Residents and law enforcement officials say the men are the feared Zetas, former members of a military intelligence battalion sent to the border to fight drug trafficking. Instead, they joined the Gulf Cartel, one of Mexico's top drug gangs. They adopted the name Zetas - a radio code for a military commander - recruited followers and made the city of 300,000 their home base.

For the past two years, the city of tree-covered plazas and hacienda-style restaurants has lived in a state of siege. Many residents are afraid to leave their homes at night, and few tourists venture over from Laredo, Texas, leaving the city's handful of horse-drawn buggies idle.

Killings and police corruption became so brazen that President Vicente Fox was forced to send in hundreds of troops and federal agents in March, and the only man brave enough to take the job of police chief was gunned down hours after he was sworn in this month.

Since then, soldiers and federal agents have flooded the streets, patrolling in trucks and setting up checkpoints. Still, daytime street killings are commonplace.

Jose Luis Santiago Vasconcelos, Mexico's top drug prosecutor, said the Zetas were recruited by Osiel Cardenas, the alleged leader of the Gulf Cartel, during the late 1990s when their unit was posted to the border state of Tamaulipas.

At the time, there were 30 Zetas who defected, Vasconcelos said, but they have since recruited other men from drug ranks and expanded.

After Cardenas' arrest in 2003, accused drug lord Joaquin ''El Chapo'' Guzman sensed weakness and tried to move in on Nuevo Laredo, unleashing a bloody turf war with the Zetas that has transformed the city.

Since January, more than 70 people have been killed in Nuevo Laredo, compared to 65 for all of 2004.

The Zetas rule with fear, threatening police and city officials and extorting money from businesses, including restaurants, car dealerships and junkyards.

''They came and intimidated anyone who had influence or power in this city,'' said a businessman who asked not to be named for fear of reprisals. ''They made it clear they owned the city.''

They sometimes set up roadblocks to stop motorists when they suspected rivals were in the area, the businessman said.

Nuevo Laredo is the busiest trade area along the U.S.-Mexico border, with an average of 6,000 cargo trucks crossing daily into Texas carrying 40 percent of Mexico's exports.

Just across the Rio Grande is Interstate 35, a main north-south artery. It's a doorway to the United States for millions of dollars of legal and illegal goods.

It is also the most coveted drug smuggling route on the border, according to Mexican officials.

While drug trafficking is nothing new to Nuevo Laredo, the Zetas took things from bad to worse. They kidnap people for ransom and charge ''fees'' to migrant smugglers and other drug traffickers. They often kill those who refuse to pay, officials say.

''There isn't much that authorities can do, because even if they get new police officers, the mafia will buy them off again or kill them,'' said Ramon Garza, who roams the city selling tacos from the back of a pickup truck.

For Garza, the solution is simple.

''We just have to wait for one of them to win,'' he said of Mexico's two main drug gangs. ''Maybe then, we'll have a little peace.''