Jailed Cocaine Baron Directs Drug Trade From Cell : Mexico: Fax machines, cellular phones and associates on the outside enable Felix Gallardo to keep trafficking.

MEXICO CITY —  The capture of Mexican cocaine baron Miguel Angel Felix Gallardo two years ago elated American officials, who predicted his arrest would have “a significant impact” on drug supplies in the United States. The multimillion-dollar empire of the “godfather” of Mexican traffickers would crumble, they said.

But today, U.S. and Mexican officials concede that Felix Gallardo continues to direct a lucrative cocaine-trafficking business from his jail cell in southern Mexico City. He does so using cellular telephones, fax machines and a small group of henchmen who are free.

Felix Gallardo controls the goings-on in his section of the Southern Prison, much as he once controlled his own properties. His foot soldiers determine who is allowed to enter the area, and armed guards working for the drug lord patrol the periphery of the prison, according to a source in the Mexican attorney general’s office.

“All traffickers know that, if Felix Gallardo is killed, the drug market will diversify,” said the source who asked not to be identified. “Felix Gallardo is running his business from jail. He is still a kingpin. He has a network.”

Other traffickers and Mexican officials have tried to pick away at that network. One of Felix Gallardo’s alleged associates, Rodolfo Sanchez Duarte, was shot to death last November and dumped on the outskirts of Mexico City. Sanchez Duarte’s father, Leopoldo Sanchez Celis, served as governor of Sinaloa, Felix Gallardo’s home base, and stood up for the drug lord at his wedding.

Mexican officials blame the murder on Jesus Hector (El Guero) Palma Salazar, who they said is trying to grab some of Felix Gallardo’s business. “El Guero is small-time compared to Felix Gallardo, but he has an advantage in that he is free,” the source said.

In January, Mexican police captured another Felix Gallardo associate. Clemete Soto Pena was nabbed by Federal Judicial Police in Hermosillo, Sonora, as he left his daughter’s house for dinner with a Mexican customs agent. The agent, sources said, had a personal stash of cocaine in his shirt pocket.

Soto Pena, 47, has his own trafficking organization, as well as helping to manage Felix Gallardo’s, U.S. and Mexican officials said. Since the arrest, the government has confiscated $500 million in assets from Soto Pena in Mexico, including real estate, antique cars and prime bulls worth $59,000 a head.

U.S. officials were pleased over the arrest, as Soto Pena has a record in the United States and is wanted in Colorado in connection with another trafficking case. They believe he may have at least as much money stashed or invested in the United States and may have information about drug laundering operations.

But they also complain that he was treated with kid gloves by apologetic Mexican police, who took him to a Holiday Inn in Hermosillo after his arrest before transferring him to Mexico City.

Mexican officials say Soto Pena moved about 1,100 pounds of cocaine into the United States each month, primarily supplying Texas, Arizona and California. He supervised the arrival of drug flights from Colombia to northern Mexico.

“He would take delivery in Mexico and warehouse it until it went across the border. He may have moved it across the border himself,” said a U.S. official who asked not to be identified.

For the last year, U.S. and Mexican officials have been working together to patrol the border area for the kind of Colombian drug flights that Soto Pena was receiving. Coca, the plant from which cocaine is produced, is not grown in Mexico but is shipped through the country from the highlands of South America on its way to the United States--the world’s largest drug market.

U.S. officials estimate that 300 to 350 tons of South American cocaine passes through Mexico each year. The United States helps track drug flights from South America and has supplied Mexico with nine armed Huey UH-1H helicopters for its Northern Border Task Force to try to intercept the drug flights.

Increasingly, Mexican officials say, traffickers are responding by landing in Guatemala, trucking the drugs over the border and flying internally from southern Mexico to the northern border. That way, the pilots can avoid radar and even file legitimate flight plans.

It is unclear to Mexican and American drug officials how much of Soto Pena’s business was his own and how much was Felix Gallardo’s. They know that Soto Pena visited Felix Gallardo in jail at least twice and that the two were partners, along with jailed drug lord Raphael Caro Quintero, in a trucking company called Tri Pacifico.

Mexican officials insist that they went after Soto Pena in an effort to break up Felix Gallardo’s network. “His network is still intact. He has cellular telephones, fax, everything. And we can’t eavesdrop on the telephones,” said the source in the attorney general’s office.

Asked why officials couldn’t control him in jail, he shrugged and said the prison is under the control of Mexico City, not the federal government.

A high-ranking city official, who also declined to be identified, denied that Felix Gallardo was operating out of the prison and defended jail officials.

“No prison in the world is without its crime organizations. What’s important is that he hasn’t escaped. No important trafficker has escaped. It is very probable that he has protection, like in all jails, but he’s there. If he had bought the director of prisons, he’d be gone,” the official said.

When Felix Gallardo, then 43, was captured in April, 1989, authorities said he was trafficking four tons of cocaine per month to the United States, primarily to the West Coast. He had built up a multibillion-dollar operation over 15 years with the protection of corrupt Mexican law enforcement officials. He also has been implicated in the 1985 kidnap-torture death of Enrique S. Camarena, a Guadalajara-based agent with the U.S. Drug Enforcement Administration.

Sources say that Felix Gallardo still depends on his brother, Jose Luis, and a couple of trusted associates to run his business on the outside. They are uncertain how much cocaine he is trafficking to the United States.

DEA officials along the border in the United States said there was no decrease in supply nor has there been one since Soto Pena was jailed.

“Felix Gallardo wants to keep control of cocaine trafficking to the United States, without too many hands and too many mouths that could talk,” said a Mexican official.