Inside the Scandal That Took Down the DEA’s ‘Cowboy’ Chief in Mexico

Relations between the U.S. and Mexico were extremely tense when the DEA’s top boss in Mexico City decided to throw himself a birthday party. It was late October of 2020, and Mexico’s president was furious over the DEA’s arrest of a top military general accused of cartel corruption. But at the fiesta, the mood was jovial. There was drinking and food and a mariachi band to entertain the guests.

The attendees included several high-ranking Mexican officials, along with a few bigwigs from other U.S. law enforcement agencies. At least one person left wondering how the host, who was celebrating his 50th birthday, managed to score a taxpayer-funded house so large and outside the zones typically authorized for housing for senior U.S. officials in Mexico City. One person described the house as a “mega-mansion.”

The party was one of several events that contributed to the downfall of regional director Nick Palmeri, who quietly retired from the DEA last year one day before he was due to be fired. Parts of his undoing, including allegedly improper meetings with defense attorneys who represent cartel members, have recently been made public. But there’s far more to the story, including bitter infighting at the highest levels of the DEA, allegedly culminating with Palmeri telling his boss to “go fuck himself.”

VICE News spoke with more than half a dozen federal law enforcement sources who knew or worked with Palmeri, and reviewed documents, emails, and other records. Palmeri himself sat for an extensive interview for the first time since leaving the DEA, defending his actions while acknowledging some mistakes.

“I’m not saying it was misconduct,” Palmeri said. “I probably could have used better judgment.”

Multiple sources said Palmeri, a former NYPD officer, was part of a group of DEA leaders dubbed by those outside their circle “The New York Mafia.” Even after Palmeri’s tenure in Mexico ended under a black cloud, he was given a position that afforded access to sensitive information back at DEA headquarters. By retiring before he was fired, Palmeri also secured what sources called a “golden parachute” with full retirement benefits, although Palmeri and his attorney dispute that characterization.

“Nick's retirement was based on how much money he put into his retirement system,” Palmeri’s lawyer, Joel Kirkpatrick, told VICE News. “That's what it is. There's nothing extra put in.”

Palmeri has been the subject of investigations by the Justice Department’s Office of the Inspector General and the DEA’s Office of Professional Responsibility. He’s been accused of flouting rules about travel and expenses, and potentially creating conflicts of interest by being overly friendly with defense attorneys. He even asked one lawyer who has represented drug defendants for help navigating his child support case, which has not been previously reported.

Meanwhile, a senior DEA official who oversaw Palmeri, Matt Donahue, was allegedly forced out of his job and into early retirement after blowing the whistle, according to sources. 

Donahue, VICE News has learned, is currently in litigation with the DEA before the federal Merit Systems Protection Board (MSPB), which handles labor disputes. Palmeri has also challenged the DEA’s handling of his firing before the MSPB, and his attorney said an appeal over the outcome is pending. Because of the ongoing litigation and concerns about losing their jobs, the sources who discussed the situation requested anonymity. Most served within the DEA or worked closely with the DEA in Mexico.

Palmeri was once a rising star in the DEA, helping to wipe an entire Colombian cartel off the map and recouping hundreds of millions of dollars worth of drug money. But in Mexico, his style clashed with a senior leader who didn’t like the way he operated.

“He's not a bureaucrat, I'll give him that,” said Ruben Oliva, a Miami-based lawyer who represents major drug cartel leaders, including a Colombian kingpin whose case Palmeri worked on. “And you know what? And that's his problem. He's a cowboy.”

In response to a detailed list of questions about Palmeri, a DEA official told VICE News: “The DEA holds its 10,000 employees to the highest standards of conduct and professionalism. While we cannot comment on the details of specific personnel matters, when an employee is found to have not lived up to those standards DEA takes decisive action, including removal from the agency.”

Know something about the DEA's operations in Mexico? Contact the author at keegan.hamilton@vice.com

Palmeri’s critics say his short-lived and contentious tenure in Mexico was entirely predictable, blaming the DEA’s leadership for creating the scandal by putting him in charge of one of the agency’s most high-profile positions, a post responsible not just for Mexico but also Canada and Central America. 

