SAN DIEGO -- Evidence at the trial of seven accused cocaine traffickers, arrested last year in an elaborate sting operation, is implicating present and former Mexican military and law enforcement officers in what U.S. prosecutors charge is pervasive, high-level corruption associated with Mexican drug smuggling. Among the top Mexican military men implicated so far in testimony and court documents in the case -- but not indicted -- are the country's former defense secretary, Gen. Juan Arevalo Gardoqui, and two currently serving officers: Maj. Gen. Juan Poblano Silva, former commander of the 25th military zone in the state of Puebla, and Lt. Col. Salvador de la Vega, his former executive officer. Arevalo Gardoqui and Poblano Silva have strongly denied that they and de la Vega were involved in protecting drug traffickers. Lawyers for the Mexican and Bolivian defendants in the case have subpoenaed the U.S. ambassador to Mexico, Charles J. Pilliod, to testify for the defense. The trial, which began in U.S. District Court here Jan. 5, threatens to aggravate mounting resentment in the government of new Mexican President Carlos Salinas de Gortari over U.S. accusations of drug-related corruption. The star prosecution witness in the case, described in court by U.S. government attorneys as a "high-level drug defector" with intimate knowledge of Mexico's "politics of drugs," has also testified that Miguel Nazar Haro and Esteban Guzman, currently top officials in the Mexico City police department, protected drug-smuggling operations and profited from the sale of seized narcotics while serving in senior posts in the feared Federal Security Directorate (DFS) in the 1970s. Nazar Haro has publicly denied the allegation, and Guzman could not be located for comment. Nazar Haro was appointed chief of a newly created police intelligence service in December by Javier Garcia Paniagua, a former DFS director and the new chief of the Mexico City police under the two-month-old Salinas government. Guzman, also a Garcia Paniagua protege, now heads a secretive police operations group, Mexican officials say. Both Nazar Haro and Guzman were among more than 20 Mexican law enforcement officers indicted by a San Diego grand jury in 1981 and 1982 on charges of involvement in a huge car-theft ring. Nazar Haro subsequently jumped $200,000 bail. Guzman and most of the others accused were never apprehended. The names of these and other officials emerged in testimony by David Wheeler, 46, a convicted drug trafficker who turned U.S. government informant and played a major role in a five-month sting operation that resulted in the January 1988 arrests of the four Mexicans and three Bolivians now on trial. Wheeler, a sometime screenwriter described by the prosecution as a "career drug trafficker" in and out of Mexico for 25 years, agreed to serve as an informant after he was arrested on drug charges in Oklahoma City in 1986. According to the prosecution, Wheeler then teamed up with a "mercenary" pilot -- renowned Drug Enforcement Administration undercover agent Mike Levine -- and other U.S. Customs and DEA operatives who posed as representatives of a major East Coast drug-smuggling organization. In August 1987, as part of a plan to set up an undercover drug buy and expose official drug-related corruption in Mexico, Wheeler renewed an old contact and set the sting in motion. Defense lawyers have charged in court that Wheeler, seeking to avoid a possible 35-year jail sentence, used his story-telling talents to "dupe" the government. They claim that the defendants never intended to deliver any cocaine but wanted only to collect protection money in their own private "sting" on the American undercover agents, who they thought were drug dealers. In an interview Thursday, the new Mexican assistant attorney general in charge of narcotics matters, Javier Coello Trejo, dismissed the drug allegations against the top Mexican officials as "pure rumor and gossip." Like his predecessors, he insisted that U.S. authorities first must provide proof of the charges before Mexican authorities can investigate them. The prosecution says the seven defendants now on trial here planned to smuggle five metric tons of cocaine from laboratories in the Bolivian jungle to the United States through Mexico, where drug-laden planes carrying a ton at a time would be given high-level military protection to land and refuel. The prosecution alleges that negotiations involving Jorge Carranza Peniche, a former Mexican military officer, and Lt. Col. de la Vega led to an agreement to pay Gen. Poblano Silva $1 million per landing to seal off a highway in Puebla state as a landing strip. The American agents and informants involved in the sting agreed to pay $25 million for the cocaine, the prosecution says. Although not indicted, Poblano Silva and de la Vega have been named by the U.S. Attorney's office in a separate criminal complaint, and arrest warrants have been issued for