DEFENSE SAYS U.S. PAID FOR PERJURY IN DRUG TRIAL

The Mexican and United States governments collaborated on a plan to pay $3
million to capture drug kingpin Juan Garcia Abrego -- then hid the details
from the jury that convicted him in a 1996 trial hailed as a triumph for
the bi-national drug effort, according to court documents.

Attorneys for Garcia Abrego filed a motion Friday asking for a new trial on
grounds that federal prosecutors encouraged perjury from star witness
Carlos Resendez Bertolocci and hid crucial evidence about financial
agreements they made with him prior to his testimony.

The allegations are based on statements by Resendez and Mexican attorney
Raquenel Villanueva Fraustro, who said she brokered a deal with U.S.
prosecutors in which Resendez agreed to lie in exchange for millions of
dollars in payments by the U.S. government.

The deal soured when the United States paid Resendez only $1 million --
only a part of what he was allegedly promised, the motion said. It said the
Mexican government paid $1 million in U.S. currency to Resendez's former
mistress, Noema Quintanilla, who attorneys said actually arranged Garcia
Abrego's capture at a ranch near Monterrey in mid- January 1996.

Mervin Mosbacker, U.S. attorney for the Southern District of Texas,
discounted the allegations that lead prosecutor Melissa Annis and FBI
Special Agent Peter Hanna encouraged Resendez to lie or hid evidence of a
financial agreement.

"I have every belief that Melissa Annis and Peter Hanna acted responsibly
and ethically," he said. "These are highly respected professionals."

However, he refused to comment on the specifics of the allegations, saying
that the government would file its response in court.

San Diego attorney Michael Pancer said the recently uncovered evidence is
indisputable -- and could torpedo one of the most important drug
prosecutions undertaken by the Clinton administration.

"The government can't deny that $1 million was paid and that was never
revealed to the defense. Ms. Villanueva's statements corroborate the
benefits that were promised the witness and the fact that the government
knew he testified falsely. That undermines the credibility of their whole
case," said Pancer. "Convictions have been overturned for this."

The allegations in the high-profile case come at a time when the Department
of Justice is particularly vulnerable to charges of misconduct in its
operations in Texas.

Earlier this month, Attorney General Janet Reno named a special prosecutor
to investigate allegations of an FBI cover-up in the deaths of about 80
people at the Branch Davidian compound near Waco. And in April, the Justice
Department reached a $500,000 settlement in a civil lawsuit that accused a
prosecutor and an FBI agent in Houston of lying to a federal grand jury in
order to win indictments in a mammoth bank fraud case.

In a series of motions filed simultaneously, Pancer asked U.S. District
Judge Ewing Werlein to allow the defense to offer cash rewards to
government employees who may have information about evidence hidden from
defense attorneys.

He also asked the court to protect Resendez from possible deportation by
the U.S. government until the matter is resolved.

One of only two witnesses to provide first-hand information about the
inner-workings of the Gulf Cartel, Resendez testified that he arranged for
Garcia Abrego's capture and did not expect financial gain in return for his
testimony.

But Villanueva, a criminal attorney in Monterrey, said she was present
during meetings with her client, Annis and Hanna in which Resendez was told
he would receive a $2 million reward for the capture of Garcia Abrego,
according to court documents.

The government's star witness was also allegedly promised:

u The U.S. government would purchase property he owned in Mexico.

u He would receive personal protection and a change of identity.

u The U.S. government would buy him a house and a farm.

u He and his son would be given government jobs.

u He and his family would be given U.S. citizenship.

According to Pancer, the financial arrangements between the government and
Resendez remained a secret from defense attorneys -- in violation of laws
requiring the exchange of exculpatory material -- until Resendez hired
Houston attorney Randy Schaffer to collect $1 million still owed him by the
government.

Indicted by a federal grand jury in Houston in 1993, Garcia Abrego was
convicted in October 1996 of 22 counts of drug trafficking, conspiracy,
money laundering and operating a continuing criminal enterprise.

The only drug trafficker ever placed on the FBI's 10 Most Wanted list,
Garcia Abrego headed the notorious Gulf Cartel -- which was responsible for
smuggling more than 396,000 pounds of cocaine -- nearly 200 tons -- and
46,000 pounds of marijuana across the Southwest border between 1980 and 1996.

Most of the drugs came through the Matamoros-Brownsville corridor and were
shipped to Houston and cities in New York, California, Florida, Illinois
and New Jersey.

His smuggling efforts were facilitated by public officials on both sides of
the border who were paid millions of dollars in bribes and gifts.

A former Mexican state police commander, Resendez gave testimony that was
the most damning of the trial. He testified that he helped arrange drug
deals and was aware of murder plots and bribes to top Mexican government
officials as a 30-year confidant of Garcia Abrego.

But he also admitted under cross-examination that he made a sworn statement
to Mexican federal police denying that either he or Garcia Abrego had
played any role in trafficking Colombian cocaine.

He also admitted asking Garcia Abrego's defense attorneys what protection
they could give him if he testified in behalf of the defendant.

During his testimony, Resendez told jurors that as an established
trafficker, Garcia Abrego pioneered the movement of Colombian cocaine into
Mexico by airplane in the 1980s.

Landing the planes on the ranches of friends, Garcia Abrego gradually
expanded his protection network to include federal judicial police and top
officials with the Mexican attorney general's office, Resendez said.

To protect the 1,100 to 1,320 pounds flown in per trip, Garcia Abrego
tapped Emilio Lopez Parra, a commander with the federal judicial police in
Matamoros, to make inroads into the Mexican attorney general's office,
Resendez testified.

Through Lopez Parra, Garcia Abrego arranged to pay Deputy Attorney General
Javier Coello Trejo $1.5 million per month in protection money, he said.

But Garcia Abrego did not always use money to rid himself of his problems.
Resendez testified "El Senor" ordered the death of an underling who brought
media attention to the drug organization by causing Matamoros prison riots
in 1999. When that didn't eliminate the problem, Garcia Abrego ordered the
murder of two Matamoros journalists who extensively covered the murders and
corruption spawned by "El Senor's" drug trafficking organization, Resendez
told jurors.

But Kent Schaffer, local counsel in the case, said the details of
Resendez's financial arrangement with the government would likely have made
jurors more skeptical of his dramatic testimony.

"This informant was paid more money that any single informant in the
history of drug prosecutions," said Schaffer. "The truth of the matter is
he was expecting to be paid even more -- and money is a great motivating
factor. The government must have believed that, too. You don't need to
cover something up if it isn't important."