Federal agents trying to penetrate the illegal drug world set up an undercover money-laundering operation in Atlanta two years ago and soon ran into complaints. They were working too slowly to suit their clients.

The undercover investigators were told to look at La Mina, or "The Mine," a Los Angeles-based operation. It could launder illegal drug profits and have the money wired back to drug kingpins in Latin America in 48 hours, they were told.Federal authorities did just that. On Wednesday they announced the culmination of an investigation that they say smashed the La Mina operation, which had laundered $1.2 billion in drug proceeds over those two years.

"I think it's fair to describe this operation as a very hostile takeover of a major money laundering operation," Attorney General Dick Thornburgh said.

Thornburgh, FBI Director William Sessions and other law enforcement officials said their "Operation Polar Cap" ended with federal drug and money-laundering charges against 127 people and two Latin American banks.

Thornburgh called the investigation "the largest money-laundering crackdown ever carried out by the federal government." He said the operation had direct ties to the Medellin cartel of Colombia, which authorities say is responsible for 80 percent of the cocaine flowing into the United States.

But Justice officials ran into problems closing their net. Plans to arrest defendant Eduardo Martinez in Panama apparently depended on the assistance of the Panamanian Defense Forces headed by Gen. Manuel Noriega, who is himself under federal indictment.

Justice officials said Martinez, who is from Medellin, Colombia, had holed up in a Panamanian bank on Wednesday and was surrounded by Noriega's forces.

"Mr. Martinez is inside the bank and won't come out," Thornburgh told reporters at lunch Wednesday.

But by late afternoon, chagrined Justice Department officials said Martinez had eluded them and was not in the bank.

Noriega himself is under a federal indictment for drug trafficking, and his relations with U.S. officials were an issue in last year's presidential campaign.