THE DRUG LORD WHO GOT AWAY

Mexican Capo Unleashes Mayhem on U.S. Border; The Making of a Legend

BADIRAGUATO, Mexico -- As a child, Joaquin Guzman Loera was so poor
that he sold oranges to scrape together money for a meal. Since then,
the 52-year-old has built a business empire and a personal fortune
currently tied for number 701 on Forbes magazine's list of global titans.

He also has another ranking: Mexico's most wanted man.

Mr. Guzman is the informal CEO of one of the world's biggest
drug-trafficking organizations, the so-called Sinaloa cartel, named
for its home state of Sinaloa. It smuggles a big part of the
marijuana, heroin, cocaine, and methamphetamines that end up on
American streets, and it has links to organized crime in 23
countries, according to Mexican and U.S. officials.

Mr. Guzman's rivalries and turf wars have contributed to a drug-war
death toll that stands at 11,000 in the past two and a half years, an
average of 366 murders per month. His feuds stretch back more than
two decades, leaving a trail of tombstones that act as milestones of
the narcotics business south of the border.

Part Al Capone and part Jesse James, Mr. Guzman has become a narco
folk hero. He is feted on YouTube videos and by musicians who pen
ballads, known as corridos, in his honor. He is known throughout
Mexico simply as "El Chapo," Mexican slang for a short and stocky man.

Adding to his mystique, "El Chapo" has survived several assassination
attempts by rival gangs, including a 1993 attack that killed a Roman
Catholic cardinal. He also pulled off the greatest escape in modern
Mexico: from a maximum security prison in 2001 -- in a laundry cart.
Ever since, he has stayed a step ahead of Mexican and U.S. officials
in a game of cat and mouse that is now in its ninth year.

Each year that Mexico is unable to catch "El Chapo" his legend grows
- -- a direct challenge to the authority of the Mexican state. Last
year, he flouted authorities by hosting a party, complete with cases
of whiskey and a norteno band, in a remote Mexican village to watch
his 18-year-old girlfriend, Emma Coronel, win a local beauty contest.
Months later, he married her.

With each year, too, questions grow about why Mexico, together with
help from the U.S., can't find him -- despite a $5 million bounty
offered by Washington (tips can be sent to chapotips@usdoj.gov) and a
$2 million reward from the Mexican government.

U.S. and Mexican officials say Mr. Guzman has used money and cruelty
to build a well-disciplined organization that protects him. He is
believed to be hiding in the towering Sierra Madre mountains that run
through Sinaloa and bordering states, making the task of finding him
a bit like finding Osama bin Laden in the forbidding mountains of
Pakistan. Another factor: Mr. Guzman is believed to have bribed
enough Mexican law-enforcement and army officials to get timely
tip-offs that allow him to avoid capture.

On at least three occasions during the past three years, Mexican
security agencies have gotten leads on Mr. Guzman, only to find he
had vanished by the time they turned up, according to a U.S.
official. Part of the problem is logistics. In the mountains, the
capo's people can spot a caravan of military vehicles coming from
miles away, giving him time to flee on anything from a helicopter to horseback.

Over the past few years, Mr. Guzman has regularly visited a ranch in
the remote mountains of Chihuahua state to check on his marijuana
crop, according to a 2008 Mexican intelligence document reviewed by
The Wall Street Journal. The ranch, owned by Mr. Guzman's associates,
has an airstrip and an underground tunnel for access. "On at least
three visits, he has arrived with a caravan of at least six vehicles,
under the protection of some authorities in the Mexican army," the
document says.

Mexico's Defense Ministry said in an email that it was unaware of the
allegations, but added that "various criminal organizations have used
army clothing and vehicles as a cover for their activities."

In April, the archbishop in Durango, a state known for its scorpions,
outlaws and rugged wilderness, declared that Mr. Guzman was living
there. "Just up the road from [the town of] Guanacevi, that's where
he lives, but, well, we all seem to know this except for the
authorities," Archbishop Hector Gonzalez Martinez told local reporters.

Four days later, the bullet-riddled bodies of two army lieutenants
turned up near Guanacevi in the trunk of a car, blindfolded and with
their hands tied behind their backs. Next to the dead men was a note
that read: "Neither the government nor the priests can handle 'El Chapo.'"

