Luis Picado’s mother remembers the day her son thought he had won the lottery. He came home to their tin-roofed cinder-block house in a Managua, Nicaragua, slum and said he’d found a way to escape poverty and start a new life in the United States.

An American man had promised to give Picado, a 23-year-old high school dropout and construction worker, a job and an apartment in New York if he’d donate one of his kidneys. He jumped at the deal, his mother says.

Three weeks later, in May 2009, Picado came out of surgery at Managua’s Military Hospital, bleeding internally from the artery that doctors had severed to remove his kidney, according to medical records. His mother, Elisabeth Tercero, got on her knees next to her son’s bed in the recovery room and prayed.

“I told my boy not to worry, that I would take care of him,” Tercero, 49, says. “But it was too late.” Picado bled to death as doctors tried to save him, according to a coroner’s report. “He was always chasing the American dream,” she said, “and finally, it cost him his life.”

Matthew Ryan, the American man, suffered a similar fate. Ryan, a 68-year-old retired bus company supervisor in New York, died two months after receiving Picado’s kidney in the same hospital.

Nicaraguan post-mortem reports cited the transplant as a cause of death for both men. Prosecutors in Managua are investigating whether anyone broke a Nicaraguan law that prohibits paying a donor for an organ.

Growing, illicit market

The two men were participants in a growing and illicit market for organ transplants that spans the globe. Every year, about 5,000 gravely ill people from countries including the United States, Israel and Saudi Arabia pay others to donate an organ, says Francis Delmonico, a Harvard Medical School professor. The practice is illegal in every country except Iran, Delmonico says.

Affluent, often desperately ill patients travel to countries such as Egypt, Peru and the Philippines, where poor people sell them their organs. In Latin America, the transplants are usually arranged by unlicensed brokers. They’re performed — for fees — by accredited surgeons, some of whom have trained at the world’s leading medical schools.

The global demand for organs far exceeds the supply. The U.S. waiting list for organs has 110,693 people, and fewer than 15,000 donors are found annually.

Americans who go abroad for illicit transplants can contract infections or HIV from unhealthy donors, posing a public health threat when they return, Delmonico says.

“With all the anxiety in getting a transplant, they exploit the patient,” says Delmonico, who is president-elect of the Montreal-based Transplantation Society, which lobbies governments to crack down on trafficking. “It’s big money.”

The illegal organ trade is the ugly side of the otherwise legal medical tourism industry, in which people travel to other countries for cut-rate hip replacements, tummy tucks and gastric bypasses. The legitimate medical procedures generated about $100 billion in revenue in 2010, according to Deloitte Touche Tohmatsu.

For decades, wealthy Brazilians, Mexicans and Saudis have gone to U.S. and European hospitals for medical care they couldn’t get at home. In the past decade, that pattern has changed. Hospitals from Puerto Vallarta, Mexico, to Medellin, Colombia, now lure middle-class Americans with promises of high-quality care at a fraction of what it would cost at home.

Medical tourism company MedToGo, based in Tempe, Ariz., says it can arrange kidney transplants in Mexico and Costa Rica for about $50,000, a fifth of the U.S. cost.

Preying on the poor

In the illegal organ trade, brokers scour the world’s slums, preying on the poor with promises of easy money and little risk in exchange for a kidney. Inside hospitals, people are injured or killed by botched surgery as doctors place money above ethics, criminal investigators say.

In Colombia, 321 foreigners got transplants from 2005 to 2010, according to the country’s National Health Institute. Juan Lopez, a doctor who oversees Colombia’s organ transplant system as director of the NHI, says many of these surgeries are driven by profit for hospitals, doctors and brokers.

“I don’t want my country to be a mecca for transplant tourism,” Lopez says. He’s gone to court to try to stop 23 organ transplants for foreigners since 2010.

In Peru, Rafael Peraldo, a taxi driver who’s under investigation for being an organ broker, has plied Lima’s dusty slums since at least 2005, according to five people who said in interviews that they sold kidneys to him.

Peraldo paid as little as $5,000, the five people say. Patients who bought these organs paid as much as $150,000, prosecutors have found.

“The poor have become a spare-parts bank for the well-to-do,” says University of California, Berkeley, anthropologist Nancy Scheper-Hughes, who specializes in organ trafficking.

The Peruvian National Prosecutor’s Office is investigating 61 transplants in seven of Lima’s top hospitals since 2004, documents in the case show. Peraldo is one of 150 brokers, doctors, nurses and others under investigation, says Jesus Asencios, the lead prosecutor.

Peraldo says that he’s done nothing wrong; he says he won’t say more until the investigation is completed.

Because people with kidney failure are in poor health, a transplant is never a guaranteed cure. Still, legal transplants have a high probability of success. More than 75 percent of the recipients of kidney transplants in the United States live for more than 10 years, according to the National Institutes of Health.

Donors usually do fine; they can live a normal life span with just one of their two kidneys. In the illicit trade, by contrast, perils abound for all participants.

