BRAZIL DRUG LORD CORNERED AND DANGEROUS

Crime: Before Fleeing Into The Jungle, Boss Showed Entrepreneurial Vision,
Cunning--And Cruelty.

RIO DE JANEIRO--Weakened by bullet wounds, his empire crumbling, Luiz
Fernando da Costa has spent weeks fleeing a military strike force in the
jungles of eastern Colombia.

But the Brazilian drug lord, nicknamed Fernandinho Beira Mar (Freddy
Seashore) for the coastal slum near Rio where he was born, is still dangerous.

During the years when he became a new breed of crime boss, forging an
unprecedented alliance with Colombian guerrillas, the only weapon Da Costa
needed was a telephone. He allegedly used just that to supervise the
torture-slaying here of a young man who had a romance with one of the drug
lord's girlfriends.

The excruciating 45-minute episode was recorded by a police wiretap: The
victim moans as his tormentors mutilate him and make him eat one of his
ears. Giving orders from a hide-out in Paraguay, a voice that police
identify as Da Costa's taunts him: "That's the ear--is it yummy. Did they
cut off both your feet already too. Wow, and how about those little toes."

Such sadism does not, in itself, distinguish the drug lord from other
youthful kingpins of the Rio favelas, or slums, who rise to notoriety with
machine guns blazing but don't stray far from their hillside strongholds
before dying or landing behind bars.

In contrast, the restless Da Costa has shown entrepreneurial vision. At a
time when South American cartels gave way to smaller organizations, his
empire stretched across the continent and overseas. He represents a new
generation of kingpins in Brazil, whose drug trade has mushroomed because
of the nation's giant economy, strategic geography and lawlessness.

Da Costa, 35, is a prime target of Colombian and U.S. law enforcement
because he allegedly ran guns to leftist guerrillas of the Revolutionary
Armed Forces of Colombia, or FARC, in exchange for cocaine. He appears to
be linked to a major guns-for-drugs deal between the FARC and Russian
gangsters looking to unload arms in Latin America and peddle cocaine in Europe.

"Fernandinho is very intelligent," said Ronaldo Urbano, deputy chief of the
anti-drug division of Brazil's federal police. "He made contact with other
networks that are not easy to enter, like the guerrillas. What is worrisome
is the magnitude that his organization attained because of his spirit of
leadership."

Da Costa has been singled out as a textbook case in a crackdown on the
guns-and-drugs racket that makes the FARC a threat to Colombia and the
region. He has spent at least a year in the wilds near Colombia's border
with Brazil, allegedly protected by the FARC's suspected point man in the
racket, a regional guerrilla commander named Tomas Medina, according to
Brazilian investigators.

Wife, Pilot And Henchman Arrested

Colombian troops almost captured Da Costa last month, wounding him three
times in a shootout at a farm, according to authorities. A doctor was
arrested on his way into the jungle to treat him; the drug lord sent
emissaries to negotiate a possible surrender last week. But Brazilian
police think the offer could be a ruse.

The Colombian operation, based in the remote town of Barrancominas,
resulted in the arrests last month of Da Costa's wife, his top pilot and
another henchman. Troops also found evidence indicating the dimensions of
the guns-for-drugs deal, according to Urbano: rifles, crates and parachute
remnants from an illicit arms shipment traced to Peru's fugitive former spy
chief, Vladimiro Montesinos.

Montesinos was a suspected intermediary between the FARC and Russian
organized crime, according to U.S. officials. In 1999, the ex-spy chief's
Peruvian operatives airdropped thousands of AK-47 assault rifles to the
FARC from Russian cargo planes piloted by Russian and Ukrainian crews,
according to investigators.

Da Costa, meanwhile, ran guns to the FARC through established smuggling
routes in hard-to-police areas of Suriname, Brazil and Paraguay, trading
each rifle for 2 kilos of cocaine, according to Urbano. After dropping off
military equipment, the Brazilian's planes picked up cocaine bound for
destinations including the Netherlands and Ghana, according to investigators.

