IRONCLAD DRUG CASE DEVELOPS A CRACK

Customs' chief informant could get $10 million

LOS ANGELES -- As federal prosecutors went to trial here against a group of
Mexican bankers and alleged drug traffickers implicated in the biggest
investigation ever into the laundering of illegal drug money, their evidence
seemed overwhelming.

Most of the suspects had been caught on hidden cameras as they negotiated
with undercover U.S. Customs Service agents about how to hide millions of
dollars in illicit funds. A half-dozen defendants had pleaded guilty rather
than face a jury, and several of them agreed to testify against their former
associates.

But now a crack has appeared in the government's case as defense lawyers
have focused on a mysterious Colombian-born informer who was at the center
of the undercover operation -- and who could receive almost $10 million for
his help.

It remains to be seen whether the prosecution will be weakened seriously by
disclosures about the informer, a former emerald dealer named Fred Mendoza.
But the trial has already focused new attention on how law enforcement
agencies use informants in the money laundering investigations that have
become a central part of the fight against the drug trade.

``If the trial hinged on his testimony, we might be in big trouble,'' one
senior Customs official said of Mendoza. ``But without this guy or somebody
else like him, we never would have made a case like this in the first
place.''

As Mendoza prepared to begin testifying last week against a first group of
six Mexican defendants, one Customs official acknowledged in court that the
informer's earnings could reach perhaps 10 percent of the $101 million that
the government has frozen or seized in the case. And even then, law
enforcement officials said, Mendoza would not become the most highly paid
informer federal law enforcement agencies have ever employed.

What may be more damaging to Mendoza's credibility, though, are allegations
disclosed to the defense by prosecutors indicating that their star witness
may have been considerably more involved in drug trafficking than at least
most of the government officials involved in the case had known.