Fast Cars and Rap Stars: How a Sugar Daddy's Empire Crumbled on Everyone Involved
One of the hottest Valley party spots in the mid-2000s was Scottsdale's CBNC, short for Coyote Bay Night Club. Hip-hop stars and professional athletes flocked there. Rap artist and music producer Kasseem Dean (a.k.a. Swizz Beatz) was a regular and claimed he was one of the owners.
Tucked in the Papago Plaza strip mall, on the southwest corner of McDowell and Scottsdale roads, the place exuded upscale cool.
On Friday and Saturday nights, a good-looking crowd of young people packed the three bars and dance floor, the latter lit up from beneath with multicolored LEDs.
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CBNC had two VIP rooms cordoned off with velvet ropes. Dress code: classy. No baggy jeans or do-rags. Security was tight, with a plethora of off-duty Maricopa County Sheriff's Office deputies. The general managers looked like bouncers, a hard-to-miss pair of burly twin brothers named Jesse and James.
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On just one of the many star-studded nights, Busta Rhymes and newly minted rap star 50 Cent hit "da club" in July 2003 after finishing a performance in Phoenix.
50 Cent, who famously had been shot before rising to stardom, felt comfortable enough to take off his bulletproof vest and dance on top of a bar counter.
On other nights, partygoers could see Eminem. Or Snoop Dogg. Or former Phoenix Suns star Amar'e Stoudemire. Or maybe Mike Tyson, NBA baller Allen Iverson, Cardinals wide receiver Larry Fitzgerald, rapper/actor LL Cool J, or pop stars Alicia Keys, Britney Spears, and Beyoncé.
Despite what Swizz Beatz claimed, the owner of the club, on paper, was Jodi Upton.
She's the sister of the twins who served as managers and — like them — is tall and blond.
Corporate records and the club's liquor license listed Upton, then in her late 20s, as owner not only of CBNC but of Scottsdale's successful Exotic Auto Sales and Leasing dealership. The car dealership touted a long list of celebrity clients, many of whom also went to the club.
The early 2000s were amazing times for Upton. She mixed with wealthy superstars and athletes, sold Ferraris and Lambor-ghinis, attended posh parties, and flew in private jets.
She was hardworking and business-savvy — but the businesses weren't really hers.
The real boss of CBNC was her boyfriend, Nazreth Derboghossian, a Syrian-born Armenian who went by "Naz."
About 15 years older than Upton, Naz had a background in the exotic-car business and enjoyed a lavish lifestyle. The couple met in 1999 when she got a receptionist job at a Scottsdale car company where Naz worked. Soon after their affair began, he was paying for Upton's apartment.
Only a few months earlier, in her home state of Massachusetts, Upton had been struggling in a violent relationship with her boyfriend, the father of her first son. And she'd been plagued by accusations against her father, George, owner of a used-car lot and a notorious criminal on Cape Cod.
By the end of 2000, she and Naz had moved into a $2 million home in Scottsdale's Troon North community. She gave birth to their son in early 2003, with Swizz Beatz signing on as the boy's godfather.
Naz showered his girlfriend with gifts and travel. He bought her a diamond bracelet for her 24th birthday, funded extravagant shopping trips. In their home, he kept stacks of cash in a safe. The couple always were off to Las Vegas — Hard Rock Café was their hangout. At the blackjack table, Naz would slide $5,000 chips to Upton and toss large tips to service workers.
To help pull in the VIPs and their entourages at the club, Naz's attitude often was: Don't worry. It's on the house.
In 2004, Upton — with Naz behind the scenes — bought Scorch Bar in Desert Ridge Marketplace.
As fun as CBNC and Scorch were for their clientele, the clubs were major money-losers. Though plenty of cash was coming in, it never seemed to be enough to pay the bills.
Both businesses had to be supported financially by Exotic Auto, which itself was propped up by millions of dollars flowing in — from Mexico.
Fact was, Naz had a sugar daddy of his own who bankrolled everything.
He was Mario de la Fuente Manriquez, a prominent figure in the Sonora, Mexico, business community who split his time among homes in Tucson, Scottsdale, and Nogales, Mexico.