them. No charges have been filed against former defense secretary Arevalo Gardoqui, Assistant U.S. Attorney Stephen G. Nelson said, but he cautioned that "the investigation is not yet closed." In a telephone interview last week, Poblano Silva, currently commander of the 8th military zone in the northern border state of Tamaulipas, called the accusation against him "totally false" and said that "the former secretary of defense himself has denied it." Asked if he knew Carranza Peniche, he replied, "I cannot make any statement" and declined further comment. The U.S. sting operation culminated in a helicopter raid by Bolivian security forces and U.S. DEA agents on five remote jungle laboratories in Bolivia's Beni region that DEA experts said could produce a ton of cocaine a week. Currently on trial are Efren Mendez Duenas, 59, a Mexican resident of Bolivia, Bolivian citizens Jorge Roman Salas, 51, Mario Vargas Bruun, 29, Rolando Antonio Ayala Justiniano, 28, and three other Mexicans. Besides Carranza Peniche, 53, the other Mexican defendants are Pablo Giron Ortiz, 41, a former policeman, and Hector Manuel Brumel Alvarez, 48, allegedly connected to Mexico's ruling Institutional Revolutionary Party. All the defendants have pleaded not guilty. Defense lawyers last month subpoenaed Ambassador Pilliod and State Department records because Pilliod had said in Los Angeles last year that, upon learning of the indictments, he called then-Defense Secretary Arevalo Gardoqui and other Mexican officials and was told that Carranza Peniche, Brumel Alvarez and Giron Ortiz were lying about their current military and governmental affiliations. "So we stung a sting," Pilliod said at the time. He later assured the Mexican government that the U.S. Embassy had "no evidence that Poblano Silva was involved with Carranza or with drug traffickers," an embassy spokesman said. A U.S. law enforcement official here said in an interview that, "with no personal knowledge of the case," Pilliod "basically shot his mouth off" in his zeal to defend top Mexican officials against corruption allegations, and that the defendants' lawyers then "tailored their defense around his statements." The prosecution has filed a motion to quash the subpoena on grounds that Pilliod's testimony is "inadmissible." Wheeler has testified he started the sting by contacting Giron Ortiz, a former DFS operative in Mexico with whom Wheeler said he had had a long drug-trafficking association. The DFS was disbanded in 1985 after some of its agents were linked to corruption. According to tape-recorded conversations introduced in the trial as evidence, Giron Ortiz told Wheeler in September 1987, "There's a lot of coke and marijuana available." Claiming to be then a federal judicial police officer in Mexico City, Giron Ortiz added in one of the taped conversations with Wheeler, "I have the connections. I can connect you with the Army. Everything is controlled by the Army. They do whatever they want, whenever they want." While riding to San Diego with Wheeler in a bugged Cadillac, Giron Ortiz mentioned that Gen. Arevalo Gardoqui was directing the Army's participation in drug-trafficking and the protection of certain Mexican marijuana fields, according to a transcript read in court. In his own testimony, Wheeler identified the general as a powerful figure who benefited from marijuana and cocaine smuggling. Arevalo Gardoqui, who retired in December when his six-year term as defense secretary expired, has angrily denied similar charges in the past, denouncing them as "slander" and "groundless lies" spread by drug traffickers to retaliate for his leadership of a large narcotics eradication campaign involving 25,000 soldiers. However, a well-informed U.S. law enforcement official not connected with the current trial here described the eradication program as "a big show." The law enforcement official added that "the Mexican military is a real problem right now." He said that as of late last year, a number of field generals were "in league with narcotics traffickers" and that "uncontrolled corruption" was widespread. Asked how high the military corruption reached, the official said, "To the top." In a U.S. District Court case in Tucson in May 1988, a DEA affidavit alleged that Mexican drug trafficker Rafael Caro Quintero "paid $10 million to Gen. Arevalo Gardoqui for protection" of a huge marijuana plantation in Chihuahua state in 1984. Wheeler also testified that in Mexico in the 1970s, he had worked with a group of DFS agents including Guzman, a key figure in a brutal, secret counterinsurgency group called the Brigada Blanca, and Nazar Haro, a reputed CIA informant who headed the DFS from 1977 to 1981. Wheeler said his job was to assess the value of seized narcotics, portions of which would then be taken away by the DFS and sold. "All of us split the profits from sales of drugs seized in Mexico, which I smuggled across the border and sold in the United States," he testified.