To their admirers, they are Horatio Alger heroes, poor boys who worked their way out of the slums and backwaters of the Cauca Valley. Onetime delinquent Jose Santacruz Londono studied engineering, went into construction and emerged as Don Chepe, a billionaire whose marble citadel looms high above the sugarcane fields of Cali, the country's third largest city.

Down the road, in the new-rich suburb of Ciudad Jardin, is the modern compound of Gilberto Rodriguez Orejuela. Nicknamed the "Chess Player" because he runs his business -- and life -- with cold calculation, he parlayed youthful jobs as a drugstore clerk by day and a kidnapper by night into a vast network of enterprises, including a pharmacy chain, office and apartment buildings, banks, car dealerships, radio stations and Cali's talented America soccer team. His handsome younger brother Miguel is a fixture on the local social scene, and their children, educated in the U.S. or Europe, are often compared to young Rockefellers or Kennedys by Colombians.

Then there are Gilberto's cousin Jaime Raul Orjuela Caballero and his three brothers, who are prominent impresarios of concerts and sporting events in ! Cali, travel frequently to New York City and have offices in Los Angeles. Ivan Urdinola Grajales and his younger brother Fabio, cattlemen and landowners from the northern Cauca Valley, are said to be exploring a regional television network. Pacho Herrera, believed to be the son of Benjamin Herrera Zuleta, an Afro-Colombian smuggler known as the "Black Pope," is a wealthy valley rancher with business interests in New York.

They are among the richest families in Colombia, but to the U.S. Drug Enforcement Administration, they are the new kings of cocaine, patriarchs of a criminal consortium more disciplined and protected from prosecution than the Sicilian Mafia and now bigger than the Medellin cartel.

The Cali combine produces 70% of the coke reaching the U.S. today, according to the DEA, and 90% of the drug sold in Europe. The Cali godfathers have a virtual lock on the global wholesale market in the most lucrative commodity ever conceived by organized crime. The cartel is the best and brightest of the modern underworld: professional, intelligent, efficient, imaginative and nearly impenetrable. Says Robert Bonner, administrator of the DEA: "The Cali cartel is the most powerful criminal organization in the world. No drug organization rivals them today or perhaps any time in history."

Most people think the narcotics trade belongs to Medellin. It did in the 1980s, when that city's cartel did more than anyone to put cocaine on the street corners of America. But Medellin's drug power has been shattered by its long and vicious war on the Colombian government. A 22-month counterattack by the authorities has killed drug boss Jose Gonzalo Rodriguez Gacha, forced the surrender of his fellow cocaine barons, the brothers Jorge, Juan David and Fabio Ochoa, destroyed dozens of labs and airstrips and scattered lesser capos abroad. In the most stunning blow yet to the cartel, Medellin chief Pablo Escobar Gaviria surrendered last week under a plea-bargaining program that promises he will not be extradited to stand trial in the U.S.

After years of murder and mayhem, the government has succeeded in disrupting one center of drug trafficking only to have an even more powerful and insidious gang emerge in Cali. While security forces concentrated on shutting down operations in Medellin, the confederacy of crime families in the Cauca Valley expanded cocaine production and grabbed the lion's share of the market.

Cali has insulated itself from government crackdowns through political influence subtly cultivated over many years. By means of legitimate business ventures, the Cali capos have forged contacts with key people in business, politics, the law and the press. Even police officials speak of los caballeros (gentlemen) of Cali in contrast to los hampones (hoodlums) of Medellin. "Cali gangs will kill you if they have to," says Robert Bryden, head of the DEA in New York. "But they prefer to use a lawyer."

Drug-enforcement agents believe the architects of Cali's takeover are Santacruz, 47, and Gilberto Rodriguez, 52. Santacruz was the hands-on designer of worldwide trafficking networks; Gilberto Rodriguez handled the finances.

In the mid-1970s, while Medellin's cocaine cowboys were monopolizing drug sales in Miami, Santacruz was sewing up Manhattan. Today the DEA estimates that Santacruz, the Orjuela Caballero brothers and the Pacho Herrera organization import 4 of every 5 grams of cocaine sold on the streets of New York City. From that base, Cali operatives have fanned out across the U.S. and deep into Mexico. The Rodriguez Orejuelas are generally considered partners in Santacruz ventures, but they sometimes appear to operate independently. Their cousins, the Orjuela Caballero brothers, are also major dealers in Los Angeles. DEA agents say the Urdinola brothers work somewhat independently from the rest of the Cali consortium, with their own trafficking and money- laundering organizations across the U.S. They are linked to large lab operations in the northern Cauca Valley and, according to DEA intelligence, are suspected of assassinating a number of Colombians.