Manriquez had earned a fortune in the communications business in Mexico, and from 2000 to at least 2008, he blew a good deal of it on Naz, whom he reportedly loved like a son. He had bought the Troon home for Naz and agreed to "loan" him millions of dollars with no real expectation of getting paid back.
That is, the fast times at CBNC, the sales of high-priced cars, the extravagant lifestyles led by Naz and those close to him — they all had one thing in common:
The party stopped on January 20, 2010.
That was the day an armored car smashed through the gate at one of Manriquez's north Tucson homes, where his ex-wife and four kids lived. Authorities took them into custody temporarily. The millionaire and his current wife were held at gunpoint in another home by Tucson police officers, who then proceeded to blow the doors off several of his safes to seize his cash.
Overall, police confiscated $15 million to $20 million in U.S. assets owned by Manriquez and one of his real sons, Mario de la Fuente Mix.
Eight people were indicted in what authorities deemed the Derboghossian-De la Fuente Criminal Enterprise.
The story quickly turned into an international scandal, making news in the United States and Mexico because of the Manriquez connection.
The businessman, now 69, was president of the primary cable company in Sonora, OmniCable, which had holdings including the Diário de Sonora newspaper and a TV station. Though he identified himself as Mexican, Manriquez was born in Nogales, Arizona, attended Nogales High School, and the University of Arizona and even was part-owner of the Arizona Diamondbacks. Manriquez's brother, Lorenzo de la Fuente Manriquez, had served as the mayor of Nogales, Mexico, from 2003 to 2006.
Besides Manriquez, Upton, and Naz, police also arrested Mix, and the purported owner of Scorch, Katie Marie Peters, by then Naz's new love interest.
These five — and three other defendants (car salesman Doug Allen, Naz's brother Ara Derboghossian, and another defendant, Nydia Zumela Morales, who has never been found) — were slapped with 102 felony counts alleging fraud, money laundering, hiding the true owners of the businesses, and operating an illegal enterprise.
By the time of the raids and arrests, Jodi Upton was 34 and long past her blurry nightclubbing days. Naz had cheated on her with a younger woman, Peters, who was installed in 2007 as his new frontwoman for Scorch. Upton also had health problems that year. She and Naz had broken up in both their personal and business lives, with Naz also extracting her from the auto dealership.
With her two children in the care of friends, Upton served 66 days before prosecutors agreed to lower the amount of what initially was a $1 million bond.
Police and prosecutors claimed the group was behind an elaborate scheme to secretly pump millions into the car-and-bar businesses to commit money laundering and fraud.
The tale involved a cast of fascinating characters: Mexican aristocrats, Manriquez and Mix; a business-savvy blonde, Upton, who wanted to be more than a patsy; her master-criminal father; a smooth-talking Armenian con man, Naz; a world-famous rap star, Swizz Beatz; Upton's younger rival for Naz's affections, Peters; law enforcement officials in over their heads; and a Valley mother and daughter who negotiated the purchase of a bar in a secret meeting at a gas station.
Yet the complex case, which investigators took more than two years to put together, has all but crumbled.
Within a year, all charges against Manriquez and Mix, the main targets, were dropped. Upton, Allen, and Peters each escaped with a misdemeanor conviction and probation.
Only Naz is stuck with felony charges — but only three, instead of the 75 for which he was indicted. He's scheduled to be sentenced in September.
Meanwhile, ramifications of the case linger: Victims such as Carol and Phaedra Boyce were ruined financially. So was Upton, who considers herself a victim.
Details in this article were culled from court filings, police reports, news accounts, and interviews with Upton, Mix, the Boyces, various lawyers, and others involved with the case. Police and state Attorney General's Office representatives declined comment. Manriquez and Naz never returned messages. Neither did Swizz Beatz.
Numerous questions remain about what really happened with this so-called crime ring. What's certain is that (so far, anyway) prosecution of the investigation's main target — Manriquez — failed.
