D A L L A S, Feb. 17, 2002 -- Yvonne Gwyn manages an auto repair shop in Dallas. She had never been accused of a crime. Then last August, she was charged with selling half a million dollars worth of cocaine.

Gwyn insists the drugs were planted in the car by the Dallas police.

"I want my record clean," she said. "It's hurting me. I am innocent 100 percent."

Fake Drugs

Gwyn is one of 39 people arrested last year in what was hailed as the most successful undercover drug operation in Dallas history. Dallas Police showed hundreds of pounds and millions of dollars worth of powdered cocaine, which they said was seized from alleged drug dealers.

But months later, police laboratory tests revealed a shocking discovery — none of it is cocaine. It's gypsum — powdered sheetrock used in home construction.

In fact, nearly half the cocaine seized by the Dallas Police Department last year is fake.

"I don't know if we're talking about bad police officers, I don't know if we're talking about bad confidential informants or both." said Cynthia Barbare, a defense attorney. "Something is not right."

Those arrested were Hispanics.

Jesus Mejia, a mechanic and father of three, was imprisoned for five months. Mejia told ABCNEWS in Spanish that he asked several times, '"Why are you taking me in? Why are you taking me in?" And the police told him to shut up.

Two Cops, Paid Informant

They were all arrested by the same two police undercover agents working with a paid informer, who received more than $200,000 for turning over information on suspected drug dealers.

In January, the district attorney dismissed all charges.

"These cases have raised questions in the mind of the public that reflect not just on police procedures, but on the integrity of the entire criminal justice system," said Bill Hill, the Dallas County District Attorney.

Those arrested could have faced up to 99 years in prison, but all have now been released from jail.

As they begin to put their lives back together, the FBI has begun an investigation into the Dallas police department.