Purported sightings of Mr. Guzman are common. In at least three
Mexican cities, including Culiacan, Sinaloa's capital, people have
reported seeing the capo turn up to eat at a local restaurant. They
say he was preceded by bodyguards who confiscated diners' cell phones
and didn't allow anyone to leave. As repayment for the patrons' brief
loss of liberty, Mr. Guzman was said to have paid everyone's tab.

An owner of one of the restaurants denies any such thing happened.
But a Mexican intelligence report says that at least one of the
restaurant stories is believed to be true.

Mexican officials say they don't want to get obsessed with capturing
Mr. Guzman at the expense of winning the broader war on drugs. "In
the past, the strategy was just to capture top guys and ignore the
operational guys. Now we are trying to weaken the structure of the
cartels," says Attorney General Eduardo Medina Mora.

This week alone, Mexican troops arrested Jose Parra, a leading gunman
for the Sinaloa cartel who police say was helping Mr. Guzman's outfit
wage war against the Tijuana cartel, a fight that claimed 749 lives
last year. And in Durango, soldiers said they killed three of Mr.
Guzman's gunmen, including the alleged head of his organization in
that city, and captured two others.

A U.S. official agrees that the capture of Mr. Guzman himself would
do little to slow the illegal drug market, but said it would be a
major coup. "Catching him would be like the capture of Saddam Hussein
after the Iraq war," says the U.S. official. "His capture didn't stop
the insurgency, but it was a huge victory."

Some U.S. officials believe Mexico will catch Mr. Guzman soon. They
say his status as Mexico's most wanted man forces him to be
constantly on the move, making it harder to conduct day-to-day
business. They say he has aged rapidly in appearance, and draw
parallels to the late Colombian kingpin Pablo Escobar, who was
finally killed after years on the lam.

"Chapo Guzman is a dead man walking, and he knows it," says Michael
Braun, who retired eight months ago as the head of operations for the
U.S. Drug Enforcement Administration. "No one in his business lives
to old age, or to enjoy his grandchildren."

But Mr. Guzman has been underestimated before. In 2005, then Mexican
Attorney General Daniel Cabeza de Vaca said Mr. Guzman was "no longer
operating" in the drug business. In early 2007, the current attorney
general, Mr. Medina Mora, wrote off Mr. Guzman as a has-been in the
drug business.

"I don't care where he is," he told The Wall Street Journal in an
interview. "He's like a washed-up soccer star."

A Central Figure

Since then, Mr. Guzman has left little doubt he's a central figure in
the drug war. Experts say it was his gang's push into northern
Chihuahua state to try to wrest control of lucrative smuggling routes
from rival gangs that has turned the place into a war zone. Some
3,300 people have been killed in the past 15 months, according to
press reports. A separate feud between Mr. Guzman and a former
associate, Arturo Beltran Leyva, led to a killing spree in Sinaloa
that claimed more than 600 lives. Among the victims of the feud: Mr.
Guzman's 22-year-old son, Edgar, killed in a mall parking lot outside
a Bridgestone tire-repair center in Culiacan.

Today, experts say Mr. Guzman's group is battling other cartels in
states as diverse as Chihuahua, Durango, Baja California, Guerrero,
Sonora, Michoacan, and Quintana Roo.

In Culiacan, urban legends about El Chapo are daily bread. One says
that a thief unwittingly robbed the capo's niece's car, and got his
hands cut off by Mr. Guzman's thugs as a lesson. In another, a former
top state official reportedly fell for a local beauty and sent her an
expensive gift. The gift was returned to his office along with a note
from Mr. Guzman saying the girl was his. "Send her another gift and
I'll kill you," the note said.

Separating fact from fiction is difficult. Asking Mexican officials
about El Chapo usually draws blank stares. "I don't know much about
him," says Juan Millan, a former Sinaloa state governor. A local
reporter who covers the drug trade for Noroeste, a leading Sinaloa
newspaper, says he stays away from writing too much about the
kingpin. "It isn't worth dying for."

According to the few people who have met him and are willing to talk
publicly about it, Mr. Guzman comes across as down-to-earth and
intelligent, despite a third-grade education.

"He's a simple guy, a rancher type, who talks with a country accent,
but he's very smart," says Jose Antonio Ortega, a lawyer who took Mr.
Guzman's deposition in prison shortly before he escaped in 2001.
Scheduled to meet Mr. Guzman at 10 a.m., Mr. Ortega says he was kept
waiting at the prison until 10 p.m. He met the capo in a
well-appointed prison cell that Mr. Guzman used as his personal anteroom.