Because of that, Arizona taxpayers may end up making Manriquez, now suing Arizona and the city of Phoenix for defamation and wrongful prosecution, even wealthier.
Locked up and accused of multiple felonies, Jodi Upton was following uncomfortably in her dad's footsteps.
She was born in 1975 and grew up on Cape Cod as one of four children of a prolific thief. When she was 2, her mother abandoned the family. While Dad was out committing crimes, Jodi first was raised by her grandmother, then by Lynn Alberico, George Upton's girlfriend.
Upton was something of a tomboy, hanging out with her three brothers, riding dirt bikes, and learning to appreciate nice cars. They were the sort of family in which each kid might have two shiny bicycles instead of one. But the kids didn't know, at first, how the money for such things was earned. It became clear as they got older.
"I saw things I shouldn't have seen," she says.
Upton and her siblings found that their home had secret compartments with cash or jewels tucked inside them. She recalls hearing conversations between her father and his buddies about stealing things or transporting shipments of marijuana.
News accounts of George Upton's legal troubles refer to his "charming" and "affable" personality. To cops, he was a sophisticated thug — and slippery as an eel.
He was sentenced in 1981 to nine to 10 years in prison for burglaries on the Cape, but the U.S. Supreme Court overturned the conviction because police had based a search warrant on an anonymous tip.
His daughter managed to stay out of serious trouble but found challenges in her personal life after having a baby at age 21 with a violent boyfriend. When her boy was 2, she decided to leave her boyfriend and the Cape, where her father was coming under increased scrutiny. She moved into an apartment in Phoenix with a friend of one of her brothers.
A few weeks after arriving in Arizona, Jodi was called back to Massachusetts to testify in a grand jury investigation concerning money George Upton had stolen. Prosecutors wanted to know how she was paying her rent and where she got money for the breast-enlargement surgery that she had before leaving the East Coast.
Prosecutors dismissed Jodi Upton from grand jury testimony after she took the Fifth Amendment concerning questions about her finances. She tells New Times that the Massachusetts man who paid for her breast implants is a drug dealer, and she didn't want to rat him out.
Authorities were concerned that George might have given Jodi some of the $900,000 he stole in 1997 from an associate, Steve Queen, the mob-connected son of a bookmaker.
Queen had swiped the cash (gambling earnings) from his father's safe, then made the mistake of driving to Look Motors, his buddy George Upton's car lot in Hyannis.
George and his girlfriend jacked the money from the trunk of Queen's car. A few days later, Queen disappeared, never to be seen again. George was suspected, but never charged, in the disappearance.
Jodi Upton's father's girlfriend, Lynn Alberico, told a friend that she'd taken $100,000 of Queen's cash and that Jodi also received $100,000.
That's what Massachusetts court records state, though Jodi denies receiving any of the money and never was prosecuted in connection with the heist.
She speculates that Queen's simply hiding out somewhere. "My father may be a lot of things, but he's not a murderer," she says.
George Upton and Alberico were convicted in 2004 and 2005 on charges related to the theft, including tax evasion and trying to launder the money. Alberico served about two years in prison. Upton received a federal sentence of 131/2 years. When he's released, he'll be transferred to state prison to begin serving a sentence of seven to 10 years for robberies of businesses and home burglaries that occurred in the 2000s.
At the same time his daughter was running businesses in Arizona on behalf of secret owners, George Upton led a team of criminals, including Vincent Alberico, his girlfriend's son, in a years-long crime spree in the Cape Cod area. In at least two of the robberies, victims were beaten and a building was torched, though not by George. Police searching his Hyannis home in late 2004 found a "treasure trove" of stolen goods hidden under a staircase, including hundreds of thousands of dollars in expensive watches, art pieces, and bars of gold.
When Phoenix investigators checked into the background of Jodi Upton, the "owner" of nightclubs and a Scottsdale car dealership, they couldn't help but be suspicious about her connection to "charming" George Upton.
Not long after landing in Arizona, Jodi Upton found a receptionist job at Scottsdale's Southwest European, which repaired and sold luxury automobiles. Naz Derboghossian was the chief technician and a salesman. They began dating in early 2000.