“It was no surprise to anyone when the train went off the rails,” said one DEA source. “It was like fuck, we saw this coming. They picked the wrong person.” 

A few weeks before Palmeri’s 50th birthday in October 2020, DEA agents in California arrested Mexico’s former national secretary of defense, Gen. Salvador Cienfuegos, on charges of narco-corruption. Caught off guard, Mexican President Andrés Manuel López Obrador lashed out at the DEA and “the meddling by all these agencies in Mexico.”

“They came into the country with complete freedom,” López Obrador said at the time. “They did whatever they wanted.”

Behind the scenes, López Obrador was threatening to restrict DEA operations in Mexico. Palmeri, who had taken over leadership of the DEA in Mexico City earlier in the year, wanted to repair the relationship with his senior counterparts in Mexican federal law enforcement—so he decided to invite some of them to his birthday party.

“What better way to engender diplomacy than by inviting someone to your house to participate in such a personal event?” Palmeri told VICE News. “What better way than to invite them, in a professional manner, to your birthday party?”

One former senior federal law enforcement official scoffed at that explanation.

“If you did throw an event for the Mexican counterparts, it wouldn't be on your birthday, it would be more in furtherance of your work,” the source said. “It would be a small gathering at best to discuss operations, not a birthday party.”

Palmeri invited the Mexican officials and their wives to a home that the U.S. government was renting for him and his family in the State of Mexico, just outside the city limits of the capital. Typically, housing for U.S. officials is limited to a handful of wealthy neighborhoods in Mexico City, partly for security reasons. But the pandemic had complicated the search for a residence that Palmeri and his wife found suitable. 

One person familiar with the situation said that because of Palmeri’s high-level job “he was still going to get a sweet place no matter what.” But, the source said, the Palmeris maneuvered for more. The place Palmeri and his wife found to their liking was a large rental property about a 20-minute drive from the U.S embassy. The location was unusual, one source said, and the house bordering on ostentatious.

“He had a mega-mansion in the State of Mexico,” the source said. “We're not even supposed to be there.” 

Documentation from the U.S. embassy’s housing office shows that his superiors approved the arrangements. The records show Palmeri was spending around $11,000 per month for housing from July into early October of 2020, and around $16,000 per month for late October and into November. The housing allotment for a four-person household like Palmeri’s typically maxes out at just under $6,000 per month, which is still expensive by Mexico City standards, but Palmeri said everything he did went through the proper channels.

“It was a large house with a large property,” he said. “But it was at the government rate—it was at or below the government rate.”

Palmeri eventually moved into another stately home in a posh neighborhood of Mexico City, but sources say the birthday party attracted attention to the fact that he was living large.

“He committed the mistake of inviting all the executives from all the other agencies,” one person said. “And even though those executives have nice houses, it’s nothing compared to that. This house was better than the ambassador's house, right? That's the level.”

After the party, Palmeri filed an expense report with the DEA, requesting to be reimbursed for the costs of hosting the Mexican counterparts. Palmeri said the total amount was $736.20, a fraction of the total he spent on the event. The reimbursement was initially authorized by DEA leadership, Palmeri said, but it later came back to haunt him.

On Jan. 25 of this year, the Justice Department’s Office of the Inspector General released a report summary describing the “misuse” of DEA funds in Mexico. Palmeri was not mentioned by name in the report, but it described “funds for the Regional Director’s birthday party.”

“The Regional Director lacked candor for omitting references to the fact that the representation funds were for the Regional Director’s birthday party, in violation of DEA policy,” the report said.

During the course of the investigation, “the regional Director was removed from DEA due to a separate DEA investigation,” the report said. “Criminal prosecution of the regional director was declined.”

Palmeri still maintains the party was a diplomatic success, helping to reestablish a bond with his Mexican counterparts during the Cienfuegos debacle. Under pressure from Mexico, the U.S. ultimately dropped the charges against the general and allowed him to return home a free man.

“We took a huge dip and we needed to do damage control,” Palmeri said. “I got it back up as good as it was gonna be.”

While some staffers at the U.S. embassy were raising eyebrows at Palmeri’s housing arrangements, others questioned his conduct around the office. While most DEA officials tend to prefer the buttoned-down look, Palmeri was known to sometimes wear more casual attire.