Organs removed by surgeons in Peru from 2004 to 2010 went to ill men and women from the United States, Chile, Mexico, Spain and Venezuela, according to hospital records and prosecutors’ interviews with donors and doctors.

One patient was Oscar Soberon, the wealthy founder of a Mexico City computer systems company. After about a year of dialysis sessions to survive kidney failure, Soberon negotiated a transplant at a Lima hospital with Peruvian doctor Christian Miranda for $125,000, Soberon told prosecutors before he died.

On Nov. 1, 2009, doctors transplanted a kidney from a baker into Soberon. Eleven weeks after surgery, Soberon was dead, his body ravaged by infection, his medical records show.

The kidney is a fist-sized organ that continuously filters blood to clear waste from the body. Toxins are flushed into the bladder, which removes them. When a kidney fails, doctors use dialysis to circulate and clean blood. A patient with kidney failure will die quickly without dialysis or a transplant.

In legal transplants, a kidney patient typically turns to relatives willing to donate one of their kidneys, or goes onto a waiting list if no one volunteers. A hospital screens potential donors, reviewing their health records, blood type and body tissue to ensure they’re medically compatible.

The illicit organ trade is dangerous for the donor and patient because criminals take shortcuts, such as accepting organs from people who are sick and wouldn’t be approved by U.S. hospitals, says Gabriel Danovitch, director of the kidney and pancreas transplant program at the University of California, Los Angeles.

“It’s a filthy business in the same subcategory as the sex trade and child pornography,” Danovitch says. “That is why it has to be stopped.”

A desperate search

It’s hard to stop critically ill people who are in a race against death from seeking solutions outside the official transplant system, especially if they have the money and connections to do something about it.

Ryan, the retired New York bus line supervisor, used his son-in-law in Managua to set up a deal for a kidney, says Picado’s boss, who overheard the offer.

In Managua, Ryan had dialysis sessions at Vivian Pellas Metropolitan Hospital under the care of kidney disease specialist Jose Tenorio. A few days after he started dialysis, in March 2009, Ryan asked the doctor for a transplant and introduced two men who said they were willing to donate a kidney, according to Tenorio’s statement to investigators.

Tenorio, who trained in nephrology at Lapeyronie Hospital in Montpellier, France, told Ryan he recommended against a transplant because of his age, according to a police statement. Ryan asked for a second opinion, so Tenorio asked fellow nephrologist Orlando Granera, educated at the National Autonomous University of Mexico, to look at Ryan.

Specialists such as Tenorio and Granera earn about $500 a month at a public hospital in Nicaragua. Ryan had agreed to pay $20,000 in fees to the medical team for the transplant, Hernandez says. The doctors declined to say how much they stood to earn. Both told police they weren’t paid anything after Ryan died.

Granera, 37, arranged to do the transplant at Military Hospital, which consists of a pair of long, mildew-stained buildings with cracked windows. Granera told police he asked Picado to sign a notarized statement saying he was volunteering to give his kidney at no cost.

“I clarify that I am doing it for humanity and without any profit,” the May 23, 2009, statement says.

Granera says he wouldn’t have taken the case had he known Picado was offered money. “They said it was strictly based on their friendship,” he says.

Luis Callejas, a Nicaraguan congressman and a surgeon trained at Tulane University, doesn’t believe Picado agreed to donate an organ for free.

“An American doesn’t meet a stranger in Nicaragua and get an organ just because they like each other,” he says.

The Picado case led the Nicaraguan Ministry of Health to start writing tougher rules on transplants, and Congress will decide whether to approve them. It’s illegal in Nicaragua to sell an organ, but the law is vague and bans transplants only if there’s no proof of the donor’s consent, says Norwin Solano, a human rights lawyer in Managua.

Different laws

Brazil, Colombia, Ecuador and Peru have passed laws restricting or banning organ donations by people who aren’t related to the patient.

Since Nicaragua permits organ transplants for foreigners, Picado and Ryan were wheeled into operating room J-5 at the end of a red-tiled corridor in the Military Hospital in May 2009. Granera, who isn’t a surgeon, chose Javier Melendez — a surgeon who had done 10 kidney transplants and had trained in urology at National Autonomous University — to remove Picado’s kidney.

Melendez, 37, told police he severed the left renal artery, which leads from the kidney to the heart, and stitched it shut with silk sutures. Then he severed the ureter, which connects the kidney to the bladder, and removed the organ, the doctor told police on July 24, 2009.

Melendez handed the kidney to Jose Borgen, a urologist and surgeon who had also studied at National Autonomous University. Borgen later told police he transplanted the kidney into Ryan without complications.

Less than an hour after the surgery, Picado’s blood pressure plummeted and he stopped breathing, a coroner’s report says. Blood surged from the severed artery, and doctors could not rescue him.

Within days, Ryan’s body rejected Picado’s kidney, his immune system attacking it as if it were a virus. Surgeons removed it. Ryan died Aug. 8, 2009.