Naz, about 40 at the time, knew a lot about the car business. His father, once a lawyer in Malta, raised him around "vintage Ferraris and racing cars, letting young Naz fix them at age 10," says a 2003 Arizona Republic story about the popular CBNC bar.
In his late 20s, he had owned a Ft. Lauderdale, Florida, dealership called Euro Motor Cars Inc. Boxer Sugar Ray Leonard and kickboxing champion Rick Roufus were his first big-time customers, and they led to other famous business contacts.
But Naz didn't always play by the rules. His Florida firm first caught the attention of police after it sold a Porsche Cabriolet that turned out to be stolen. Months later, cops were alerted to the theft in Miami of a 1990 Ferrari Testarossa worth $150,000. Using the LoJack vehicle-tracking system, the car was traced to Naz's business. It was found on a lift, its window broken and the ignition punched in with a screw.
Naz claimed a guy had dropped it off for repairs but left the garage without giving a name or phone number. Authorities knew Naz didn't steal the car himself, but they didn't buy his story. He was convicted in 1991 of grand theft auto and sentenced to probation.
He moved to Arizona in the late 1990s but was arrested again in early 1999 after allegations that he had swindled a Virginia man out of a 1975 Rolls-Royce. A police report states that "the suspects have ties with organized crime." Naz managed to beat the rap; charges were dropped.
Jodi Upton explains that Naz had many friends in the car business. He was an expert at finding well-maintained used luxury cars and selling them at a profit.
Until the economic crash of 2008, it was a great time to be in the business.
Back then, car enthusiasts were more than willing to pay $50,000 or even $100,000 over the sticker price for a rare vehicle, as long as it had very low mileage. Investors often would "floor" vehicles, meaning they would pay the up-front costs to put them in a showroom, later splitting the hefty proceeds once cars were sold. Customers even joined in the action, finding limited-production or collectible vehicles, driving them for a short while and contracting with a dealership like Naz's to floor them and sell them on consignment. Car fanciers with money would end up driving several awesome cars each year. Naz knew how to play the game to his advantage — especially once he found the right banker.
Naz Derboghossian met Mario de la Fuente Manriquez, who fancied luxury cars, at a Lotus dealership in 2000. Only he and Naz know why they became so close. But by several accounts, Naz sometimes referred to Manriquez as "Dad," and the elder man called Naz "son."
In May 2001, Naz used $165,000 from Manriquez to purchase Scottsdale Lotus. Another $750,000 from Manriquez went to purchase Exotic Auto Sales and Leasing LLC in 2002.
Jodi Upton was set up as owner of Exotic Auto. Later, Exotic's dealership license listed car salesman Doug Allen as owner, though Upton still was listed as a partner until 2007.
The ruse was illegal. In the application for an automobile dealer's license, state law requires disclosure of partners who own more than 20 percent of a business.
At the time, Upton says now, she understood it was necessary for her to be listed as owner because Naz wasn't an American citizen.
In fact, foreigners with work visas — which Naz apparently has — can apply. People with auto-related felony convictions in the previous 10 years can't, but Naz's 1991 conviction was in September. It seems possible that he simply could have waited a few months if he had wanted to put the licenses in his name.
Instead, the real ownership was hidden. Naz's name was on bank accounts but not on state forms. This had the effect of putting one more cloaking layer between the state and Manriquez, arguably the true owner.
Whether George Upton had more than a peripheral connection to the Arizona scheme is unknown. He flew out to visit his kids a couple of times while free on bond before his 2004 conviction, sometimes attending the Barrett-Jackson car show in Scottsdale.
Manriquez and George Upton hit it off. Once, Jodi recalls, Mario let her father borrow a Lamborghini to drive while in town.
George Upton received money from Manriquez, too, albeit indirectly. When the car dealerships first ramped up, a $20,000 payment — through a car company — was sent to George.
Jodi Upton says it was only to repay a like amount that George had given them to floor vehicles in the showroom. She says she is unaware of any other payments to George.
With or without George Upton's help, Naz — and Jodi Upton, police allege — managed to hoodwink several investors and buyers in various shady deals.
