In a damning blow to its fight against drug traffickers, the Mexican government Monday acknowledged severe penetration of a top law enforcement agency by a vicious gang that may even have bought intelligence on U.S. operations from renegade employees.

At least 35 officials and agents from an elite unit within the federal attorney general's office have been fired or arrested in an investigation that began July 31 following tips from an informer.

The officials, including a senior intelligence director, are believed to have been leaking sensitive information to the very traffickers they were investigating for as long as four years, prosecutors said.

In exchange, prosecutors said, the corrupt government officials received monthly payments of $150,000 to $450,000 each from the so-called Beltran Leyva cartel, a drug gang based in the Pacific state of Sinaloa that is engaged in a bloody fight with rivals for domination of the region's lucrative trade.

The group has also been linked to crimes, including the May killing of Edgar Millan Gomez, acting chief of a federal police agency, who authorities believe was targeted in re- venge for the arrest of alleged traffickers including top cartel operative Alfredo Beltran Leyva.

Good reputation

The accused officials were members of the agency in charge of probing drug and weapons smuggling as well as kidnapping and terrorism, known by its initials in Spanish, SIEDO. Unlike many agencies within a notoriously corrupt police system, the SIEDO has a generally good reputation in U.S. government circles.

The case, which represents an unusually serious breach of Mexican security, was launched after an informer with the code name Felipe turned himself in at the Mexican Embassy in Washington. He revealed the names of senior SIEDO officials on the cartel's payroll and was quickly put into a U.S. witness protection program, sources in the attorney general's office said Monday.

"Felipe" told Mexican investigators that he had worked for Interpol and then for the U.S. Embassy in Mexico, where he relayed information to members of the Beltran Leyva gang, according to several Mexican media reports.

The embassy declined to comment. And in Washington, senior Drug Enforcement Administration officials said the investigation was ongoing, and that it was premature to confirm details.

Whether or not those reports are true, it is certainly possible that intelligence on activities by the DEA in Mexico could be gleaned from within SIEDO, and the alleged spies could have had access to it.

"They handed over secret information and details of operations against the Beltran Leyva criminal organization," Atty. Gen. Eduardo Medina Mora said during a news conference -- including details on raids of traffickers' hide-outs and the evidence seized.

Extent unclear

The full extent to which counter-narcotics operations may have been compromised is still not known.

"This investigation is not finished," Medina Mora said.

Although 35 people from SIEDO have been implicated, a spokesman for the attorney general's office said, five officials are likely to face the most serious charges, including illegal release of classified information.

They include Fernando Rivera Hernandez, a senior director of intelligence, and Miguel Colorado Gonzalez, SIEDO's general technical coordinator, both of whom have been in detention since August.

Colorado Gonzalez has also been named in a U.S. federal indictment filed Friday in the District of Columbia. He is accused of criminal association in the production and distribution of cocaine in the U.S. The U.S. is seeking his extradition.

The three others are federal agents, one of whom is a fugitive, prosecutors said. Medina Mora said SIEDO would be restructured and purged of its corrupt members through tighter screening and tougher punishment for lawbreakers. Reforming Mexico's underpaid and poorly trained police forces is a central component in President Felipe Calderon's two-year-long offensive against drug traffickers but one that has yet to show abundant progress.

SIEDO's predecessor agency within the attorney general's office was shut down in 2003 after half a dozen of its agents were arrested on suspicion they were helping drug traffickers.

Nearly 4,000 people have been killed in Mexico this year in drug-related violence as gangs fight Calderon's security forces and one another. The U.S. has pledged an additional $400 million to Mexico for help in training police and judicial agencies, but the money has not arrived.

Calderon wins praise from U.S. officials for attacking traffickers head on, but the mounting death toll and spread of violence to much of the country could eventually erode public support for the campaign.

Cases such as this also leave American law enforcement officers wary of sharing intelligence with Mexico.

Wilkinson is a Times staff writer.

wilkinson@latimes.com