“It’s funny as hell actually,” one source said. “Every DEA guy goes to the embassy in a suit and tie. Here’s Nick in his Sopranos tracksuit, or designer jeans, shirt down to belly button, the whole New York guido thing.”

One former senior U.S. official in Mexico, Tim Sloan, country attaché for the Bureau of Alcohol Tobacco Firearms and Explosives (ATF), said that at least for important meetings with the U.S. ambassador, Palmeri was always dressed in a suit and tie.

“Nick was always squared away and professional,” Sloan said. “The DEA guys I know loved him. He was a cop’s cop.”

Palmeri also pushed back against the allegation he did not dress professionally: “I don't own a tracksuit at all,” he said. “I resent this whole Sopranos thing, because it's just catty. It's petty.”

A New York City native, Palmeri started his career with the city’s police department before joining the DEA in 1997 and climbing the ranks. Documents reviewed by VICE News say Palmeri “had no prior discipline with DEA,” before he ran into trouble in Mexico. On the contrary, he was a decorated agent with a stellar record and “numerous DEA performance awards.” 

Palmeri had done a tour of duty at the DEA’s office in Guadalajara, Mexico, from 2004 to 2009, and when the top job in Mexico City opened up in mid-2019, he decided to apply. Beyond a promotion to the DEA’s uppermost echelon, known as “senior executive service,” Palmeri said the job offered the chance to do impactful work. He felt he was qualified for the post, which oversees employees in more than two dozen offices across the region.

“I understood the Mexican culture, which is a necessity if you're going to be successful,” he said.

Multiple sources and documents reviewed by VICE News describe a conflict that brewed almost immediately between Palmeri and his predecessor in Mexico, Donahue, who had advocated for another candidate to fill the regional director position.

Donahue’s attorney, Rob Feitel, declined to comment.

Donahue moved to DEA headquarters to serve as the deputy chief of foreign operations, and he became Palmeri’s supervisor in early 2021. In February of that year, Palmeri sent an email asking Donahue for permission and funds to travel to Florida on DEA business. He planned to attend a meeting of DEA supervisors in Tampa, then travel to Miami to meet with a confidential source and two defense attorneys before flying back to Mexico. 

Emails reviewed by VICE News show Donahue raising concerns because Palmeri intended to meet with the defense attorneys without any other DEA personnel present.

“I did not plan on bringing anyone with me to the defense attorney meetings, they want to speak generally about serving up defendants in Mexico,” Palmeri wrote to Donahue.

In his emails, Palmeri described one of the lawyers as representing “heavy hitters” from the cartel world who now cooperated with the DEA. The other lawyer, he wrote, “represented a bunch of Colombians and Venezuelans with links to Mexico.” 

Donahue wrote back: “Definitely cancel that portion of the trip and meeting with those attorneys (yes, I have concerns).”

Undeterred, Palmeri decided to take the trip to Miami on his personal vacation time. A couple hours after receiving Donahue’s directive, documents show, Palmeri emailed a colleague from the DEA in Mexico, a person who was in the U.S. recovering from a severe case of COVID, with the message: "Cu in Miami."

Palmeri would later tell DEA investigators—and VICE News—that he simply misunderstood Donahue’s order to cancel the trip, assuming it was fine to proceed as long as he paid his own way. DEA investigators wrote that his excuse “lacks credibility,” and that he had seemingly made “an immediate and deliberate decision” to disobey an order.

“Your intentional disregard of your supervisor's instructions calls into question your reliability as not only a DEA employee, but as a supervisor,” the DEA wrote to Palmeri.

Palmeri’s wife, Laura, also tagged along on the Florida trip. Their first stop was Feb. 25, 2021, at the home of a DEA confidential source, who lived on a farm outside Miami. They brought a bottle of wine to the meeting, and Palmeri helped himself to a glass. 

The source, an informant who leveraged connections with criminals to help the DEA, had worked on cases with Palmeri dating back to 2010, according to records. The source “was not currently providing information regarding any specific pending investigation,” but Palmeri hoped to debrief him about “new intel, trends, knowledge, regarding money-laundering, drug trafficking, crypto, etc. that he may provide.”

Palmeri brought another DEA agent along for the meeting, documents show, but that agent was not fluent in Spanish and could not follow the conversation. Nobody took notes.