One scheme involved persuading a company called Midway Motors to lease exotic cars to people who, in turn, agreed to have the vehicles sold on consignment by Southwest European. In a lawsuit Naz later settled, Midway accused Naz of selling some of these cars and failing to turn over the proceeds.
Records detailed several other problematic sales.
Valley car dealer Eric Edenholm, for example, bought a 1990 Ferrari F40 for $250,000, then asked Naz to sell it for him at Southwest European's Scottsdale showroom at 8355 East Raintree Drive.
A few months later, in the summer of 2001, a California buyer paid $290,000 for it. Before it was delivered, Dale Wilkens, president of the Scottsdale branch of First International Bank and Trust, checked out the F40 and paid about $150,000 to Southwest European for it, the idea being that the bank would invest in the vehicle and would be paid back once it was sold.
The car was shipped to California, and neither the bank nor Edenholm got paid. Reached last month, Wilkens declined to discuss the deal or his past association with Naz.
Sometimes, customers would pay for vehicles but never receive the cars or valid titles. Lawsuits against Naz's companies piled up.
Jodi Upton, who is named in some of the lawsuits, denies that she forged anything, defrauded anyone, or intentionally committed any crime.
Swizz Beatz, who had been introduced to Naz at the former Valley home of fellow rapper DMX, entered into one of these bad deals with Naz in 2001 and ended up suing in federal court. In the unlikely aftermath of the lawsuit settlement, Swizz and Naz became good friends. Swizz bragged that he bought 25 luxury cars from Naz in the following years.
Exotic Auto Sales, which had a showroom at 811 North Scottsdale Road, was the primary car business. Mario's money paid to floor the vehicles that were sold. The company generated at least $30 million in sales proceeds, police believe.
At least some customers, including famous ex-athletes Tony Womack and Penny Hardaway, apparently drove away happy.
Mario and Naz's secret partnership flourished until 2005, when it began to decay from within.
Naz and Jodi bought CBNC and its liquor license for $435,000 in the summer of 2002. Again, Naz's name was kept off the records; Upton declared herself sole owner on the license. As with car-dealer licenses, state law requires that true owners of bars and nightclubs reveal themselves in official paperwork.
The money for the purchase and another $2 million spent renovating the place came from deposits by Manriquez into Exotic Auto Sales' bank accounts, which then were transferred out for CBNC's needs.
From 2002 to 2007, at least $5 million was transferred to CBNC by Manriquez, with the money always first going through accounts held by Naz or Exotic Auto. Overall, police estimate, Manriquez moved about $17 million to the enterprises controlled by Naz.
Most of the money, which had been accumulated in Mexico, passed through a U.S.-based Edward Jones investment account before it was transferred to Naz. Manriquez's actual son, Mario de la Fuente Mix, was co-signer on the account.
When funds were not sent through the bank electronically, Manriquez usually would have a check sent via FedEx. Sometimes, Exotic sales manager Doug Allen would be forced to drive from Scottsdale to Manriquez's Tucson home to pick up money.
The runs to Tucson were "the most ridiculous thing ever," Allen later told a Phoenix police detective. "[Manriquez] would walk out in his bathrobe like Hugh Hefner, and he would hand me an envelope and say, 'Give this to Naz. Bye-bye.'"
Allen recalled holding the envelope up to the light a "couple of times" and seeing $200,000 or more.
As the years passed, Manriquez used his investments to refine his aging-hipster lifestyle, sometimes driving several kinds of luxury cars that he'd borrow from the dealership each week. He also stopped by the club from time to time.
Manriquez's money paid for Scorch Bar in 2004, and Upton was listed as owner. Scorch became a hit, with its giant lava lamps, glowing bar tops, a small dance floor, and adjacent bathrooms connected by windows in which partiers could watch members of the opposite sex primp at sinks.
Manriquez also funded a 49 percent ownership in a luxury-car showroom that opened in 2005 at Caesar's Palace in Las Vegas. Casino patrons could pay $10 to see sparkling Bentleys, top-end Ford Mustangs, and low-slung Italian sports cars.
