ordered her contractor to apply for a permit to demolish the new construction.

Sweig General Contracting, which was working on the property, declined to comment

Gordillo's name appears on just one of more than 800 pages of planning documents filed with the city and seen by Reuters. The document authorizes a contractor to sign documents for her.

According to building permit records, about $13,000 was spent tearing out concrete footings and removing the utility connections that had just been put in. It is not clear how much of the estimated $872,000 of approved construction had been done before work stopped on Thursday morning.

(With reporting by Simon Gardner and Liz Diaz in Mexico City; Writing by Simon Gardner; Editing by Kieran Murray and Philip Barbara)

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