While Palmeri and his source discussed DEA business, their wives “sat at the far end of the picnic table engaged in their own conversation.”

Palmeri later acknowledged, according to one document, that the presence of his wife at the source meeting “was not optimal.”

“The meeting had the appearance of a social interaction,” DEA investigators wrote, “and there was no contemporaneous official DEA documentation concerning the substance of this debrief, both of which violate DEA policy.”

The agent who accompanied Palmeri later returned with a fluent Spanish speaker to meet the source again and officially “memorialize the conversation” with DEA paperwork. But that didn’t happen until nearly two months later—after Palmeri had come under scrutiny.

After the meeting at the source’s farm, Palmeri and his wife drove to the home of a defense attorney named David Macey in the Florida Keys, where they stayed for two nights. Palmeri said he considered it a personal visit. Documents show he later told investigators that “some DEA-related topics were discussed,” although he felt that Macey “did not have the type of access to Mexico that would have been useful to DEA.”

“I hadn't had a case with David Macey since 2013,” Palmeri told VICE News. “We had no cases going on. There was nothing going on between us as far as active cases, potential cases, nothing. And so the relationship would have morphed into friendship. There's nothing nefarious about it. We weren't making grand plans on DEA topics.”

Macey did not respond to requests for comment.

Palmeri said at one point he and Macey were smoking cigars together when the subject of Palmeri’s child support case in New York came up. His oldest daughter had recently turned 23 and graduated from college, Palmeri explained, and he was in the process of trying to stop the payments since she was now an adult. Palmeri was handling the matter himself but struggling to make headway. Macey offered to help.

Palmeri recalled Macey telling him: “Send me the stuff, I’ll look at it, and I'll tell you what to write.” 

Later, Palmeri said, he paid Macey $1,000 for his services “because I didn't want the appearance of a conflict.”

Palmeri’s meetings in Florida have come under the most scrutiny since his departure from the DEA, partly due to the fact that other DEA agents have recently faced criminal charges for allegedly taking payments from defense lawyers in exchange for sensitive information. 

While Palmeri has not been accused of that type of wrongdoing, DEA sources said he should have known about the potential appearance of impropriety.

“You don’t talk to a fucking defense attorney, never,” one source said. “The only time is with the presence of a U.S. Attorney you're working an investigation with, and even then you give heads up and ask if it’s OK. It’s so out of bounds what he did, there’s no way anyone can articulate it.”

After leaving Macey’s home in the Keys, Palmeri and his wife returned to Miami for another meeting. Their host was Ruben Oliva, a high-powered defense attorney who had represented a Colombian cartel leader who Palmeri had helped investigate.

Oliva also brought his wife along, and the group of four dined at a restaurant called Tutto Pasta. Oliva recalled it as nothing fancy, and sent an AmEx receipt of the tab for $286.52. 

Oliva told VICE News that he and Palmeri discussed the decision to invite senior Mexican officials to his birthday party following the Cienfuegos arrest the previous October. The birthday invite was an unorthodox but effective way for Palmeri to rebuild trust, Oliva said.

“That's how you do things in Mexico,” Oliva said. “That's how you mend fences.” 

After Palmeri came under investigation for the meeting, he disclosed that his wife, who he met while working for the DEA in Guadalajara, had a financial relationship with Oliva, doing part-time translation work at his law firm. Oliva said the work was minimal, totaling less than $2,000 per year in payments for work unrelated to cases that involved Palmeri.

Oliva provided an email to VICE News from Palmeri’s wife saying her husband had consulted the DEA’s Ethics & Standards of Conduct Unit about the arrangement. The advice, which records show was requested after the Miami meeting, said he should recuse himself from any cases where his wife’s work intersects with cases “under the jurisdiction of your region.”

The letter included an end note that the opinion “does not address any conflicts that might arise with those attorneys with whom you have developed a personal relationship.”

Oliva first crossed paths with Palmeri in the case of Enrique Calle Serna, alias Comba, leader of the violent Rastrojos gang in Colombia. A specialist in “cooperators,” drug traffickers who agree to plead guilty and help U.S. authorities in exchange for a reduced sentence, Oliva had brokered a deal where Comba turned himself in and agreed to help dismantle his entire organization. Comba forfeited over $450 million combined to the U.S. and Colombian governments, with Palmeri working the money laundering aspects of the case for the DEA.