The Cali families are now focusing their efforts on cornering the market in Europe and Japan. Last year Dutch officials seized 2,658 kg of coke packed in drums of passion-fruit juice from Cali, the biggest single bust in Europe. Santacruz bank accounts have been found across Western Europe and as far afield as Hungary and Israel. DEA informants report that Cali is looking for sales representatives to man branch offices in Japan, where the going wholesale price for cocaine is as high as $65,000 per kg. "If the Cali cartel makes an alliance with the yakuza ((Japan's organized-crime network))," warns a Colombian presidential aide, "watch out!"

"El Gordo" (the Fat Man), as Santacruz is known, is a legend in the New York Latin underworld. The word making the rounds is that every so often he materializes in the middle of a drug deal and exchanges a few pleasantries with the customer. Then, as suddenly as he appeared, he is gone again.

These tales filter back to the DEA. Possibly, Don Chepe wants it that way. "He's toying with us," says William Mockler Jr., chief of the New York task force investigating the Cali cartel. He and Kenneth Robinson, a retired New York City policeman who is now a DEA intelligence analyst, have been a step or two behind Santacruz since 1978, when they found out that he was building an air fleet and setting up businesses along the East Coast. Thanks to their efforts, Santacruz was indicted for drug-trafficking conspiracy in 1980, but he fled the country. "He is my Professor Moriarty," Mockler says. "He's the one I'll never get."

Investigators in New York, Los Angeles, Louisiana and Florida have won some battles against the cartel. They have dismantled a succession of distribution rings. Federal narcotics trafficking and conspiracy charges, which form the basis for extradition requests, have been lodged against Cali's reputed financiers Gilberto and Miguel Rodriguez, their four Orjuela Caballero cousins and dozens of other senior figures. U.S. Attorney General Dick Thornburgh has asked the Colombian government to extradite them. Santacruz's half-brother and confidant, Luis Santacruz Echeverri, has been convicted on conspiracy charges in Miami, and his personal financial adviser, Edgar Alberto Garcia Montilla, has been jailed in Luxembourg for money laundering.

Yet these setbacks have not impeded the cartel's steady growth. Cali's leaders have carefully compartmentalized their organization, so that individual losses do not threaten to bring down the whole enterprise. The Cali management style is cerebral, calculating and guileful. In the tradition of the great Mediterranean trading dynasties, the major families have a patriarchal, authoritarian structure that demands absolute discipline and loyalty yet encourages creativity.

The Cali imagination shines when it comes to the art of smuggling. Medellin brazenly shipped cocaine across borders in fast boats or light planes with extra fuel bladders. Calenos prefer the slow but safe merchant marine. The cartel has devised endless ways to hide contraband in commercial cargo and launder it through third countries. U.S. Customs can check perhaps 3% of the 9 million shipping containers that enter U.S. ports annually, making the odds very favorable for Cali.

When U.S. agents do uncover a shipment, the cartel adopts new shippers, different routes and more ingenious deceptions. Federal agents took nine years to crack a Santacruz-designed lumber scheme. In 1979, a Cali operative was arrested with the name of a Baltimore lumberyard in his pocket. There, agents saw piles of mahogany boards sliced end to end, with pockets hollowed out and the tops veneered on. A few more clues popped up over the years, but nothing to pinpoint which planks, among the tons of lumber imported from South America, contained contraband.

Then in April 1988, a load of Brazilian cedar boards arrived in Tarpon Springs, Fla., aboard the freighter Amazon Sky. DEA alerted Tampa Customs that an informer had reported drugs were aboard. Inspectors drilled holes in stacks of lumber planks, but found nothing. At the last moment, a Customs man saw a crew member drop a plank and glance about nervously. The inspector drilled into the board and hit white powder. The seizure was a record 3,270 kg of cocaine, but just 700 of the 9,000 planks held any drugs.

Other scams are just as difficult to uncover. In 1988 Customs officers found 2,270 kg of cocaine encased in 1,200 blocks of chocolate shipped from Ecuador. The cocaine bricks had been wrapped in lead to thwart X-rays, but the lead set off metal detectors. The next time, Customs found, the smugglers had switched to heavy plastic wrapping.

