As is the case with most things cute and furry, Senor Pepe is, in fact, pure evil. Debates rage among conspiracy buffs about whether or not he is an alien himself or simply a traitorous Earthling in charge of preparing the world for colonization. One thing is for sure, however: each and every chalupa you eat is one more step toward armageddon.
Senor Pepe first appears in Episode 9, where he and Grizzled Old Smoking Dude plot the destruction of the planet in front of a horrified Muldoon.