“He would go and meet with my guy every day,” Oliva recalled. “My guy paid a lot of money. And not voluntarily, I might add. One prosecutor described it this way, ‘Wow, with Comba, we really scraped the cookie dough out of that bowl.’ What he (Palmeri) did is unprecedented.”

Oliva said after spending hours with Palmeri, along with other agents and federal prosecutors, sitting together with Comba during debriefings, they kept in touch and remained cordial. By the time they met for their meal in 2021, Oliva said, Comba had already served his time. Oliva said he and his client had nothing to gain from Palmeri, and so he felt the meeting was perfectly proper. It was business as usual, with Oliva offering support from other cooperator clients should Palmeri need help in Mexico.

“If you ever need anything, they might be able to help you, they're an asset,” Oliva said, recalling the conversation. “Feel free to call me. I'm happy to help you. Happy to help the feds. That's it.”

While Palmeri insisted the meal with Oliva was “a social visit” on his own time, records show he also argued that he was there trying to “drum up business” for the DEA. 

“If someone has ill motives, then it could be bad,” Palmeri said. “But there's no ill motives here. This is all for the benefit of the government. The government didn't lose. This wasn't any benefit to Nick Palmeri.”

In early March 2021, shortly after Palmeri returned from Florida, he messaged Donahue again to request permission to travel from Mexico City to Guadalajara. When Donahue refused to allow the trip—which was unusual given that it was within Palmeri’s territory in Mexico—there was a blow up between the two men. 

“The straw that broke the camel’s back was [Palmeri] told his boss to go fuck himself,” one source said.

Palmeri later told DEA investigators he “believed the denial was personal.” Documents show Donahue told DEA investigators that Palmeri “used vulgar language and insults,” including telling Donahue that he was "being such an asshole." Palmeri also allegedly told Donahue to "do [his] fucking job," to "go fuck [himself]," according to documents.

Palmeri later admitted to DEA investigators that his language was “unprofessional,” and that he had "never spoken to a person like that” before in his life. Palmeri also claimed, according to one document, that Donahue had provided “misrepresentations” of curse words used on their call “to falsely intensify the charge.”

On March 25, 2021, Donahue sent a letter to the DEA’s Office of Professional Responsibility raising concerns about Palmeri, accusing him of “poor judgment, insubordination, conduct unbecoming, and failure to follow directions.” 

“As the highest ranking DEA representative in Mexico, RD Palmeri is a symbol of US federal law enforcement,” Donahue wrote. “The appearance of impropriety can have a significant impact on DEA’s reputation with our foreign and domestic law enforcement counterparts.”

The DEA launched an internal investigation and in June 2021 Palmeri was reassigned from Mexico City to Washington, D.C., and replaced with an acting regional director. Palmeri was being “temporarily” reassigned from Mexico, according to an email sent to DEA employees, to serve as the “associate deputy assistant administrator in the Office of Special Intelligence to lead and direct increased support to investigative efforts in Mexico and other foreign regions.” 

Sources say Palmeri received a per diem from the government that allowed him to stay at the Ritz Carlton while working in Washington. Multiple people said Palmeri kept his security clearance, and one person said his  job was “in the most secure facility DEA has, with the most sensitive information available.” 

Asked about his position after leaving Mexico, Palmeri told VICE News: “My integrity was never really questioned.”

As for the Ritz, Palmeri said it was within his authorized budget: “I never requested more than a penny over the government rate”

At the same time, Palmeri was under investigation by the Justice Department’s Office of the Inspector General. Part of that case focused on money used to fund the DEA’s Sensitive Investigative Unit (SIU) in Mexico, in which Mexican federal police officers undergo special vetting and training in the U.S. and then work closely with the DEA. The program has been plagued by scandals, including an intelligence leak that led to a massacre in 2011, and more recent reports of corruption and dysfunction.

In the report summary released earlier this year, the Office of the Inspector General reported finding “indications that multiple offices within the region under the regional director’s supervision were inappropriately requesting and documenting the use of SIU funds.”

