Former Mexico Prosecutor Linked to Drug Kickbacks : Justice: Authorities allege he received millions from handpicked officials in charge of narcotics enforcement.

Federal prosecutors suspect that Mario Ruiz Massieu, the former deputy attorney general who once was Mexico’s top anti-drug official, set up a “franchising operation” in key states across the nation that generated millions of dollars in kickbacks from international drug smugglers operating in Mexico from March to November, 1994.

Tracing almost $7 million in Texas and $3 million in Mexico that the government said it had discovered in Ruiz Massieu’s name, officials said Thursday that they are documenting an intricate operation in which he filled those bank accounts with payoffs from a network of handpicked federal attorneys who headed narcotics enforcement in their states.

Regional prosecutors, in turn, took payoffs from major narcotics traffickers, including those from the two largest drug cartels that operate in Mexico, said current and former Mexican law enforcement officials familiar with the investigation and the alleged scheme.

They stressed that only some of the dozens of senior federal prosecutors in regional posts were involved.

Officials said the payoffs were deposited in the Texas accounts by Jorge Stergios, Ruiz Massieu’s former deputy in the attorney general’s office.

The Ruiz Massieu-appointed district prosecutors “received payoffs from the drug traffickers, and Ruiz Massieu received payoffs from the district prosecutors,” a Mexican official said. “He was selling franchises, and Stergios was the general manager. He made the deposits in Houston.”

Mexican Atty. Gen. Antonio Lozano has not formally charged Stergios--who is said to own a mansion with a private lake in Houston--but investigators now consider him to be a fugitive.

Thursday’s disclosures were the latest in a series of public and private accusations that the Mexican government has leveled against Ruiz Massieu, who is now being held in New York on U.S. charges that he failed to properly declare all the currency he was carrying when he was detained and questioned in Newark, N.J.

Mexican authorities have formally sought his return to face charges that he covered up the role of the former president’s family in the murder of Ruiz Massieu’s brother last year.

Ruiz Massieu, who had been a ruling party stalwart, became an overnight sensation when he turned on the Institutional Revolutionary Party, or PRI, in November. He asserted then that its top two officials and his own boss--the attorney general--had blocked his investigation of the Sept. 28 assassination of Francisco Ruiz Massieu, his brother and the No. 2 official in the PRI.

Mexican authorities have said his accusations against the PRI officials are baseless.

Through one of his attorneys, Mario Ruiz Massieu has denied the charges against him, among them that he deliberately covered up the alleged role of former President Carlos Salinas de Gortari’s elder brother, Raul, as mastermind of the slaying of the ex-prosecutor’s brother.

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Initially, the special prosecutor now in charge of the case suggested that personal motives were behind the assassination.

But in the days since the Mexican government announced that U.S. Customs had discovered Texas bank accounts with $6.9 million in Mario Ruiz Massieu’s name, authorities have said privately that a new investigation was focusing on links to narcotics trafficking and money laundering.

“He’s confident that when all the facts come out that he’ll be cleared,” Kathy Fleming, one of Ruiz Massieu’s attorneys, said on Los Angeles radio station KCRW Thursday.

The disclosures of Ruiz Massieu’s alleged drug links also appeared to be part of a campaign that Mexican authorities have launched against the crusader-turned-accused criminal, an effort so successful that afternoon newspapers here were blanketed with banner headlines: “Ruiz Massieu Falls!”

The operation now under investigation was first detected almost a year ago, shortly after Ruiz Massieu was appointed to his post, said Eduardo Valle Espinosa, a top attorney general’s office narcotics investigator who was looking into reports of the alleged kickback network until he quit his post in May.

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Valle said he had learned that a top federal law enforcement job in the northern border state of Tamaulipas--a key route for the drug cartels that smuggle cocaine from South America to the United States--was sold for $1 million soon after Ruiz Massieu took over the nation’s No. 2 law enforcement position.

“Many people must have known, but only a few of us complained,” said Valle, now an outspoken critic of alleged drug corruption at the highest levels of the Mexican government.

Valle said his early suspicions were grounded in the job candidates Ruiz Massieu picked after he left his post as ambassador to Denmark to accept the Salinas government’s appointment as deputy attorney general in Mexico City.

Among the new chief federal prosecutors Ruiz Massieu appointed in several key states, Valle said, were law enforcement officials who had been expelled from the agency for suspected misconduct before Ruiz Massieu arrived.

Adding that he believed that the money amassed in the Texas and Mexican bank accounts came not just from one drug cartel, Valle said that he believes Ruiz Massieu was “cooperating in a direct way with the worst chiefs of the (federal) judicial police, who had links to drug trafficking.”

Investigators now suspect that all major drug-trafficking operations in Mexico were contributing to the system, a Mexican official said.

The attorney general’s office has stressed that it is continuing its investigation to determine if Ruiz Massieu maintained other accounts.

* ECONOMIC OUTLOOK GRIM: Stabilization plan announced; 42% inflation foreseen. A6