"Mario . . . saw his empire growing," Upton tells New Times.
But the venture couldn't last. Las Vegas police, in checking out the group's dealership application, found the arrangement so sketchy that they denied the majority owner, Richard Weisman, a license to continue operating unless he ditched his Arizona partners. The Vegas showroom folded a couple of years later.
Problems kept arising. In March, CBNC suffered a serious loss of clientele after the parking-lot shooting of former Arizona State University football player Brandon Falkner by ASU gridiron star Loren Wade.
Then, Naz and Jodi split — mostly, anyway — as a couple.
One big reason: Naz was cheating on Jodi with Katie Marie Peters, who enjoyed hanging out at the club.
Naz kicked Jodi out of the Troon home. She then bought a house in Phoenix with money she had earned from the sale of a classic 1933 Ford her father had given her, she says.
In late August 2005, Naz fired Upton's brothers, who had worked for CBNC for three years. Naz complained to Scottsdale police that they had threatened him. Jimmy Upton had called him to say, "Watch your back" and "I'm going to kill you," Naz told police. The pair had been implicated, but never charged, in a previous assault of a bar employee in the CBNC parking lot.
Naz told police he felt the men, whom he called "steroid monkeys," would burglarize his home and "burn his dealership down."
At some point that year, Naz asked Jodi to draw up papers that would transfer everything out of her name. She refused.
It was into this hornet's nest that Carol and Phaedra Boyce stepped in late 2005.
Carol Boyce is an accountant for several Valley businesses and partner at a virtual-office company. Her daughter, Phaedra, a fitness trainer and former bar manager, met Ara Derboghossian, Naz's brother, through her boyfriend. After the "personable" Derboghossian brothers found out that Carol and Phaedra had some money they wanted to invest in a nightclub, there were free stays in a VIP suite at the Hard Rock Café in Las Vegas. Phaedra even got to meet Swizz Beatz.
Naz urged the women to invest in the club, Carol Boyce says, promising that it would make $1 million profit in a year.
The Boyces made an offer in early 2006: They would pay Naz a $150,000 down payment on a planned total investment of $750,000, which would grant them 50 percent ownership in the club. After a year, they would have the option to do the same thing with Scorch.
Ara Derboghossian called the Boyces to let them know that Naz had agreed. He told them to meet him at the Mobil station at Tatum and Thunderbird on February 16 with $25,000 in cash and a $25,000 check.
Weird as it was, the Boyces played along. Ara showed up, took the money, then came back 40 minutes later with a contract signed by Naz.
"I didn't really know what to think," says Phaedra Boyce. "We knew nightclubs were a cash business . . . We were trusting."
A week later, Naz introduced the women to Jodi Upton, who informed them that she was the actual owner of CBNC. But more worrisome than the appearance of an unplanned partner was the club's nearly nonexistent accounting practices. Some employees were paid strictly in cash, Carol Boyce says, while others clearly were stealing from the bar. Cash registers stayed broken for unusually long periods. The club should have been making money. Instead, it was losing funds every month.
The silent partner the Boyces would never meet, Manriquez, apparently made no payments to CBNC at this time.
By itself, Carol Boyce believes, the club would have been profitable while she was a partner if, she claims, Naz had not pilfered cover-charge revenue.
"I never got to see that money," she says.
Despite the high-profile shooting of the ex-football player the previous year, CBNC raked in $10,000 or $20,000 at the door each Friday and Saturday night during February and March 2006, she estimates. In the first couple of weeks the Boyces were there, the place was packed for a Black Eyed Peas performance.
Naz always explained that the door money went to pay DJs or celebrities, or that there were unexpected expenses.
"He would look you straight in the eye," Carol recalls. "By the time the meeting was over, you were like his best friend again."
At the end of March, the Boyces not only had paid their $150,000 but had chipped in another $18,000 to pay bills. Naz put some money in the CBNC account for the next few months as the Boyces pressed him to adopt proper financial procedures. Then, one day in July, Upton changed the locks on the doors.