Mr. Guzman apologized for the 12-hour delay, telling the lawyer that
he had had a conjugal visit that day, and had then taken a nap and a
shower in order to be ready to "receive [you] with all the courtesy
you deserve to be received with," Mr. Ortega recalls.

Mexico's 'Golden Triangle'

One of four brothers, Mr. Guzman was born in a Sinaloa mountain
hamlet of some 40 houses known as La Tuna. La Tuna sits in
Badiraguato County, which has the dubious distinction of being the
birthplace of most of Mexico's famous drug lords. Badiraguato's
location has a lot to do with it: It's the gateway to Mexico's
"golden triangle," a remote, mountainous intersection of Sinaloa,
Durango and Chihuahua states where opium and marijuana have been
grown for generations.

Little is known about Mr. Guzman's early years. But it is believed
that like many of his neighbors, Mr. Guzman's late father was a
gomero, a person who grew poppies for opium and heroin. The family
was so poor that when Mr. Guzman was a baby, his mother turned an old
wooden crate used to pack tomatoes into a cradle for him, says a
local official who has seen a Guzman family photograph.

"When he talked about his childhood, he became suspended, as if it
were something he wanted to forget," Zulema Hernandez, a former
policewoman who met Mr. Guzman while she was serving a stint in
prison for robbery, said in an interview with Mexican journalist
Julio Scherer for his book on the country's prison system.

Ms. Hernandez said Mr. Guzman was driven by a fear of returning to
poverty. "We both shared this dread of having to be poor," she told
the journalist. Ms. Hernandez went into the drug business herself
after her release in 2004, Mexican police say, and was found dead in
the trunk of an abandoned car in Mexico City last year. Police don't
believe her death was linked to Mr. Guzman.

Badiraguato, one of Mexico's 200 poorest counties, offers its young
few jobs other than the drug trade. In the small town of Santiago de
los Caballeros, near the birthplace of legendary drug lords Rafael
Caro Quintero and Ernesto Fonseca Carrillo, local peasants, or
campesinos, haul freshly cut marijuana on their backs. The smell of
marijuana wafts through the air.

The mountain folk of Badiraguato are widely seen as macho,
close-mouthed people of tight-knit clans, given to intense loyalty,
bloody vendettas and honor killings. "The Omerta of Badiraguato is
much deeper than that of Sicily," says Luis Astorga, an expert on the
drug trade at Mexico's UNAM University who was born and raised in Sinaloa.

Here, up-and-coming drug lords pick out girls as young as 13,
returning to claim them -- usually with the girl and her families'
consent -- when they reach 16 or 17. "It's not seen as a negative
when a narco comes calling. He can offer a way of life," says a local official.

Many of the fathers and grandfathers of these young capos are buried
by the side of Badiraguato's dusty roads or on hillsides with views
of the crumbling adobe homes where they were born. They lie in grand
marble mausoleums built like mock colonial cathedrals or Greek
temples, far more elaborate than the humble houses below.

Judging by photographs or paintings of the dead displayed on the
tombs, Badiraguato's native narcos often die young. "Better to live
like a rey [king] for six years than as a guey [ox, or fool] for
sixty," is a common saying here.

Trying to catch Mr. Guzman in a place like Badiraguato is a tall
order. The county covers 2,300 square miles -- half the size of
Connecticut -- with more than 450 tiny towns sprinkled throughout
inaccessible mountains. Badiraguato has just 38 cops and five police
cars, all stationed in the county seat, leaving every other town with
no police at all, just gunmen from the cartels.

Mr. Guzman's hometown sits a five-hour drive from the county seat
down a bumpy dirt road. From June to September, rains make the road
nearly impassable. The town itself hasn't changed much, say local
officials, except for a bunker-like compound Mr. Guzman built for his
mother and a small church he built for his mother's evangelical
Christian group.

Wall Street Journal reporters tried to visit the town along with a
local official, who wanted to show off the county's economic
development efforts such as building eco-friendly log cabins for
tourists. But after two days' delay, the official said a trip was too
dangerous. "I was told a visit would be seen as inconvenient," he
said. "[Chapo] is not eager for publicity."