"Donahue went out, Palmeri went in, there was a lack of oversight of the SIU,” one source said. “I don’t want to use the word misappropriation of funds, but it was certainly a violation of DEA policy relating to expenditures of SIU money."

As the allegations piled up, the DEA decided it was time to part ways with Palmeri. On Jan. 14, 2022, the DEA sent a “proposed removal action” listing the reasons why the agency planned to fire him: “For failure to follow instructions, lack of candor, conduct unbecoming, and poor judgment.” 

“Throughout the OPR investigation you attempted to minimize your conduct,” the DEA told Palmeri. On his meetings in Florida, the agency wrote: “At a minimum, this commingling of personal and professional matters with defense attorneys could give rise to an appearance of impropriety… Your failure to understand this raises questions concerning your judgment.”

Palmeri disputed the charges, but after learning that he would be fired, he opted for “involuntary retirement” from the DEA on March 14, 2022. The move allowed him to receive a standard retirement package based on his salary as a senior DEA official.

“He gets a golden parachute,” one source said. “The person who ultimately pays the price is Matt [Donahue] for whistleblowing.”

Palmeri’s lawyer said his client was within his rights to retire rather than be fired: “There was nothing special about his retirement,” Kirkpatrick said. “No golden parachute or the agency —wink wink—said, ‘Go ahead and retire so we don't have to deal with this.’ If that was the case, we would have negotiated something more significant.” 

Palmeri is said to be close with Ray Donovan, a former special agent in charge of the DEA’s New York Office. Donovan played an important role in the capture of Joaquín “El Chapo” Guzmán, and later served as the DEA’s chief of operations, and remains with the agency.

Donovan and other veterans of the DEA’s New York office are said to look out for each other. 

“Within the DEA, there are cliques and in senior management when they come up, they bring their people in, like in any corporation,” one source explained. “There is a New York mafia in the DEA. You take care of your boys from New York.”

Asked about the so-called “New York Mafia,” Palmeri told VICE News: “The treatment I received was for merit, not for any personal relationship.” If anything, he said, DEA officials from New York “were less inclined to help because of the perception that one might have, it worked in the opposite effect.”

But another source described a sort of patronage system in the upper ranks of the DEA.

“These are all guys that worked together or worked cases together and have continuing relationships and got to the upper levels,” the person said “And as they get higher and higher, they think no rules apply. ”

For those who were fed up with Palmeri in Mexico, the fact that he was able to retire rather than be fired remains galling.

“He violated DEA policy, laws, and common sense,” one source said. “The shit he did was just egregious.”

Another source called out Donovan specifically for enabling Palmeri’s behavior.  (Donovan was not Palmeri’s direct supervisor.)

“He failed to supervise the guy,” the source said. “He (Palmeri) transferred to Mexico and fucked up so bad that within a year he had to resign. That kind of conduct is ingrained. It means you’ve gotten away with bullshit before.”

The DEA declined to make Donovan available for an interview with VICE News.

Oliva, one of the attorneys who met with Palmeri, blamed Donahue for holding a grudge and trying to get Palmeri fired.

“Nick did his job and he did it really well,” Oliva said. “He was barely there [in Mexico] before they pulled him out. It was because this guy Matt Donahue declared war on him.”

Donahue, sources say, also opted to retire from the DEA rather than commit to a mandatory reassignment late in his career and on short notice from DEA headquarters to Bogotá. He now works in the private sector, according to LinkedIn.

According to a document reviewed by VICE News, Donahue has filed a “whistleblowing action” related to Palmeri. Donahue is also said to be “the target of several EEO complaints,” a reference to the Equal Employment Opportunity Act, which protects against workplace discrimination.  

Multiple sources told VICE News they were happy to see Palmeri gone, even if it meant Donahue was also forced out in the process.

“What message did that send?” one source asked. “It shows a leader is breaking the rules. And if a leader is breaking rules, everyone can break the rules.”

Follow Keegan Hamilton on Twitter: @keegan_hamilton

Nathaniel Janowitz and Miguel Fernández-Flores contributed reporting.

Correction: A previous version of this story said the DEA's Ray Donovan was recently in the courtroom for the Genaro García Luna trial. This was not the case.