The cartel has also buried cocaine in toxic chemicals. In 1989 Customs agents and New York policemen found almost 5,000 kg of the drug inside 252 drums of powdered lye. No sane inspector would poke around in lye, which can inflict severe eye, skin and lung burns. Luckily, someone had tipped off the authorities.

The cocaine bricks unearthed from the lye were marked with a destination code, "Baby I." The same marking had been found on an 18,000-kg seizure near Los Angeles two months earlier. Baby I turned out to be a Santacruz protege in New York, Luis ("Leto") Delio Lopez, 28. His style, according to DEA agents, embodied the typical Cali cartel executive: businesslike, resourceful, hard- working and discreet.

The Cali families are conservative managers, much like other big corporate heads. In the home office sit the chief executive officer and his senior vice presidents for acquisition, production, transportation, sales, finance and enforcement. The logistics of importing, storing and delivering the product to wholesalers are handled by dozens of overseas branches, or cells, overseen by the home office through daily, often hourly, phone calls.

+ Each cell is directed by a Caleno like Leto Lopez and staffed by relatives and neighbors whose salaries are banked in Cali. Their accounts are debited when they make mistakes. The code of conduct is strict: nondescript clothing, four-door family cars, no drunkenness, no loud parties. Also no failures, no excuses, no second chances. This unforgiving system produces few defections: the penalty for dissent is death, not only for cell members but also for their kinsmen back home in Colombia.

Leto Lopez looked no different from his Westchester County neighbors: he wore conservative suits, lived in a $775,000 colonial house and drove an Acura Legend. He opened a public fax service to mix his drug messages with thousands of others dispatched by honest customers. He set up an import business and actually imported South American furniture so that the U.S. Customs Service would think he was a legitimate businessman.

After the highly publicized Baby I bust, Leto stayed away from his house and offices, which DEA agents were watching. One day in March 1990, he happened to drive past a DEA team running another surveillance in Queens. As the agents started tailing him, he whipped his Acura into a fast U-turn and melted into the traffic. The next thing the agents knew, Leto was back in Colombia -- where his luck ran out. At the request of the U.S. government, police arrested him.

U.S. agents have almost no chance of infiltrating a Cali family. Calenos sell only to people they know, meaning other Colombians. A prospective wholesale buyer must establish his bona fides at an audience with top management in Cali. If he is approved, he is not required to pay cash up front. He will send the cartel payment after he resells the drugs to middlemen. The wholesale buyer must put up collateral, cash or deeds to real property as insurance if he is caught. He must also provide human collateral in the form of his family in Colombia, who will pay with their lives if he ever turns informer.

The system for transferring the drugs is dizzyingly complicated but well- orchestrated. When a load of drugs is shipped to the U.S., the home office faxes to the cell head a list of buyers, the amount of their purchases and their beeper numbers. The cell head signals each customer's beeper to arrange a delivery at a street corner or parking lot. After the customer sells the cocaine down the line, he fixes a second meeting to make payment. The deals take two minutes or less to consummate.

After each meeting, both drivers alert the cell head in code from a mobile phone or beeper. He telephones a desk officer in Cali, then sends confirmation by fax. Detailed ledgers are maintained in both countries. The ledgers have proved the system's main vulnerability, providing a rich lode of data to DEA analysts when seized.

If anyone involved in a deal fails to call in, or catches a whiff of the law, the cell is shut down. Last July, in a raid on a Leto Lopez front business in Queens, agents found a list of Calenos who had rented apartments around Manhattan. By the time agents reached the addresses, everyone was gone, leaving behind cocaine, ledgers, more than $1.5 million in cash, and two steamer trunks full of arms. "Whenever we get close to these people," says U.S. District Attorney Andrew Maloney, "they're on a plane back to Colombia, and we have to start all over again."

The cartel's need for goods, services and go-betweens has spawned a thriving network of cottage industries. Front companies acquire mobile phones by the dozen and "sublet" them to the cells. The traffickers know investigators need four or five days to get a court-ordered wiretap, so they use a phone for two days and discard it. If a mobile phone is eventually traced, the trail stops at the front company.

Document specialists obtain clean driver's licenses and car registrations. In 1989 the FBI and New York City prosecutors cracked a scheme in which employees of the state Department of Motor Vehicles were taking bribes of $100 to write phony registration papers. Hundreds of falsely documented cartel vehicles, fitted with hidden compartments, moved drugs north from Mexico and returned south with cash.