Believing they had been defrauded, the Boyces took their complaints to Phoenix police in early 2007.
Throughout that year, police say, several other "investors" in, or would-be buyers of, the businesses also were defrauded by Naz for hundreds of thousands of dollars.
Meanwhile, Upton threatened to negotiate the sale of CBNC herself. To stop her, Doug Allen — at the direction of Naz — filed documents with the state that claimed a financial interest in the club and car dealerships. The partners ultimately sold CBNC in 2007 and split some of the proceeds with Upton. The new owner never opened the club, which was closed at the time for planned renovations.
Then Upton contracted a kidney infection and needed surgery that cost $49,000. She agreed to sign over Scorch to Naz for this amount. Katie Marie Peters became the new "owner" of the bar.
Upton decided her problems were diet-related and skipped the surgery. She flew to Maine and took a course in becoming a raw-food chef.
"I walked away from it, happy, and never cared to look back," she says.
But it didn't turn out to be that easy.
The Valley played host to Super Bowl XLII in 2008, and Scorch Bar had a special party planned. Katie Marie Peters applied to the city of Phoenix for a permit to put out a few portable toilets.
Officials had grown suspicious of how Peters supposedly acquired the bar from Upton. They were left even more suspicious after Peters was called to Phoenix City Hall to answer questions about her ownership. Inspections were carried out at the bar, one of which found a stash of liquor for sale that had been purchased from a supermarket instead of from an authorized wholesaler, a violation of state law. Fire-code violations also were noticed, and the bar was shut down in late February 2008.
The case was assigned to Phoenix police Detective Jeff Kornegay. He and other officers spent almost two years going through financial records, conducting interviews, and unraveling the Naz-Manriquez connection.
When indictments and arrests were announced in January 2010, authorities made it sound as if they had cracked the case of the century.
Then-Phoenix Mayor Phil Gordon and former Councilwoman Peggy Neely joined police and representatives of the state AG's Office as they addressed the news media.
The unspoken sentiment was that if the public was looking for evidence of Mexican criminals tainting the Arizona business community in a significant way, this was it.
Poster boards placed around a conference room at Phoenix Police Department headquarters displayed large pictures of cash, vehicles, gold coins, and other items seized in raids on the homes of Manriquez and Mix. Another poster showed a flowchart of the so-called crime enterprise, with pictures of the accused and arrows showing how money was transferred between the businesses and defendants.
Then-Phoenix Police Chief Jack Harris crowed that his "top-flight detectives" had "done a fantastic job."
Yet the police version of events had a glaring hole. Kornegay was asked by reporters why the group allegedly had tried to launder money.
The answer (long pause): Police didn't know.
"It was their money," Kornegay said, referring to Manriquez and Mix. "We don't have any reason to believe it came from illegal sources."
Police offered no speculation of a motive for the "criminal enterprise." For his $17 million, Manriquez had received little in return — a few hundred thousand dollars in various payments since 2000, plus several non-exotic used cars sent to Mexico for use in Manriquez's cable business.
The first sign of cracks in the prosecutors' case came during a bail hearing for Manriquez and Mix, who were represented by southern Arizona lawyers Michael Piccarreta and Saji Vettiyil.
The suspects had been thrown in jail following raids of their homes and slapped with an initial $5 million bond. Their lawyers soon proved to then-Maricopa County Superior Judge Gary Donahoe that the men were trustworthy. Strengthening their argument was that Manriquez and Mix had no criminal records and were considered respectable businessmen with strong ties on both sides of the border.
They weren't just Mexican nationals — both qualified as U.S. citizens.
Besides, Manriquez hardly could "disappear" into Mexico like a common fugitive, Piccarreta noted in court filings. Manriquez was practically a celebrity, known not just for his media companies but for his political connections: His great-uncle, Plutarco Elias Calles, had been president of Mexico from 1924 to 1928.
Judge Donahoe was asked whether the men simply could agree to forfeit the millions in seized items and money if they failed to appear for court proceedings. The judge agreed that would be fine, and the two walked out of jail after 16 days behind bars.
