Posted: 09/25/2010 01:32:04 AM PDT

Updated: 09/25/2010 01:32:04 AM PDT

http://www.montereyherald.com/local/ci_16172038?nclick_check=1

Four defendants' ankles chained to floor of Eastern District federal courtroom

SACRAMENTO — The trial in the first high-level narcotics conspiracy case against the Nuestra Familia gang began Thursday as prosecutors opened with a sprawling tale involving clothing and cell phone stores used as money-laundering fronts, a fleet of cars with sophisticated secret compartments and sales of hundreds of thousands of dollars' worth of drugs.

The trial is the long-awaited fruit of Operation Valley Star, an FBI-led investigation into the gang's Monterey County and Central Valley regiments. The operation began more than four years ago and became the model for using drug cases — rather than gang charges — as law enforcement's preferred method for going after the Nuestra Familia.

In a specially-equipped Eastern District federal courtroom where the four defendants' ankles were chained to the floor, Assistant U.S. Attorney Jason Hitt described a "large scale" and "high profit" enterprise that unloaded wholesale quantities of methamphetamine and cocaine onto the streets of Salinas and other cities during the 11 months FBI agents infiltrated the Nuestra Familia.

Facing possible life sentences are former Salinas residents Larry "Paqui" Amaro, Gerardo "Reggaet n" Mora, and Ernest "Powder" Killinger. Also on trial is Jason Stewart-Hanson, an alleged co-conspirator from Los Banos, who earlier tried unsuccessfully to sever his case from the others on the grounds he was not a gang member.

Hitt called Nuestra Familia member Amaro "the leader and the boss" of the gang's street operations, and described Mora as a "critical cog in the machine."

Killinger, once a low-level Norteño gang member in Salinas, operated a cell phone store in Oakland as a front for the Nuestra Familia before relocating to the Sacramento area in 2007, prosecutors said.

Their trial is expected to last into 2011. Hitt indicated the government plans to rely heavily on testimony of the man who was its top target — former Castroville resident Mario Diaz, once considered Amaro's right-hand man. Officials said Diaz began cooperating with prosecutors soon after his arrest in May 2007.

In a statement that lasted several hours over two days, Hitt drew a "road map" of his case, describing drug deliveries by Salinas resident Sophia Sanchez, who was among those arrested in 2007 but not yet tried.

While couriers, several of them female, drove vehicles loaded with drugs and cash around the state, there were tense moments for Mora and others who were unknowingly wiretapped and followed by officers and agents, Hitt said.

At one point, Hitt said, Amaro's niece drove with 23 pounds of methamphetamine in a car's hidden compartment, but was stopped by highway patrol officers. The car was impounded because she didn't have a license and for other traffic violations.

"That little Honda contained a very important and valuable asset," Hitt said, referring to the methamphetamine.

Mora had the car's title transferred to Sanchez, Hitt said, and the two claimed the car from the yard. They were relieved to find the drugs in the compartment, which was located under a pile of new clothes from Geez Clothing, one of the businesses Hitt said the gang used as a front operation.

Later, on a trip east, a car driven by Sanchez and a Cleveland man broke down in Elko, Nev.

Eight pounds of cocaine were hidden inside that vehicle's secret storage space. Mora followed the "load car" in a car he rented in Salinas, Hitt said.

Mora worried the whole time that mechanics worked on the car, Hitt said. The stash was never found and the group finally traveled to Cleveland, where the drug could be sold at a much higher price than in California.

The three stayed at one of the city's most elegant historic hotels, which they used as their "home base" while the drug was sold one or two pounds at a time, according to prosecutors. The gang took in $160,000 in cocaine sales on the trip, Hitt said.

When FBI agents staged simultaneous raids on dozens of residences in Salinas, Los Banos and other cities in June 2007, they searched Mora's large, newer-model house on Lexington Drive in Salinas.

There, detectives found a paper chronicle of the trip to Ohio: Mora saved all the receipts. He even kept the American Airlines boarding pass he used on a quick business trip home to Salinas during the Cleveland operation.

Surprisingly, none of the four defense attorneys presented opening statements.

But a trial brief recently submitted to the court shows the gang-tinged nature of the case remains among the defense's top concerns, though the charges in the case are drug-related with no mention of gangs

Judge William Shubb has allowed the government to name the Nuestra Familia and to describe defendants' varied connections to the organization.

He agreed to Hitt's request to shackle the defendants during trial because of the gang's reputation for violence, but agreed to allow a curtain to conceal the chains from jurors.

The chains are wrapped to keep them from clanking.

Another area of controversy is sure to be the role played by Nuestra Familia member Charles "Peanut" Oak, the confidential informant whom prosecutors named for the first time Thursday.

A year after his work for the FBI in Operation Valley Star ended in 2007, Oak was arrested and named as the "kingpin" in charge of the gang's activities in Stockton.

In a failed attempt to have the case dismissed earlier this year, the defense said Oak was involved in violent crimes and may have distributed untold quantities of drugs to Stockton's streets while he worked for federal agents on the Valley Star case.

Prosecutors have not said whether they plan to call Oak as a witness, though he was the only informant to wear a wire transmitter during critical meetings between Diaz, Amaro and others. The recordings became key evidence for proving the alleged conspiracy.

A final group of defendants is expected to start its own trial after the current one concludes.

Before that, as one attorney said when court adjourned Friday, the trial of Amaro, Mora, Killinger and Stewart-Hanson is likely to be "one long road."