Working as an Enforcer

As a young man in Badiraguato in the 1980s, Mr. Guzman rose through
the ranks to become a top lieutenant for Miguel Angel Felix Gallardo,
another Badiraguato native and former cop who had become Mexico's top
drug lord, according to analysts and former police officials. Known
as El Padrino, or the Godfather, Mr. Felix Gallardo cobbled together
a super-cartel dominated by fellow Sinaloans called "The Federation."

But the relative unity imposed by Mr. Felix Gallardo collapsed after
his arrest in 1989. His empire, in particular the border crossings
that were useful smuggling points, was divided up among his
lieutenants. Mr. Guzman and his close friend Hector "El Guero" Palma
got the border crossing at Mexicali, about 70 miles from Tijuana.

Mr. Guzman began building an empire of his own. He pioneered the use
of underground tunnels across the U.S.-Mexico border to ferry drugs.
One such tunnel near San Diego had electricity, air vents and rails
to transport the drugs, according to the DEA.

Mr. Guzman operated an assembly line packing cocaine into chili
pepper cans under the brand Comadre, exporting the drugs to the U.S.
by rail, his former top accountant, Miguel Angel Segoviano, testified
in 1996 at the trial of one of Mr. Guzman's associates. In return for
the drugs, Mr. Guzman imported into Mexico millions of dollars packed
into suitcases flown into the Mexico City airport, where bribed
federal officials made sure there were no inspections.

A lot of the money "was given to people who worked for the attorney
general's office," testified Mr. Segoviano, who became a DEA
protected witness in 1993, and was referring to a period in the early
1990s when there was a quick succession of attorneys general.

All the while, Mr. Guzman fought other traffickers, notably the
Arellano Felix clan that controlled the border at Tijuana. Believed
to be Mr. Felix Gallardo's nephews, the clan -- including brothers
Ramon, Benjamin and Francisco -- initially went to war to drive Mr.
Guzman and Mr. Palma from the Mexicali border. The feud unleashed
almost two decades of unremitting violence.

In one of the earliest incidents, Rafael Clavel, a Venezuelan
believed to be working for the Arellano clan, seduced Mr. Palma's
wife, Guadalupe Leija, according to former Mexican police officials.
They say he took her to San Francisco, where she gave him access to
some $7 million of Mr. Palma's money. Mr. Clavel cut off her head,
and sent it to Mr. Palma's house in Culiacan in a cooler. Soon after,
Mr. Clavel threw Mr. Palma's two small children off a bridge in Venezuela.

Arrested and charged for that crime in Venezuela, Mr. Clavel was
murdered in prison. Ms. Leija and her two children are buried in a
tomb in Culiacan, adorned with a fresco of the trio. Captured in
1995, Mr. Palma was later extradited to the U.S. and sits in prison
for drug trafficking and conspiracy.

The beheading of Ms. Leija was Mexico's first linked to the drug
trade. Twenty years later, decapitation has become common practice as
the country's warring cartels try to outdo each other in barbarity.

"The killing of El Guero Palma's wife and children shattered the
unwritten rules of drug trafficking," says Gregorio Ortega Molina, a
Mexico City-based writer who has written a novel about Mexico's first
generation of drug capos.

Messrs. Palma and Guzman sought revenge. In 1992, gunmen for the two
men kidnapped and killed nine people, including lawyers and nephews
of Mr. Felix Gallardo, the imprisoned drug lord, according to Mexican
police reports reviewed by The Wall Street Journal.

Seeking Revenge

The Mexican attorney general's office created a special unit to
investigate the executions. But the unit was taken off the case after
investigators said they discovered Mr. Guzman had paid $10 million to
the country's top police officials, including the then head of the
federal police and the top anti-drug official, according to police
reports and interviews with former police officials.

Mexico's Attorney General's Office said it had no comment about
allegations of corruption in past administrations.

In early November 1992, Ramon Arellano and four gunmen riddled Mr.
Guzman's car with their AK-47s as he was driving down a main avenue
in Guadalajara, then the hub of Mexico's drug trafficking industry.

Days later, El Chapo struck back. A commando team of about 40 gunmen
posing as policemen attacked Christine's, a nightclub frequented by
American tourists in the resort town of Puerto Vallarta. Five people
died in the shootout, but Ramon and Javier Arellano, both in the
bathroom when the gunfire started, escaped unharmed.