The traffickers used a satellite navigational system to coordinate airdrops
of cocaine into the ocean near the Brazilian state of Espirito Santo, where
small boats ferried the bales to ships, according to an investigative
commission of the Brazilian Congress.

"Beira Mar today furnishes drugs for the United States and Europe. We are
convinced that Luiz Fernando da Costa represents for Brazil and Latin
America a new Pablo Escobar," the commission concluded in a report in
November, referring to the slain Colombian drug lord.

Superlatives should be handled with care; the murky history of the drug war
suggests that kingpins who get a lot of headlines have often already begun
their decline.

In some ways, however, Fernandinho does recall narco-barons such as Escobar
who were simultaneously perverse monsters and staunch family men. Brazilian
journalists have grown accustomed to phone calls from Da Costa in which he
rails against authorities for jailing two of his sisters on charges of
money laundering.

"He's a pop star," said Marcia Velasco, a prosecutor here. "He's always
calling newspapers. He's very vain."

Although he insists that his relatives are innocent, Da Costa has admitted
publicly to killing people, according to published accounts. In January, he
called the Paraguayan newspaper ABC Color and gave a long interview about
the slayings of two smugglers based at the Brazil-Paraguay border, former
allies whom he accused of betraying his right-hand man to police.

"You can write that I ordered the killings of Mauro and Ramon Morel," Da
Costa declared, according to the article. He warned members of the Morel
clan that "they can't fight a war with me. They are like ants to me, and I
am an elephant for them. I'll crush them like a steamroller."

The drug lord sounds smart, articulate and manipulative on the phone,
according to Renato Homem, press chief for Rio's state police and a former
crime reporter who has interviewed him.

Da Costa has an elementary school education. His mother worked as a motel
maid when he was growing up in the Beira Mar favela in Duque de Caxias, an
industrial zone north of Rio. Da Costa doesn't smoke, drink, gamble or use
drugs, according to Velasco. He was first arrested for robbery while doing
his military service.

Doing Business With All The Drug Rings

Taking control of the local drug traffic, Da Costa followed the path of
small-time gangsters who rule the tightknit, socially isolated slums,
authorities say. He ordered residents of the Beira Mar community of 1,300
families to paint their houses the same color. He financed a radio station
whose announcers sung his praises.

Da Costa didn't align himself with any of the criminal rings that fight for
domination of Rio's 650 favelas. Instead, he did business with them all,
selling bulk quantities of marijuana grown in Paraguay, police said.

As business boomed, Da Costa decided to go to the source. In Paraguay, he
formed partnerships with the Morels and others who moved all manner of
contraband from border towns such as Ciudad del Este and Capitan Bado. He
smuggled marijuana, cocaine and guns into Rio and at least four other states.

Da Costa was arrested in 1996 in Minas Gerais state. But he soon
escaped--allegedly paying a hefty bribe--and took refuge in Paraguay, where
he swaggered through the streets in defiance of police, according to law
enforcement officials.

When Velasco began investigating him, she realized the vast power of her
prey. "It opened up the map of Brazil: We had to investigate everything,"
said Velasco, 35, who lives under armed guard.

The prosecutor became the drug lord's obsession. U.S. agents warned her
that telephone intercepts had picked up conversations in which Da Costa
ordered henchmen to assassinate her, she said.

Da Costa's talent for international deal-making may be what brings him down.

"I think it is a matter of days before he is captured," said Josias
Quintal, the public security chief in Rio state. Quintal recalled the
tape-recorded torture slaying: The victim, Michel Anderson do Nascimento,
21, wasn't a criminal; he simply had an affair with Da Costa's girlfriend.

The woman was also killed by gangsters, according to the congressional
report, which says the killers then displayed her corpse in a wheelbarrow
that was carted around the favela.

"I have been a policeman for 30 years," Quintal said. "And that tape is the
most terrible thing I have ever encountered."