The state first dropped charges against Mix. The money wasn't his, he argued, and he was co-signing on checks and wire transfers only when his father asked him to. The state conceded his point.
Manriquez, by his own reasoning, was nothing more than Naz's banker. Manriquez denied that his infusion of cash into the club or the car dealership meant he was their owner or manager. His accountant even produced one-page contracts in which Mario had agreed to lend Naz money "in multiples of $250,000" at 24 percent interest.
Even if corporate paperwork and official licensing forms required his name (which they did, police say), Manriquez contended that the law still didn't obligate him to ensure that the borrower, Naz, made necessary disclosures.
Piccarreta noted that Detective Kornegay and Deputy Attorney General Theodore Campagnolo didn't instruct the grand jury correctly on these nuances. The judge agreed and wrote an order to remand the case to the grand jury because Manriquez had no obligation to ensure disclosure if he was a "bona fide creditor."
The state moved to drop charges against Manriquez on December 6, 2010. Two days later, a representative of the AG's Office told New Times that the state intended to keep $12 million of the money seized from Manriquez, regardless of the outcome of the criminal case, and threatened that new charges could come the following year.
It never happened. Instead, the state gave back everything it had seized from Manriquez and his actual son.
Mix, who has homes in Tucson and Sonora, says he made a deal with prosecutors not to sue over his arrest and attempted prosecution. But he's critical of treatment he received at the hands of police during his arrest — he was unable to call his wife for 14 hours, he says — and of the prosecution that resulted in his children getting called names at school. He says police theories about a crime ring were "fantasy" and that his father merely made "bad decisions" by lending money to someone who misused it.
Asked if he ever went to CBNC, Mix says his father once took him there for an hour. Mix also had been to the car lot a couple of times, where he met Naz and, once, Upton. He says his father understood he was lending money for Exotic Auto Sales but that there was no money laundering going on — there was no reason for it.
The former director of operations for OmniCable (since taken over by Mexico's MegaCable), Mix hopes to move on with his life and start a microbrewery in Tucson.
When asked in 2011 to comment for this article, the AG's Office responded with an August 3 letter to Manriquez's attorney, in which Campagnolo wrote that the state won't file new charges against Manriquez, even though evidence was found that he put his in-laws on the books as employees at CBNC to give them a bogus employment history. This allowed them to sponsor a Mexican relative to enter the country.
But Manriquez isn't completely in the clear, prosecutors insist.
Campagnolo mentions that a defendant in the "crime ring" — Naz's personal bookkeeper, Nydia Zulema Morales — never has been found. If new evidence comes up, Manriquez still could be charged, prosecutors say.
Manriquez's defamation lawsuit against Phoenix and the state is wending its way through court. Yet major mysteries remain: Why did Manriquez give Naz $17 million over an eight-year period? Why did he not just use his wealth to invest legitimately in whatever he wanted? Steve Weiss, the Tucson attorney representing Manriquez in the defamation case, declined to comment on these questions.
Police never alleged that Manriquez's money was used to launder drug money or finance drug buys. However, one drug connection did exist: Ara Derboghossian, Naz's brother, told undercover cops in 2007 that he could help them transport hundreds of pounds of marijuana because his brother owned two car dealerships and had access to a warehouse and semi-trucks.
Ara was convicted last year on charges related to that sting and received a 31/2-year prison sentence.
Upton, now working two food-service jobs at upscale restaurants in Phoenix, and Allen, who found work at another dealership, each pleaded guilty to one misdemeanor related to their false-record filings. They got probation. Peters will get the same deal when she's sentenced later this month. Together, they're supposed to pay back a $20,000 bill for the investigation.
Doug Allen would say on the record only that he is glad Manriquez and Mix "were cleared in this whole thing. I believe they were truly victims."
Naz's sentencing has been continued until September 26. Earlier this year, he pleaded guilty to fraud, operating an illegal enterprise, and forgery. Prosecutors are seeking a one-year jail term, probation, and restitution of $1.4 million to victims such as the Boyces and Eric Edenholm.
Manriquez, presumably, has no plans to give "son" Naz more money.
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