The cartel's second-biggest industry is money laundering. The monthly gross for some New York cells runs from $7 million to $12 million, all in $5, $10 and $20 bills. That translates into 1,000 to 3,000 pounds of bills a month, a logistical nightmare.

In the early years a cell's financier would cart the money to a local bank and wire it to Panama. The cartel had a personal banker there: First Interamericas Bank, owned by Gilberto and Miguel Rodriguez Orejuela. In 1985 the U.S. government forced Manuel Noriega to close Interamericas and required U.S. banks to report all large cash transactions.

Many cells now ship the money in bulk to Cali, where some is invested, some converted into pesos and some wired back to banks in the U.S. or Europe under a relative's name. In January 1989 New York agents seized a Santacruz truck loaded with $19 million as it was departing for Mexico. Last October agents found an additional $14 million inside heavy cable spools on Long Island, along with records showing shipments of $100 million more over the previous nine months.

The immunity the Cali cartel enjoys from prosecution is a matter of intense concern to Bush Administration officials. While Henry Orjuela Caballero is in jail in New York State awaiting trial on federal drug-trafficking conspiracy charges, brother Carlos is out on bail on similar charges filed against him in Los Angeles. Another brother, Jaime, the family boss, is free in Colombia. So are Don Chepe Santacruz, the Rodriguez Orejuela brothers and such rising powers as the Urdinola brothers. "You can't destroy the organization without lopping off its head," says DEA's Bonner. "The tentacles grow back. If the Cali cartel is to be attacked successfully, there must be pressure in Colombia."

President Cesar Gaviria Trujillo's advisers insist the Cali cartel will be given priority now that Escobar is jailed. Bonner argues that the new gangs will prove a more formidable threat to Colombia's security than the Medellin cartel "precisely because they make more discreet use of murder, bribery and intimidation." Says he: "The Cali organizations can be characterized as murderous thugs who are more politically astute in the way they carry out their business."

Colombian national police officials say the Cali capos are not living at home, are not doing business as usual and will be arrested if found. Santacruz has kept out of sight since the government began its antidrug campaign after the assassination of presidential candidate Luis Carlos Galan in August 1989. But others seem to feel safe from prosecution. Gilberto Rodriguez Orejuela is very much at home, defiantly proclaiming his innocence and that of his brother Miguel. Gilberto describes himself as a "captain of industry and banker" and has the portfolio to prove it. He also has reputable friends who are partners, associates or suppliers in his business ventures, which do much to promote development throughout the Cauca valley.

Even when police do close in, the Cali bosses have escaped jail. When Gilberto was arrested in Spain in November 1984, the Colombian government went to great lengths to prevent his extradition to the U.S. According to a Rodriguez friend, Gilberto's son Jaime Fernando appealed to then President Belisario Betancur for help. Betancur declined comment. The elder Rodriguez says, "If Betancur helped in seeing I was extradited to Colombia and not the U.S., he was simply doing his duty as President, supporting an extradition order issued by a Colombian judge." Back in Cali, Rodriguez was tried on charges identical to those filed in the U.S. and was acquitted -- along with Santacruz, who was tried in absentia. The acquittal protected both men from further extradition to the U.S. on grounds of double jeopardy.

While the Rodriguez and Santacruz clans seem to enjoy considerable respect in Colombia, they are not universally admired. Some intellectuals protest that if the drug mafia's economic power is accepted, its values will eventually be countenanced as well. Critics are especially wary of the dynastic ambitions of the high-profile Rodriguez family. "They invest in the future," says a Bogota businessman. "They are thinking of the next generation, and the one after that."

Gilberto's son Jaime Fernando graduated from the University of Grenoble with a degree in international commerce. Two other sons studied at Stanford University and the University of Tulsa, and a fourth son is learning systems engineering. Gilberto boasts that one of his daughters has a master's in business administration and that a second is an engineer. "Most are now working in our businesses," he says.

Critics fear the proud father is grooming his children for political office as well. "Someday their sons will rule part of this country," predicts Luis Gabriel Cano, who has succeeded his assassinated brother, Guillermo, as publisher of Bogota's crusading newspaper El Espectador. Unless the Colombian government can now break the hold of the cartel in Cali, Cano's warning may have come too late.