Six months later, Arellano gunmen killed seven people in a
spectacular shootout in the parking lot of Guadalajara's airport
where Mr. Guzman had gone to catch a plane. Among the dead were two
of Mr. Guzman's bodyguards and five bystanders, including Juan Jesus
Posadas -- the city's cardinal and one of Mexico's two top prelates.

Mr. Guzman escaped by crawling and rolling out of the airport parking
lot, eventually grabbing a taxi, he later told police. He took refuge
in Mexico City, bought false passports and set out with a girlfriend
and a business associate for Guatemala while "the problem at the
Guadalajara airport was resolved."

The Cardinal's killing shocked Mexico, and forced the Mexican
government to make a show of cracking down on drug traffickers. Just
16 days later, Mr. Guzman was captured by Guatemalan soldiers and
handed over to Mexico.

Interviewed by police after his arrest, Mr. Guzman denied being
involved in drug trafficking. He said that "all of my life I've been
dedicated to agriculture." He said he was a farmer and businessman,
buying and selling corn, sugar, canned goods, and seeds, and dabbling
in cock fighting. His income, he said, was about "20,000 new pesos
[$5,700] a month without any extras." A gun lover, he told police he
favored the Russian-made AK-47 automatic rifle.

A Good Life in Prison

Mr. Guzman was sentenced to 20 years for conspiracy, bribery, and
drug trafficking. He was sent to Puente Grande prison, a maximum
security facility, where he continued to run his empire. At the
prison, he bribed nearly everyone, including the warden, who is now
in jail himself for letting the escape occur under his watch.

Mr. Guzman's money bought him privilege, according to police
officials who investigated his escape. His cell had a television, and
he sometimes chose his meals from a menu rather than be served with
the rest of the inmates. He had a cellphone to continue directing his
drug business, and met often with members of his organization. Other
regular visitors were his wife, several lovers and prostitutes. He
was given Viagra.

One of his lovers was Ms. Hernandez, the policewoman in jail for
robbery. After the pair became romantically involved for the first
time, Mr. Guzman sent her a bottle of whiskey and flowers, followed
by dozens of love letters, dictated by Mr. Guzman and written by someone else.

"Zulema, I adore you... [To think] that two people who didn't know
each other could meet in a place like this," says one of the letters,
as quoted in a book by journalist Mr. Scherer. All were signed with
the initials JGL, for Joaquin Guzman Loera.

El Chapo, together with his longtime associate Mr. Palma, terrorized
the jail. Female members of the prison staff, ranging from nurses to
cooks, were paid to have sex with the drug lords. One woman who
refused was raped, according to documents from the Jalisco state
human rights agency viewed by The Wall Street Journal.

Prison guards, too, were offered money to cooperate with the capo.
Those who refused were beaten with baseball bats by a group run by
Mr. Guzman known as "the batters," according to the documents, which
include first-hand accounts from people working in the prison.

In January 2000, a prison guard named Felipe Leanos filed a complaint
with the Jalisco state human rights commission about the abuses at
the jail. In the following months, he persuaded four other guards to
step forward. The state agency, run by a lawyer named Guadalupe
Morfin, tried to get federal officials to intervene in the jail
during the course of the year. Mr. Leanos disappeared in May 2007 and
is presumed to have been murdered by Mr. Guzman's men. Ms. Morfin
received death threats and had a government-assigned security detail
until last year.

Mexico's official story of Mr. Guzman's escape goes like this: He
befriended a prison maintenance worker named Javier Camberos. Mr.
Guzman then told the guards who were on his payroll that Mr. Camberos
was going to be smuggling some gold out of the prison in a laundry
cart, and to not search the cart. But on the night of Jan. 19, 2001,
Mr. Guzman hid in the cart as Mr. Camberos wheeled him out of the
prison. Mr. Camberos is now in prison for helping the escape.

Many Mexicans believe prison officials essentially let Mr. Guzman
walk out. It is difficult to know what really happened, partly
because the prison's camera surveillance tapes of that night were
erased by prison officials. Jorge Tello, one of Mexico's top security
officials at the time, visited the prison on the day of the escape,
after having heard rumors the capo might flee. Despite the visit, Mr.
Guzman still managed to escape.

Mr. Tello, who didn't respond to requests for comment, is now
President Felipe Calderon's top adviser in the war on drugs.