Nicaragua’s health ministry found in February 2010 that the hospital had violated regulations by failing to examine Picado properly before surgery.

In Peru, Latin America’s fifth most populous country, prosecutors are conducting a much more extensive investigation. They’re looking at 61 cases of suspicious transplants and are targeting the role of brokers.

It’s in the slums of Lima, the capital, where brokers have found most of their recruits. Brokers enlist people like Jose Levano, an unemployed medical laboratory technician, and his wife, Vilma Bramon. They live with one of their four children and Levano’s elderly mother in a derelict home in Ancon, a dusty coastal town on the northern edge of Lima. They have no running water.

In 2005, Levano, 45, placed an ad in a local newspaper offering to sell a kidney. Peraldo, the taxi driver, responded. Peraldo paid Levano $5,000, and surgeons at Clinica Internacional in Lima completed the transplant without complications.

By late 2007, Levano and Bramon were broke. Levano called Peraldo again, saying his wife would sell a kidney so the family could get some money. Peraldo took Bramon to a medical testing laboratory in Lima that’s co-owned by Peraldo’s friend Victor Salas, a pathologist, Bramon says.

Days later, Peraldo brought Bramon to Christian Miranda, a nephrologist in Lima’s San Isidro neighborhood, where mansions line the streets.

“He told me I was a perfect candidate to be a donor and nothing would happen to me,” Bramon says.

In January 2008, Miranda had Bramon admitted to San Felipe Hospital, her medical records show. As she settled into a private room, Peraldo gave her $6,000 in cash, Bramon says.

The next day, Jose Arias, a transplant surgeon on the hospital’s staff, removed her kidney. The organ was transplanted into a Spanish man, hospital records say.

Immediately after her surgery, Bramon was moved to an intensive care bed, suffering from high fever, nausea and a urinary tract blockage, she says.

“I thought I was going to die,” she says.

Bramon says she has been in pain ever since. At night, she can’t lie on her left side because it hurts too much. She’s visited four doctors, had six abdominal scans and tried five painkillers. She spent all the cash she got for her kidney on medication and doctors.

In January this year, Bramon allowed a reporter to accompany her on a visit to Wilfredo Luna, a cardiovascular surgeon in Lima. She told the doctor that her pain was overwhelming. Luna, 50, examined images of Bramon’s abdomen and shook his head. The malady was caused by a poorly made incision during the transplant, which slashed nerves, he said.

“It cannot be reversed,” he told her.

Arias says in his office at San Felipe that he’s been paid $4,000 to $5,000 for each of the four transplants he’s done. All of his donors, as required by law, said they hadn’t accepted money.

‘What can I do?’

“If these people are up to something but have all the correct papers, what can I do?” Arias says. Bramon says she signed a sworn statement saying she wasn’t compensated for her kidney because Peraldo said that was the only way she’d get paid.

Miranda, the nephrologist, told investigators he didn’t know anything about organ trafficking in Peru.

“I don’t belong to or know of any illicit organization,” Miranda said in a Jan. 14, 2010, statement to police.

Peruvian prosecutors started their criminal investigation of Peraldo and his associates in 2009. Peraldo said he was a taxi driver who knew nothing about donors paying for kidneys. Salas, who says he screens patients for transplants, told investigators he didn’t know anything about organ trafficking.

Oscar Soberon, founder of Mexico City-based computer systems company S&C Constructores de Sistemas, had been suffering from kidney failure since 2008. He’d heard about the organ ring in Peru at his country club, his son, Oscar Soberon Jr., says.

In September 2009, the senior Soberon called Miranda in Lima, and the doctor promised him a transplant with a donated kidney for $125,000, Soberon told police after the transplant.

“He told me that would cover all the costs for me and the person who donated the kidney,” Soberon said.

Peraldo called Santiago Montero, a 34-year-old baker in Lima, according to a statement Montero gave police.

Surgeons removed Montero’s left kidney and transplanted it into Soberon. As Montero recovered from the surgery, Peraldo stopped by.

“He gave me $7,000 in U.S. dollars,” Montero told investigators.

Six weeks after the surgery, Soberon, 56, began complaining of severe pain. His body rejected the transplanted kidney, his medical records show. On Dec. 13, doctors removed it. Within 10 days, Soberon had developed a fever and pneumonia. He died in Mexico City, his death certificate says.

“I don’t think this business has anything to do with medicine,” Oscar Soberon Jr. says. “It’s all about money.”

Miranda and Peraldo told investigators they hadn’t paid Montero for a kidney. “It’s false that I said there was a donor or spoke of economic figures,” Miranda told police.

Conflicting statements are typical of the organ transplant trade, making it hard to curb illegal behavior, Delmonico says. “The problem is that you have so many people who are desperate for a transplant and willing to pay for one and so many poor people who need the money and can be exploited,” he says.

The full version of this article appears in the June edition of Bloomberg Markets magazine.